Australia is the world's number two coal exporter

Australia plans major deregulation of energy industry

Australia plans to deregulate its energy industry, boost domestic gas supply as well as liquefied natural gas exports and cut renewable energy subsidies.

In a draft policy blueprint, the conservative coalition government unveiled a range of policy proposals to keep the country's energy industry competitive amid dwindling demand and investment – most involving scaling back government interference.

Australian energy resource exports in 2013 were worth about A$69bn (£38bn) or nearly a quarter of the country's total exports, with more than half of those exports coal, making it the world's number two coal exporter.

But profit from coal exports is slowing because of lower coal prices and a relatively high Australian dollar, the paper warned, and energy investment has "peaked and is entering a downturn" as companies shift from construction to production.

"The Australian energy market has undergone significant transformation in recent years as a result of declining demand and changing patterns of consumption," industry minister Ian Macfarlane told a mining conference in the city of Melbourne.

"We cannot afford to just coast along because we are blessed with such a diverse energy resource."

Australia plans to become the first country to develop coal-seam gas – a form of natural gas extracted from coal beds – for LNG export in late 2014, and "must remain at the forefront of industry secure its share in growing global LNG markets", it added.

It said governments must streamline workforce and environment laws between states, "rationalise" subsidies for households which return unused solar power to the grid, introduce smartmeters so consumers can use appliances at cheaper times, and speed up gas supply so prices don't rise as gas exports begin.

The government, swept to power a year ago partly on promises to repeal an unpopular carbon emissions tax, published the so-called "green paper" after taking 260 submissions over a previous draft document. It will take submissions on the document before unveiling an official policy later this year.

The new energy measures should benefit the country's largest energy retailer, Origin Energy, which plans to export LNG from Queensland state to Asia, and number two retailer AGL Energy which plans to fill the domestic supply gap left once Origin and others sell gas offshore.

About 80 per cent of Australia's power is produced by coal-fired power stations, making it one of the world's biggest carbon emitters on a per capita basis.

Last month, a government-commissioned report recommended Australia effectively end its Renewable Energy Target (RET), a scheme designed to ensure that 20 per cent of its electricity would be generated from renewable sources by 2020.

Australian Greens Senator Larissa Waters criticised the energy paper as "cling(ing) to last century's ideas by focusing on fossil fuels while the world calls for action on climate change", a reference to the United Nations Climate Summit 2014 taking place in New York.

But the Energy Networks Association, which represents grid companies, said it supported the proposal to change "unfair cross subsidies between users".

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