NEG: Commonwealth paper shows Coalition not budging on emissions

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New Commonwealth document shows Coalition has not moved on emissions for National Energy Guarantee, and the use of offsets in such a weak target will mean retailers will not have to make any new investments in wind or solar.

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The federal Coalition government has not budged on its weak emissions target for the electricity sector, the latest commonwealth paper on the National Energy Guarantee distributed to state and territory administrations on Tuesday night shows.

The 22-page Commonwealth document – titled the National Energy Guarantee, Final Detailed Design, Commonwealth Elements, July 2018 – was circulated to government officials after the Energy Security Board “final design” was leaked and published in full on RenewEconomy on Tuesday.

But the federal document, also obtained by RenewEconomy, shows no shifting at all in its much-criticised target of a 26 per cent reduction in electricity sector emissions by 2030, and a 10-year timeline that seeks to lock those targets in for the next decade.

As even the ESB document admits, this effectively means no target at all, because the construction of new wind and solar plants, and rooftop solar, under the current renewable energy target means the 26 per cent reduction will be met by 2021 or 2022.

Worse, the commonwealth paper says Australian offsets can be used for up to 5 per cent of the emissions, which effectively means that any energy retailers falling short can use offsets, such as planting trees – rather than investing in clean energy – to meet their obligations.

It has, at least, ruled out the use of international credits.

However, while it says the target will be reviewed in 2025 to set trajectories from 2031 on, it does indicate a potential review in 2024 “to ensure targets from 2025 to 2030 remain appropriate.”

This, though, seems to lock the target in by stealth.

“It is a farce and for all intents and purposes still locks in no action for a decade,” said Environment Victoria’s Erwin Jackson.

“It will just continue to strangle renewables investment for a decade. Is a Government going to give business six months notice for a significant change to the target? This is locking in a weak target by stealth.”

As for the government, it says: “(The National Energy Guarantee) is the first and best opportunity to integrate climate and energy policy to support investment in the right combination of resources.”

“Energy users and producers alike have recognised that the Guarantee represents the best
opportunity to break a decade-long impasse on energy policy.”

Those quoted in support of its meagre emissions target include Delta Energy (a coal generator), and the Business Council of Australia, which recently launched an extraordinary campaign against renewables. Rio Tinto is cited as supporting the 10-year lock in on targets.

The government then goes on to cite support from a range of other companies and lobby groups, including BHP, Bluescope and the likes of Origin and the National Farmers Federation.

State governments should not be fooled. Even the NFF have woken up to the implications of this weak electricity target on their sector (see more below), and the likes of Origin have urged higher emissions targets for electricity, and more regular reviews such as a three-year rolling target.

The commonwealth paper will do little to stop the criticism of the NEG. Even those who suggest that something might be better than nothing – and there are many who argue the opposite – were hoping there would be some movement on emissions.

But that is made impossible by the push-back from the right-wing elements of the party room, and strong opposition to the whole climate and clean energy thing from the National Party.

However, the pressure now falls on state government and territories, particularly the ACT government, at the August 10 CoAG meeting. Activists are seeking another state government, such as Victoria or Queensland, to vote against it.

Interestingly, it seems the timeline for the NEG has been quietly pushed back.

While high-level decisions and unanimous state and territory agreement on mechanism are still required at the August 10 COAG meeting, draft legislation for the National Electricity Law changes are now to be considered at a September COAG meeting.

It now appears that the legislative changes are not to be implemented until November-December, which is not surprising given the amount of time it would take to effectively re-write the rules of the NEL. But the commonwealth is now asking the states to effectively vote blind on laws that don’t pass the pub test.

The reaction from various stakeholders to the ESB document revealed on Tuesday was mostly centred on the lack of ambition in the emissions target, and many were dismissive of the modelling.

The NEG modelling claims, for instance, that savings to households could be more than $550 a year from the policy – a line amplified on the front page of the Australian Financial Review.

But the documents show quite clearly this increase – up from $400 a year previously cited – is a direct result of the increase in wind and solar generation, and its moderating impact on wholesale prices. This is all driven from the renewable energy target.

Dylan McConnell, from the Climate and Energy College, pointed out the huge discrepancy between the ESB modelling and the recent modelling by the Australian Energy Market Operator. It would be laughable if the stakes were not so high.

This first graph (above) is from the ESB modelling. Compared to the AEMO forecasts drawn by McConnell from its Integrated System Plan (below), the ESB appear to have ignored not just utility-scale solar, and some wind, but also the planned closure of the Vales Point coal generator in NSW.

ITK analyst David Leitch points out this and many other simple errors – not usually associated with such important documents – and the use of the “straw-man” arguments suggests there is a particular agenda afoot.

The Clean Energy Council said it wanted to see more work on the mechanics of the NEG, but re-iterated its concern that the low target would not encourage any new renewable energy investment.

But it said it was broadly happy with the framework, apart from a few issues, and as long as it could be ratcheted up in the future. And if international offsets were not allowed.

