30 October 2012
The Chairman of the AEMC, John Pierce, addressed the Australian National University H C Coombs Forum in Canberra on 30 October 2012.
Go directly to: H C Coombs Forum, John Pierce speaking notes.
ANU Australia s Energy Future Speaking Notes 30 October 2012
19 October 2012
AEMC Chairman, John Pierce, has addressed the Eastern Australia's Energy Markets 2012-25 forum in Sydney. He participated in the session on the impact of the carbon price on the energy market during the period 2012-25 (10.00am 18 October 2012 AEST). John Pierce's conference paper can be viewed below which accompanied his speech and provides greater detail on the issues that were outlined.
Read the J.Pierce conference paper here:
For information contact:
AEMC Chairman, John Pierce (02) 8296 7800
Media: Communications Manager, Prudence Anderson 0404 821 935 or (02) 8296 7817
16 May 2012
AEMC Chairman, John Pierce, has addressed the World Forum on Energy Regulation in Canada. He participated in the session on environmental impacts of the current electricity generation mix (12.30am 16 May 2012 AEST).
27 October 2011
Presentation to the Maddocks Energy Lunch 27 October 2011
John Pierce Chairman Australian Energy Market Commission
This speech by Mr Pierce was presented to a private luncheon held in Sydney by the national legal firm, Maddocks, on 27 October 2011.
Introduction Thank you for the opportunity to speak to you today. I am grateful for the invitation from Alan Stockdale and the Maddocks team more broadly.
I will discuss today some of the issues and questions that the AEMC considers need to be addressed within the Australian stationary energy sector, and some of the work that we, together with Governments, other agencies and industry are undertaking to address those challenges.
On the night of the Commonwealth budget in August 1993, I was facing a difficult decision. Would I listen to the budget speech or attend the RC Mills Memorial Lecture at Sydney University, being delivered by a visiting economic growth theorist, Professor Luigi Pasinetti, from the Catholic University of Milan?
This choice of how to allocate a non-renewable and valuable resource - time - between the immediate and the potentially important is one we all face repeatedly. It is a question of priorities. As it turns out, 18 years later I can recall far more of Passinetti’s lecture than I can the Treasurer’s.
After discussing the nature and drivers of structural change in the economy and the role of technical progress and productivity growth, Pasinetti commented, somewhat prophetically, that:
“intricate problems of structural dynamics are particularly going to become important here in Australia… In the next decade, or even few years, those who are responsible for the Australian economy will have to make crucial decisions as to the mix of strategies that concern the size of the economy, the speed of population expansion, the size of productivity raising investment, the extent of exploitation of the natural resources; the branches of production to pursue and diversity, or to close down. The real crux of the matter is that the new channels should be singled out and pursued before the old ones are doomed to extinction, not the other way around.”
Pasinetti’s description of economy wide issues in 1993, I think you will agree, ring true today, particularly when we look at the issues facing the energy sector in 2011.
Structural change, i.e. the movement of people from one type of job to another and capital from one type of investment to another - in response to changes in technology, relative prices, consumer preferences and dare I say government policies and regulation – is a normal, continuous and dynamic process. In fact it is a necessary one. The task for institutions such as the Australian Energy Market Commission – be it with our statutory rule change hat on or in our policy advisor role – is to understand the drivers of this process, adapt to them ex-ante and facilitate and help manage the adjustment process in the long term interests of consumers.
2 The notion that there will be changes in the way energy is produced, transmitted, distributed, controlled, marketed and consumed is hardly a radical one. It’s been happening since Edison was a boy. Nor is the idea that structural change is necessary in order to gain the benefits of, and drive, productivity growth. Nevertheless, these changes throw up a number of issues and there are choices to be made about how we respond to them and prioritise them.
This is essentially what the Strategic Priorities for Energy Market Development released last week by the AEMC – and the process of engagement with stakeholders leading up to its publication – seeks to address.
What are the challenges, issues and opportunities that have the biggest impacts on the sector’s economic performance and consumers in the longer term? What are the three most important things we can do about them?
Clearly identifying priorities allows us to focus on the work that has the greatest pay offs. Any more than three:
and everything risks becoming a priority which means nothing is . . . and nothing gets done.
The demand for energy is a derived demand. It is derived from almost everything that goes on in our society and economy. The reliability of energy services and the efficiency with which resources are deployed to provide those services has significant flow on effects for the performance of the whole Australian economy.
