Five red line items that need to be fixed before NEG is agreed

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“Even if the Energy Security Board gives Malcolm Turnbull a Rolls Royce model of energy policy, it’s not going to be of much use to the country if he immediately seeks to put it in the garage and lock it up for 10 years.”

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State and territory energy ministers meet at dinner tonight and at a specially convened COAG meeting in Melbourne on Friday to discuss the proposed National Energy Guarantee, and whether the Energy Security Board should continue its work towards a final policy design in August.

The general expectation is that an amber light will be forthcoming – a draft communique that has been circulating is suggesting just that – but the question is, on whose terms?

Enough progress has been made on the technical aspects of the emissions guarantee and the reliability guarantee to meet the biggest concerns raised by the industry and regulators. Further work should resolve any outstanding issues.

The main problems lie not with the Energy Security Board – who seem to have finally embraced the inevitability, and overwhelming advantages, of the clean energy transition – but with the policy position of the federal government, which hasn’t.

As usual, Labor’s Mark Butler summed it up best on Thursday morning:

“Even if the Energy Security Board gives Malcolm Turnbull a Rolls Royce model of energy policy, it’s not going to be of much use to the country if he immediately seeks to put it in the garage and lock it up for 10 years, which is what he is trying to do.”

There are five big sticking points that will end up being the make-or-break of this opportunity for a bipartisan approach to climate and energy, both at state and federal level, and it all revolves around the level of ambition, and the position of the federal Coalition.

They are:

The emissions reduction target for the electricity sector has to be higher

It is now clear that the target to reduce emissions in the electricity sector by 26 per cent by 2030 is grossly inadequate. Worse, it is actually worse than having no target at all, given the rapid uptake of household solar, corporate investment and the amount of renewables already installed by 2030.

The target needs to be flexible, and not locked in for a decade

The Coalition government wants not just a target that is worse than business as usual, it wants to lock it in until 2030, by setting a target for that year and allowing no review in between. This must be refused.

There has to be “additionality” for states

This is also important. The extra work and ambition of certain states, such as Victoria, Queensland, and the ACT, should be used to elevate Australia’s target, and not used as an excuse for others, namely NSW, to do less.

There must be no allowance for offsets

The issue of offsets is also critical. In theory, it means that big retailers can invest in cheap offshore offsets rather than putting money into clean energy investments in Australia. Given that the target is already weak, this would be a bad outcome.

There need to be more regular reviews

Similar to the need for flexibility. The “reliably” obligation and whether it needs to be triggered will be reviewed each year. There is absolutely no reason this should not be the case for emissions.

The way the COAG meeting will pan out, it will be up to the ministers from the ACT, Victoria and Queensland to do the hard bargaining.

South Australia, which previously led the anti-NEG brigade, is now governed by the Liberals, who will be keen to toe the federal line, particularly as the issue of contracting and competition appears to have been addressed.

NSW seems to be doing nothing much at all. It has a massive pipeline of projects, and grand plans from transmission and market operators for huge renewable energy zones.

It, too, has a Coalition government, anxious to be in lock-step with its federal counterpart, although it is hard to understand why. If policy is prostrated before the right wing, and ambition is not tightened, then little or nothing will happen in NSW over the next decade.

To be sure, there is still some work to be done on some of the technical details, particularly around penalties for failing to meet the reliability obligation if triggered; and clarification around the treatment of rooftop solar and storage in the obligation of retailers.

As for tonight’s dinner, and this Friday’s meeting, it’s difficult to say what ground the federal government would give on these five big issues, considering the push from its own dominant right wing that would rather Australia were not a signatory to the Paris climate deal and was building coal-fired generators rather than wind, solar and storage.

So for the Labor states, this is a tactical question, but they will be careful not to allow the federal government to carry too much momentum, for fear that a hopelessly inadequate emissions target would make the NEG more or less redundant.

Such an outcome would be bipartisanship in name only, and would only serve to act as a barrier to new investment in renewables. That cannot be allowed to happen, and there is a sense that the states know this.

 

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16 Comments
  1. Patrick Comerford 7 months ago

    Hard to imagine the Labor states being prepared to cop the flack of undermining their own emissions and grid transformation efforts and more energy price increase because of the NEG. All just to placate the Monash forum? I don’t think so. By all means no harm in walking Joshie and Turnbull towards the inevitable cliff edge of voter anger when this falls in a heap. As for T and J let them fall may be even a little helpful nudge at the right moment.

  2. Ben Dixon 7 months ago

    Put some coal infused ice cream on the desert menu and see who goes for that.

  3. Peter Todd 7 months ago

    Yes the emissions reduction target for the electricity sector has to be higher. The NEG says emission targets are decided by Government so it is down to who we vote for in both state and federal elections. The NEG documents state that targets will be set by region so each state doing more should not be a problem. LNP say they want to lock in target long term but that will be impossible whichever way you look at it.
    We have a global climate problem so why must there must be no allowance for international offsets, as long as the offsets result in real sequestration. There are many hard emission problems that will not be solved quickly so trading of emission reduction and sequestration is vital and it should be made flexible and lucrative. This in the long run will be a boon to Australian farmers.