“With the policy architecture settled, it would be easier to increase the emissions target in the future,” CEO Kane Thornton said. But this also depended on the ability to have flexibility in the target, such as five-year rolling forecasts and three-year notification periods. Some major utilities also favour this.

The Australia Institute issued new analysis that found the weak emissions target for the electricity sector would impose significant costs on agriculture, something the Farmers Federation appears to have finally woken up to.

The TAI analysis says a weak NEG would require agriculture to reduce emissions per year by 18.7 million tonnes (Mt) of CO2e by 2030, and this would lead to significant reductions in livestock numbers – 2.9 million fewer beef cattle, 8 million fewer sheep, 290,000 fewer dairy cows and 270,000 fewer pigs.

“This does not need to be the case,” said Matt Grudnoff, report author and senior economist at TAI. “The (NEG) must operate as a genuine floor – not a ceiling – to future emissions reductions or it will fail to deliver on the energy trilemma.”

Environment Victoria’s Erwin Jackson noted the changes around obligations on generators, and comments that while the net effect of this is hard to gauge “it does mean that the incentives to reduce emissions in the scheme have moved from carrot and stick to just lots of carrots.”

Overall, high emissions plant are not directly penalised, but low emissions plants are strongly incentivised. The big caveat there, however, is that there needs to be an actual target.

Giles Parkinson is founder and editor of RenewEconomy.com.au, and is also the founder of OneStepOffTheGrid.com.au and founder/editor of www.TheDriven.io. Giles has been a journalist for 35 years and is a former business and deputy editor of the Australian Financial Review.

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28 Comments
  1. Ren Stimpy 5 months ago

    It would be madness for state governments to commit to anything just 6 months out from a federal election. Particularly when what they would supposedly be committing to won’t take effect until 2021. 3 years away.

    This is desperation politics by the federal Liberals who are about to lose government. State governments of all stripes shouldn’t fall for it.

    • MaxG 5 months ago

      Let’s hope they loose!!

      • Ren Stimpy 5 months ago

        Politics is like tuning into your preferred radio station for the clearest transmission, but the Greens haven’t yet learned how to do that.

      • solarguy 5 months ago

        If going by the guy I just gave a quote to for expanding his solar, nah. They will win, because idiots believe the coal is the only way to provide base load mentality. It would be easier to take out a contract on Murdock, RWNJ, etc, than try and get through to morons.

    • Nick Kemp 5 months ago

      Exactly – They should just say ‘We’ll have a look at that after the election – there has been no hurry up to now and there’s no real change in the document so why rush’

    • Joe 5 months ago

      The NEG was always only about being a political fix of sorts for Turnbull. He wants it signed by The States so he can go the next election and wave his NEG at the punters and say lookie here, I’ve got it all sorted….now vote for me!

  2. MaxG 5 months ago

    The new pollution remedy: plant trees (but run coal). No civil words can appropriately describe this madness.

    • Rod 5 months ago

      Direct Action 2.0

      • Joe 5 months ago

        Notice how you don’t hear The COALition say the words ‘Direct Action’ anymore….$2.5billions of our hard earned ( taxes ) just pissed away.

        • Rod 5 months ago

          Yes, that would have been very handy if it was put towards something like the offshore wind farm project Victoria is thinking about.
          Don’t forget the $500 million for carbon capture fairy tales.

        • john 5 months ago

          Very true there is a need for a federal ICAC which would look into this rip off of taxpayers and hold the idiot who designed it accountable and bring to court the rip off merchants who benefited especially the I am not going to cut down trees merchants.

    • Joe 5 months ago

      With all the land clearing still going on planting trees is probably a necessity but it ain’t a fix for the madness of vandalising the landscape in the first place.

  3. Rod 5 months ago

    As Simon pointed out on the Drum. What is the hurry? They have dithered for nearly a year since they canned the CET. There is no real urgency to finalise this.

    Take a leaf out of the COALition’s book and delay until you get what you want. QLD, Vic. talking to you.

    • Hettie 5 months ago

      Simon was disingenuous. He pretended NEG is toothless. It’s not.
      It WILL severely limit RE.

  4. Peter G 5 months ago

    Yes, Minister !

  5. Mike Westerman 5 months ago

    Let’s get another round of emails off to Anthony Lynham and Lily D’Ambrosio!

  6. Ken Dyer 5 months ago

    The NEG is just an excuse to do nothing, just like the LNP COALition has been doing all the time while it has been in power. It is a sorry bloody mess.

    A 26% target is an absolute joke and will do nothing to reduce carbon emissions.
    A 26% target will drive wholesale prices (and electricity bills) higher not lower.

    There is no incentive to do anything at all.

    • Hettie 5 months ago

      No. Far worse.
      It is a deliberate attempt to stymie renewables.

  7. john 5 months ago

    ha ha
    at the bottom of this list of comments is an add for the Courier Mail quote from add ” We are for you” honestly are your? sorry no you are not!

