Keynote address at the Australian Liquid Fuel Security Conference
27 October 2020
ANGUS TAYLOR: Thank you for the opportunity to deliver the keynote address at the inaugural Australian Liquid Fuel Security Conference.
It’s great to see so many senior representatives from the private sector participating today.
This conference has become even more relevant as we recover from the pandemic and rebuild the economy.
I see that speakers at this conference cover both traditional fuel sources – such as petrol, jet fuel and diesel – along with new and alternative fuels.
In September, I announced our plan to enhance Australia’s traditional fuel security and back future fuel technologies.
This includes new and emerging technologies such as hydrogen, electric vehicles, hybrids and biofuels.
The COVID pandemic has not left the fuel market untouched.
The reduction in air and road travel, along with ongoing global production, resulted in an oversupply into the market.
With demand slowing and storage filling up across the world, we saw the extraordinary event of negative crude prices.
A global response was needed. Actions and production cuts were taken and our work continues through the G20 Energy Ministers group to ensure global energy security.
This has demonstrated not only the vulnerability of the market in extreme events, but highlights how interconnected the global fuel market is.
In Australia, our fuel supplies have been kept secure and many motorists experienced low prices at the bowser.
While Australia has not faced a significant supply shock in more than 40 years, these challenging times have shown that we can do more to prepare for these rare but impactful events.
We know that secure and reliable fuel supplies are a critical enabler of our economy. It is what keeps our country moving.
More than half of the total energy Australians use comes from liquid fuels.
The transport sector sources 98 per cent of its energy from fuels.
This includes road, rail, shipping and air transport.
Our farmers and miners rely heavily on liquid fuels to do their jobs and provide essential services.
As we rebuild, we will ensure supply chains and industry remain resilient for these extreme disruption events.
We are committed to ensuring that Australia can keep its economy and critical services running at all times.
It was with this in mind that the Government recently announced a comprehensive fuel security package that will:
- invest $200 million in new domestic diesel storage facilities;
- create a minimum onshore stockholding to safeguard key transport fuels, including support local refineries; and
- maintain a refining capability that is both appropriate to our needs during an emergency and into the future.
Affordable and reliable energy will underpin Australia’s economic recovery. It is critical to job creation and will reduce the financial burden facing Australian families, businesses and industry.
Enhancing Australia’s long-term fuel security, both now and in the future, is central to this.
Our fuel security package will keep fuel prices for Australian consumers among the lowest in the OECD.
It will create around 1000 new jobs, and protect the existing jobs of our farmers, truckers, miners and tradies.
The Government recognises that Australia’s future refining sector will not look like the past. However, having an appropriate level of refining capacity in Australia is important for both price suppression and local jobs.
Australia needs more fuel stocks held domestically to increase our resilience to supply disruptions.
By creating a minimum stockholding obligation for key transport fuels, we are guaranteeing a baseline level of stocks at all times.
The obligation will see Australia’s jet fuel and petrol stocks set to be maintained at least at current average levels. Diesel stocks will be increased by 40 per cent. This reflects the significance of diesel to the economy.
Diesel is the most important and versatile fuel needed to cover us during a fuel disruption.
Emergency diesel generators can kick-start the electricity grid and support critical services like hospitals, water and sanitation. This was highlighted during the Black Summer bushfires.
And diesel generates electricity in many remote and Indigenous communities around Australia.
It is vital for the distribution of food and medicine and underpins major export sectors like mining and agriculture.
A 40 per cent increase in diesel stocks will require 780ML of diesel storage, adding around 10 days to our International Energy Agency compliance total.
Our $200 million storage grant program will help the sector implement these obligations and reduce costs for industry.
This competitive grants program will be launched in the first quarter of 2021. It will focus on strategic regional locations, connections to refineries and existing fuel infrastructure.
We have already commenced work with the refining sector and the broader fuel industry on the design and implementation of this package.
In additional to these three key measures, the Government will modernise our liquid fuel legislation, improve our online fuel reporting system and reduce the reporting burden on industry.
These measures build on the actions we have already taken to boost our fuel security.
Earlier this year, we took advantage of record low global oil prices to purchase Government-owned crude oil to boost our stockholdings. We also acted quickly to temporarily amend the diesel standard to assist refineries during COVID19.
In addition to securing the energy Australia's needs now, the Government is putting in place policies and initiatives that will secure our future fuel needs as well. Our approach is built around consumer choice and backing emerging technologies.
Technology will play a crucial role in maintaining steady and reliable sources of fuel into the future.
It will be technology, not taxes that will help us to reduce emissions.
As part of the 2020-21 Budget, we announced a $1.9 billion investment package for energy technologies to lower emissions.
This includes our Future Fuels Package that will play a key role in delivering this technology-neutral focus.
This includes hybrids, EVs, and hydrogen fuel cell vehicles, and will ensure consumers can choose the transport technology that is right for them.
We will establish a $71.9 million co-investment Future Fuels Fund to be delivered through ARENA.
This Fund will focus on two key areas.
One – it will enable businesses to start integrating new vehicle technologies into their fleets. This will accelerate the uptake of future fuels in areas where it makes the most commercial sense first.
And two – it will address blackspots in public charging and re-fuelling infrastructure in regional areas.
The package will provide improved information on EVs and charging infrastructure to ensure consumers are well informed about the vehicles they choose to buy.
The Government will support the enabling infrastructure needed to help consumers who want to adopt future fuel technologies.
Looking at other fuel sources, there will be opportunities for advanced biofuels in planes, ships and heavy vehicles.
With the support of the Government through ARENA, projects are underway to test market readiness for advanced biofuels.
Australia has natural advantages in producing bioenergy, including expertise in agricultural science, an established agricultural economy and an abundance of natural resources.
There is emerging demand for bio-jet — an advanced biofuel that can be mixed with mineral oil-based fuel.
Major airlines have made commitments to increase the number of flights fuelled by biofuels in the next few years.
This sector and the opportunities in it will be assessed through our Bioenergy Roadmap, which is currently being developed by ARENA.
We have invested a further $70.2 million to boost Australia’s hydrogen industry through the development of a regional export hub.
This will be on top of the over half a billion dollars the Government has already committed to backing our hydrogen sector.
The National Hydrogen Strategy highlighted hydrogen’s potential to be a clean and cost competitive fuel option for both land and sea transport.
A regional hydrogen hub will create economies of scale, drive down costs, and unlock further demand. It will build up on the international work already underway with countries such as Korea, Japan, Germany and Singapore.
Hydrogen as a transport fuel will likely be used within the new hub. This will help to stimulate domestic demand, and accelerate innovation and investment in hydrogen fuel cell vehicles.
For land transport, hydrogen’s application in remote sites, as well as for heavy duty and long-range vehicles seems a very good initial fit. This makes it a promising technology for a traditionally hard to abate sector.
But for this uptake to be widespread, we need to drive the cost down. This is why we have set the H2 under $2 stretch goal in the Technology Investment Roadmap.
As you know, H2 under 2 is the point we need to get to where hydrogen essentially competes with traditional sources.
This is an important target for Australia. It will help us assess progress and give us a clear signal when a technology is reaching commerciality.
We know the Australian hydrogen industry could create thousands of new jobs—many in regional areas—and support billions of dollars in economic growth between now and 2050.
Cautious estimates puts this at around 8,000 jobs and about $11 billion a year in GDP. This is an opportunity we cannot afford to miss.
COVID has reinforced the critical nature of fuel to our nation and our economy.
The Government's measures and policies will address current challenges, reduce future risk and ensure our fuel supply is resilient, reliable and affordable to support job creation.
I look forward to working with you as we fuel our economic recovery.