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February, 2019 9:01 AM



OECD calls on Australia to sort out energy sector

OECD calls on Australia to sort out energy sector

Successive Australian governments have failed to sort out any kind of consensus on national energy policy, and although it may have caused consternation and embarrassment for some at home, it had yet to reflect outwardly quite so noticeably.

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By Nigel Frith 01.02.2019

Successive Australian governments have failed to sort out any kind of consensus on national energy policy, and although it may have caused consternation and embarrassment for some at home, it had yet to reflect outwardly quite so noticeably.

However, as the world markets become more aware of the threat of climate change and the potential to affect how some assets are valued, various intergovernmental organizations and business analysts have been calling for action.

It has not been an easy process for Australia, with any impetus to shake up the energy sector met by stubbornness and, eventually, the change of leadership. There appears to be a growing sentiment that this cannot be allowed to carry on for much longer, and now the Organization for Economic Cooperation and Development (OECD) has called for the nation to start taking its commitments more seriously.

The international member organization with 36 countries has said Australia needs to step up its game when it comes to reforming the energy sector, saying leaving it as it is will not be enough for the country to meet the 2030 targets it agreed to with the Paris accord in 2015.

The OECD has provided a list of recommendations for Australia, saying part of their issue is that they have not yet found a way to introduce an adequate carbon tax or price on emissions, and noted that the infrastructure is lacking the ability to integrate renewable energies into current energy systems.

Anthony Cox, their deputy environment director, said Australia was "increasingly exposed to rising sea levels, floods, heat waves, bushfires and drought", which he felt made it even more necessary to "take a more proactive role in fighting climate change and addressing biodiversity loss."

Tourism is one of the country's most important avenues for income and development, but it has been that much of this is under threat from some of the issues listed by Cox. If no appropriate measures are brought in to counter ongoing threats to natural resources such as the Great Barrier Reef and picturesque coastlines, it is thought that these could reduce in viability as income sources, which are seen as vital to local economies.

That being said, the OECD did point out that the big outstanding issue was still the heavy reliance on coal, which made up two-thirds of all electricity generation in Australia – making it by far the highest of all advanced economies. Although the organization did note there had been a transition of sorts to move away from coal, with renewables making up more of the mix alongside natural gas, it was not happening fast enough.

Currently, oil, coal and gas make up an alarmingly high amount of the grid uptake in Australia, at 93% of the mix. This is a fair bit higher than the average for other OECD countries, which comes in at around 80%. It has been acknowledged that there is a lot of off-grid generation in the country, which may not all be accounted for. However, from a government perspective, there still seems to be a lot to do.

The OECD recommended working towards a bipartisan initiative on energy, something which many politicians still seem against backing, on the basis that a 26-28% cut of 2005 emission levels is needed to hit the 2030 target and keep up with the commitments it has already agreed to.

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