PEAK OIL

Adjourned debate on motion of Hon. S.M. Kanck:

1. That a select committee of the Legislative Council be established to inquire into and report on the impact of peak oil in South Australia with particular reference to—

(a) The movement of people around the state, including—

i. the rising cost of petrol and increasing transport fuel poverty in the outer metropolitan area, the regions and remote communities;

ii. ways to encourage the use of more fuel efficient cars;

iii. alternative modes of transport;

iv. the need to increase public transport capacity; and

v. implications for urban planning;

(b) Movement of freight;

(c) Tourism;

(d) Expansion of the mining industry;

(e) Primary industries and resultant food affordability and availability;

(f) South Australia's fuel storage capability including—

i. susceptibility of fuel supply to disruption; and

ii. resilience of infrastructure and essential services under disruptive conditions;

(g) Alternative fuels and fuel substitutes;

(h) Optimum and sustainable levels of population under these constraints;

(i) The need for public education, awareness and preparedness; and

(j) Any other related matter.

2. That standing order 389 be so far suspended as to enable the chairperson of the committee to have a deliberative vote only.

3. That this council permits the select committee to authorise the disclosure or publication, as it sees fit, of any evidence or documents presented to the committee prior to such evidence being presented to the council.

4. That standing order 396 be suspended to enable stranger to be admitted when the select committee is examining witnesses unless the committee otherwise resolves, but they shall be excluded when the committee is deliberating.

(Continued from 13 February 2008. Page 1664.)

The Hon. P. HOLLOWAY (Minister for Police, Minister for Mineral Resources Development, Minister for Urban Development and Planning) (16:00): I have an amendment to this motion, which has been circulated. I move:

Paragraph 1—leave out the words 'That a select committee of the Legislative Council be established to' and insert 'That the Natural Resources Committee'.

Leave out paragraphs 2, 3 and 4.

I believe that peak oil, as it is called, is an important issue. Certainly it is something to which the government needs to pay close attention and does pay close attention. It is also something to which this parliament should pay close attention. In moving my amendment, I believe that this is one of the core matters for which standing committees were established. We have standing committees to look at these important ongoing issues of the day. On the other hand, we have a very large number of select committees in this place, and I believe the performance of those select committees suffers accordingly because we have so many of them. Essentially, I have moved this amendment so that the matter can go to a select committee, because select committees are established for this very reason: to look at important issues such as this.

A lot could be said about the issues that have been raised. Certainly, if this matter goes to the Natural Resources Committee, officers from the Petroleum Geothermal Group of the Minerals, Energy and Resources Division of Primary Industries and Resources South Australia will, I am sure, be able to brief the committee on what work is being done within government. I receive reports from the committee in relation to these issues.

The community at large and all parliamentarians obviously want a diverse range of readily available, safe, secure, affordable and competitively priced energy supplies, including transport fuels. The recent rise in the world price for oil has focused attention on the implications of the eventual and inevitable peaking of the world's capacity to produce conventional oil. With that as an introduction, I would like to offer a few observations drawn from an analysis undertaken by my department, PIRSA—the energy resources division.

Most experts conclude that recent steep increases in the price of oil relate to the confluence of constrained investment in production and processing; increasing demand for oil-based products from developing countries, especially China; a diminishing in the size of oil discoveries; and both sporadic hostilities and natural disasters in proximity to major oil-producing centres. The result is a tight balance between oil demand and deliverability. There is also wide agreement that oil production will peak and put upward pressure on the price of oil unless exploration discovers considerably more oil and/or demand for oil is offset with alternatives, including energy efficiency from changes in transport modes and transport habits, bio fuels, gas to liquid fuel, coal to liquid fuel, shifts to hybrid vehicles, and other alternatives.

Whilst there is a diversity of views on how much oil and gas remains to be discovered and produced, to sustain prosperity it is sensible to simultaneously continue to entice investment in petroleum exploration and development, while also facilitating innovation to secure safe competitive and environmentally sustainable substitutes for oil. In this regard, the state government is taking some measured practical steps to offset threats to transport fuel supplies, including a legislated framework to attract environmentally sustainable petroleum exploration, production, refining and transport.

It is essential to enable investors to reap a competitive price for its products and services; to do otherwise would risk security of suppliers at any price. In terms of expanding mass transport, one target is to double the use of public transport to 10 per cent of weekday travel by 2018, which is in our South Australian Strategic Plan. The conversion of a proportion of government vehicles and public transport to use compressed natural gas allows the blending and sale of up to 10 per cent ethanol with petrol in the state. Public transport currently operates on 5 per cent (B5) biodiesel, and has committed to increase the use to 20 per cent (B20) biodiesel. We are also participating in the CSIRO's future fuel forum.

The goal of the FFF is to bring together stakeholders from community, industry and government to determine the implications of plausible scenarios for the future of transport fuels in Australia. The results of modelling are scheduled to be released to participants in June 2008. We are also joining with all states, territories and the federal government under the auspices of Ministerial Councils of Energy and Minerals and Petroleum Resources to consider the challenges all Australia must deal with in relation to the security of readily available and affordable transport fuels.

One key initiative of the federal government is its national energy security assessment. Stakeholder consultation for that assessment is expected to start in the second quarter of 2008. This assessment will address the challenge to meet climate change targets, while maintaining adequate, reliable and affordable energy. We are also undertaking gas supply demand assessments to underpin well-informed policies and programs to foster the security of our competitively priced gas suppliers.

Extensive stakeholder engagement has been and is continuing to be undertaken to design enabling best practice legislation for the geosequestration of greenhouse gases in South Australia. This is being done through our parliament's usual practices for proposed enhancements to legislation. In this particular instance, I refer to proposed amendments to the Petroleum Act 2000 to create a new form of compatible licence—gas storage licences—which will be complementary to the entitlements of petroleum production licence holders to store regulated gases including CO2. Incidentally, that geosequestration has, I know, been used in Canada to also enhance petroleum production.

There are a number of fronts on which the state government is already taking those measured, practical steps to offset threats to transport fuel supplies. I can also refer to what is being done in my other portfolio of planning. We are, of course, planning for the future in relation not just to the prospect of large, real increases in the price of transport fuels but also water availability. It is essential that both of those areas be properly taken into consideration in our planning system.

The planning review, which I hope to be in a position to produce fairly shortly, will be a lengthy document. That planning review will have a number of recommendations, but central to the driving force behind it will be the impact of higher transport fuels as well as the need for sustainability of other resources. So, that will be, as I said, released fairly soon, and I trust the council and the people of South Australia will be impressed by the detail that that review has undertaken in relation to addressing the issues.

I will conclude by again pointing out that the government does regard the availability of transport fuels at affordable prices as a very important issue. The government is, through its various agencies, paying a lot of attention to a lot of work that is being done. We are quite happy to share that work with the parliament. Members of parliament, we believe, should not only be aware of these issues but should have the opportunity to contribute suggestions about how we deal with them.

It is the government's view that the best way to do that is through the appropriate standing committee set up for that task, which is the Natural Resources Committee of the parliament. That is why I support the amendment.

Debate adjourned on motion of Hon. I.K. Hunter.