Latrobe City Council Submission

Transcription

1 Latrobe City Council Submission Energy Green Paper - November 2014 For further information in relation to this submission please contact Sarah Cumming Executive Manager, Office of the Chief Executive Latrobe City Council, 141 Commercial Road, Morwell 3840 Telephone: (03) sarah.cumming@latrobe.vic.gov.au 1

2 Latrobe City Population and Economic Profile Latrobe City is recognised as one of Victoria s four major regional centres and is the State s only eastern regional centre. Less than two hours drive east of Melbourne, Latrobe City is home to approximately 74,000 1 people. Latrobe City s 1,426 square kilometres encompasses four urban centres of Churchill, Moe-Newborough, Morwell and Traralgon and seven smaller settlements including Glengarry, Tyers, Toongabbie, Yinnar, Boolarra, Traralgon South and Yallourn North. The Gippsland region is rich in natural resources, including water, gas and a vast supply of brown coal. Latrobe City currently supplies over 85 per cent of Victoria s electricity generation requirements and extensive electricity distribution infrastructure links the existing generation facilities at Loy Yang A, Loy Yang B, Hazelwood, Yallourn and gas peaking facilities to Melbourne. The region boasts a skilled workforce and substantial auxiliary industry base, to support construction and ongoing maintenance of the power industry. With a Gross Regional Product (GRP) of approximately $4 billion, the City makes a significant contribution to the Victorian economy. The low cost electricity generated in the Latrobe Valley from brown coal resources has contributed to Victoria s economic prosperity over the last 90 years. The City has traditionally been recognised as the centre of Victoria's electricity industry which, is derived from one of the largest brown coal reserves in the world. It is also the centre of a large forestry industry that services Australian Paper's pulp and paper mill (the largest in Australia) and other sawmills. Other industries in the area include food processing, engineering, post-secondary education with the new Federation University Australia and the service sector. The largest population centre in the Gippsland region, Latrobe City acts as the regional headquarters for Government agencies and private operators including banks and insurance companies. Latrobe City provides excellent opportunities for investment. New and existing investors have access to a skilled workforce, strong road and rail transport links, natural resources, established electricity infrastructure, locally based education institutions and affordable land prices. Technology advances, globalisation together with carbon emission reduction strategies present both challenges and opportunities for Latrobe City. Latrobe City Council is committed to strengthening our role as one of Victoria s four regional cities and Gippsland s commercial centre whilst ensuring quality education, health, community services and facilities are provided to our community. References: 1. Latrobe City Economic & Population Indicators 2014 Report 2

3 Latrobe City Council Policy Context Latrobe City Council has been proactive in planning and advocating with all levels of Government to support investment and to secure the long term economic prosperity and environmental sustainability of Latrobe City and broader Gippsland region. The following key documents overview Council s vision and objectives in these areas: Latrobe 2026: The Community Vision for Latrobe Valley The aim of the Community Vision is to identify the current strengths and issues that can be built upon or improved to achieve the Community Vision by The Community Vision was generated after identifying three broad concepts shared by the Latrobe Valley community; Sustainability, Liveability and Leadership. The concepts are further broken down into nine objectives; Economy, Natural Environment, Built Environment, Our Community, Culture, Recreation, Governance, Advocacy and Partnerships, and, Regulation and Accountability. Council Plan Latrobe City Council on behalf of its community identified its vision and key themes which will shape the future of our City to The Council Plan builds on the Community Vision, recognising a range of local and nationally significant issues and emerging opportunities and provides its response to them. The five key themes of the Council Plan are: Job creation and economic sustainability. Appropriate, affordable and sustainable facilities, services and recreation. Efficient, effective and accountable governance. Advocacy for and consultation with our community. Planning for the future. Economic Sustainability Strategy In 2011, Council delivered a revised Economic Sustainability Strategy that provides a framework for Council to identify actions that will consolidate Latrobe City s position as a major regional city and service centre for the Gippsland region and drive economic growth. The Strategy focuses on: Strategic Business Development - including retention and growth of existing businesses and pursing new investment; Building the Investment Brand promotion and further development of the Latrobe City brand; Creating an enabling business environment strong leadership and clear direction, attractive policy setting, efficient and rigorous planning processes; access to skilled labour, high quality infrastructure and services, well managed natural resources, and a liveable city. 3

