In a bid to get state energy ministers on Team NEG, Federal Energy Minister Josh Frydenberg has said the emission reduction target can be reviewed after five years.
The proposed target of reducing emissions by 26 per cent on 2005 levels by 2030 has caused concerns among industry leaders.
Clean Energy Council chief executive Kane Thornton has warned the proposed emissions reduction target remains too low to encourage sufficient new investment in energy generation.
He said most credible analysis suggests the current 26 per cent emission reduction target would be met by the electricity sector in just a few years’ time, due to the current wave of investment under the national renewable energy target.
“Encouraging new investment into the next decade remains critical to reducing power prices as our old coal-fired power plants continue to close,” Mr Thornton said.
A final government design, given to state governments earlier this week with a final paper from the Energy Security Board (ESB), says the target should apply for a decade, but a review in 2024 would be allowed.
“In the first half of 2024 the government will conduct a review to ensure targets from 2025 to 2030 remain appropriate,” the paper says.
“The government intends to consider energy market conditions including price, reliability, as well as Australia’s international obligations when setting future targets.
“The review will include public consultation and a report of the review will be published by June 2024.”
The ESB paper warned states would deny consumers lower power prices and spark a collapse in renewable energy investment if they failed to support the NEG.
“The average national electricity market-connected household is estimated to save around $550 dollars a year on their retail bill in the 2020s relative to 2017-18,” the paper says.
“Of this, nearly $150 per year is forecast additional savings as a result of the guarantee.”
The review has been seen as an olive branch offering from Mr Frydenberg, who hopes to make a decision on the NEG at the next COAG Energy Council meeting on August 10.
“As the NEG approaches the final stages of development and debate, it is worth bearing in mind the broad base of support this reform has,” he wrote in an opinion piece in The Australian on Monday.
“It is for good reason that employer and consumer groups see it as the way forward: it will deliver a cleaner, cheaper and more reliable energy system.”
