Coalition squibs on emissions in new energy policy paper

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Coalition refuses to budge on emissions targets for NEG, despite considerable shift on technical details of emissions and reliability obligations from Energy Security Board.

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The Coalition government has made no concessions on the emissions component of its proposed National Energy Guarantee, risking a stalemate with Labor states despite major improvements in the NEG’s technical design.

A Commonwealth paper circulated to energy ministers late last week reveals that the Coalition government – under pressure from its significant coal-supporting, climate science-denying conservative rump – has not budged on emissions.

The 11-page paper repeats the government’s long-standing position: Namely, a 26 per cent emissions reduction target for the electricity sector by 2030, that state schemes will not add to its target, emissions exposed industries will be excluded, and offsets may still be allowed.

“Where States and Territories pursued their own renewable energy targets, such as to achieve investment or employment policy objectives, this would not change the target under the Guarantee,” the paper says.

This will likely make the NEG difficult to accept for states and territories like Victoria, the ACT and Queensland, who have put in place ambitious renewable energy targets that imply much more significant emissions reductions.

It also puts states such as New South Wales in a curious position, because it means there will be no drivers at all for renewable energy investment in its own state, apart from the likely phased closure of large coal-fired generators such as Liddell (2022), Vales Point (2028) and Eraring (2032).

As we reported  in February – Coalition seeks to lock in weak targets in NEG – and last week – Frydenberg says it’s a weak NEG or nothing – the government will hold position not just on a weak emissions target, but on locking it in for as long as possible. This paper confirms that.

It will start with a 10-year target (out to 2030) that can only be reviewed every five years (unlike the reliability component which will be reviewed each year), and cites support from the big energy utility and business groups for this position.

Indeed, the Commonwealth paper relies heavily on quoted support from the main business lobby groups, corporates such as BHP, and the big three energy retailers and manufacturers.

Other organisations barely get a look in, and neither do views that don’t accord with the government’s own ideology.

Of particular note are the weak emissions targets and the observations such as Origin Energy’s that Australia can and should be doing a lot better on emissions, a view shared by nearly all submissions apart from those with strong vested interests. But it was ignored.

Analysts say the 26 per cent reduction is ridiculously low for an electricity sector – both in the context of the Paris climate agreement, and because the sector offers the cheapest and easiest emissions reduction in the country, and this will merely shift the burden elsewhere.

It will be even weaker if offsets are allowed into the scheme, as this means that the big utilities can buy cheap international offsets to meet the weak emissions scheme, so avoiding investment in renewables in Australia. Needless to say, most of the big retailers support this.

The technical paper circulated last week – as reported by RenewEconomy – shows significant movement in the technical design of the scheme.

One of the big shifts was the decision to abandon the idea of physical contracting, and replace it with financial contracts already common in the electricity market.

This is seen as an important step to avoid further concentration, and further price hikes, in a market largely controlled by the dominant big three retailers and the government-owned Snowy Hydro.

Other major shifts occurred in the reliability mechanism, and it appears that this will only be a “light touch” mechanism that will only be triggered when a potential shortfall is not met by the market three years out from occurring.

This will likely prompt investment in cost-effective and modular investments in dispatchable power, favouring demand management and other demand-side initiatives, as well as battery storage, because of the speed and easy scaling of their deployment.

Those initiatives now risk being lost in the debate over the emissions targets, as many analysts have noted that locking in the Coalition targets will actually be worse than not having a policy, and could cause investment in new generation to dry up.

But the Coalition government is unable to move because of the vocal right-wing rump, led by former prime minister Tony Abbott, former deputy prime minister Barnaby Joyce, and backbench energy committee chair Craig Kelly, along with a group of disaffected former ministers.

It says in its paper that it will undertake detailed work to further assess and develop the approaches discussed in this paper before making final decisions.

“This includes work on: how the target is expressed and the process for reviewing and adjusting it within the emissions mechanism, how any EITE exemption is calculated and implemented, and further consideration of the eligibility of offsets, and the frameworks that could apply if they were to be used.”

