Executive summary:

Australia has profound energy security challenges. The oil sector’s reliance on fragile international supply chains and volatile markets is the most prominent and pressing. But Australia also has considerable vulnerabilities related to gas, the power sector, and clean energy supply chains. The most significant risk in each sector is a sudden and major supply disruption. This could arise from various combinations of factors and undermine key interests and values, including Australian Defence Force abilities. Baseline energy insecurity, in the form of exposure to high or volatile prices, is also a significant national concern.

Policymakers have failed to adequately respond to ongoing changes in Australian patterns of energy production and consumption, including declining oil self-sufficiency, the need to more rapidly transition away from fossil fuels, and a surrounding context of rising geopolitical, geoeconomic, environmental, and other instability. Efforts to resolve Australia’s energy security challenges must begin with better acknowledgement and understanding, including identifying energy security’s relationship to other key issues such as climate change. Australian policymakers must abandon flawed perspectives, such as their ‘market fundamentalist’ approach to energy sector development. Policymakers should prioritise improved liquid fuel security, but locate this in a wider, systems thinking-inspired approach to enhancing energy security and its contributions to overall national resilience and security.

Policy recommendations:

This report recommends six principles to guide improved energy security decision-making, starting at the Commonwealth level but ideally extending to sub-national levels. In summary, these are: better align Australian energy security policies with peer country commitments; prioritise Australian needs over trading partner energy security; embrace a mix of market forces and strategic defences against market forces; adopt a systems-thinking approach to energy; better prepare for short-term shocks while building long-term resilience; and better recognise and work to realise how energy security and transition can be mutually reinforcing.

The report also makes concrete Commonwealth-level policy recommendations, including: • On liquid fuels, significantly improve stockholding and other short-term shock absorbing capacity, alongside accelerated energy transition and efficiency; • On gas, implement east coast reservation and monitor Western Australian developments, while again pursuing long-term demand reduction; • On electricity, pursue sustained bipartisan support for a renewables-heavy grid and ensure cost savings are passed on to consumers; • On clean energy supply chains, continue to monitor and invest in areas of newfound economic and strategic ability and balance between ties with China and strategically aligned partners; • In a cross-cutting sense, improve strategic assessments of energy and its broader relations, including potential development of a national energy security strategy, and enhance energy diplomacy.

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