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Â»Ã¢ÂÂ  * *  PRESS STATEMENT ,7 Ma' Â· by the M inister for NationalÂ· Development and Energy 8 1 / . Jw AUSTRALIA ,,v Ã¢ÂÂ S'ÃÂ·ÃÂ·

IEA REPORT ON AUSTRALIA'S ENERGY R, D & D POLICIES AND PROGRAMS

The Minister for National Development and Energy,  Senator

J.L. Garrick, said today that an article in The Australian

Financial Review of 17 December misrepresented the IEA’s

views on Australia's energy R&D efforts. Â·

Senator Garrick said that the article did not provide.Â· a balanced

report and in order that the public could judge for themselves

what the report said, Senator Garrick released a copy of the

full report on Australia taken from the IEA publication.

The IEA had not slated Australia's efforts. Their overall

views were more accurately reflected in the following quotation

from the.-.report: "Australian energy R ,  D & D policy has been

developed in an exemplary way, and it is being systematically .

implemented. There are some areas in which actions would

strengthen the R, D & D programme". .

The Minister said that the total level of energy R, D & D

activity in all sectors .in Australia had increased significantly

since 1978. A recent report by the Australian Bureau of

Statistics estimated expenditure at $122 million for 1980/81.

This compared with figures of $63 million for 1978/79 and.$97

million for 1979/80. The Minister said that he attributed

much of this growth to the stimulus provided by the Government

under the NERD&D Program. '

Senator Garrick said .that he had approved grants totalling

almost $80 million since 1978 under the NERD&D Program. This

was a large sum of money in difficult Budgetary circumstances. .

Senator Garrick also drew attention to the .arrangements .

announced on 30 April 1981 under which he would have an

effective policy role in the formulation of the overall

nature and direction of CSIRO's energy research. The Minister

added that he also had such a role in respect of the AAEC and

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the BMR, both of which were included in his portfolio

responsibilities. .  . .

Senator Garrick said that the following major developments

also had to be given due recognition -

. completion of the joint Australia/FRG coal to oil

feasibility study, which had been presented publicly

. the decision by the Nippon Brown Coal Company to proceed

with the construction of a $200 million pilot plant in

Victoria for brown coal liquefaction

. continuing major feasibility studies into possible oil

shale developments, funded by the private sector

interests involved. .

On the question of the level of Government energy R, D & D .

funding in Australia compared with other countries, Senator

Carrick said that useful comparisons were difficult to make.

Consideration had to be given to each country's specific

resource endowment and expected energy supply/demand scenarios'

and the range of energy technologies in which the country needs

to concentrate its resources. The IEA report recognised that

the Government had carefully related its R&D priorities to

forward assessments of the likely supply and demand position.

In conclusion, Senator Carrick said that the IEA report

generally endorsed the approach which had been taken by the

Australian Government in increasing the level of energy R , D & D

activity. The recommendations in the report were constructive

and were being taken into account by the Government.

Canberra .

17 December 1981 '

Contact: R. Hopkins (062) 45 8324 (BH) (062) 86 1237 (AH)

EXTRACT FROM TEA PUBLICATION "ENERGY RESEARCH, DEVELOPMENT  AND DEMONSTRATION IN THE IEA COUNTRIES - 1980 REVIEW OF  NATIONAL PROGRAMMES" '  .

Individual Reports on the In-Depth ,

Review Countries .

AUSTRALIA .

Lead Rapporteur: Dr Jack Vanderryn (US) Co-Rapporteur : Prof G. Elias (Italy)

I. Energy RD&D Policy and Objectives

(a) Are energy RD&D policy and objectives clearly defined?

The Australian Government has .one of the clearest and most

systematically defined statements of energy RD&D policy of any '

IEA country. Specific technology priorities have been developed  from an analysis of the country's long term supply and demand

picture through the National Energy Research, Development and  Demonstration Council, and these have been endorsed by the

National Energy Advisory Committee and approved by the Minister.

The Commonwealth Government's stated energy RD&D policy is  aimed at:

- taking a "leading role" in those technologies which Australia can and should develop and which are not .

substantially dependent on RD&D from overseas;

- developing and maintaining a capacity which can facilitate the introduction into Australia of new .

technologies developed overseas, including their .

adaptation to Australian conditions; .

- improving co-ordination by: .

.  dissemination of information on energy RD&D  projects

. facilitating access by researchers to information

on energy RD&D both within Australia and overseas

. close liaison with the States, industry and .  '

tertiary institutions '  .  Ã¢ÂÂ  . .

. identifying and evaluating economic, social .

and environmental issues, together with .

institutional and other non-market issues  peculiar to Australia which might inhibit the  implementation of energy strategies Â·

. fostering participation in appropriate bilateral  and multilateral international projects.