As you know, Australia has traditionally enjoyed relatively low cost electricity and gas. Underpinned by our relative abundance of primary fuel sources, it has shaped our economic and industry structure. However, in addition to these natural advantages, policy initiatives such as the National Electricity Market (NEM) itself, have enhanced the productivity and efficiency of the stationary energy sector. Policy choices can, of course, also do the opposite.
Be it a rule change, such as that recently proposed by the Australian Energy Regulator with respect to network regulation, or a policy intervention such as the mandating of so called ‘smart meters’ or various climate change policies, a core question that needs to be answered is “How will this impact on the productivity and efficiency of energy services?”
In answering this question it is worth remembering that 70% of this stuff is not consumed in the residential sector.
A noticeable Australian economic trend over the last 20 to 30 years is the increasing contribution of the service industries to GDP growth. While all other primary and secondary industrial groupings have increased, the service industries have more than tripled their contribution to total Australian GDP. This has profound implications for the way that Australia uses energy
As we can see, the energy usage of services industries is low in comparison to other industries, while their level of economic output is clearly significant
So, while overall GDP growth has increased, energy consumption has increased at a slower rate, and the overall energy intensity of all Australian production has in fact decreased. This is likely to be a continuing trend.
When I started working in the Electricity Commission of New South Wales, the standard electricity consumption growth number for planning purposes was in the order of 6% p.a. By the late 1980’s it had become 3%to 4% and for sometime now it has been in the order of 2% p.a., with some evidence emerging that it may be tracking lower.
Now while growth rates vary between regions, the point is that changes in the structure of the economy over time have and will impact on energy consumption growth rates. If you are contemplating policies designed to impact on energy consumption, you might like to be aware of the underlying structural dynamics.
As Australians have become wealthier and economic output has expanded, levels of electricity consumption have generally increased, if at a declining rate, due to these changes, in the drivers of growth.
However, perhaps more importantly from the viewpoint of productivity and prices (and hence how the electricity sector feeds back and impacts on the economy), the way we consume electricity has changed.
Despite improved energy efficiency of many household appliances, increased wealth and incomes mean that we have more of them, with a consequential deterioration in load factors – that is, peak demand has been growing faster than average demand or energy growth. For example, the Australian Energy Market Operator (AEMO) has estimated that while average electricity growth across the NEM regions will increase by 2.3% per year out to 2020, maximum demand will increase at around 2.6%.
As peak demand periods tend to be of very short durations, the additional capital invested in networks and to some extent generation, has relatively lower levels of utilisation. As network costs have been the primary driver of recent retail price increases, a core question has become “How can energy services in terms of cooling, heating, lighting etc be maintained while increasing the utilisation of the capital invested in network infrastructure?”
Performance of the NEM since market start
The wholesale NEM as we now know it had a rather long but relatively orderly gestation and implementation period. At least it appears so from today’s perspective. Despite some views I have heard, its development commenced prior to Alan Stockdale coming to office, though the pace certainly quickened after he did.
The process of development and management of its implementation certainly deserves to be fully documented as a case study of successful policy implementation – but that is a story for another time. The first issue we faced when developing the NEM, concerned how to co-ordinate efficient dispatch, that is production from various power stations using price signals rather than via centralised direction from system control engineers. Various trials and experiments with different means of exchange and contract forms were undertaken in New South Wales and Victoria prior to the integration of these two regions. These trials and experiments meant that when the NEM commenced we could be very confident that the wholesale market could work, at least in the operational sense – and that the ‘lights would stay on’.
What you could not trial or experiment with were real investment decisions.
Investment challenge
AEMO has estimated that between 40 and 130 billion dollars of new investment in generation will be needed by 2030, depending on the scenario that you pick. To put this in context, we estimate that around 12 billion dollars of generation investment has occurred in the 12 years since market start. The scale of this investment requirement is challenging in itself. It is exacerbated by the situation that capital markets find themselves in, and market uncertainty around climate change policies.
It is important to note that investment is likely to continue, even in a climate of significant market uncertainty. However as Grant King, Managing Director of Origin Energy, recently explained, investors will generally seek to minimise their capital exposure when making investment decisions in such a market. For the energy sector, this is likely to result in investment in relatively low capital cost, high operating cost plant, such as peaking plant, rather than more capital intensive base load generation.
If such a mix of plant proves not to be the lowest cost in the long term, customers will pay through higher prices than otherwise would have been the case.