  8. John Cozins 5 months ago

    Old King COAL was a DIRTY Old Soul,

    A DIRTY OLD SOUL was HE

    He called on His Old Mate TONY ABBOTT

    Who was really just a MAD MONK in a habit

    He then called his friend Malcolm TURNBULL

    Who turned out to be even more BULL than ABBOTT

    Being by now, both FRUSTRATED and TENSE

    He had to admit, The SUN made MORE SENSE

    • Joe 5 months ago

      Niiiiiiiice one.

  9. Hettie 5 months ago

    It seems to me that the idiot government is desperate to get NEG, and it’s roadblocks to renewables, locked in well before the election. Could it be that the coal lobby, fed up with years of ineffectual waffling, has said, “Do it, or you can forget about election funding?”

    After all, they, coal, are getting hammered by flattening peaks, and can see that things will only get worse for them, unless the troglodytes can hold back the RE tide.

    So email your state energy minister, and urge him (they are, I think, all men) to reject NEG, in August, September, October, and every COAG meeting right through to the election.

    • Mike Westerman 5 months ago

      Hear hear Hettie. Note that Vic Energy Minister is Lily D’ambrosio (lily.d’[email protected])

      • Hettie 5 months ago

        Oops, my bad. The plea still stands.
        Make a serious effort to be a serious nuisance to your State Energy Minister.
        Google – GetUp NEG Campaign.
        The name of every State Energy Minister is provided, with a button that puts you right on their email address.
        Get a copy sent to yourself, and you have that address for future reference, if you put it in your phone contacts, to use at will.
        The more pressure they get from voters, saying “do it or I’ll vote against you” and “do it to save the planet” and because it will bring costs down, , and because anything else you can think of.
        NEG is NOT fuel neutral. It is pro coal, anti renewables, and seeks to lock coal in, renewables out, for ten years before any review. That is what is so wicked about it. Locked in stone for ten years.

        • Phil NSW 5 months ago

          Well done Hettie. Hopefully the energy ministers will start feeling the vibes from the voting public we are not happy with their plans to allow the continued pollution of our planet.

        • Phil NSW 5 months ago

          I read an editorial in the 25/7/18 Telegraph which is so riddled with dishonest, misleading statements which obviously masquerade as the truth I am worried. Given it is an editorial how can they be called out for such bad behaviour?

          • Hettie 5 months ago

            Don’t bother, Phil. Rancid Rupert’sRobots will do as their puppet master decreess, and the sheeple will read and believe, or not. They are not the ones who must decide, in just a few days, to accept this wicked plan. The State Energy Ministers are.
            Get on board the GetUp campaign. Say your piece to the decision makers. Remind them that the Feds have dithered for years, and Now are trying g to stampede them into agreeing to an ill considered, error ridden, hastily constructed mess, based on out-of-date prices, that will cripple the only means there is to reduce the burden of outrageous power prices to consumers, and deduce employment opportunities.
            Something so faulty must not be accepted. It must most certainly not be cast in stone for ten years.

  10. Alastair Leith 5 months ago

    “The TAI analysis says a weak NEG would require agriculture to reduce emissions per year by 18.7 million tonnes (Mt) of CO2e by 2030, and this would lead to significant reductions in livestock numbers – 2.9 million fewer beef cattle, 8 million fewer sheep, 290,000 fewer dairy cows and 270,000 fewer pigs.”

    Ways to reduce emissions in the land use sector are many and varied in their impact on productivity. The Beyond Zero Emissions Land Use Report of 2014 looked at the suite of measures comprehensively in their literature review. Would reductions in ruminant livestock not mean increased forestry, regrowth of clear remote woodland that could be sold as offsets if designed properly? (the vast majority of Ag emissions are associated with and ~90% according to authors of BZE LUR 2014).

    It’s such a big subject, but the assumption from TAI seems to be that emissions and farm productivity are directly and irreconcilably linked. (I guess I need to read their report but others’ who read it are saying there are false assumptions in it, not least that Agriculture and LandUse are the same thing for GHG accounting… the difference being land use includes forestry and land clearing for ag, while the Ag sector doesn’t — the way emissions are assigned using inadequate UNFCCC accounting methodology is very problematic in reporting accurately the impact of Ag sector).

    The advocates of regenerative agriculture would say that productivity and soil carbon can both be increased with different management practices (very questionable assertion in Australia remote dry conditions where much of the nation herd is produced though). Certainly regenerative agriculture can lock up more carbon and increase productivity for properties where chemical based cropping practices that destroy soil biota/carbon dominate today.

    Land use also includes forestry and deforestation, land clearing (woodland in QLD being the huge area of impact today and NSW about to follow suit) and savannah burning. Ag emissions are more like 54% of the national average if you add it all up and use GWP20 — a 20 year time frame (which is more relevant to Short Lived Climate Pollutants like methane, black carbon and CO). Even using the more common GWP100 timeframe which tends to obscure SLCPs, agricultural emissions will be half the national total within years according to the BZE Land Use Report. We don’t see them in AEGIS accounting because they shove land clearing into LULUCF and it is then obscured by all the NPs, state and private forests sequestering carbon so it dines’t stand out.

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