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19 Comments
  1. Patrick Comerford 7 months ago

    As we have come to expect from this corrupt and incompetent mob we are moving inexorably to the worst of outcomes over this NEG policy. This government has a perfect record of cocking up every policy they touch. The only two issues that now need to be resolved is the labor state governments remain united in opposing this farce and ensuring the next federal labor government have a free hand to sweep this NEG nonsense completely out the window and implement a plan for the future grid.

  2. PLDD 7 months ago

    Does anyone know the legislative pathway for these two parts of the NEG. I assume the technical part of the NEG is governed by State parliaments not Federal hence the more realistic policy.

    But this new target document seeks to lock in Federal government policy and I assume both houses will need to approve it. That sounds far from easy.

    I assume the ALP are keeping their powder dry and will let the LNP internal political circus run for some time before joining in with the voice of common sense.

  3. Joe 7 months ago

    No surprise that The COALition stays the course in being piss weak on emissions reduction, why do they even pretend anymore that emissions reduction is a consideration anymore. And once again no surprise that The Big Vested Corporates are cheering this one home. They know that when Labor wins the next election things are going to look…. just a ‘tad’ different.

  4. John Mitchell 7 months ago

    Its been designed to fail, just like the republican referendum. Its also designed to wedge the ALP Vic Govt. in the State Election this year. The State opposition want the beat up Andrews on electricity prices in the lead up to the election. I just hope that the Andrews Govt. don’t cave in on the emissions target. This also applies to Qld. & the ACT.

  5. Carl Raymond S 7 months ago

    It’s a telling chart. I notice the spans between plant closures, for some inexplicable reason, are further apart in the years ahead than in years past. The chart pleads with us to believe that the renewable energy revolution will slow down. Not a chance, guv’nor.

    • Rod 7 months ago

      Agreed, Northern power station had a few more years in her but RE cut its lunch and Hazelwood took the scraps leftover at dinner time.
      More RE will make those marginal coal burners less profitable and more likely to run at a low capacity factor or close earlier than advised.

      • Phil NSW 7 months ago

        Anything to crimp the RE introduction helps the coal gang so they are willing to prostitute themselves for the cause. Their voters show little initiative to look into the truth and rely on the garbage feed up to them as gospel.

  6. Ren Stimpy 7 months ago

    It’s now incumbent on the states to reject the squibbing cabinet’s NEG (an NEG which is a squib to 8 or 9 of their scientifically-illiterate backbenchers).

    The states are ultimately responsible for their own supply of power. They should not let the federal government try to override the states’ known long term responsibility of gradual emissions reductions. Not even with the blatherings of a handful of uneducated blustering populist federal government backbenchers.

    Each of the states’ responsibility to emissions reductions is here, for the long term. Those ignorant federal backbenchers who oppose that will probably be kicked out of their seats within a year i.e. the very short term. If we’re lucky.

  7. Jon 7 months ago

    Very disappointing!!!

    Hopefully the states will be able to get the direction change on this paper they have managed to the NEG itself.

  8. baseload renewables 7 months ago

    Who are the “big three energy retailers and manufacturers”?

    • Chris Ford 7 months ago

      AGL, Origin Energy and Energy Australia

      • baseload renewables 7 months ago

        Thanks Chris. Looks like I’ll need to send an email to my retailer.

        • Ben Mc 7 months ago

          For sure you should be switching retailer instead!

          This sends a stronger message than continuing to provide them with revenue. I would recommend PowerShop or another green retailer

      • Phil NSW 7 months ago

        Why do we allow generators to be retailers. Distorts the market and excludes RE because of the incumbent’s market power.

        • Chris Ford 7 months ago

          Agree Phil. The current rules set this up for rorting.

  9. Barri Mundee 7 months ago

    The only way forward is to change the government.

  10. Chris Fraser 7 months ago

    I still find it strange the authors of the NEG are asking for the States’ agreement on locking in current emissions – or at least a paltry rate of reduction in emissions – before the mechanism to achieve those reductions is even set out and agreed.To me the aim of the Friday discussion to delay everything of any substance. It is backwards and unworkable. Few would agree there’s no political agenda.

  11. RobertO 7 months ago

    Hi All, If “Councils ” are allowed to dump all their recycling programs our emissions are going to continue to rise. There very good leadership at the top on how we should be dealing with emissions, curtail RE is the best policy the COALition have.

Comments are closed.