Irrespective of your view of what is going to happen to future demand or the types of investment that will be required in future – or the balance between demand and supply-side investments – relative to the past, the investment requirements for the reliable provision of energy services will be large.
Given this, a core question is “what policy and regulatory settings do we need to make investment in this sector, or this country, an attractive proposition?”
Adjustments to meet climate change policy objectives:
Delivering the objectives of climate change policy will have major implications for the way in which we generate and transport energy. Work undertaken for the Commonwealth Treasury suggests that by 2050, nearly half our energy supply will be met through renewable generation, while coal will contribute around 20%. To put this in context, almost 80% of our electricity is currently sourced from coal fired generation, while renewable generation makes up around 8%.
Whether we agree or not with the Treasury’s precise view, the direction of the shift is the key issue.
The challenges of managing this transition are far from trivial. For instance, there are significant issues involved in managing a power system dominated by intermittent renewable generation.
A consequence of large volumes of intermittent generation is the impact on wholesale spot prices. In South Australia, significant levels of wind generation have contributed to depressing average annual spot prices to their lowest level since market start, while contributing to the significant volatility in prices in that region.
As you can see, South Australia has also seen a significant increase in the number of periods when prices have dropped below zero dollars. These are periods where generators are actually paying to generate.
While a price on carbon will eventually drive investment and disinvestment decisions, it is the Renewable Energy Target which is currently responsible for the majority of new renewable generation. The kind of depression of wholesale prices seen here has the capacity to defer investment in high capacity factor generation and make the economics of existing plant very challenging.
Some would regard such an outcome as a positive, however it should also be acknowledged that it drives a wedge between wholesale and retail prices, and drives them in the opposite direction.
Changing industry structure
Since market start, participants have developed various strategies to manage risk – market risk being quite different to policy and regulatory uncertainty.
An increasingly dominant strategy is vertical integration of retail and generation businesses. Vertical integration represents a logical risk management strategy.
Possessing both generation and retail arms provides businesses with a natural physical hedge, provided your generator can actually generate when you want it to.
I have no problem with vertical integration per se . . . it is all a question of degree.
Balanced gentailer businesses have less of a need to buy or sell wholesale contracts resulting in a reduction in liquidity. This can have competition implications.
An industry structure characterised by a relatively small number of vertically integrated and balanced players will also be one characterised by high barriers to entry and exit. Again with productivity and price implications for consumers.
Policy uncertainty and inconsistency has the potential to exacerbate this trend, if new investment can realistically only be funded by a small number of existing vertically integrated players.
Gas and electricity market convergence
For an example of structural dynamics in practice, we need to look no further than the east coast gas industry. Development of coal seam gas prospects and related LNG facilities will allow for the export of significant volumes of gas.
The convergence of increased demand for gas-fired generation, with east coast LNG facilities producing perhaps three times as much as Western Australia and the Northern Territory, will create a number of issues for the domestic stationary energy sector. The price of domestic gas, once you can get a long-term contract, may come to reflect international prices. We will need to manage a situation where domestic electricity prices become linked to international outcomes.
Security of the gas system will also increasingly affect the supply of electricity. As we saw in Western Australia in 2008, system emergencies can rapidly constrain the availability of gas to a large number of consumers. In an electricity sector with high gas generation penetration, such an event could have additional security of supply implications.
The next stages of reform for the stationary energy sector
The AEMC’s Strategic Priorities highlights the key areas where there are opportunities to respond to the structural challenges facing the energy sector. We have adopted a “broad church” approach when consulting on these priorities, as it is important to ensure that all viewpoints and inputs are considered.
The first of the strategic priorities is the need to develop market and regulatory frameworks which reward economically efficient investment. For the economy as a whole it is important that the market frameworks encourage investment decisions on both sides of the meter which deliver energy services at the most efficient cost.
This strategic priority is related to the need for policy consistency and certainty. Reducing uncertainty in a marketplace encourages the availability of funding for new investment. It also allows participants to make better investment decisions.
The AEMC is progressing a number of rule changes and reviews related to this issue. For example, our work on the effectiveness of competition in energy retail markets and on the extent of generator market power in the NEM.
Our second strategic priority relates to building the capacity and capturing the value of flexible demand.
Demand side participation (DSP) has the potential to deliver a number of benefits. An active demand side can help to reduce the need for new investment in networks and generation to meet changing demand patterns. It may also be used to address some of the issues related to increased penetration of intermittent generation, by offering an alternative to investment in peaking generation to address rapid changes in supply.
