Wednesday, 7 February 2007
Rural and Regional Affairs and Transport Committee; Report
When I initiated this inquiry into Australia’s future oil supply by proposing it to the Senate last year, it was because I had very real concerns about the fact that people in Australia were not focusing on the fact that we are facing an oil supply crisis—in fact, the whole world is facing that crisis—with the approach of peak oil. Peak oil is not something that has been discussed in Australian parliaments to any great extent, and I think that is what makes this report highly significant.
The committee worked very hard. We got a lot of submissions from around the country, we had a lot of hearings and I think that senators who participated are now a lot better informed about the issues pertaining to future oil supplies and also the issues around what we are going to do to develop some kind of strategy to get ready for a significant reduction in oil supplies. What we learnt is that Australia’s net self-sufficiency in oil is expected to decline significantly, as future discoveries are not expected to make up for the growth in demand and the decline in reserves as oil is produced.
Only this week, there are several reports out suggesting that we have already hit peak oil. Australia does not have a strategy to oil-proof itself, to make the transition to a low carbon economy and to get off its dependence on oil. I hope this report, because it goes into a number of these issues in detail, will go some way to starting people thinking about the need to do that. In last year’s budget, the Treasurer did not mention the need to oil-proof Australia; he did not mention climate change either. It was clear to me that Australia could not afford to be giving away its surplus in tax cuts when it should have been using that to create and implement a strategic plan to deal with peak oil and climate change.
I think the specific recommendations of the report go a long way to addressing a number of problems that the country is facing. The recommendations basically require Geoscience Australia and ABARE to reassess the official estimates of future oil supply and the early peak arguments and report to the government on probabilities and risks, particularly in the light of climate change. And that is the other significance of this report. It says quite clearly that it has been informed by the need to respond to reduced oil supply, to oil depletion, in the light of climate change. You cannot come up with policies that give you an alternative transport fuel if they increase greenhouse gas emissions. There is quite considerable analysis of coal to oil, which is being touted by ABARE, but it is very clear that that is going to be a major greenhouse gas emitter and so it is not the response that Australia needs.
It is very clear there is a huge opportunity in Australia to make much more of alternative fuels. They will provide jobs in rural and regional Australia, they deserve to be promoted and they deserve consideration. Of course there has to be an analysis of the amount of carbon embedded in all the alternative fuels and of course they have to be ecologically sustainable. We were all excited when we heard about what is going on in Western Australia with their lignocellulose research, and the committee recommended that more government effort should go into supporting that research.
The committee also recognised the need to get cities off oil dependence. That would be better for public health and for the amenity of living in the cities, and that means addressing fuel efficiency in vehicles and looking at strategic planning in cities. We recognise the need to get better mass transit systems in Australian cities. We need to review our transport corridors strategies to make sure that they are sustainable and that they recognise this issue of oil depletion, climate change and the need to plan our transport future in a more substantial way.
Some of the other recommendations ask the government to look at investigating the advantages and disadvantages of congestion charges. In fact in London, where they introduced congestion charges, the money was hypothecated to public transport improvements, making a substantial difference to the provision of public transport in London, to air quality and to fuel use. That is something the committee thought the government should investigate. We also thought that the Commonwealth should support the TravelSmart projects and maintain them beyond their planned termination dates. We wanted more use of rail for long-distance freight. We wanted to make sure that the fringe benefits tax on employer provided cars is examined, because we now have a perverse incentive that sees people driving additional kilometres for the sole purpose of reaching a kilometerage level, which wastes fuel and increases greenhouse gas emissions. It is a quite ridiculous situation.
Essentially, what we have said as a committee—which worked very hard and listened to a lot of people—is that we accept that peak oil is coming. We have different views about when it is coming. I would argue that we have reached peak oil, but others would say that it is coming sometime in the future. But there was agreement that this country needs to start planning for reduced oil dependence and for the development of alternative fuels in a sustainable way, because we do not want to facilitate the conflict between fuel crops and food crops into the future; nor do we want to see the production of palm oil if it means the conversion of old-growth forests, as is occurring in the tropics. We want to make sure that any fuel crop is produced sustainably, and that is a key finding.
It is a leap forward in Australia that we can all agree that energy policy needs to be consistent with environmental goals, particularly the need to do more to reduce fossil fuel carbon dioxide emissions. The committee was also prepared to recognise the recommendations of the 2006 World Energy Outlook, which says quite specifically that current trends in energy consumption are neither secure nor sustainable and that energy policy needs to be consistent with those environmental goals, particularly the need to do more to reduce fossil fuel carbon dioxide emissions.
I think this report makes a significant contribution to the debate in Australia, and now hopefully we are not just going to see knee-jerk reactions when petrol prices go up. We need to recognise that oil is going to become more expensive into the future as it becomes much scarcer, and when that happens we have to have a policy framework to get ourselves away from dependence on oil and to not have people clamouring to reduce the price of petrol. That is not a sustainable thing to try to achieve in the long term. The greatest contribution we can make to this country is to give ourselves a strategy to reduce our dependence on oil, not only because that is good for the environment but because in the future we are going to see appalling current account figures because we will be importing oil. I think that $15 billion by about 2015—or something to that effect—is the figure that has been projected, but a huge amount of money is going to be required from the Australian taxpayer and it will cause enormous dislocation.
So if we know that it is coming, why not plan now to get away from the use of oil and build ourselves a competitive advantage in a carbon-constrained economy by building fuel-efficient vehicles, investing in public transport, getting people healthier and getting people moving more with bicycle lanes and the capacity to walk more safely through cities? Why don’t we get ourselves involved in investment in mass transit, investment in alternative fuels and investment in fuel efficiency, and build up rural and regional Australia and jobs at the same time? In my view it is a win-win strategy. Not to do so is simply going to bandaid the current problems we have and, within a decade, we will face the most appalling costs due to the failure of leadership and foresight at this particular time in dealing with the very real concept and outcomes of peak oil. The whole world is going to face a huge change in the way we currently do business in manufacturing and trade. No-one is starting to project what it means for trade when aviation fuels are so expensive; no-one is looking at what it is going to mean for shipping. We really need to look at what peak oil means for Australia. This report is a significant contribution. I really enjoyed working on this Senate committee, with colleagues from all sides of the parliament involved. I would like to thank all of the people who made submissions. (Time expired)