4 Positioning Latrobe City for a Low Carbon Emission Future (2010) In 2010, Latrobe City saw the need to develop a policy to deal with structural adjustment pressures that were likely to result from the introduction of a price on carbon and a changing Australian economy. Council s policy Positioning Latrobe City for a Low Emission Carbon Future (2010) was the first of its kind in Australia. This important policy set the scene for Council s proactive approach to creating economic growth and transitioning to a low carbon economy. The core themes contained in the Policy are: Pursuing and Realising Opportunities; Contingency Planning; and Working Together. Securing Our Future 2013 Securing our Future 2013 complements Positioning Latrobe City for a Low Emission Carbon Future (2010), and represents Latrobe City Council s immediate asks from the Victorian and Australian Government, to assist the region create real and sustainable jobs. The jobs will stem from local projects, opportunities and initiatives that, if met, will ensure that the Latrobe City economy is able to proactively transform to a low carbon future. The key directions contained within Securing Our Future 2013 are: Advocacy - government to government support and support for our community; A new resource - leveraging innovation and jobs from the brown coal asset; Economic development - infrastructure enabling job creation; and Liveability - Gippsland s regional city. Natural Environment Sustainability Strategy The Natural Environment Sustainability Strategy focuses on the sustainable management of the natural environment across Latrobe City for the next five years. The themes contained within the Natural Environment Sustainability Strategy are: Meeting statutory requirements; Building capacity to respond to change; Improving resource use efficiency; and Protecting natural assets. 4

5 Latrobe City Council Submission Latrobe City has long been identified as a community likely to be exposed to significant pressures as a result of changing energy policy as well as the introduction of greenhouse gas mitigation schemes. Coherent and constructive market reform and properly integrated policies are necessary to provide significant local energy generators and distributors as well as local large industrial consumers, small to medium enterprises, and household s certainty in energy policy. This includes continued investment into technological advancements into clean energy; reduced cost pressures on households and businesses; and improving international competitiveness to grow the export base and economic prosperity of Latrobe. Latrobe City Council is supportive of an integrated energy policy approach from the Australian Government. Council is aware of the Government s broader Direct Action Plan and its efforts to reduce greenhouse gas emissions through the Emission Reduction Fund. These policies, and the likely future constraints on carbon based emissions that will arise from their implementation, potentially have significant implications for the ongoing sustainability, vitality and wellbeing of the Latrobe City community. Latrobe City Council supports international and Australian efforts to address climate change, recently making a submission to the Emission Reduction Fund Green Paper in February Council also developed a policy Positioning Latrobe City for a Low Carbon Emission Future in 2010 to prepare for a transition towards a low carbon emission future. In response to recent Australian Government Policy changes, Latrobe City Council recently established the Gippsland Carbon Transition Committee. The purpose of the Gippsland Carbon Transition Committee is to facilitate outcomes that support economic development and environmental sustainability in Gippsland, and leverage outcomes from the Australian Government policy framework. Latrobe City Council has identified a range of energy challenges and opportunities locally for the electricity generation and distribution industry, large manufacturing industry, small to medium enterprise, potential investors and households alike. Latrobe City Council therefore welcomes the opportunity to provide a submission to the Energy Green Paper and appreciates the commitment of the Australian Government to consult with both businesses and communities. Council understands that during 2014 the Australian Government has already made changes to the commercial environment for the energy sector through repealing the carbon tax and the Minerals Resource Rent Tax; as well as releasing the report of the independent panel that reviewed the Renewable Energy Target. Council also understands that the Australian Government will release an Energy White Paper and an Agricultural Competitiveness White Paper and welcome the opportunity to continue to engage with the Australian Government on the potential opportunities and impacts of these, combined with the introduction of the Emissions Reduction Fund on the local economy, environment and community. 5

6 Energy Green Paper Goals Latrobe City Council Feedback 1. Attracting energy resources investment Streamlined environmental and Streamlining regulatory processes other approvals Outcome: More certain, timely and accessible approvals. Better regulation will lower cost to business, boost productivity and enhance Australia s international competitiveness. Latrobe City has long been identified as a community likely to be exposed to significant pressures as a result of changing energy policy as well as the introduction of greenhouse gas mitigation schemes. Coherent and constructive market reform and properly integrated policies are necessary to provide significant existing local energy generators and distributors as well as local existing and proposed large industrial consumers, small to medium enterprises, and household s certainty in energy policy. This includes continued investment into electricity generation and distribution infrastructure; technological advancements into clean energy; reduced cost pressures on households and businesses; and improving international competitiveness to grow the export base and economic prosperity of Latrobe. Council supports creating an enabling business environment, as outlined in Council s Economic Sustainability Strategy. Creating a business environment that is attractive to existing and new business owners and investors is a key focus of Latrobe City Council. The Strategy outlines Council s role to create an enabling business environment including: strong leadership and clear direction; attractive policy setting; efficient and rigorous planning processes; access to skilled labour; high quality infrastructure an services; well managed natural resources, and a liveable city. At present there is a variable level of awareness and understanding across the community of energy supply issues. Latrobe City Council advocates for an ongoing community awareness program where Australian Government energy policies directly impact on the Latrobe City community. Council acknowledges the key role of establishing social licence in enabling new and continued investment in energy in the Gippsland Region. Council supports genuine 6