The AEMC’s Power of Choice Review will examine this issue in detail. Adopting a whole of supply chain perspective, the review will seek to make recommendations on how any customers can be given the tools to take advantage of these opportunities.
The final strategic priority relates to the regulation of transmission and distribution networks. The prospect of investment in new types of intermittent generation in remote locations will create new issues in regards to connection and augmentation of the network and also create challenges for system operators.
Network costs have been the primary driver of recent retail price increases, and are forecast to continue to be the major contributor in the medium term. As significant new demands are placed on the frameworks governing network investment, it will be important to ensure that this investment occurs for an efficient cost.
The AEMC’s Transmission Frameworks Review is examining the effectiveness of existing access, congestion, connection, charging and planning effectiveness of existing arrangements. We are also progressing a review of distribution reliability standards.
The AEMC is also considering proposed changes to the Rules, brought forward by the AER, which are related to the economic regulation of networks. In assessing potential changes to these Rules, we will be seeking to ensure that the productivity of networks is maximised through the development of effective regulation.
Ultimately, the reform of energy markets is the prerogative of government. While the AEMC will continue to provide advice and highlight priority areas, a co-ordinated effort of unity and purpose will be needed to effectively implement improved outcomes.
Industry participants will have a vital role to play in this process, and I look forward to working closely with many of you over the coming years on these issues. While much has been achieved in the Australian energy sector over the last 20 years or so, there continues to be much still to be done to help ensure that the sector makes the greatest contribution that it can to the economic growth of the country.
Thank you again for the opportunity to talk to you today, and I am happy to take questions.
Ends
04 November 2010
Presentation to the Asia-Pacific Partnership on Clean Development and Climate (APP)
4 November 2010
John Pierce Chairman Australian Energy Market Commission The Asia-Pacific Partnership on Clean Development and Climate (APP) brings together Australia, Canada, China, India, Japan, Republic of Korea and the United States of America to address the challenges of climate change, energy security, and air pollution in a way that encourages economic development and reduces poverty. This grouping represents around half of the world’s emissions, energy use, gross domestic product and population. It is an important initiative that engages key greenhouse gas emitting countries in the Asia Pacific region. This speech by Mr Pierce was presented to the 3rd Energy Regulatory and Market Development Forum held in Sydney, Australia on 3- 5 November 2010. This forum is a project under the Power Generation and Transmission Task Force of the APP.
Introduction
Good morning ladies and gentlemen and let me add my welcome to this rather unique forum, which brings together so many important policy makers and regulators in the energy sector, from the Asia-Pacific region and further afield.
The Asia- Pacific Partnership on Clean Development and Climate has been in existence for about five years, so this is a good time to reflect on what has been achieved, as well as challenges for the future.
The Partnership was formed to facilitate voluntary co-operation in the sharing and diffusion of technologies that promote achievement of each countries’ energy and climate change policies. There is an impressive list of projects being undertaken by the Partnership across the eight work areas. This illustrates the scope and benefits of sharing information and ideas on issues that underpin not just the energy sector but the direction and nature of economic development and its environmental impacts.
This Energy Regulatory and Market Development forum is one of the important projects within the Partnership that recognises the critical role that the market and regulatory frameworks play in the energy sector’s ability to efficiently achieve the goal of a more sustainable use of the environmental resource upon which we all depend.
I am sure that over the next two days we will find that while there is much that differs in the market conditions and regulatory structures in our countries, there are lessons we can all learn, and common themes that we can draw on, as we undertake our respective roles at home.
In addition to the members of the Partnership, the involvement of the UK and New Zealand in this forum is particularly welcome given their experiences of liberalising energy markets alongside tackling environmental challenges.
Over the last 15 to 20 years there have been major changes in the Australian energy sector that reflect, I suspect many of the themes that we will hear from each country over the next two days.
The reform program that created Australia’s National Electricity Market (NEM), and subsequently the emerging national gas market, has delivered substantial benefits to customers through more efficient risk allocation, productivity improvements, competition, continued strong investment and reliable supply.
This program however is not some mythical perpetual-motion machine. There are no ‘set and forget’ options. The laws of thermodynamics apply as much in the world of governments, policy makers and regulators as they do to the physical world.
The ability of our industry and regulatory structures to deliver the outcomes - the performance our populations value - requires a significant and continuous supply of time and effort by officials such as ourselves.
