media statement OPINION: a pragmatic path to australia's energy future must achieve balance

Balaji Krishnamurthy - President, Chevron Australia
The following appeared in The Australian print edition as,
“A pragmatic path to Australia's energy future must achieve balance”. 

24 September 2024

 

Energy is essential to modern life. From powering homes and hospitals to fuelling mining and manufacturing — secure, reliable and affordable energy supply is the backbone of contemporary civilisation.

Today, our dependence on smartphones, laptops, and cloud services means that even a brief power outage can impact work, education, and essential services.

On a larger scale, industrial energy disruptions can ripple through supply chains, national economies and global trade.

With energy demand at an all-time high and forecast to continue growing, decisions about energy policy will shape not just daily lives but also long-term national prosperity.

In charting a path forward, we must have honest and pragmatic conversations which acknowledge that there will be trade-offs in seeking to achieve the objectives of economic prosperity, energy security and environmental protection.

Good governments and responsible companies understand that over-emphasising any one of these can result in unintended consequences.

If the focus is solely on affordability, environmental degradation may follow. Prioritising reliability above all else could result in excessive system redundancy and wastage of valuable resources. And if environmental concerns dominate all others, it risks driving up costs to unsustainable levels, adding further pressure to households and creating system vulnerabilities that can lead to instability and blackouts.

What is needed is a mindset that blends optimism with practicality, so that these trade-offs can be appropriately evaluated and decisions made with full understanding – and acceptance – of the implications.

This approach allows policymakers to balance competing objectives, attract investment and maintain public support, while ensuring long-term energy system stability.

Consider the current debate around Australia’s next emissions reduction target.

One of the strengths of the Paris Agreement is the flexibility it provides for each country to set its own nationally determined contribution that reflects its unique circumstances, available resources and climate aspirations.

Optimistic and ambitious targets can inspire communities, drive innovation, and support the development of breakthrough technologies. These are all vital to a lower-carbon future.

But when the task is as complex as redesigning our energy system, requiring hundreds of billions of dollars over decades, governments have a responsibility to ensure there’s a thoughtful plan if the targets aren’t met and investment falls short.

This is where practical optimism becomes essential, and two strategies pursued concurrently.

One is to responsibly develop the resources the country has so it can maintain its energy security. With abundant resources, talented people, and a mature energy market, Australia is well positioned to continue providing for its communities.

The second is to support innovation and technology development that will enable progress towards emission reduction goals.

According to the International Energy Agency (IEA), about 35 percent of the reductions needed in the net zero emissions by 2050 scenario will come from technologies that are still in development and have not reached markets at commercial scale.

By pursuing these dual strategies – resource development and technology development – nations can avoid jeopardising the current energy system by prioritising one objective at the expense of the others.

A balanced approach will also help policymakers ensure plans are in place for all scenarios.

The Australian Government’s Future Gas Strategy, released in May last year, is a start in this direction and was a welcome whole-of-government recognition on the role gas plays in providing energy security for Australia and the Asia Pacific.

And politicians across the spectrum are increasingly acknowledging that gas delivers reliable and affordable energy, with recent decisions being made that balance long-term energy supply objectives with environmental and cultural considerations.

However, without bipartisan support and concrete action, the Future Gas Strategy risks remaining just a statement of intent. Instead, its implementation should be seen as a shared responsibility, and one that demands cooperation across party lines.

The road to a lower carbon energy system will be challenging. We must be prepared for setbacks and ensure our system is resilient enough to handle them. That includes maintaining a role for gas in our energy mix.

A blend of optimism and pragmatism is the best way to navigate the road ahead.

Australia has much at stake, but also significant natural advantages and a strong foundation from which to meet the challenges and seize the opportunities of the future.