7 community engagement to ensure the Latrobe City and broader Gippsland regions community views are understood, impacts mitigated and risks managed. Latrobe City has recently been impacted by the Morwell coal mine fire. The associated long term health impacts are still not clear, and this is fresh in the minds of many in our local community. Council advocates for ensuring there is a balance between new energy investment and careful regulation and monitoring, to ensure that community health and safety is not adversely impacted. Council encourages the Australian Government to ensure that the appropriate regulatory framework is developed and appropriately regulated to ensure community safety and environmental management is achieved, while not hampering economic growth. Better skills and workforce productivity, including access to skilled migration Outcome: Industry has access to the skills it needs for timely and cost-effective projects, which will encourage future investment. Improving productivity and skills Latrobe City is home to significant energy production and distribution industries which, supply over 85 per cent of Victoria s electricity generation requirements. The low cost electricity generated in the Latrobe Valley from brown coal resources has contributed to Victoria s economic prosperity over the last 90 years. It has also built a region that boasts a skilled workforce and substantial auxiliary industry base to support construction and ongoing maintenance of the power industry into the future. Electricity, gas, and water services provide over 1,500 jobs in Latrobe City linked directly to this sector, in addition to 340 associated with coal mining activities. Furthermore, due to the supply chain links and high incomes associated with these sectors, a considerable number of jobs are sustained in the local economy as an indirect outcome of these sectors. 1 Council s Economic Sustainability Strategy specifically discusses the need for access to skilled labour and the need for targeted education and training to increase Latrobe City s competitive advantage, workforce participation and productivity. The Strategy outlines Council s support for the Skilling the Valley initiative which, aims to identify future industry and employment opportunities and to develop new skills in the Latrobe Valley. The initiative specifically focuses on; Strong Foundations for Gippsland; State of the Valley Report; Preparing for the Future; Worker Engagement; and 7

8 Skilling the Valley Project Officers. Council advocate for a commitment from the Government to invest in industry planning, job creation and skills enhancement opportunities in Latrobe City, to ensure our local workforce are skilled appropriately into the future to support emerging energy industries, in particular the recent Advanced Lignite Demonstration Program projects in the Latrobe Valley. Skills are essential to ensuring we continue to have a secure energy supply whilst making advancements in the area of carbon emission reductions. Create supply chain opportunities and Indigenous employment Outcome: Local SME s more involved in supply chains, lowering project costs and growing local economies. More Indigenous Australian s employed in the energy resources sector. Create supply chain opportunities and indigenous employment Council supports this approach and advocates for the Australian Government to work in partnership with Latrobe City Council to encourage investment and local business development to grow the Latrobe City economy. Council s Economic Sustainability Strategy specifically identifies potential opportunities for new investment in Latrobe City that complements existing industries and serves to diversify the economy. Opportunities identified include low emissions and renewable energy technologies, promoting the development of alternative coal use and soil carbon programs. Council welcomes the opportunity to work with the Australian Government to continue its work in facilitating indigenous employment in Latrobe City. Council has for a number of years, delivered an indigenous employment program and recently was awarded the Local Government Wurreker Award. Awarded by the Victorian Aboriginal Education Association Incorporated (VAEAI), for recognition of Latrobe City Council s contribution to growing success in Aboriginal employment, education and training. The award recognises how high quality training can open up new directions for Aboriginal people. This promotion of excellence provides an inspiring example of the potential within our communities and has a real impact on all stakeholders who support the ongoing development of the strategy. 8

9 Enhance pre-competitive geoscience and improve access to environmental data Outcome: Low costs and exploration risk. Reduced duplication and regulatory burden. Improved community engagement. Better informed decision making and environmental management. Better geoscience to encourage investment and assess impacts Latrobe City Council s Natural Environment Strategy outlines Council s commitment to the sustainability objective To promote the responsible and sustainable care of our diverse built and natural environment for the use and enjoyment of the people who make up the vibrant community of Latrobe Valley. Latrobe City is diverse in its many natural resources. Its land uses include approximately 17 per cent open-cut coal mining; approximately 36 per cent agriculture, primarily dairy farming and livestock; approximately 29 per cent forestry, with the majority of the product produced then used by the pulp and paper mill located in Maryvale; 6 per cent urban development; 5 per cent rural living and the remaining 20 per cent consists of native vegetation. Council supports the removal of unnecessary duplication and regulatory burden whilst ensuring responsible and sustainable management of Latrobe City s natural resources are maintained to ensure long term benefits for the region are achieved. Help to identify and address infrastructure bottlenecks Outcome: Industry has access certainty, reducing infrastructure duplication and cost. Identifying and addressing infrastructure constraints The development of the Port of Hastings is of vital importance to the entire Gippsland region, as expressed in many Latrobe City, and broader Gippsland and State Government strategic documents. A key challenge identified by Council in respect to the development is the current mandate to not consider bulk containerised product, mainly bulk coal, as part of the scope of the project. The potential for significant economic benefit from bulk coal exports from the Latrobe Valley has been identified in many key Council and Victorian State Government documents. In addition to this, Securing our Future 2013 outlines key infrastructure requirements to support the access to key export gateways. Rail connectivity to Gippsland from the Port of Hastings is a vital infrastructure requirement that would allow the costeffective export of brown coal products and derivatives as well as other products. A number of international investors 9

