Australian Domestic Gas Security Mechanism extension

CEMENT INDUSTRY FEDERATION
SUBMISSION

Australian Domestic Gas Security Mechanism
Extension

July 2022

The Cement Industry Federation Limited ABN 59 008 468 639 ███ PO Box 4178 Manuka ACT 2603

Telephone +61 2 6260 7222 ███ www.cement.org.au
INTRODUCTION

The CIF is the national body representing all Australian integrated cement manufacturers and comprises the three major Australian cement producers – Adbri Ltd, Boral Cement Ltd and Cement Australia Pty Ltd.
Cement is a critical input for Australia’s residential and commercial construction industry, as well as for major infrastructure projects.

Cement is an indispensable material to produce concrete. After water, concrete (including cement) is the most used material in the world and will continue to be crucial in supporting a modern world.

Natural gas is a critical fuel source for domestic cement manufacturing. Gas will also continue to play an important role as a transition fuel over the longer term as coal-fired generation is replaced by lower or zero emission technologies.

In the absence of ideal market conditions, targeted policies and measures will be required to address the needs of both gas exporters and domestic users. This should include consideration of suitable short and long-term strategies, including broader domestic gas field development as well as domestic reservation.

KEY COMMENTS

The ADGSM should extended to 1 January 2030, but not in its current form.

The Federal Government has announced a separate review of the ADGSM to ensure the mechanism is fit for purpose and stated that extending the ADGSM would ensure continued access to the emergency mechanism to reserve gas for domestic supply in times of a supply shortfall.

This approach is supported provided that the subsequent review addresses the clear shortcomings of the existing ADGSM and results in significant changes to address these issues.

For example, the objective of the ADGSM is to ensure that there is a sufficient supply of natural gas to meet the forecast needs of Australian gas consumers. However, this objective does not address the critical issue of affordability, nor does it include any requirements/mechanisms to ensure a rapid response to supply and/or affordability issues.

The proposed future review of the ADGSM must take these issues into account.

It should also be recognised that the ADGSM is a reactive policy mechanism designed to forecast and attempt to address a potential supply shortfall. The ADGSM does not address issues around the long-term supply and affordability of domestic gas in Australia.

Additional policy measures aimed at addressing the long-term supply of competitively priced gas in
Australia should be considered. Examples include a potential domestic gas reservation policy as well as policies and measures aimed at encouraging broader domestic gas field development.

A carefully designed domestic reservation scheme and policies to increase domestic gas field development have the potential to ensure the secure supply of reliable and affordable supply of natural gas to all
Australian consumers without compromising existing and future investment in the development of
Australia’s LNG industry.

Ensuring the adequate supply of affordable energy in all forms, including natural gas, must be a key priority for all Australian governments to ensure a strong, growing manufacturing industry and economy in general.

The CIF looks forward to the opportunity to provide input the future review of the ADGSM.

For further information relating to this submission please contact Margie Thomson, Chief Executive Officer, using the details below.

Margie Thomson
Chief Executive Officer, Cement Industry Federation e: mthomson@cement.org.au m: 0418 290 058

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