"The two-year delay of the VNI West transmission project, vital to energy security for Victoria and New South Wales, underscores the desperate need for Australia's productivity debate to include better energy planning, efficient approvals processes, a focus on quicker construction and agreement on clearer priorities," said Innes Willox, Chief Executive of the Australian Industry Group.
"The bottom line is that if we fail to deliver affordable, reliable and scalable energy solutions for industry, we will continue to lose capacity, capability and competitiveness.
"Investment will inevitably slip away, employment opportunities will diminish, and we will be perpetually managing energy uncertainty. Getting our energy settings right and delivering on them is fundamental to lifting our flagging national productivity performance.
"Cheap, scalable clean energy is central to managing our biggest vulnerabilities — social and economic exposure to climate change — and our biggest opportunities: world-scale industries producing green energy intensive commodities.
"Australian Industry Group analysis shows our nation's energy intensity has halved since the 1960s, which means energy availability is more important than ever; we have more to lose than ever before if energy supply does not meet demand.
"Renewable technology costs are falling, and if we can keep these under control while we deliver more projects, Australia can potentially again be as cheap a place to use as anywhere in the world and far more scalable than most.
"And, if we are unable to build faster and cannot minimise project cost inflation on large-scale renewable projects, including transmission, coal generation will be required to stay for longer.
"As we work towards a greater clean energy future, we need to be mindful of the need to permit and develop our gas resources, including to provide reliable peaking power and sustain industry. Simple anti-gas and pro-gas ideologies don't match the reality: the ways we use gas will change and some will shrink, but we will need it for a long time and we need greater productivity in both gas development and our renewables buildout.
"There are clear ways to substantially improve productivity in the energy space:
I. Streamline environmental approvals — reform the EPBC so national standards are enforced by accredited states and pursue approvals that are limited, co-ordinated and outcomes-focused;
II. Improve community engagement — communicate the shared benefits of energy projects for affordability, reliability and climate;
III. Simplify project expectations — deliver clean energy faster and cheaper and reassess and reduce cumulative burdens on developers;
IV. Embrace automation and smart skills planning — promote robotics, assistive tech and machine learning and align project skills with workforce capacity;
V. Advance smart electrification — use coordinated tools (such as price signals, standards and education) to ensure smarter energy use and electrification lowers rather than raises unit energy costs;
VI. Evolve clearer carbon signals — explore clearer market signals to govern generation emissions after coal retires and consider border carbon adjustments to ensure climate policy does not cause carbon leakage; and
VII. Design efficient gas security policies — allow supply- and demand-side options for gas suppliers to acquit potential forward-looking gas reservations.
"These should be our energy priorities as we look to lift productivity," Mr Willox said.
"Maximising our ability to deliver energy projects is the essential counterpart to meeting our industrial and climate ambitions."
Access Ai Group's analysis here