10 have identified that connectivity to the Port of Hastings is a key infrastructure gap that is negatively effecting long term investment decisions in the Gippsland Region. Congestion in the Dandenong rail corridor restricts rail freight access to Melbourne; this infrastructure issue could potentially affect the competiveness of businesses efficiently and effectively getting their products to the International market, including access to the Port of Melbourne and the Port of Hastings. A number of infrastructure improvements could be made to allow for future growth. Council acknowledges that pipelines perform a significant role in Victoria s freight network and supports their use to facilitate the efficient bulk movement of large volumes of liquids to points of consumption and export gateways, a key potential future infrastructure requirement being pipelines for the export of coal by-products. Pipelines are a highly efficient means of transport, and are often safer and less intrusive than other methods of transportation. Council supports the strategies and actions outlined in the Victorian Freight and Logistics Plan which, states the Victorian Government will ensure that Victoria s pipeline network is efficient and adapts effectively to future demands by working cooperatively with industry to plan for and respond to changing patterns of domestic energy consumption, with an emerging trend to greater use of biogas fuels (e.g. natural gas) to substitute for biomass fuels (e.g. coal). Promote Australia s energy products, technology and services exports Outcome: Increase the export earnings of Australia s energy resources, products and skills. Promoting exports Council supports this approach and advocates for leveraging innovation and jobs from the brown coal asset located in the Latrobe Valley. The Latrobe Valley has the fourth largest deposits of brown coal in the world and is readily accessible and of interest to investors from around the globe. However, the moisture content and reactivity of brown coal makes it unsuitable for bulk export without treatment, with the potential for high greenhouse gas emissions. The introduction of federal policies to reduce carbon emissions is putting strong pressures on electricity generators to cost-effectively cut emissions as well as consider 10

11 alternative uses of the resources and potentially export opportunities. Latrobe City Council supports the balanced use of brown coal as an energy source. Council advocates for the development of low emissions coal technologies and research and development to facilitate the advancement of new technologies that support the alternate uses and markets for coal. The $90 million Advanced Lignite Demonstration Projects are a welcomed investment in the Latrobe Valley and Council actively support proposals that offer an economically and environmentally sustainable future for Latrobe Valley. As outlined in the previous point, Identifying and addressing infrastructure constraints, a key issue associated with exporting the Gippsland brown coal resource is the lack of key transport infrastructure. Council advocates for the consideration of coal products as part of the Port of Hastings development mandate, and key transport infrastructure to link Gippsland to the port. A number of international investors have identified that transport infrastructure is a key gap that is negatively effecting long term investment decisions in the Gippsland Region. An opportunity for Latrobe City is the development of an Energy Park to be located in close proximity to energy producers in the Latrobe Valley. The proposed Energy Park would not only enable industry access to reduced cost electricity, but also improve efficiency through reduced transmission energy loss and enable co-location energy symbiosis. Council have advocated for this proposal in the past and still sees it as a relevant opportunity today. Interest from significant sized industrial companies has been previously received by Council, and Council believes there would be significant interest from industry if this development went ahead. Latrobe City Council commissioned a report, Latrobe Valley Energy Park LaTrobe Region Energy Advantage 1999, which outlines issues associated with the existing regulatory processes. It overviews the impacts and opportunities for the Latrobe and broader Gippsland region, if these barriers were overcome. It states, the most economical and environmental sound use of this power would be for the electricity to be consumed at source. 11

