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Defence & Security | Energy & Utilities | Mining & Resources

Australia needs a military approach to liquid fuel security – John Blackburn AO

7 Oct 2020, by Amy Sarcevic

Retired Air Vice-Marshal John Blackburn AO has criticised Australia’s approach to ensuring national liquid fuel security ahead of the Australian Liquid Fuel Security Conference, claiming it has been “delayed, reactive, insufficient and out of touch”.

Discussions around the preservation of Australia’s few remaining oil refineries began at the turn of the millennium – bolstered by a Senate Inquiry in 2015, a Parliamentary Joint Standing Committee (JSC) in 2018 and an Interim Report in 2019.

But the government is yet to work out a post-subsidy strategy that will bullet-proof its liquid fuel supply in response to natural and humanitarian crises – despite flagging it as a national resilience priority earlier this year.

This is in spite of the COVID-19 pandemic exposing significant vulnerabilities in the global supply chain. Importing more than 90 percent of its liquid fuel stocks – an increase of 50 percent in 20 years – Australia remains at the mercy of overseas supply interruptions (and oligopolisation) – notwithstanding its IEA stockholding obligations.

“Australia’s oil refineries are being kept on life support, but no-one has really asked, ‘what happens next?’,” John said to Informa Connect.

“The warning signs have been there for the past decade, but it seems as though we have been in a collective state of denial about the unfolding crisis. Either that or complacency, after thirty years of continuous economic success.

“I applaud Minister Taylor’s recent admission that we need to do more on the liquid fuel security front. As far as I am aware he is the first Energy minister to have done so in Australia in the past decade. But the fuel security report tasked by the 2018 JPC is still sitting on his desk, and until it is published we cannot have a realistic (and long overdue) conversation about what to do next.”

Ends, ways and means

A realistic discussion, said John, would involve the confluence of scientific, business and military approaches – what he describes as the “national security triangle”.

“At the moment we’ve only had ideas coming out of each corner separately and not a holistic strategy. On top of that, they have been primarily from the business ‘corner’ which is focussed on a ‘just-in-time’ lean model, in contrast to the military’s ‘just-in-case’ approach,” he said.

“By the government’s own admission [several years ago], imports are cheaper than maintaining a refinery industry, so what is the problem with import dependency? That’s the kind of thinking that results from a business mindset. And you can immediately see the flaws here when you look at the broader picture: rise of oligopolisation in the global liquid fuel market, and supply chain setbacks.

[Also] “Chief Scientist Alan Finkel recently said he drew influence from his own business start-up experience when advising the Low Emissions Technology Statement – focussing the strategy on the ‘means’, rather than a target to be delivered. That’s certainly an option; however, a large number of start-up businesses fail, so an approach influenced by start-up strategy is, in my view, inadequate for our national security,” he added.

John, a retired Air Vice-Marshal, says the military approach to strategy which addresses ‘ends, ways and means’ is more prudent.

“No one can deny that the military is excellent at proactive crisis preparation,” he said.

“Although the government has responded impressively to the COVID-19 crisis, this has been almost entirely reactive – even though we have long been aware that a future pandemic was a ‘when not if’ scenario.

“In my view we have gotten off quite lightly with this crisis in Australia to date, but future crises may not be as forgiving. This is not a one in 100 year event, and there is nothing to stop a different pandemic or other global crisis coming along and wreaking just as much havoc, if not more.

“There is also the ongoing economic fallout to deal with – something which we cannot quarantine from.

“On top of that, our regional security situation is deteriorating rapidly and the United States’ withdrawal from its’ global leadership role is something that is concerning most democracies in the world.

“Many of our fundamental assumptions about our nation’s security need to be revisited and with that, the assumptions we have made regarding our supply chains. The security of critical supply chains is something that cannot simply be left to the market. Government needs to take a leading role to assure our nation’s ongoing security.

“In my view, we need to create a military-style strategy and preparedness plan for liquid fuel security that ensures we will get through the next crisis smoothly – when, not if, it happens.”

Supply-side strategy isn’t enough

Increasing domestic supply of liquid fuels – as per the IEA net oil stockholding obligation – is an important measure but will need to be balanced with demand-side efforts, argued John.

“As a nation we are still too reliant on imported liquid fuels. Farmers and miners rely heavily on diesel – and the transport sector sources 98 percent of its power from liquid fuels.

“If we purely mandate stocks without thinking about how to curb demand for imported fuels, by increasing local transport energy options, my feeling is that the current strategy won’t be resilient enough to withstand crises in the future.”

John Blackburn AO is a consultant in the field of Defence and National Security. He is a Fellow of the Royal Society of NSW, the Institute For Regional Security, the Sir Richard Williams Foundation and the Australian Institute of Energy.

John has extensive experience across the fields of strategy, policy, planning, operational command, capability development and material acquisition. He has written and spoken on Energy Security, Economic Security, Integrated Air and Missile Defence, the 5th Gen Air Force, Cyber Security, Space Policy, Defence Logistics, Defence White Papers and Fuel Security.

John’s board roles have included Board Chair of the Institute of Integrated Economics Research – Australia, Chairman of the Kokoda Foundation (renamed the Institute for Regional Security,) Deputy Chairman of the Williams Foundation and Australian Strategic Policy Institute Council member.

Join John for a lively debate on this issue at the Australian Liquid Fuel Security Conference – held as a virtual event on 27-28 October 2020.

Learn more and register.

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