(b) Are energy RD&D policy and objectives consistent with  and derived from.the overall national energy policy?

With the exception of oil, Australia is very richly endowed  with energy resources. It currently imports about 30% of its  oil requirements, and this could well increase in the absence  of new major discoveries. The transport sector is projected

to account for about 63% of oil use by 1990.

The fact that RD&D policy gives high priority to conservation

of liquid fuels, coal conversion,.  extraction and utilisation,  and remote applications of solar energy indicates that

Australian RD&D policy is consistent with and supportive of  energy policy.

II. Government Energy RD&D Programmes and Budgets *

(a) Are the scope, size, internal distribution and future  prospects of the Government energy R&D programmes and  budgets consistent and well balanced with the policy _   and objectives above and with resources available to *   the country? (see Figures 1 and 2)

(b) Is the priority given to the energy R&D programmes  and budgets consistent with the severity of the energy  situation?

The Government energy RD&D budget increased by 20% in real  terms over the four year period 1977-1980 from Au s$21.1 million

to Aus$31.9 million ($35.7 million). A comparison of per capita  outlays with some other IEA countries yields the following:

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1980  Govt.RD&D  per capita (us $)

1980 GDP (US $ billions)

RD&D/ GDP (per mille)

Pop. Million

Australia $ 2 . 5 0 1 3 7 . 5 0 . 2 7 1 4 . 6

Norway $ 1 0 . 0 3 5 6 . 7 0 . 7 2 4 . 1

Canada $ 1 0 . 7 6 2 4 3 . 1 1 . 0 6 2 3 . 9

Ireland $ 1 . 9 3  ' 1 7 . 6 0 . 3 8 3 . 4

Belgium $ 1 2 . 5 0 1 1 6 . 0 1 . 0 6 9 . 9

Germany $ 1 7 . 0 5 8 2 4 . 9 1 . 2 7 6 1 . 6

The balance of effort in the 1980 budget: Conservation 6.1%, Oil and Gas 8.2%, Coal 30.4%, Conventional Nuclear 35.3%,  Renewables 14.3%, Fusion 1.4%, Supporting Technologies 3.9%. .Ã¢ÂÂ  The trends since 1977 have been for conservation to decrease

in relative and absolute terms;  oil and gas to decrease slightly;  coal has moved from next to nothing to nearly one-third of the

budget;  the nuclear proportion increased in 1979 but then  declined in 1980; solar has remained roughly constant in -   absolute terms. The Review noted that to date a number of quite  small projects had been funded, and that the minimum critical

size would need review in the future.

Within the overall Federal R&D budget the share given to energy

RD&D has increased from 2.8% in 1977 to 5.0% in 1980.

The.overall level of effort is still low compared with'other  countries' with similar GDPs and resource endowments. The areas

in which current funding levels give cause for concern are

(i) basic energy research, particularly basic coal science;

(ii) oil shale, including environmental aspects; (iii) coal combustion; (iv) industrial energy conservation; and (v)  institutional and social consequences of very large resource

development projects. .  .

State Governments, the Northern Territory and universities play  an important role in the national energy RD&D effort. All  States and the Northern Territory have energy Authorities, most

of which have published well prepared statements of policies

and objectives.

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III. Organisation for Establishing and Implementing  Energy RD&D Policy

(a) Are the governmental and organisational structures for establishing and implementing energy RD&D policy  and programmes effective and well co-ordinated?

The Department of National Development and Energy (DNDE) has  prime responsibility for energy matters, including RD&D. Other  areas of the Commonwealth Government with an interest in energy  RD&D are the Commonwealth Scientific and Industrial Research

Organisation (CSIRO) and the Australian Atomic Energy Commission,  both of which carry out energy RD&D. CSIRO derives part of its

funding from the National Energy RD&D Programme, funded through .   DNDE,  but the main source is a direct appropriation from the  national budget.  While DNDE does have the benefit of a very

comprehensive set of advisory and co-ordinating bodies, it  does not have a responsibility for the direction of Commonwealth

energy RD&D funds appropriated outside DNDE. .

DNDE has set up an information system covering all energy  RD&D projects. However, as the size of the Government

programme expands, management resources may need expansion to  assure scientific accountability. .

IV. Measures to Facilitate Development of New Technologies '   and their Application by Industry

(a) Are there adequate incentives by the Government to  encourage private energy RD&D investments?

(b) Are there adequate incentives by the Government to  encourage commercial application of new technology?

(c) Are there adequate programmes to treat institutional  and regulatory impediments to the development and  application of new technologies?

(d) Is manpower availability a possible constraint to the  commercialisation of new energy technologies?

