Chapter 6
Committee view and recommendations
6.1
Evidence to the committee suggested that Australia is almost totally
reliant on liquid fuels for transport and transportation services which
underpin significant economic activity, utilities and essential services.
Therefore, any substantial disruption to Australia's transport fuel supplies
would have a significant impact on safety, national security, national
productivity and society.[1]
6.2
Evidence to the committee regarding the question of whether Australia's
fuel security will remain adequate, reliable and competitive into the
foreseeable future was divided. Some submitters held the view that, in the
absence of local capability, there are no guarantees that Australia would be
able to access adequate alternate sources of supply in the event of a
disruption to the supply chain.[2]
Others, including the department and AIP, argued that Australia had adequate
sources to maintain supply.
6.3
While attention was drawn to contingency planning in the wake of fuel
supply disruption brought about by an emergency, focus was also given to the
wider question of the security and sustainability of Australia's fuel supply.
In particular, the role of alternative energy sources in providing for the
country's energy needs into the future was considered.
6.4
Historically, Australia has relied on a combination of domestic crude
oil production, domestic refining and diversity in supply points to maximise
reliability in supply. However, the point was made that Australia’s declining
crude oil production and refining capacity, coupled with its growing reliance
on crude oil sourced from relatively unstable regions, is changing Australia's
fuel risk profile.[3]
6.5
One of the central questions before the committee was whether reliance
on the market is the best course of action in relation to energy security.
Caltex and other fuel supply companies contend that it is.[4]
Others, most notably NRMA and Engineers Australia argued that Australia's
growing reliance on imported oil, together with declining refining capacity,
warranted a comprehensive review of Australia's fuel security into the future.[5]
Noting that Australia is at the bottom of a long supply chain, the committee
was repeatedly reminded of the vulnerabilities to the supply chain that result,
quite apart from Australia's continued inability to meet IEA stockholding
requirement.
6.6
In light of its growing dependence on fuel imports, the committee
questions whether leaving Australia's energy security to market forces remains
the most feasible and tenable policy approach. Ultimately, it is not the role
of the fuel supply companies to ensure that Australia has adequate reserves.
That is a matter for government. In this regard, the fact that a substantial
disruption in fuel supply would have serious consequences across the Australian
community weighted heavily on the minds of committee members.
6.7
The committee takes the view that, as a first step, a comprehensive
assessment should be undertaken to establish a sound understanding of the
internal and external factors which pose as possible risks to Australia's fuel
supply. The assessment should take into consideration both external and
internal threats to supply and examine the feasibility of risk mitigation
strategies.
Recommendation 1
6.8
The committee recommends that the Australian Government undertake a
comprehensive whole-of-government risk assessment of Australia's fuel supply,
availability and vulnerability. The assessment should consider the vulnerabilities
in Australia's fuel supply to possible disruptions resulting from military
actions, acts of terrorism, natural disasters, industrial accidents and
financial and other structural dislocation. Any other external or domestic circumstance
that could interfere with Australia's fuel supply should also be considered.
Compliance with the IEA 90 day holding requirement
6.9
The committee upholds the view that Australia's membership of the IEA is
imperative and commends the Australian Government for its recent commitment to
meet Australia's 90 day stockholding obligation.
6.10
The committee acknowledges that the continued decline in domestic
production and increased demand for liquid fuel has placed pressure on
Australia's IEA commitments. However, it is concerned that Australia has not
met its 90 day stockholding obligations since March 2012. The committee is
equally concerned that under current projections, Australia may average below
45 days of reserves by 2024.[6]
6.11
Therefore, the committee strongly encourages the Australian Government
to set out its plan to achieve compliance as soon as practicable. Where
appropriate, the plan should set targets and other measurable indicators of
progress towards compliance.
Mandatory regular reporting on fuel stocks
6.12
At the start of the inquiry, the committee set out to identify the
amount of fuel stocks available in Australia on any given day. It proved to be
a complicated task. Considerable evidence to the committee emphasised the lack
of details and knowledge regarding the availability of fuel supplies as well as
the uncertainty of emergency management outcomes and the related consequences
for Australian industries.
6.13
The committee acknowledges that the department has improved the
reporting process in relation to fuel supplies. However, the committee firmly
believes that fuel companies should be required to report their fuel stocks to
the department on a regular basis. Evidence to the committee suggested that it
would not be onerous for fuel supply companies to report regularly to the
Department of Industry and Science on their fuel stocks.[7]
Recommendation 2
6.14
The committee recommends that the Australian Government require all fuel
supply companies to report their fuel stocks to the Department of Industry and
Science on a monthly basis.
Transport Energy Plan
6.15
The committee acknowledges the concerns raised by submitters during the
inquiry regarding the sustainability of Australia's transport energy and the
need for surety regarding alternative energy sources. The committee upholds the
view that the Australian Government should develop a national transport energy
plan which sets appropriate targets for the provision of a secure supply of
Australia's transport energy.
6.16
The transport energy plan should consider all energy sources including
that of alternative fuels. It should identify the obstacles and challenges to
achieving an affordable and sustainable transport energy supply and provide
short and long-term solutions to them.
Recommendation 3
6.17
The committee recommends that the Australian Government develop and
publish a comprehensive Transport Energy Plan directed to achieving a secure,
affordable and sustainable transport energy supply. The plan should be
developed following a public consultation process. Where appropriate, the plan
should set targets for the secure supply of Australia's transport energy.
Senator Glenn Sterle
Chair
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