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Australian energy policy decisions in the wake of the 2022 energy crisis

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  • Flottmann, Jonty

Abstract

Large economies are trying to shift their energy procurement from fossil dependence to renewable sources. In 2022 global commodity markets saw rapid price increases due to Russia's invasion of Ukraine and subsequent economic barriers on Russian commodity exports. Australia was not immune to these commodity price rises. Throughout the last decade Australia has become increasingly exposed to global energy prices through its commodity exports of LNG and thermal coal. Over this same decade Australia also experienced energy and climate policy discontinuity, and therefore policy uncertainty. These factors combined with a continued reliance on aging thermal plant resulted in a perfect storm of events which saw Australian electricity and gas prices reach all-time highs across the east-coast. The outcome resulted in long-term government intervention in markets to stabilise prices. This article will argue domestic factors helped fuel record high electricity and gas prices but have since subsided or are in the process of being mitigated. As a result, policymakers should reconsider how interaction occurs with electricity and gas markets to stabilise prices. Another decade of energy and climate policy discontinuity would not be a helpful development for the desired energy transition. A survey of market participants exemplifies concern that this outcome is materialising.

Suggested Citation

  • Flottmann, Jonty, 2024. "Australian energy policy decisions in the wake of the 2022 energy crisis," Economic Analysis and Policy, Elsevier, vol. 81(C), pages 238-248.
  • Handle: RePEc:eee:ecanpo:v:81:y:2024:i:c:p:238-248
    DOI: 10.1016/j.eap.2023.11.025
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    1. Paul Simshauser & Joel Gilmore, 2024. "Demand shocks from the gas turbine fleet in Australia's National Electricity Market," Working Papers EPRG2414, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    2. Sun, Haibo & Han, Fangyuan & Liu, Zhonglu, 2024. "Does executive environmental protection experience reduce enterprise energy consumption intensity?," Economic Analysis and Policy, Elsevier, vol. 83(C), pages 652-666.
    3. Paul Simshauser, 2024. "Competition vs. coordination: optimising wind, solar and batteries in renewable energy zones," Working Papers EPRG2419, Energy Policy Research Group, Cambridge Judge Business School, University of Cambridge.
    4. Flottmann, Jonty & Wild, Phillip & Todorova, Neda, 2024. "Derivatives and hedging practices in the Australian National Electricity Market," Energy Policy, Elsevier, vol. 189(C).

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