12 2. Electricity prices Pursue tariff reform and improved consumer access to energy use data, including electricity network tariff reform to lift cross-subsidies Outcome: Consumers are better informed, have tariff choice and know how to manage energy use and cost. Energy users pay their fair share of the costs of the poles and wires that supply electricity. Increase the range of tariff choices The Council Plan outlines Council s commitment to providing the community with affordable people focused community services. With electricity prices rising by around 50 per cent nationally over the past five years, this has placed a lot of pressure on the Latrobe community, including industry, small to medium enterprise and residential households. Council advocates for Government to continue to improve the affordability of essential services for all aspects of our community including households, small to medium enterprise and industry. Council supports improved information for consumers to enable informed energy use and choice. Council notes the relatively high level of low income earners and disadvantage within the Latrobe City municipality. The SEIFA index of disadvantage score for Latrobe (C) LGA is 940, ranking Latrobe City as one of the most disadvantaged in Victoria, with a national ranking of 133 out of 564 LGAs. Any rises in electricity prices are therefore likely to detrimentally affect that cohort of the Latrobe City community. In addition, low-income households on an energy rebate or concession scheme are limited in their ability to change and manage their electricity tariff. Council advocates support to its small to medium and large sector employers, as it understands the importance of job retention and creation for Latrobe City. Small to Medium enterprises are likely to be detrimentally impacted by continuing energy price increases. Small to Medium enterprises play an important role in the economic profile of Latrobe City. Almost one in five or 18 per cent of businesses registered in Latrobe City employ between one and four employees, and 24 per cent employ five or more employees. The remainder are non-employing businesses, such as sole traders. Latrobe City has a higher proportion of larger businesses (five or more employees) compared to Victoria s other major regional cities. 1 Council also notes that its large industries that use significant amounts of energy have the potential to be greatly affected by increasing energy prices. 12

13 Ensure reliability standards do not encourage unnecessary investment in electricity networks Outcome: Consumers do not receive higher reliability standards than they would be willing to pay for if they understood the impact on electricity prices. Improve the efficiency of electricity use Outcome: Electricity cost savings for consumers. Reliability standards should reflect consumer expectations Council submits that there is a price disconnect between the wholesale and retail price of electricity. The price of wholesale electricity has not risen significantly over the past five years, yet retail electricity prices have risen by around 50 per cent nationally. Council encourages the Australian Government to regulate reliability standards, as it believes the unnecessarily high standards are driving up retail prices beyond the level consumers are willing to pay. Council advocates for the correct balance in energy reliability, to ensure affordability for all sectors of our community. Improve the efficiency of electricity use Council s Natural Environment Sustainability Strategy outlines Council s support for improving resource use efficiency. The Strategy looks at opportunities for Council to work towards overall reductions in water use, energy use, waste generation and unsustainable purchases. Objectives outlined in the Strategy include: Monitor and review Latrobe City Council s energy consumption and make the information available to the community. Work towards an overall reduction in Latrobe City corporate energy consumption to improve energy efficiency. Support and promote energy efficiency within the community, industries, developers and other agencies to minimise the amount of energy needed and maximise the efficiency of what is used. Engage with schools, businesses and households to improve energy efficiency and reduce environmental impacts. Council notes that lower income households have limited ability in many instances to improve building efficiency and appliance efficiency, particularly where they reside in rental properties. For example cooking, heating and hot water appliances in rental properties are generally installed by the landlord. Residents in rental properties would need to persuade the landlord to invest in new energy efficient appliances for them to benefit from lower bill costs which, presents a real challenge for those energy consumers. 13

14 Rationalise emissions reductions actions to reduce unnecessary costs Outcome: Consumers do not pay more due to market distortion. Rationalise emission reduction schemes Latrobe City Council has for a number of years recognised that international and Australian policies are being developed to reduce greenhouse gas emissions in response to growing concern and science about climate change. Council s policy Positioning Latrobe City for a Low Carbon Emission Future outlines Council s support for International and Australian efforts to address climate change. Latrobe City seeks to ensure that its economy and community continue to prosper and, with the appropriate transition mechanisms in place, it believes that both climate change mitigation and economic growth can be achieved. Latrobe City Council recognises that uncertainty surrounding the introduction of Australian policies to reduce greenhouse gas emissions has presented the electricity generation sector with significant challenges, particularly in relation to the investment in future infrastructure requirements. Council supports the Australian Government s review of the National Energy Policy, with the aim to establish a coherent policy framework to support investment and policy outcomes. Council advocates for ensuring confidence in energy price, though a mix of base load and renewable energy sources. Remove unnecessary regulatory barriers and market interventions, and encourage further privatisation Outcome: Better prices and services for consumers through more competition, efficiency and innovation. Remove unnecessary regulation and encourage privatisation The Latrobe Valley underwent a difficult structural adjustment process following the privatisation of the State Electricity Commission Victoria (SECV) during the 1990s. This has been an influence and key driver of Council s work in the area of transition and economic and environmental sustainability. The post privatisation era saw long periods of poor investment in community infrastructure and planning. Once the social and economic impacts that arose as a consequence of electricity sector privatisation became evident, the State Government established the Latrobe Valley Ministerial Taskforce. The Taskforce subsequently worked in partnership with local government and the community to attempt to improve the economic prospects of the Latrobe Valley, however not all outcomes were substantial. As a result of workforce reductions and later privatisation of the SECV, unemployment rates in the Latrobe City in 1998 were at an all-time high at 14.9% compared with the Victorian average of 7.5%. Unemployment rates have remained higher than the Victorian 14