In the Australian context:
These and other developments are occurring at a time when the Global Financial Crisis (GFC) and the subsequent impacts on the real economy have shaken the confidence of some in the resilience and effectiveness of markets and their associated regulatory structures to deliver affordable, reliable, efficient and environmentally sustainable supply and use of energy.
The Australian Energy Market Commission’s (AEMC) work however is based on the proposition that such objectives cannot be delivered without harnessing competitive markets and market incentives.
In the current context, this view applies most directly to measures that Governments adopt to address climate change and the achievement of emission reduction commitments.
Market incentives do not operate within a vacuum and to work effectively depend upon:
This is particularly important when the forces of economics and finance need to be reconciled with the laws of physics.
Where does the AEMC fit?
Australia’s energy market governance framework is a reflection of:
Although the national electricity market started to develop in the early to mid 1990s, the current governance framework was established under an intergovernmental agreement signed in June 2004.
This agreement sets out the National Electricity and Gas Objectives as well as the role of the Ministerial Council on Energy and the institutional bodies that regulate and operate the markets.
The Australian Energy Market Commission was established as a statutory commission under its own Act to perform two principle functions:
Our statutory rule making and provision of advice is guided by the National Electricity and Gas Objectives which are also embedded in the National Electricity and Gas Laws.
These objectives are to:
“Promote efficient investment in, and efficient operation and use of, electricity and natural gas services for the long-term interests of consumers with respect to price, quality, safety, reliability and security”
The interests of energy users – current and future – are therefore paramount to our decision making and provision of advice to the MCE.
The Australian Energy Regulator (AER), whose Chairman will speak to you next, implements the rules relating to economic regulation of the monopoly network sector and rule compliance and enforcement and functions.
The Australian Energy Market Operator (AEMO) is the wholesale market operator and has various planning, co-ordination and market information provision functions.
The challenge of climate change policy
Australia is now a signatory to the Kyoto protocol and has committed itself to a 5% reduction by 2020. The considerable scale of the task can be seen by reference to the contribution of the stationary energy sector to overall carbon emissions from Australia and the heavy reliance on coal fired generation capacity.
As is the case in most places, the choice of generation technology is primarily a reflection of the relative price and availability of the primary fuel sources which in Australia’s case has lead to the dominance of coal. A complete technological transformation of the generation sector will be required if our emissions reduction commitments are to be met. Policies will therefore be required to effect this change, which will significantly test the responsiveness and robustness of energy markets.
The Australian Government is committed to ensuring that 20% of electricity comes from renewable sources by 2020. This is expected to require an additional 45,000GWh by 2020, or approximately 10,000MW of renewable generation capacity, against the level of renewable energy output in 1997. The Renewable Energy Target is divided between large and small scale generation, with a supplier or retailer obligation to achieve the target and an associated tradeable certificate scheme designed to promote investment in the most efficient forms of renewable energy.
Following the recent federal election the government has now appointed a multiparty parliamentary committee to advise it by the end of 2011 on how best to put an explicit price on carbon.
In addition to these federal policies we have a range of state based schemes, including for instance in New South Wales a base-line and credit emissions trading scheme, a gas target in Queensland, and in many parts of the country feed-in-tariffs for residential solar. There has however been some concern about the cost and efficiency of some of these schemes as a means to reduce emissions, and the burden they will place in the future on all customers.
The Prime Minister’s Task Group on energy efficiency has recently issued its report with a range of recommendations for improving Australia’s energy efficiency. Amongst the recommendations is an obligation on retailers to deliver a defined level of improvement in energy efficiency.
Climate change policies and deregulated energy markets
A range of carbon related policy measures are therefore being brought to bear on achieving our international obligation to reduce emissions by at least 5% on 2000 levels. This will present considerable challenges to competitive energy markets to operate effectively under these policy developments and continue to deliver energy policy objectives at minimum costs to consumers.
We consider these challenges emerge in three key areas in particular:
I expect these challenges are familiar to many of you in your particular countries.
Generation investment and adequacy
Both the electricity and gas sectors are entering a period when a higher level of investment will be required be that for adding to capacity replacing capacity approaching the end of its economic life or ‘re-tooling’ the emissions intensity of the existing capital stock. In the electricity sector, estimates of the required generation investment over the next five years are up to $1.5 billion per year. The global financial crisis and uncertainty over the scope and form of climate change policies may affect the volume and form of generation capacity entering the NEM. This can happen in two ways.
