Australia and Energy Security

The topic of energy has become so politicised, both between the major parties and within the Liberal party, that the national interest has been subsumed by both party and personal interests.  The reality is that energy security, like national security, can only be addressed with consistent bipartisan political support.

Energy security is fundamental to our way of life. Without energy security and without resilient supply chains, our Defence Forces will not be able to operate.  Likewise, our society would also cease to operate if our national energy infrastructure and associated supply chains falter.

The public awareness of these risks is relatively poor; even significant energy infrastructure failures, such as the 2016 South Australian electricity blackouts, seem to have faded from the news cycle around much of the country.  In an effort to counter the lack of awareness there has been a considerable amount of public discussion of energy and fuel security in Australia over the past few years.

In 2013 and 2014, I wrote a series of reports on Australia’s Liquid fuel Security that were published by the National Roads and Motorists’ Association (NRMA).[1] More recently:

• The Australian Senate held an Inquiry in 2015 into Australia’s Transport Energy Resilience and Sustainability.
• Senators David Fawcett and Jim Molan, along with the House of Representatives member Andrew Hastie, have expressed their concerns repeatedly in the media regarding these issues.
• The 2017 Independent Review into the Future of the National Electricity Market, led by Dr Alan Finkel, Australia’s chief Scientist, made recommendations including the establishment of an Energy Security Board (the Review focussed primarily on electricity and, to a lesser extent, gas.)
• In August 2017, the Australian Strategic Policy Institute (ASPI) published its report on “The Challenge of Energy Resilience in Australia.”
• In February 2018, the International Energy Agency (IEA) published their review of Australia’s energy policies.
• In March 2018, when reviewing a critical infrastructure bill, the Australian Parliamentary Joint Committee on Intelligence and Security made the following recommendation “The Department of Home Affairs in consultation with the Defence and the Department of the Environment and Energy need to review and develop measures to ensure Australia has a continuous supply of fuel to meet these national security priorities.”

Each of these reviews and reports have highlighted aspects of energy security that are deficient.  However, energy security is about much more than just the Defence force or a more “reliable” electricity supply.  It is about our security as a nation, it is about protecting our society and our way of life and, as such, it is a very complex issue.

The first problem we have in addressing energy security is that of language.  The terms “national security” and “energy security” do not have common definitions amongst Australians.  Nor is there a common view that energy security is a subset of national security.   The Macquarie Dictionary defines national security as the protection afforded to a nation against any external threat to its existence.

However, when the Australian Government talks about “energy security” it defines it as the adequate, reliable and competitive supply of energy across the electricity, gas and liquid fuel sectors, where reliability is the provision of energy with minimal disruptions to supply.  The conditions under which this is assessed are not clear.  It is therefore not surprising that there are significantly different views regarding energy security when considered from industry, national security or bureaucratic policy perspectives.

In effect, the Government has articulated energy security through a “market lens.”  This is also evident when the Government states that energy security is is a “shared responsibility between governments, market institutions and energy businesses.”

When I was researching my fuel security reports I had the opportunity to interview the CEO of one of the Australian based oil companies.  He made it clear that energy securitywas nothis responsibility; his responsibility was for the reliable supply of fuel to his customers and a return for his shareholders,nothing more.  From a business perspective this makes sense.  However, with respect to security, someone has to be in charge.

The Government readily accepts responsibility for national security;when launching the 2016 Defence White Paper (DWP), Defence Minister Payne noted the Government’s firm commitment to the Australian people that “we will keep our nation safe and protect our way of life for future generations.”

Energy security is a prerequisite for protecting our way of life and therefore I am of the view that markets cannot be held responsible for energy security which is a component of national security; Governments must take that responsibility.

A further problem in the discussion of energy security is that of implicit assumptions.  We often assume that if something hasn’t failed recently that it will continue to operate.  This is a common assumption most of us make, for if we spent all day worrying about what could go wrong our lives could be miserable.

However, we do need to have some people think deeply about these issues and to make whatever preparations are necessary to ensure our ongoing security.  I suggest that we need to apply the national security framework and analytical methods that we have applied to our nation’s Defence Forces to areas of risk such as energy security, that are critical to our national security.

Defence has often reflected on the expectations of the Government and the Australian population.  Australians expect their Defence Force to operate when markets fail; in other words, Defence Forces are not just there for “business as usual” times.  I would suggest that Australians would rightly expect essential services to operate when markets fail and to be secure and resilient; the public (and political) outcry following the 2016 blackout in South Australia was a clear example of this expectation.

How confident are we that such essential services are secure such that they would continue to operate in the event of some form of market disruption?

What assumptions do we as Australian’s make about issues such as our energy security that are flawed?