15 average ever since, with Latrobe City s unemployment rate only recently coming close to, but still above, the Victorian average. The effects of privatisation are still evident today, the unemployment rate and high number of low income earners has resulted in a high level of disadvantage within the Latrobe City community, with Council ranking as one of the most disadvantaged LGA s in Victoria, and Australia. These impacts are still fresh in the minds of many in the Latrobe City community. It was recognised that the detrimental impacts on the community following electricity sector privatisation may be lessened or avoided by early coordinated intervention. Latrobe City again faced potential major impacts in 2011 with the Federal Governments proposal to close down brown coal fired power stations in the Latrobe Valley, through contracts for closure. This ongoing change in energy policy, this uncertainty is resulting in reluctance to invest, which has flow on effects to the Latrobe City economy, unemployment levels and levels of disadvantage. Council advocates to the Australian Government to consider a proactive approach to support any proposed privatisation activities and to compensate the communities affected. Council understands the benefits of streamlining regulation to reduce costs, enhance certainty and lower barriers to competition for investors. However, a balance is required to ensure that regulation associated with environmental management is the highest standard and well regulated to avoid unnecessarily detrimental impacts on the communities who are directly impacted as a result of lack of regulation and accountability. 15

16 3. Building gas supply and improving market operation Bring on new gas supply as Addressing near-term east coast gas supply quickly as possible Outcome: Avoid potential supply shortages so that domestic gas users do not pay higher process than necessary. The impending increase in Victorian gas prices, due to the imminent export of liquefied natural gas (LNG) via the liquefaction plants in Queensland, coupled with the Victorian State Government moratorium on all land based gas exploration and extraction, could have major consequences on Latrobe City s large manufacturing industries, small to medium enterprise and residential consumers if not positively addressed by clear policy direction. Council acknowledges that increased production of gas is expected to lead to reduced gas prices. Council supports better information and research to inform whether an onshore gas industry could be safely and sustainably established in Victoria. Council also acknowledges that some sections of our community have expressed strong reservations for the development of onshore gas, in particular issues associated with health, safety and the environment. In addition, the long term viability of an onshore gas industry in Gippsland is unknown, particularly given that the capacities of onshore unconventional gas reserves are largely undefined. Council supports the State Government s community engagement program and associated Victorian Water Science Studies. Council advocates for better information and research, as well as increasing community literacy regarding proposed onshore gas developments. Latrobe City Council acknowledges the importance of ensuring reputable, balanced information is available to help community members to make informed decisions. Council advocates for genuine community engagement regarding proposed onshore gas developments to ensure the Latrobe City and broader Gippsland regions community views are understood, and considered by policy makers. If an onshore gas industry was to be developed in Victoria, Council would strongly advocate for an appropriate regulatory framework which is regulated to ensure community safety and environmental management is achieved. 16

17 It is essential that communities, who could be impacted by the potential onshore gas industry, are confident that any impacts and risks identified through research be appropriately mitigated and managed, before a new industry is established. The Victorian Government Gas Market Taskforce Supplementary Report (October 2013) states: Local communities must be properly consulted and engaged by industry and governments to ensure community concerns are addressed to create a social licence to operate for the onshore gas industry. Council acknowledges the challenges that the potential increase in gas prices will have on local large industrial users of gas. The Victorian Government Gas Market Taskforce Supplementary Report (October 2013) states: Large users are experiencing difficulties securing long-term contracts and some manufacturing firms have indicated they may shutdown if they cannot secure gas at competitive prices. And Some market participants have expressed concern that contracted gas may not be delivered. Potential gas price rises on small to medium enterprises as well as residential consumers is also a concern for Council; particularly given the fact that electricity prices are also expected to rise (refer to Council s feedback on electricity prices section). The Victorian Government Gas Market Taskforce Supplementary Report (October 2013) states: Residential gas prices in Victoria are likely to increase by around 30 per cent by 2015, although falling somewhat by 2020, with prices 20 per cent higher than 2013 prices. In 2013, average annual Victorian household gas costs are estimated to be $1,200. And There are some indications that domestic prices have begun to increase. Spot prices in the gas market during winter in 2012 increased significantly to over $6 per GJ. On some days this price exceeded $7 per GJ Improve the availability and quality of market information to improve market transparency and competition Outcome: Gas sellers and buyers have more certainty about the availability of supply and pricing, and the market is Sustaining national gas supply The Victorian Government has commenced a process of consultation with the community in relation to onshore natural gas; this process is yet to be completed. In collaboration with the Australian Government, the Victorian Government is also undertaking Water Science Studies to examine the impacts of potential onshore natural gas development on Victoria s water resources, including water quality and quantity. The Victorian 17

