NEG to stew for another six weeks, as states demand “flexibility”

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It will likely be another 6 weeks before the NEG is decided, but Coalition is refusing to cede any ground on flexibility to the Labor states.

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The Turnbull government may have shimmied the National Energy Guarantee around its “climate crazies” in the party room yesterday, but the continued safe passage of the controversial policy is far from guaranteed.

Yesterday’s Coalition meeting – in which Liberal and National MPs voted to ensure no new investment in large-scale wind, solar or battery storage for nearly a decade, and fuelled the fantasy of new coal-fired generation – was followed by an evening “phone hook-up” between federal energy minister Josh Frydenberg and his state and territory counterparts.

It is a meeting that appears to have been both “functional”, and yet solved nothing.

On the functional side, the phone call drew agreement that the draft federal legislation for the NEG should go out for consultation for the next four weeks, during which time the Energy Security Board will consult on any amendments.

According to a statement from Frydenberg, after this, there will be a further two weeks then given to refining the legislation before a decision can be taken on the implementation of the Guarantee.

But apart from that, no quarter was given by the federal government on the conditions put by the states, including the provision to ensure the federal emissions target behind the NEG is reviewed every three years, three years in advance, to allow for a ramping up of ambition.

In a Tweet posted last night, Frydenberg said it was up to the Labor states, now, to “get on board.”

The states, meanwhile, continue to assert that they will not sign up to the policy as it stands.

And it stands; as Victoria energy minster Lily D’Ambrosio put it on ABC Radio on Wednesday morning, “even as of last night,” when ministers were given a copy of the draft legislation 10 minutes before the meeting, “there was no movement there at all.”

So where to from here?

“What we need to do … in the next few weeks is really get serious about some of the political issues that are there,” said ACT energy and environment minister Shane Rattenbury in comments on Wednesday morning.

“The states and territories have been raising real concerns for several months now, and I am concerned the federal government is not taking those seriously. And if we don’t address them soon, we will reach a political dead end in a few weeks, that is not going to serve anybody’s purposes.

Rattenbury again outlined that his government’s “concerns” about the NEG, including the level of ambition on both emissions reduction and on renewable energy development – which the ACT, Victoria and Queensland all argue go hand in hand, and are a crucial part of delivering lower electricity prices.

“We’re looking for a good outcome that delivers better energy prices for consumers and cuts greenhouse gas emissions for the benefit of the planet,” he said. “At the moment, the National Energy Guarantee is not delivering on either of those things, nearly as well as it should.

“…The critical issue is resolving the design issues and the policy issues that are embedded in this that have not been addressed yet. That means, both sides need to come to the table, and so far, the Commonwealth government has not indicated a lot of room to negotiate.”

Rattenbury said he particularly wanted to see the federal emissions reduction target lifted, and rejected the Turnbull government argument that this is solely the responsibility of the Commonwealth.

“The ACT, Queensland and Victoria all have ambitious renewable energy targets which are actually cutting our emissions and bringing in new supply to the energy market, which is actually helping to bring down costs, because we know renewables are the cheapest new form of energy in the energy market.

“We think the 26 per cent target should be lifted. It is simply not ambitious enough. It will not cut greenhouse emissions, and it will not reduce electricity prices as much as we want to see.

In Victoria, D’Ambrosio was taking a similar line.

“We’ve been very clear that we have conditions that need to be addressed …(Josh Frydneberg) has got to deliver on the conditions that we’ve put down,” she told ABC Radio’s Breakfast program on Wednesday.

“They are eminently sensible, doable, and for the sake of locking in a scheme, a NEG, that can see us through into the long-term, it needs to not lock in failure, and that’s what we’re faced with right now.

And D’Ambrosio defended the state’s push to allow for the national emissions reduction target to be adjusted through regulation, and not legislation – even though, in her own state, the renewable energy target has been enshrined in the law.

“Putting the ability to increase emissions in regulation really holds up very well when you consider the threats that have been put around (in) the lead-up into the party room meeting and since then, when we don’t even know that the federal government can deliver its numbers on the floor of the parliament to achieve its legislative outcomes,” she said.

“We are trying to fix a decade of problems that conservatives have presented in terms of landing an energy policy and climate change policy, and that is often, if not all the time, being played out through a recalcitrant Senate – cross-benchers, but also Conservatives. So we need a solution that will address that problem.

“I’ve got no problems in the state of Victoria, delivering certainty. Certainty is good, when you’ve got the ambition that matches it. When you have certainty in federal legislation that delivers next to no ambition and will not lead to any significant if any new-build of generation, then that is a certainty that I don’t think anybody wants,” D’Ambrosio said.

“What we’ve got, and it’s been confirmed, is the …emissions target being reached barely within the same year of the NEG operating and you’ve got years – years – when nothing happens, because there is no review that is undertaken. So that is not confidence, that is not investor certainty, the only certainty is that it locks in is low ambition, it… provides no confidence for investment to come through.

Asked whether Victoria could see its government signing on for the NEG before its November election, D’Ambrosio said that was “all dependent on the negotiations.”

“(The federal government) have got a choice: they can negotiate with the states, or they can negotiate with federal Labor. Either way, they cannot be allowed to lock in very little ambition where nothing happens in terms of investment, and no new generation coming through to lower prices.”

Rattenbury, for his part, was a little more optimistic (or was he?).

“I think we just need to sit down at the table, have a sensible conversation, see some flexibility from the federal government.

“I am concerned, after yesterday’s party room, they have locked themselves into a position which means they’ve got nowhere to go. And we need some room, we need some negotiating skills here, and I think we can get this sorted out.

“At this stage we have been raising concerns for several months now, those concerns are simply not being addressed, they’re important policy questions, so at this stage we are not prepared to sign off on the National Energy Guarantee, in its current form.

“But we are committed to staying at the table and trying to find an outcome on this,” he said.

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