The Review Team formed the impression that the level of energy

RD&D in the private sector is generally low. This seems partly

to result from the tendency of extractive industries to carry

out less R&D than, say, manufacturing industries and partly

from -Australia *  s historical reliance on foreign technology.

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In 1978/9 $18.9 million was expended by private industry on

energy RD&D, which was 38% of total outlays in Australia.

The main source of Commonwealth Government financial assistance

for energy RD&D in industry is provided through the NERDD

Programme.  Of the total of $41.8 million awarded in support

grarits, to date 39.5% has gone to private industry. Up to  100% of operational costs are provided, including direct labour

overheads.  Administrative overheads are normally borne by the

organisation itself. In addition, the conditions governing  patents in the agreements are attractive to industrial companies.

Provided an invention or process developed under a grant is  utilised by the grantee itself no share is sought by the  Commonwealth in any resulting additional profits.

Aside from the general incentive to conserve oil provided by  the Government's policy of import parity pricing of crude oil  and removal of sales tax on all non-oil heating appliances,  there are no specific incentives to encourage commercial

application of new energy technologies.

The Australian Science and Technology Council (ASTEC) in its  report "Industrial R and D - Proposals for Additional Incentives",  published in June 1980, has recommended that Government

laboratories contract an increasing proportion of their work

to industry. In another report, "Interaction Between Industry,   Higher Education and Government Laboratories", published in

October 1980, ASTEC recommended that initiatives leading to

greater interpenetration between the Government, industry and  tertiary education sectors be encouraged. ,

The Review noted the importance of private industry receiving  and making maximum use of know-how developed in Government and  university research centres, and the fact that the Government

is addressing this problem. Ã¢ÂÂ   Â·

Australia faces an acute shortage of technical manpower to

develop, and particularly, to deploy new energy technologies.  Demand for such skills will also be created by projects involving

large components of overseas investments, The Government is well

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aware of the problem, but further actions may be needed to

avoid the development of shale and coal conversion iridustries

being constrained. .  .  '

V. Support for IEA RD&D Co-operative Programmes

(a) Is the participation in IEA co-operative RD&D activities commensurate with the size and scope of  resources available to the country?

Australia joined the IEA in 1979. It is participating in the  jointly-funded Energy Technology Systems Analysis project and

Coal Economic Assessment Services. The geographic situation of  Australia does pose obstacles to participation in international

co-operative activities, but that same situation requires  special efforts to make use of co-operative opportunities. In

particular, a government-wide quota system for foreign travel

makes it difficult to increase co-operative RD&D activities.

VI. Conclusions and Recommendations

Australian energy RD&D policy has been developed in an exemplary  way, and it is being systematically implemented. There are  some areas in which actions would strengthen the RD&D programme:

RD&D Policy

1. A statement of government policy with respect to support  of demonstration projects to prove technical feasibility,  and the extent to which the Government is prepared to

support it with funding, would be useful.

RD&D Budgets and Programmes

2. The fact that the overall, energy RD&D effort is still very

low compared with other IEA countries with similar GDPs

and resource endowments suggests that the Government should  continue to give priority to increase budgets in this area.

The following areas are particularly in need of more

support:

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Â·-. basic research, especially basic coal science;

- oil shale,  including environmental aspects; '

- coal combustion;

- industrial energy conservation; - institutional and social consequences of large

resource development projects. .  .

3. The Government should consider sponsoring national "centres of excellence" in energy R&D and should also  improve incentives for training graduate level researchers

in the energy field. "

Organization '

4. It is important that the Commonwealth body, which has  primary responsibility for energy policy, also has  sufficient influence over energy RD&D performed with  Commonwealth funds, to ensure that RD&D programmes support

long-term energy policy objectives.

Industrial Activities .  Ã¢ÂÂ   .

5. The Department of National Development and Energy and the  National Energy RD&D Council should take actions to stimulate

more private sector energy RD&D.

International Collaboration

6. The Government should examine whether special actions and

funds are needed to enable the Australian energy R&D .

community to take maximum advantage of and contribute to  co-operative energy RD&D within the IEA framework and

through bilateral projects.

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AUSTRALI A

F i g u r e  1 : EVOLUTION OF GOVERNMENT R D  & D BUDGETS IN MAJOR ENERGY TECHNOLOGY AREAS

A u s tr a lia n  $  (c u r r e n t p r ic e s  in m illio n s )  . A u s tr a lia n  $  ( c u r r e n t p r ic e s  in m illio n s )

'  30

25

20

15

10

AUSTRALIA

Figure 2 : EVOLUTION OF GOVERNMENT ENERGY RD & D BUDGETS AT CURRENT AND 1974 PRICES

A ustralian do llars (m illion s) A ustralian do llars (m illions)

CURRENT PRICES

1974 PRICES

1979 1980 (E s t.) 1978 1977

1978 not available