18 more transparent and competitive. Government has made clear statements that they will not support any form of onshore gas production until further scientific evidence has been produced on the potential impacts of industry. Results of both the community engagement program and Water Science Studies are expected to be finalised in Latrobe City Council does not have a specific policy position on the exploration and extraction of onshore natural gas, including Coal Seam Gas (CSG). In 2012, Latrobe City Council engaged a consultant to prepare a report in response to the petitions received related to CSG. The report concludes that, The viability of CSG extraction in the Latrobe Valley is uncertain. There are potential issues and environmental risks associated with some CSG extraction techniques. However, the severity of these issues depends on the extraction and downstream processes used, on local site specific characteristics, particularly the hydrology and geology, and on the regulatory controls that are in place. There are potential benefits for Latrobe City and Victoria as a whole that could arise from CSG developments including economic development, energy security and the opportunity for affordable clean energy production. Again, the extent of these benefits will depend on the characteristics of the individual CSG production scheme. As outlined in the report, mining licenses and regulation is governed under state legislation. The role of local government is limited to participation in Environmental Effects Statement (ESS) processes, planning permits and advocating for local communities. Council notes that the Australian Government will prepare a strategy to support the responsible development of the CSG industry and other unconventional gas resources, in consultation with state governments. If an onshore gas industry was to be developed in Victoria, Council would strongly advocate for local government to be included in consultation as part of its development. It is essential that our local community s safety and health, as well as local environment are managed appropriately. It is also crucial that there is an ongoing community engagement and awareness program in order to adequately engage our community on this issue. 18

19 Gas process are not transparent The impending increase in Victorian gas prices could have major consequences on Latrobe City large manufacturing industries. Local large manufacturers have identified that significant operating increases are expected associated with the expected gas price increases, as well as reduced transparency in negotiating new contracts and the limited options in accessing gas due to the state government s moratorium on onshore gas are all issues they are facing. Latrobe City Council recognises the key economic role large industries play in the community of Latrobe City. Large employers that have a demonstrated history of investment are integral to the overall economic output of Latrobe City and wider Gippsland region. Implement other gas market development priorities to expedite gas market reform Outcome: A development strategy for the unconventional gas industry. More flexible and transparent market arrangements. Improving gas market function Council notes the Australian Government s commitment to ensure an efficiently operating market. Council advocates on behalf of the community, including industrial users, to build confidence by providing a sound policy framework. However, this must be done in a safe and sustainable manner. 19

20 4. Security, innovation and energy productivity Maintain secure, competitivelypriced and reliable energy Secure and reliable energy supplies supplies Outcome: Consumers have access to adequate and reliable energy. Council supports the Australian Government s review of the National Energy Policy, with the aim to establish a coherent policy framework to support investment and policy outcomes. Council advocates for ensuring confidence in energy price, though a mix of base load and renewable energy sources. Latrobe City Council has identified the need for a new base load power station to be built in Latrobe City to ensure the future needs for efficient and reliable energy supply are met. At the Ordinary Meeting of Council on Tuesday 10 June 2014, Council resolved: Calls on the state Government to facilitate the construction of a new base load Power Station in the Latrobe City; that the Mayor write to both the Premier (The Hon. Dr Denis Napthine) and opposition leader (The Hon. Daniel Andrews) asking them to publicly state their position on a new Power Station and detail plans to achieve operation to meet future market demand. Calls on the Federal Environment Minister (The Hon. Greg Hunt) to publicly clarify the Commonwealth Government s position on the allocation of Direct Action Plan funding to assist the transition to cleaner generation technology for the people of Latrobe Region and Victoria. Council acknowledges the current over supply of energy and associated lack of incentive for investment in this area. However, Council believes the Victorian and Australian Government need to start planning for the next generation of Victoria s base load power supply, particularly given the lead times associated with the planning and commissioning of a new base load power station. In addition, Council supports the Government s position to reduce Australia s emissions to meet its 2020 target and acknowledges the environmental benefits of renewable energy; however current limitations regarding consistency of supply, and high infrastructure costs mean they are not considered a viable option for base load power supply. Council sees an opportunity to overcome both of these issues by planning for a flexible, reliable, more efficient base load power station which can complement the growth in renewable 20

