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Aussie Brownouts, Energy Policy Rifts

The Energy Policy Institute of Australia recently invited me to do a four day, four city tour of eastern Australia and a series of presentations hosted by the American Chamber of Commerce in Australia.

My colleague and counterpart Robert Pritchard, Executive Director of EPIA, and I hit Sydney on Tuesday, Melbourne on Wednesday, Brisbane on Thursday, and on Friday, we headed to meetings in Canberra with the U.S. embassy. We met with the media and with an Australian parliamentary publication, all to discuss the expectation of President Trump’s energy agenda.

If you think we have issues with national versus state jurisdiction, our regulatory and energy policy issues pale in comparison. I see Australia as having an even bigger chasm and more significant consequences to that jurisdictional divide.

On my first day, I see Prime Minister Malcolm Turnbull on national television urging a renewed focus on deploying carbon capture and storage technology on new baseload coal and natural gas power plants.

Of the more than 60 countries in which I have traveled over 28 years with USEA, this was the first time I saw a prime minister talk to the public about the basics of, and necessity for, CCS. 

Courtesy of Eesti Energia

Barry Worthington

The South Australia province has been very successful at wind and solar deployment. Unfortunately, that success has yielded imbalances, which have led to rolling brownouts. Several of the power outages were on the heels of a major storm that caused a provincial blackout.

In fact, the day I landed in Australia, steel giant Bluescope’s CEO, Paul O'Malley, was on the front page of the Australian Business Review discussing the implications of not having a national energy plan.

He said the country’s average electric power prices were three times that of the U.S. industry prices on average, and Australia’s average natural gas prices were four times that of the U.S.

Others blamed the ban on hydraulic fracturing in some provinces for the relatively high natural gas prices and blamed high power prices on the penetration of renewables. Our Australian friends, desperately in need of their own national energy strategy, were keen to understand what might happen in the states and what it means for them.

The Trump Energy Plan- Goal One- Jobs

Our friends down under asked me to share my expectations of energy policy in the Trump administration. I told them there are three energy priorities:

  • Jobs
  • Jobs
  • And more, high paying jobs.

I have no doubt that President Trump’s energy team, which is outstanding, would agree. The energy sector is one of the few that can expand employment quickly. If we can mobilize capital investment in domestic energy production, we could quickly generate hundreds of thousands of new direct and indirect jobs from the oil, natural gas, coal, nuclear, renewable, and energy efficiency sector. And they would be high paying jobs.

Capital investments lead to job creation and increased domestic energy production.

The energy industry executives go to the capital markets, through stock or bond offerings, to raise dollars for major infrastructure projects. Private capital sparks new investments that help deploy the smartest, most advanced technologies. Let the taxpayer dollars contribute to roads, bridges, ports and waterways.

The Trump Energy Plan- Goal Two- Reduce Costs to Consumers

Let’s have increased domestic energy production and increased domestic energy efficiency reduce costs even further for the American consumer. At a recent USEA forum, it was noted that increased production and efficiency gains have resulted in an average energy bill for American consumers that is $1100 less than it was five years ago. This includes the cost of gasoline, and other transportation fuels, electric power, and natural gas. Energy savings means more dollars for food, healthcare, education, entertainment and other societal priorities for American families. Can we drive these costs even lower over the next five years? Why not?

The Trump Energy Plan- Goal Three- Reduce Imports

Freshman Sen. John Kennedy of Louisiana noted that we are still importing three million barrels of oil daily from Venezuela and Saudi Arabia at $50/barrel. That is $150 million/day that we are going to take out of the U.S. economy and give to the economy of two other countries. What kind of economic stimulus- not taxpayer funded, could result from keeping $150 million a day here in the United States?

The Trump Energy Plan- Goal Four- The International Deal

We have international energy issues, all of which are intertwined with other sectors. Energy cannot be separated from other issues that we have with the European Union, the Middle East and Africa, Asia, South Asia, and Latin America. I told our Australian business leaders and ministers that I expect a Trump administration to negotiate all issues with the country bilaterally and all inclusively.

Europe and Asia want access to less expensive U.S. supplies of LNG, which is federally regulated. But who pays for U.S. military bases in Europe, and contributions to NATO?

President Trump wants individual, bilateral trade deals, not regional deals. He abandoned the Transpacific Partnership and the US-EU Free Trade Agreement, and he wants to rewrite NAFTA as part of a larger US-Mexico diplomatic/economic discussion.

The Trump Energy Plan- Goal Five- The Domestic Deal

In my conversations with the Australians, I concluded that we all have domestic issues. An argument can be made that Australia’s problems are derived from its intent over the past few years to mimic policies of the U.S. and the EU. Our domestic focus will shift to:

  • Domestic energy development- all fuels; all technologies, including energy efficiency
  • Streamlined permitting process- Australia permits a mining operation in 2-3 years. We take 8 years.
  • Increase production of oil and gas on federal lands, and offshore, and maybe even in the Arctic.
  • Balance tax incentives for renewables with other carbon/no carbon fuels
  • Focus on states versus U.S. federal jurisdiction for regulation
  • Unleash domestic production to push prices down for consumers
  • Expand export markets

As both Australia and the United States confront their energy future, we have more similarities than differences. We can cooperate and learn from our experiences, both successes and failures. This cooperation concept can be achieved from the relationship between the U.S. Energy Association and the Energy Policy Institute of Australia

Barry Worthington is executive director of the United States Energy Association.

 

 

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