Both sides of the Australian political spectrum have been talking up Australia as a potential energy superpower for far too long. It is time for a change of narrative.
Claiming to be a superpower is inappropriate and carries political overtones: it implies an ability to influence a market beyond the forces of supply and demand.
The claim is based on Australia's strong position as an LNG exporter, coal and uranium supplier.
However, it is hardly the way to describe a country that is increasingly dependent on imported oil, is having difficulty warding off gas supply shortages in its eastern states, is confronting environmental campaigns against new coal mines, and still has a legislative ban against uranium mining in several states and against generation of nuclear power nationally. It's also an inappropriate way to describe a country whose electricity prices are now unaffordably high for much of its manufacturing industry.
Such claims may appeal to national pride, but it is a turn-off for overseas energy customers. Their overwhelming concern is with their own security of supply.
To bolster their security of supply, energy importers want diverse supply sources. Relying on one main supply source makes importers potentially hostage to any supply disruption, including arbitrary intervention by the government of the supplying economy. Energy importers look for reliable low-cost suppliers with whom they can form long-term relationships.
Sensibly, the Australian Government’s policy position is that it will only intervene in energy markets where there is clear evidence of a market failure.
The biggest challenge we face today is how we reduce greenhouse emissions. Australia's domestic and international energy policy needs to coherently integrate our response to this challenge and over the long term.
Australia should work harder to be a reliable long-term energy supplier. It should continue to rely on markets for sound resource allocation. It should work in conjunction with our trading partners on policy settings to reduce emissions.
It is important for its terms of trade that Australia is effective in marketing itself as an energy supplier in an increasingly competitive world. However, Australia should drop its claim to energy superpower status and should instead focus on its commitments to its trading partners to be a predictable and reliable long-term energy supplier. This is what buyers and investors want as an essential element of Australian energy policy before they further expose themselves to the Australian market.
Robert Pritchard is Executive Director of the Energy Policy Institute of Australia, an independent, apolitical, technology-neutral energy policy body.