[1]The NRMA Fuel Security Reports are at: https://www.aph.gov.au/DocumentStore.ashx?id=86e8dfbc-1467-47fe-ad1e-bc635407ecf8&subId=301736https://www.aph.gov.au/DocumentStore.ashx?id=86e8dfbc-1467-47fe-ad1e-bc635407ecf8&subId=301736; https://www.aph.gov.au/DocumentStore.ashx?id=677ff8dd-ce35-40ee-9af8-bfec1e43d125&subId=301736; and https://www.dropbox.com/s/8vycz1u54al3uj0/Benchmarking_Australias_Transport_Energy_Policies_Report_December_2014.pdf?dl=0

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The Impact on Defence and National Security

Without adequate and secure energy sources, Defence cannot function. It is essential for Defence leaders to understand Australia’s energy systems and supply chains and that we are undergoing a fundamental transformation in our energy systems.  It is a critical vulnerability.

Energy Security is not just about fuel stocks for Defence. When I have spoken about this issue, a common question I am asked is “how many days of fuel stocks do we have in Defence?”   The issue is far more complicated than the question suggests.

For example, if you doubled the current level of fuel stocks it would in reality make little difference if an energy supply interruption lasted longer than the number of days of stocks held.  The issue is the assured ongoing flowof adequate energy, where stocks act merely as a buffer for variations in flow rate.

The other critical issue to understand is that if our civilian infrastructure and critical supply chains do not have assured energy, then Defence will not be able to operate.  Defence is wholly reliant on the non-Defence support infrastructure to operate.  I have therefore purposely referred to energy rather than fuel.  Our infrastructure, and in turn, Defence relies on assured flow of multiple energy components including electricity, gas and fuels.  Fuel stocks alone do not deliver energy security.

If we examine the 2016 DWP for its analysis of energy security and related Defence vulnerability, there is little to read.  The DWP discussed the remediation of problems in fuel infrastructure that would address OH&S and some resiliency issues. There are good energy related developments across the Services, in Defence Estate and in Defence Science, but in piece parts.   Compounding the lack of a comprehensive Government integrated energy policy and plan is the apparent lack of a Defence operational energy strategy and a Defence operational energy policy.  This should be addressed as a matter of priority.

So, why have these issues not been addressed by Defence; why did I not realise the problem when I was the RAAF Deputy Chief?

I think it is an issue of culture and habit.  Many in Defence consider fuel to just be a “logistics issue” and that will be managed by the logisticians and that energy is a domestic Defence Estate issue. Unfortunately, logistics has not received the priority it deserves as, for decades, the focus has been on the acquisition of new capabilities and their introduction to service.

Lieutenant Colonel David Beaumont, the Commanding Officer of the Australian Army School of Logistics, has an informative perspective when he states that “more often than not, the idea of the ‘logistics system’ is used to reduce the logistics process to a category of specialist activity. This view is part of the problem why logistics has tended to receive much less attention than it should warrant …”[1]

In addition, the majority of recent Defence operations have been conducted under the umbrella of the US Forces where access to their logistics supply chains has perhaps made us somewhat complacent.  We need to have a Defence Force with resilient and secure supply chains and that can operate, when required, independent of US support.   Energy is a key logistics component that needs much more attention.

The Energy System Transformation

We are undergoing a major transformation in how our societies work in areas such as the economy, energy and the environment.  These areas are closely interlinked, but largely managed as separate competing issues and usually in a fragmented manner as a result of near term political goals.

Australia’s energy systems are being shaped by the opportunities afforded by technology changes, by economic pressures and by our emissions reductions commitments under the Paris Agreement.  The transition in energy systems will not come without a cost and yet our economy already appears to be at risk of stagnating.  Our debt levels and economic performance give us little reserve with which to act.

In spite of the abundant blame throwing in the public debate, significant trade-offs will need to be made between these areas as we, and the wider global community, have to deal with these issues. Collectively, these challenges are a major threat to our way of life and are both a human and national security threat.

Technology changes will afford great opportunities for us, if they’re applied intelligently. I argue they’re not being done that way because of a lack of an integrated systems design approach.

As we collectively navigate these challenges over the next decade, a question we must address is whether or not Defence and our Nation can get secure and resilient energy supplies?

It will take many years to improve our energy security as the engineering solutions will be complex.  We therefore need an honest statement of vulnerability, a risk mitigation/adaption plan and a realistic emergency response plan to deal with supply interruptions as we transition.

An Integrated Design Approach?

Energy issues are so intertwined with other security developments that we cannot afford to ignore them.   Solving the energy security issues of today will not be sufficient; we need to anticipate the energy systems of the future. As we try to address the energy transition challenge, there is an opportunity to learn from others who are making some progress in systems integration.

I will suggest that there may be some design thinking that we could adapt from someDefence Forces, that are in the process of transforming to an integrated design force model, and apply it to the challenge of integrated energy system design in Australia.

