Industry: ‘Keep working on the NEG’

With federal and state ministers set to meet on Friday to decide on the National Energy Guarantee, the energy industry is calling further work to be done on the policy’s design.

“Our organisations call for further progress to be made towards designing a workable solution which addresses emissions reduction, reliability, and affordability across our energy system,” a joint statement from 14 companies and organisations said.

“Australian industry and households alike require competitively priced energy.

“Reliable supply is critical to our economy and society. And we all have a stake in achieving Australia’s emissions goals to combat climate change.

“A durable policy settlement to resolve energy and climate policy uncertainty remains essential to delivering on all three aspects of ‘the energy trilemma’.”

The group urges the COAG Energy Council to ask the Energy Security Board (ESB) to develop and consult on a detailed National Energy Guarantee design for final consideration later in the year.

“While the broad framework of the Guarantee is a plausible basis for compromise by all sides, to earn our support the final design will need to preserve competition; harness existing market structures; operate efficiently and equitably; help deliver the electricity we need at the lowest sustainable cost; be scalable and investment-credible; and from the outset help deliver Australia’s long term Paris Agreement emissions reduction commitments,” the statement said.

“There is much more to securing Australia’s energy future than just the National Energy Guarantee.

“The comprehensive Finkel Review framework for reform remains essential. So is dealing fairly with the consequences of ongoing change in the energy sector for affected businesses, communities, households and workers.

“And beyond electricity, Australia needs an agreed national climate change policy framework for the whole economy.

“Making peace in energy policy, however, can do much to unlock investment and deliver affordability, reliability and our emissions goals.”

The group comprises Australian Council of Social Service, Australian Energy Council, Australian Industry Group, Brotherhood of St Laurence, Business Council of Australia, Cement Industry Federation, Chemistry Australia, Clean Energy Council, Energy Efficiency Council, Energy Networks Australia, Energy Users’ Association of Australia, Investor Group on Climate Change, National Farmers’ Federation and St Vincent de Paul Society.

Clean Energy Council chief executive Kane Thornton said the most recent policy design developed by the ESB appeared to address some of the industry’s key concerns.

“Based on our understanding of the proposal, the adoption of a central register for the emissions obligation, the use of flexible contract options to demonstrate compliance and a range of measures to address market power and competition concerns are all welcome steps forward,” Mr Thornton said.

“We remain open-minded about the potential of the policy and believe this proposal warrants further detailed design and consultation.

“However our ultimate support for the policy will be contingent on completion of an effective and detailed design of the policy and addressing concerns in relation to the emissions target.

“One of the limiting elements of the current policy is that the level of new investment – that is critical to driving down power prices – will be determined by the nature and level of the emissions reduction target under the policy.”

Mr Thornton said he was concerned by the low level of the proposed emission reduction target.

“Unless the emissions reduction target is higher, there will not be enough new power generation built to replace the coal-fired power stations which will retire in the coming decades,” he said.

According to the Green Energy Market’s latest Renewable Energy Index, the NEG will deliver “no meaningful emission reduction” unless the proposed target is tightened.

The Index revealed the capacity of large-scale renewable energy projects under construction in Australia already exceeds what is required to achieve the government’s 2030 targets.

“According to economic modelling undertaken by Frontier Economics for the Energy Security Board, from 2017 onwards we’d need to install 9271MW of wind and solar in the NEM to achieve the government’s 2030 emission reduction target,” the report said.

“Yet we already have 9691MW of projects that will be delivered in the NEM based on what has been committed to construction and what is being contracted under procurement processes currently underway.”