Australian Energy Policy

The energy market and policy environment in Australia have seen rapid changes during the five years since the IEA presented the last in-depth review of Australia in 2012. In line with global energy market trends, Australia’s energy system is undergoing a profound transformation, bringing about challenges to the design of energy and climate policies and energy markets.

Well-endowed with energy resources, Australia is a key player in global energy markets. Energy exports are driven by the significant increase in energy demand from emerging economies, such as the People’s Republic of China and India. Energy represented nearly 40% of Australia’s total export revenues in fiscal year 2015 and exports are growing significantly, making the country the world’s largest exporter of coal and a leading exporter of liquefied natural gas (LNG).

In 2016-17, the Commonwealth government, including through the Council of Australian Governments Energy Council (COAG) (both at leaders’ and Energy Ministers’ level), has been undertaking a large number of policy reviews. In 2016, the COAG Energy Council requested an Independent Review into the Future Security of the National Electricity Market (NEM) by Chief Scientist Dr. Alan Finkel. Dr Finkel presented a national reform blueprint to maintain security and reliability in the NEM in June 2017 (the “Finkel Review”). Building on its climate pledge under the Paris Agreement in 2015, the Commonwealth government is now also reviewing its climate policies. The NEM market bodies have reviewed market rules and regulations.

Bringing together the outcomes of the reviews and adopting new legislation and new NEM market rules will be a significant task. The energy policy governance in Australia is very complex and fragmented. It suffers from frequent changes of policy direction and institutions at Commonwealth level. The states and territories are implementing energy policies, notably for renewable energy and energy efficiency, but have agreed to common energy market rules in the NEM. At this level, there are three key market bodies (the Australian Energy Regulator, the Australian Energy Market Commission and the Australian Energy Market Operator) which have a role in the oversight of energy markets and networks, and are active in keeping up with and adapting to the country’s rapid energy developments and changing markets. There are overlaps in many areas among them and with Commonwealth institutions, such as the ACCC or the Clean Energy Regulator (CER) or Climate Change Authority (CCA), which are not part of the NEM.

A key priority is to ensure that Australia can maintain its competitiveness as a natural resource exporter and embrace the energy transition at home by fostering secure, competitive and clean energy supply for households and industry alike.

Source: IEA Energy Policies of IEA Countries Australia 2018 Review