The COAG Energy Council has decided to progress to the final design stage for the National Energy Guarantee (NEG).
Energy Security Board (ESB) chair Dr Kerry Schott presented the high-level design proposal for the energy policy to federal and state ministers this afternoon in Melbourne.
Federal Energy Minister Josh Frydenberg said the decision to further develop the detailed design of the NEG, to be presented at its August meeting, was a “big step forward” in delivering a more affordable and reliable energy system.
“Backed by an unprecedented cross-section of business, industry and community groups, the NEG is a technology neutral energy policy that will drive the right investment in the right place and at the right time to secure Australia’s energy future,” Minister Frydenberg said.
“Modelling undertaken by the Energy Security Board (ESB) shows wholesale electricity prices will decrease by 23 per cent under the NEG, flowing through to households and businesses.
“There was a lot of good will in the room, and while there is still much work to do, there was a commitment to getting an outcome in August.”
The Commonwealth Government also presented its paper, including the emissions target and the treatment of emissions-intensive trade-exposed industries.
Some states, including Victoria, Western Australia and Queensland, are concerned the NEG might impact state renewable energy targets.
Victorian Energy Minister Lily D’Ambrosio said she would ensure the NEG framework would not compromise the implementation of the state’s emissions reduction and renewable energy targets.
Victoria has legislated ambitious renewable energy targets of 40 per cent by 2025 and net-zero emissions by 2050.
“The Labor Government will continue to pursue policies that ensure reliable and affordable power across Victoria,” Ms D’Ambrosio said.
“Significant issues remain to be addressed in the High Level Design Document and Commonwealth Design Elements paper, including setting the emissions target, EITEs, offsets, state additionality, the setting of the reliability standard, and market power mitigation and other technical matters.”
The government has agreed to progress the outstanding elements of their Update on Commonwealth Design Elements paper, at the request of the Victorian minister.
“We have obtained assurances that the Energy Security Board will urgently provide an update to COAG Energy Council on the status of implementation of the the Finkel Review,” she said.
“We will act in good faith on the development of the NEG – but we still have significant concerns that are yet to be addressed.
“We will continue to support the growth of renewable energy in Victoria to deliver a reliable and low cost energy system for the future.”
Queensland Energy Minister Dr Anthony Lynham said Queensland supported the concept of an integrated climate and energy policy but had not been provided the information it needed to make a call.
“We support an end game of lower prices, lower emissions, an energy market that works for industry, and other Australians having the reliability of supply Queenslanders enjoy,” he said.
“But we still don’t have the detailed game plan to decide if the NEG is the way to get there.
“Queensland has agreed today to progress the NEG work so everyone can know the potential impact.
“Importantly, we remain rock-solid in our commitment to a 50 per cent renewable energy target by 2030 and any NEG cannot impact on our target.”
Australian Energy Council’s chief executive Matthew Warren said the decision to progress the NEG was an important step towards a return to bipartisan energy policy in Australia.
“Today’s agreement by the COAG Energy Council is a critical step towards ending more than a decade of destructive political point scoring on energy policy,” he said.
“Importantly, energy ministers today demonstrated they were willing to work together to deliver this important national reform – to finally unite climate and energy policy.
“It is crucial to complete this reform to deliver the reliable, affordable and sustainable energy system that will underpin the Australian economy in the 21st century.”
Mr Warren said the decision would instill greater confidence in investors and businesses looking to build new energy assets in Australia.
“Political agreement drives investor confidence, more capacity, more reliability and lower prices,” he said.
Ministers agreed to convene again in a phone hook-up in June to discus s the progress of the detailed des ign.
The development of the detailed design will also include opportunities for stakeholder feedback.