21 energy. Historically this has been performed by gas plants, however due to increasing gas prices and advancements of brown coal fired technology, Council believes a technology which utilises the abundant brown coal resource located in the Latrobe Valley would be a more cost effective and secure alternative into the future. Council advocates for energy consumers to not only have access to adequate and reliable energy, but to have choice and affordability. Council advocates for more policy certainty and direction for our community in respect to this. Improve energy productivity Outcome: Cost savings to Australian households, businesses, improved domestic security and reduced greenhouse gas emission intensity. Improving energy productivity Council s Natural Environment Sustainability Strategy outlines Council s objective to encourage the reduction of pollution from Council activities as well as local domestic, transport and business sources. Council notes the co-benefits that can be achieved from enhancing energy productivity by cutting greenhouse gas emissions whilst reducing energy costs. The Natural Environment Sustainability Strategy also outlines Council s objective of improving resource use efficiency. The Strategy states; working towards overall reductions in water use, energy use, waste production and unsustainable purchases; that is consistent with the Australian Government s proposal to raise the minimum efficiency standards of appliances. As outlined in Council s policy Positioning Latrobe City for a Low Carbon Emission Future, Council acknowledges and supports international and Australian efforts to address climate change. Council also acknowledges the role of renewables in reducing Australia s overall emissions. Council understands that during 2014 the Australian Government released the report of the independent panel that reviewed the Renewable Energy Target and that the Australian Government will soon announce its response to the report. Council supports lowering overall emissions rather than renewables in isolation. Council encourages the Australian Government to consider opportunities associated with the brown coal resource, through improved technology and 21

22 energy productivity, this world class resource has the potential to be used more efficiently into the future. There are opportunities for new power stations to improve efficiency, lowering initial emissions. There are also opportunities through emerging technology, to capture emissions for alternative uses and storing emissions within the Gippsland Basin. These opportunities would support the sustainable use of the Gippsland Brown Coal resource into the future and provide Victoria with a secure energy source. Council are also supportive of the Carbon Capture and Storage concept and the work being undertaken by the Global Carbon Capture and Storage Institute and CarbonNet in this area, acknowledging Carbon Capture and Storage could be a real solution to achieve a sustainable, low emission, future for the brown coal resource located in the Latrobe Valley. Council also acknowledges and supports opportunities associated with Carbon Farming Initiative (CFI). This combined with energy efficiency initiatives and new technologies; CFI presents an opportunity to reduce the overall emissions from brown coal generated electricity in the Latrobe Valley. Commencing Carbon Farming in the Gippsland Basin would not only enhance the region s agriculture but also reduce emissions through biological carbon capture and storage (bio-sequestration). There would be social, environmental and economic benefits as a result of this approach. Develop a better outlook capacity Outcome: Government better prepared to respond to supply issues, to global market opportunities, and to invest strategically in research. Industry will have access to better information, giving more certainty and encouraging investment. Develop a better outlook capacity Council supports this approach and acknowledges the need for Government to be better prepared to respond to supply issues and for industry to have more certainty to encourage investment. The Boston Consulting Report, The Shifting Economics of Global Manufacturing, How Cost Competitiveness is Changing Worldwide, August 2014 states, Several traditional high-cost countries that were already relatively expensive a decade ago have lost additional ground, resulting in 16 to 30 per cent cost gaps relative to the U.S. This is largely because of weak productivity growth and rising energy costs. The countries losing ground include Australia, Belgium, France, Italy, Sweden, and Switzerland. These dramatic changes in relative costs could drive a 22

23 large shift in the global economy as companies are prompted to reassess their manufacturing footprints. Four factors most responsible for the dramatic shifts in manufacturing competitiveness from are wages, exchange rates, labour productivity and energy costs. The report provides an overview for Australia stating For Australia to achieve its potential as a manufacturer of highvalue products, however, it must improve its cost competitiveness. That will require an increase commitment by both business and government to invest in technology, skill building, productivity initiatives, and capital equipment in sectors in which Australia has a competitive advantage. The report concludes that economies that have already fallen behind in cost competitiveness need to take action now to keep their manufacturing bases from deteriorating further. Actions include; enhancing productivity, accounting for the full cost; considering the implications for the broader supply chain; promoting better business environments; regulating the business model; and realigning the global footprint. Council concurs with the Boston Consulting Report, and advocates for the Australian Government to take a long term approach to energy policy. Many of the issues associated with energy relate to the instability in energy policy in recent years, through successive government changes, and the inability of Government to provide confidence has hampered long term investment in the sector. The new energy policy needs to be thoughtful, with a sustained focus, to enable it to be effective and in turn provide both industry and the community with certainty into the future and encourage long term investment in energy. Keep the range of energy options technology neutral by tackling regulatory barriers and making best use of research investment Outcome: Australia is able to choose from the broadest possible range of energy options. This will strengthen Keep future energy technologies open The Council Plan outlines Council s support for promoting research and development for new products and processes to exploit the significant coal resource of the Latrobe Valley. Latrobe City Council supports the balanced use of brown coal as an energy source and will work with researchers and government to support future low emission research. The $90 23