    • David leitch 7 months ago

      I am strongly against international offsets. I believe based on the previous European scheme that international offsets are subject to fraud and abuse. A very significant amount of abuse, and outright fraud was associated with the earlier Kyoto units. This is nearly impossible to properly police from Australia.

      Secondly I personally think that Australia and Australians, some of the highest per capita emitters in the world, should take responsibility for eliminating our own carbon emissions. We can’t or shouldn’t buy our way out of our obligation to reduce our own emissions.

      • Phil NSW 7 months ago

        International offsets are only a copout for doing nothing. I can not see buying someone else’s already existing work can help the planet. We need to create new efforts to actually effect change.

      • Peter Todd 7 months ago

        The world needs carbon sequestration (in the ground or bottom of the deep oceans) and someone needs to pay a good price for that activity. It will take a lot more human ingenuity then is being currently applied to make it large scale and successful. The best people to pay for this is carbon emitters/polluters. The world needs a strong well run international carbon trading market. The free marked systems is the only way to make difficult things like this happen. Just because it has not worked well before does not mean it can’t work.

  4. Rob G 7 months ago

    It’s not going to go well with Matt Coalvan there.

  5. George Michaelson 7 months ago

    all this “…have to be…” looks like wishful thinking. There is no moment where the LNP is going to resist locking a future labor government in. So, asking them to keep the door open, because ‘have’ is a red-rag-to-a-bull language: What makes this an imperative, set against partisan politics and skullduggery? Because there is a man with a death-smile, an onion in his hand, wearing red budgie-smugglers who says we don’t have to do that, and we’re scared of him. So no. why do we have to be flexible, when we can be inflexible, and lock labor to do what we want?

    Also, while we’re at it, have workchoices, and bigger tax cuts. Because we can.

    • neroden 7 months ago

      The LNP *can’t* lock in a future Labor government.

      Parliamentary supremacy: a Labor government can simply repudiate the corrupt legislation of the LNP, replace it, break any contracts involved. If the courts say that they must pay compensation for breaking contracts… they can tax that compensation at 100% and pay nothing. This is how parliamentary supremacy works. There is a long history in England of later parliaments declaring previous acts of parliament to be corrupt and voiding them, though it hasn’t been done recently…

      That said, they should do their best to prevent the criminals of the LNP from passing their criminal legislation.

      • Carl Raymond S 7 months ago

        Voted up for the cheery thought that the NEG won’t protect coal for long. Though I can’t see Labor taxing anything at 100%. Canberra is caught under the thumb of big business.
        The banking enquiry is causing much embarrassment to both Canberra and the banks. Perhaps it’s the start of a corruption clean up rout all round. The grip that the coal industry has on the LNP is no less corrupt.

      • George Michaelson 7 months ago

        I abosolutely agree they can’t. But, they try. They try to make the expense so high, nobody wants to enact it. Look what reversing the eastlink cost the new entrant. Look at how much people wave ‘sovereign risk’ flags whenever labor proposes to explore its green constituency.

        No, literally speaking, nobody can ‘lock in a future government’ any more than a treaty does. What you do, is make it too painful to enact the un-locking.

  6. Robert Comerford 7 months ago

    I wouldn’t bank on Victoria judging from the recent H2 from lignite BS scheme they are in bed with.
    The way to reduce emissions is to not extract in the first place.

    • Barri Mundee 7 months ago

      I think Vic Labor has one eye to the state election; I suspect they know that brown coal is transitioning towards irrelevance but they may fear losing seats if they tell the truth. They only have one seat majority.

  7. john 7 months ago

    I note in today”s Australian an article from Ron Boswell who is screaming against any uptake of any type of Renewable Energy this is the person who said ” Solar Panels will never pay for themselves in a Million Years”
    This is the kind of behind the front men knowledge that is driving the LNP.
    I do not expect any sensible outcome from this exercise when the drivers of the decision hold such pathetic knowledge or technology.

  8. Carl Raymond S 7 months ago

    Excellent 5 points. I feel they are trying to stifle debate by clouding it in confusion – a smoke screen behind which their precious coal fires keep burning. This cuts through it.

  9. RobertO 7 months ago

    Hi All, I still believe that the NEG is a dogs breakfast. There is no hope that the Senate will allow COALition to lock in emission targets for 10 years when they are so weak and there is no plan on how the rest of the economy (and how it will play it’s part). Even the bill currently before the Fed Gov to allow CEFC to invest in CCS will not make it past the Senate unless lots of horse trading occurs such as allowing the Shooters Party to weaken the Gun Control we have at this time.
    I hope they dump the NEG today.

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