First, uncertainty over a future carbon price may encourage participants to delay investment and where they do invest, choose less risky smaller scale options, which do not require a carbon price to be financially viable. However, this may lead to a technological pathway which is higher cost once a more broad ranging carbon policy is introduced.
Second, capital market conditions as a consequence of the GFC, particularly when combined with uncertainty over climate change policies, may mean only large participants with strong balance sheets, or diversified portfolios, will be able to attract cost effective funding. This creates the risk of a less competitive market structure over time. In recent years investment in new generation capacity has been concentrated amongst a smaller number of larger vertically integrated companies, with relatively few projects undertaken by independent generators. If this trend continues it could have implications for the degree of competition in the market and the liquidity of the contract markets.
Another important issue is that a large proportion of the new low carbon investment requirement will come from intermittent capacity, such as wind. This will test system operation, but also more volatile prices may make some investment decisions more difficult. We have already seen periods of very high and very low, negative, spot prices as a result of wind penetration in the NEM.
The market in South Australia will be an important test case in this regard, since with 17% of overall generation capacity coming from wind it already has one of the highest penetrations of wind capacity in the world. We understand that only the Danish market currently has a higher percentage penetration.
All stakeholders, including Government, recognise that we need greater certainty about whether, when and how a carbon price will apply so that investors can enter the market with confidence.
Demand side participation
Thus far, demand side participation is an underdeveloped component of energy markets in many parts of the world, including Australia.
The benefits from more flexible demand may be higher when there is a greater level of intermittency in supply. A price on carbon will also increase the value of demand side participation (DSP) and energy efficiency. Demand side participation and energy efficiency measures have the potential to make a significant contribution to lowering carbon emissions. Importantly, the evolution of “smart grids” and two way communication systems between consumers and suppliers substantially increases prospects for demand side participation. Consideration of efficient approaches to the adoption of these technologies is therefore timely.
A number of state governments in Australia have already committed to requiring retailers to introduce smart meters into homes and businesses and the potential for smart grids is also being evaluated through a number of initiatives. However, without appropriate technical, contractual and regulatory arrangements, the full benefits of these technologies may not be harnessed. Similarly, there are a range of largely state based support schemes for small scale renewable energy projects, which are likely to encourage a significant increase in the scale of embedded generation. Although there have been changes to network charges to help ensure that such generation is appropriately rewarded for the reductions in network reinforcement that it helps avoid, it will be important to continue to ensure that the framework evolves to allow timely connection of such generation and provide appropriate financial rewards.
It is important to recognise that the potential value from demand side participation, being able to monitor and control individual loads in real time, runs right through the supply chain.
The key role for the AEMC is to identify and remove barriers to effective demand side participation across the supply chain, but in a more pro-active manner, to also identify the preconditions and actions that would need to be undertaken to improve the productivity and efficiency of the whole market. While the demand side represents an opportunity, it is important to recognise that demand side participation will only have a systemic and lasting impact if customers see value in it for themselves.
Network investment and operation
The RET will change the economics of generation and gradually move us towards a mix of plant that includes more renewable energy and less coal.
Renewable energy will generally need to locate in different areas compared to where generation has located traditionally, because of different fuel resource requirements. This will raise challenges for our transmission systems, given the geographical spread of the NEM and its existing transmission system.
The AEMC is currently reviewing the framework in Australia to identify areas where improvements to the co-ordination of generation and transmission investments could be made. We want to make sure that congestion and connection costs are kept at economically efficient levels from a total system perspective. We are looking at approaches to transmission in other countries to inform our review. We very much have an open mind at this stage. The current rules have connected a lot of wind generation in South Australia, so they can deliver additional connections, but we want to be sure that the framework will continue to minimise costs for customers.
Concluding remarks
The deregulation of Australia’s energy markets over the last 15 to 20 years has delivered competitive outcomes with reliable supply. Addressing climate change will require transformative change to the way energy is sourced, distributed and used, and will ‘stress test’ the ability of liberalised energy markets, its regulatory structures and institutions to continue to deliver efficient outcomes for consumers.
It is therefore vital that climate change policies are designed and most importantly - implemented - in a way that makes the most use of market incentives to deliver the investment, innovation and competition required to ensure that the climate change policy objectives are achieved in the manner that is in the best long-term interests of consumers.
Thank you.