NERA's Sector Competitiveness Plan

Update 2020

Welcome to NERA's 2020 SCP update

Utilising industry-led and technology-driven innovation to build business resilience, unlock resources productivity and create employment opportunities are the critical pathways to economic recovery from COVID-19, according to NERA’s latest energy sector report.

Releasing the 2020 update of the Sector Competitiveness Plan, NERA has identified priority areas of action for the $93.1 billion energy resources sector to assist Australia’s communities and the economy rebuild from the global pandemic.

NERA’s 2020 Sector Competitiveness Plan update follows the release of the inaugural SCP in 2017 and aims to assist the sector respond to unprecedented challenges from new technologies, unique business models and the transition to a decarbonised economy.

NERA’s lighthouse projects and initiatives are transforming the innovation culture across Australia’s energy resources sector by optimising today and adapting for tomorrow. We are achieving this through increasing collaboration and commercialisation, growing international market opportunities, enhancing management workforce skills and identifying regulatory reforms.

This COVID-19 crisis could be the catalyst for a fresh, far smarter and collaborative effort to plan for and manage Australia's energy transition.

2020 Foreword: powering an industry-led and technology-driven recovery

At the time of writing, we are living through a once-in-a-generation global crisis that will undoubtedly result in profound social and structural economic changes. As the COVID-19 pandemic continues to sweep across the globe, previously inconceivable impacts on the movement of people, the way we work and learn, social freedoms, and economies, are emerging day after day. COVID-19 has thrown into sharp relief how false many of our beliefs about markets have been, with what were once seen as seemingly incontrovertible rule books being torn up.

Despite our abundant resources and relative isolation, Australia is of course not immune. We have long been a trading nation and have in recent decades embraced the opening of our markets and industries to globalisation and free trade. In the space of just weeks, COVID-19 has emerged as one of the toughest challenges ever faced by our nation — a nation already stressed from the worst bushfire season on record and fatigued from a long-running and bitter political battle about how best to plan for and manage the energy transition and decarbonise the economy. The gravity of the pandemic from a health perspective has necessitated widespread measures to slow its spread, and these will continue to exact an unprecedented toll on national, regional and local economies, shutting down entire industries, restricting business activities and creating financial hardship for hundreds of thousands of Australians.

The energy resources sector, although familiar with price shocks, is being hit with a severe double blow. COVID-19 restrictions have immediately driven a sharp fall in demand for energy, particularly transport fuels, and in some cases the declaration of force majeure on LNG contracts. At the same time, the oil and gas sector is reeling from plummeting global oil prices as a result of the failure by the OPEC to reach an agreement to not increase but instead cut production in the face of increased supply and reduced demand.

Our energy resources sector's immediate focus has been on significantly reducing personnel to protect the safety and well-being of the essential workforce and ongoing production. Many companies have made announcements to radically scale back non-critical activities and defer or cancel planned capital projects in Australia. Issues are also emerging with prefabrication yards across Asia and longer lead times for bringing in essential supplies through Australian ports. Significant flow-on impacts will be felt across the service sector, and there will inevitably be some market restructure and mergers and acquisitions.

The full implications and impacts are still being worked through, but 2020 through 2021 are set to be challenging years for the sector. However, one thing is absolutely clear: access to reliable, secure, affordable and clean energy will remain vital over the short term, but most importantly can play a major role in helping Australia through the recovery phase and into the longer term.

This COVID-19 crisis could be the catalyst for a fresh, far smarter and collaborative effort to plan for and manage Australia's energy transition.

The state of the sector

Australia has developed one of the strongest energy resources sectors in the world, built on world- leading innovation.









The sector remains one of the principal providers of the energy needed to power the economy and revenue for the nation, including from export income, royalties and supply chain investment. Australia generated $93.1 billion in gross value add in 2018–19 from combined energy resources and directly employs around 94,800 full-time workers. The nation is now the largest LNG exporter in the world, with each direct job in the oil and gas industry supporting ten additional jobs across the supply chain and the wider economy, highlighting industry's long investment in and high value of leading technology, but also, critically, the huge opportunity and threat that will arise from the growth or decline in further investment in the sector and in leading technologies.

In our jointly-released 2019 research report Staying Ahead of the Game, NERA and METS Ignited identified $74 billion in value that could be secured into the Australian economy and over 80,000 new jobs created by 2030 from the automation of the oil and gas and mining sectors. This highlights the magnitude of the growth opportunity for the national economy.

Cross-industry and cross-sector collaborations open a much-needed opportunity to build market scale for local supply chains.

Whilst NERA's focus is on Australia's energy resources sector, increasingly it is the rapid discovery and sharing of knowledge, technologies and innovative solutions between leading industries such as space, energy resources and mining, emergency services, agriculture, MedTech and defence, that will be critical to maintaining Australia's global competitiveness, creating market scale for local supply chains and long-term prosperity for all.

To address this opportunity and threat, and maintain our global leadership position, the sector is working to both secure future investment in the vital energy resources needed to power the economy and support, accelerate and invest in digital and low-emissions technologies.

In recent times, the ubiquity of wireless systems, access to cloud computing and solutions such as artificial intelligence and machine learning have enabled an additional layer of insights to be brought into the energy resources sector. It is now easier and more affordable to gather information and transform data into valuable insights, allowing facility operators to improve their safety, operations and maintenance.

Cross-industry and cross-sector collaborations open a much-needed opportunity to build market scale for local supply chains. Digital technologies also enable these local supply chains, providing simulated and test lab environments to trial, prototype and certify innovative technologies in safe environments. An example is the University of Western Australia Industry 4.0 Test Lab partnership with the energy resources sector to solve integrated data problems, drive more efficient operations and maintenance and ultimately improve productivity.

Leveraging our existing capabilities could see Australia and the world build a sustainable, high-tech and low-carbon future.

Support for and investment in low-emissions technologies will also be required to address climate change and assist Australia to meet its carbon emissions reduction targets. As the World Economic Forum has stated: "Energy is the lifeblood of the global economy — a crucial input to nearly all of the goods and services of the modern world. Stable, reasonably priced energy supplies are central to maintaining and improving the living standards of billions of people."

However, the International Energy Agency (IEA) reported that around 72 per cent of global manmade greenhouse gas emissions are from the energy sector — from generation of electricity and heat, transportation, manufacturing and construction and other fuel combustion. There is no more contentious a global issue than climate change and how to navigate the energy transition.

For Australia, navigating this transition is proving especially challenging given that our economy, jobs, export income and prosperity have been so tightly interlinked with our abundance of resources. Despite this, solutions are emerging globally and locally. Australia has world-leading technical, engineering and innovation capabilities from decades of investment in the resources and oil and gas industries. Our country also has abundant cleaner energy resource alternatives, and the technologies needed to support them are developing. Leveraging our existing capabilities could see Australia and the world build a sustainable, high-tech and low-carbon future.

Our sector can and must bring its enormous capabilities and experiences to the table and play a central role in transitioning towards a digital technology and low-carbon future. Our challenge for this new energy decade is to create the conditions necessary for new technologies to form, grow and be deployed widely in far shorter timeframes and in more agile ways than in the past.

Considering the present challenges facing our nation, all industry sectors must recognise that this cannot be a period of business-as-usual. Sharing knowledge, technologies and innovative solutions across leading industries will be critical to sustaining Australia's global competitiveness, creating market scale for local supply chains and long-term prosperity for all.

In this current climate of uncertainty and instability, it has never been more vital to sustain innovative, resilient, adaptive and globally competitive critical industry sectors.


To view the full report, click below.