There has been much publicity in recent years about the transformation of our Defence Force into a “5^thGeneration” Force.  The initial discussion centered around the RAAF’s Plan Jericho, with subsequent discussion of a 5^thGeneration Navy and Army.  The concept of a 5^thGeneration force was not just about acquiring 5^thGeneration platforms. It was about using the opportunity of 5^thGeneration technologies to integrate the existing 4^thGeneration platforms, to improve their capability and then, in turn, to amplify the capability of the new 5^thGeneration platforms. It was a change in the way of  thinking about integrated design, it was about a cultural shift away from the platform towards thinking at the program or systems level.

If we apply the construct of “Generations” of capability to the energy sector we could perhaps describe biomass as 1^stGeneration, Coal as 2^ndGeneration, Oil and Gas 3^rdGeneration and Nuclear and Renewables as 4^thGeneration.   I have referred to the latest energy technologies as 4^thGeneration because they are being developed and fielded the same as we fielded 4^thGeneration platforms, such as the F/A-18.  With 4^thGeneration platforms, we acquired them in component pieces and hoped that other technologies would integrate the platforms once they were fielded.   We learnt the real limitations of extant data links through that process.

Similar to what was done in Defence, 4^thGeneration energy systems are being acquired in component pieces, not as a part of an integrated system.  This has led, as in the case of the South Australian Electricity blackouts, to systems failures.

So, the question is, can we think about a model for a 5^thGeneration integrated energy system?

The technologies necessary to implement a 5^thGeneration energy system exist today.

We just lack the integrated design approach.   An example of such an approach can be shown in combination with solar and wind systems.  Despite having the highest deployment of solar on domestic houses in the world, solar and wind systems provide only about 1% each of our energy supply.

The problem is that together they can at times provide more energy than is required; in some cases, it is the local electricity infrastructure that cannot handle the amount of energy that can be produced.   At other times, solar and wind systems cannot meet the energy demand and thus they are blamed for supply failures.

Is there a possibility of utilising the energy produced by solar and wind systems differently?  There are a range of excellent academic studies that have highlighted the value of pumped hydro systems to store renewable energy. At scale, pumped hydro seems to be the only viable solution, but at considerable cost and time for implementation.

There are also excellent examples of small scale, regionally-based renewable energy storage systems such utilising Hydrogen, which can also be used to produce a range of energy products. Hydrogen, in this case, is the medium to produce both a time and mode shift of renewable energy.   Hydrogen could be used for power generation, for fuel cells in vehicles and trains, to produce ammonia, to supplement gas supplies and to produce gas.  It could also provide a significant export resource to countries such as Japan, where Hydrogen imports have been identified as a Government energy policy priority.

Whilst not the panacea for Australia’s energy needs, Hydrogen, as but one example, could be an important component of an integratedenergy system, particularly as it could employ excess renewable energy capacity.

The production and transformation of energy in regional or sub-regional networks using such “energy integrators” could exploit an energy resource that is not utilised to maximum effect today. It is about integration, resilience, economics, energy security and scalability.

It is about integrated design. A more comprehensive discussion of this topic can be viewed in my presentation to the 2018 RAAF Air Power Conference:  http://youtu.be/568ezJ2mbeI

Conclusions

The people of Australia expect the Defence Force and the nation’s critical infrastructure to operate not just when the markets are functioning normally, but when there is a problem. There are are significant issues with our energy systems that should concern us all; unfortunately, the analysis of our energy security and resilience is inadequate and the management of energy security has been outsourced to the market.

The idea that we are at peace and “business as usual” is the appropriate model where the markets can manage all aspects of our critical infrastructure and supply chains is clearly out of date.

Energy security is a vital component of national security and an increased level of Government control / leadership with respect to energy security is warranted.

A 5^thGeneration Defence Force needs a 5^thGeneration energy system; so does our Nation.

The discussion of these issues is not just for our politicians; it is our collective responsibility to discuss these issues and to tell our politicians what we need to have done and not wait to just complain after our energy systems fail.

Air Vice-Marshal John Blackburn AO (Retd) is the Board Chair of the Institute for Integrated Economic Research (IIER) – Australia and a Fellow of both the Institute For Regional Security and the Sir Richard Williams Foundation.  The IIER- Australia is exploring the challenges of linked transformation of economic, environmental and energy systems; details of the issues under consideration can be found at the IIER(Europe) website – https://www.energyandstuff.org/en

[1]https://www.army.gov.au/sites/g/files/net1846/f/transform_logistics_b5_faweb.pdf

The featured photo:

An understanding of the technical aspects of power generation is lost on many. Getty

Editor’s Note: The full article which is entitled “Energy Security: Is There a Problem?” was recently published by the Australian Defence Magazine and can be read in its entirety on their website:

http://www.australiandefence.com.au/budget-policy/energy-security-is-there-a-problem

What we republished with the permission of the author was the introduction to the article as well as the final sections of the article including the conclusion.