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Question: Discuss about the Energy Policy in Australia. Answer: Introduction The energy policy framework in Australia involves considerable fiscal policy influence. The energy policy of federal government is designed to give extensive support to source of energies such as natural gas, coal mining, and fossil fuels. Australian energy sector has paramount importance in earning of foreign exchange through its contribution to export. Revenue of the government is largely subjected to earnings from this vital sector. Despite giving priority to this sector, some factor causes a disrupted electricity supply and high energy. Therefore, stability in the energy sector needs a proper long-term policy design. Malcolm Turnbull, Prime minister of Australia concerns with blackout recorded in the last year and announces future energy policy. Essence of the story In the article published on The Australian, Prime minister gives assurance to for a stable energy supply in the state. Daily life in Australia are disturbed with high electricity price and still getting irregular service. One reason of high price is the shortage in power supply. Many of the power plants in Australia had closed in the last few years reducing the power supply. The subsidized plants take advantage of the situation and raise the price. Still they are unable to meet the power demand. All these cumulatively result in inefficiency in the energy market. Hence, Turnbull criticizes government interventionist policy of giving subsidy to power plants in certain regions (Theaustralian.com.au. 2017) In the new policy framework, government officials are directed to make a detailed analysis of the energy in Australia. The analysis includes existing supply sources as well new sources, the prices prevailing in the market and information regarding the power production technology. Based on these information short run measures will be taken in line with the demand for power for domestic as well as industrial use. Short-term measures prepare the base for long term policy (Farzaneh, Doll and de Oliveira 2016). Without designing short-term policy goals, no effective long-term policy can be designed. Detailed energy policy is designed after discussion with local retailer as mentioned by Turnbull in the report. Another major step towards long-term energy policy is taken in terms of analysing the shortage of base load power. Energy market operator reports in this matter. Government also realizes the need for huge investment for a secure energy supply (Foran et al. 2017). Therefore, investmen t friendly environment are designed to attract private investors to compliment public investment in this field. Economic theories The energy crisis in Australia can be explained with simple theory of supply shortage. In the free market interaction of supply and demand forces determines the price and quantity in the market. Now, if for some reason there is a reduction in market supply then market supply curve will shift leftward (Bumas 2015). With no change in demand condition, the new equilibrium is obtained at the intersection point of shifted supply curve and old demand curve. In the new equilibrium price, a small quantity is supplied at a high price. This is explained in the figure given below Figure 1: Effect of supply reduction in the energy market (Source: As created by the Author) The figure above shows the effect of a supply reduction in the energy market. A leftward shift of the supply curve from SS to S1S1 increases market prices from P to P1 while reduces its supply from Q to Q1. The need for securing a stable energy supply has become a major concern following state wide blackout recorded in the month of September in 2016 (Chapman, McLellan and Tezuka 2016). The supply shortage experienced in Australia is resulted from a number a factors. Wind power is a major swource of renewable energy in Australia. The power plants in South Australia hat runs wit winf power are heavily subsidized. When government offers subsidy it benefits the producers in terms of a declining effective cost of production. The subsidy policy is expected to reduce energy price while transforming the subsidized plants as major energy suppliers. However, the opposite result comes out. In the phase of closure of some of the existing energy plants, few large plants become powerful (Hua, Oliphant and Hu 2016). In this time, owner of some powerful gas forcefully restrain their supply to create an energy crisis in the state and increase power price. This gives the large gas suppliers and the subsidized plants enough market power to control the energy market (Council, 2015). The failure of interventionist policy target reflects the adverse consequences of uncoordinated state policy. Recommendation A stable energy supply is the priority of every nation. The policy announced by Turnbull is expected to solve the supply side problems of the energy market. However, other aspects need to be considered while designing energy policy. To fill the supply gap, increasing power production is necessary. In doing so focus should be given on an efficient production plant. Advanced techno logy should be adapted in the old plants so that emission can be minimized. The target of Australia is to reduce emission to a level of 26-28% of that in 2005 in the upcoming years (Devine-Wright 2014). Setting only targets is of no use. Installation of low emission technology is the o0nly way to reduce emission. To provide a power supply government should encourage opening of new power plants. The new power plants will supplement the existing plants. In the initial years government may provide support to the new plants if needed without violating free market efficiency. Proper storage of energy is required so that it can be supplied at times of crisis. Conclusion The paper has made a critical evaluation of existing and future energy policy in Australia. The subsidy given to power plants under Renewable Energy target mission fails to ensure flawless power supply. Rather it increases peoples suffering as they face a high price in the energy market. The Prime minister has given attention to the ongoing energy crisis and tried to mitigate energy problems in the state. Long-term policy goal has been set with effective short-term measures. The policy suggestion has been made for further improvement in power supply while keeping in mind the target of least emission and environment sustainability aspect References Bumas, L.O., 2015.Intermediate Microeconomics: Neoclassical and factually-oriented models. Routledge. Chapman, A.J., McLellan, B. and Tezuka, T., 2016. Proposing an evaluation framework for energy policy making incorporating equity: Applications in Australia.Energy Research Social Science,21, pp.54-69. Council, C.E., 2015. Clean energy Australia report 2014. Devine-Wright, P. ed., 2014.Renewable Energy and the Public: from NIMBY to Participation. Routledge. Farzaneh, H., Doll, C.N. and de Oliveira, J.A.P., 2016. An integrated supply-demand model for the optimization of energy flow in the urban system.Journal of Cleaner Production,114, pp.269-285. Foran, T., Fleming, D., Spandonide, B., Williams, R. and Race, D., 2017. Understanding energy-related regimes: A participatory approach from central Australia.Energy Policy,91, pp.315-324. Hua, Y., Oliphant, M. and Hu, E.J., 2016. Development of renewable energy in Australia and China: A comparison of policies and status.Renewable Energy,85, pp.1044-1051. Theaustralian.com.au. (2017).Turnbull works on long-term energy policy. [online] Available at: https://www.theaustralian.com.au/news/latest-news/turnbull-works-on-longterm-energy-policy/news-story/28110d4d8114c95f2a1929c85f6a42d4 [Accessed 18 Aug. 2017].