Energy, resources and environment update - July 2023

On 15 June 2023, the South Australian State Budget was delivered and promoted prioritising housing, health, and cost of living relief. Some highlights for the energy and natural resources sector are outlined below.

The government has allocated funding to partner with industry to undertake further studies (including environmental studies), final engineering and costings for the Northern Water Supply Project, with a final decision for the initiative expected in the second half of 2024. This project is assessing the viability of building a desalination plant and pipelines to meet the increasing demand for water in this region.

$2.1 million over four years to establish a copper taskforce to maximise public benefits from the development of copper deposits.

$1.2 million to facilitate the development and implementation of the Hydrogen and Renewable Energy Act, which aims to support the delivery of the hydrogen jobs and a world-leading hydrogen sector.

$1 million over two years towards designing works for a new Brukunga Mine water treatment plant.

AEMO is currently developing the 2024 Integrated System Plan (ISP), a whole-of-system plan that provides an integrated roadmap for developing the National Electricity Market (NEM) over the next 20 years and beyond. The draft ISP is expected around 15 December 2023, with a published ISP planned for 28 June 2024. AEMO is currently consulting on the 2023 draft inputs, assumptions and scenarios report. Further information, including a timetable, is available here.

In the 2023-2024 Federal Budget, the Australian Government announced the establishment of the $2 billion Hydrogen Headstart initiative to underwrite significant green hydrogen projects to be built in Australia.

On 9 May 2023, ARENA welcomed $4.2 million in funding to support the Hydrogen Headstart initiative by developing and operating the program in consultation with the Department of Climate Change Energy Environment and Water.

The Hydrogen Headstart initiative will provide revenue support for investment in renewable hydrogen production through competitive production contracts. Funding will be provided to cover the commercial gap between the cost of hydrogen production from renewables and its current market price. Hydrogen Headstart aims to support two to three flagship projects which could provide up to 1 gigawatt of hydrogen electrolyser capacity. Further details on this initiative can be found here.

On 4 May 2023, the Fraser Institute released its annual survey of Mining Companies for 2022. The survey assesses how jurisdictions' mining endowments and local public policy factors, including regulations and taxation, affect exploration investment. The report ranked South Australia as the 9^th most attractive jurisdiction in the world for mining investment. The investment attraction index is constructed by considering geologic attractiveness, policy perceptions and a composite index that measures government policy on attitudes toward exploration investment. The report is found here.

On 15 June 2023, SACOME welcomed announcements in the 2023 State Budget which benefit the resources sector in the State. Amongst other points, SACOME highlighted that the resource sector continues to be the backbone of the State economy, and that the State has received record royalties from the sector. The economic contribution of the resource sector was highlighted in our last energy, resources and environment update, which highlighted that the latest Economic Contribution Analysis undertaken by SACOME identified 15 resource companies that contributed over $10.7 billion in direct and indirect spending to the South Australian economy in 2021-2022, equivalent to 8.3% of South Australian Gross State Product. Further information on SACOME's response to the State Budget can be found here.

On 18 May 2023, the South Australian Aboriginal Heritage (Miscellaneous) Amendment Bill 2023 (Amendment Bill) was introduced into the legislative council. The Amendment Bill follows the election commitment from the Malinauskas government to increase protection of Aboriginal Heritage. The Amendment Bill seeks to introduce increased penalties for serious breaches of Aboriginal Heritage laws and provides powers for the courts to make remedial, compensation and profit forfeiture orders against offenders who have breached the Act. The Amendment Bill seeks to enshrine with certainty, the requirements of reporting a discovery of Aboriginal Heritage and includes stop work obligations near such discoveries to allow the Minister to respond to such notification.

ElectraNet owns and operates South Australia's electricity transmission network and plays a vital role in distributing energy to the community. Each year ElectraNet reviews the capability of the transmission network and forecasts a range of operating scenarios, and publishes the results in ElectraNet's Transmission Annual Planning Report (TAPR).

Responding to unprecedented forecast electricity demand growth in South Australia, ElectraNet released a TAPR Update on 31 May 2023, in addition to the TAPR completed in October 2022. The TAPR Update considers potential new demand developments which could fundamentally change the outlook for South Australia's transmission network, including (but not limited to) the development of a hydrogen hub, widespread adoption of electric vehicles, the electrification of sectors currently utilising other fuel sources and the potential connection of large new customer loads such as new or expanded mines, data centres and production of green steel. The TAPR Update forms a key input to the Australian Energy Market Operator in response to its Draft Transmission Expansion Options Report released for consultation on 2 May 2023. Further details on the TAPR Update can be found here.

This article provides general commentary only. It is not legal advice. Before acting on the basis of any material contained in this article, seek professional advice.


Co-authors

Name: Mario Pegoli

Position: Associate and corporate adviser

Practice: Corporate

Name: Stephanie Maurangi

Position: Lawyer

Practice: Transactions

Name: Yasmin McBride-Hellewell

Position: Law clerk

Practice: Transactions

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