Early signs that federal Labor and one of the renewable energy industry’s key lobby groups could “accommodate” the proposed National Energy Guarantee, on the basis that weak emissions targets could be improved at a later date, need to be treated with caution.
The revised NEG to be considered by state energy ministers at the COAG meeting this Friday includes some significant technical improvements, particularly in the way that the two obligations, emissions and reliability are met.
Indeed, the reliability obligation has been revised to such an extent that it barely exists, and may not require anything beyond business as usual contracting.
But there is still great concern over the emissions target, not in the technical details of how it will operate, but its scope.
The Coalition government is locked in to its 26 per cent reduction target for the electricity sector by 2030, a target that is seen by most as totally inadequate, both because of the scope of the Paris commitment, and because of the sector’s greater ability to achieve low cost reductions.
If the electricity sector only needs to cut emissions by 26 per cent, and can meet some of that with offsets and the rooftop solar of its customers, then it may need to do little, and greater effort will be passed on to other sectors, such as transport and industry.
The Coalition is also seeking to have this weak target “locked in” for 10 years, with a review only allowed in 2025, and any change to have 5-years notice.
If that were to be the case, it would lock in for the whole decade 2020-2030 an emissions target that was effectively weaker than having no policy at all, with the corresponding impact on new investment. There would be little incentive for any.
Many in mainstream media have noted comments by federal Labor, and the likes of the Clean Energy Council, that there could be agreement on the NEG, subject to further work by the Energy Security Board and the Commonwealth ahead of the next COAG meeting in August.
But this is where the rubber will hit the road. Labor is insisting that – while it may in the end agree on the mechanics of the NEG – it will not agree to any deal that effectively “locks in” weak emissions targets for 10 years.
This is a crucial point, and one that needs to be analysed carefully. The Coalition needs to get its weak target, and its “lock in proposals”, set in legislation, which means it has got to get through the Senate.
This won’t be backed by Labor, or the Greens, and it may not even get the support of the Hansonites and other right wing independents who continue to deny the science of climate change and argue against any initiative.
Indeed, some within the Coalition government itself are arguing that the Paris climate commitment be dumped altogether. They are fans of various Sky News commentators who continue to mock the science of climate change.
If the Coalition emissions target does get through this parliament, then new legislation will likely be introduced should Labor win the next election and has the numbers in the Senate to get it through.
It doesn’t look a lot like a climate policy truce at all. It doesn’t look much like bipartisanship, whatever the deal on the mechanism of the NEG.
Indeed Labor, far from flagging the truce emblazoned across the front pages of the Fairfax media, says it refuses to have its hands tied.
It argues that 10 years is too long, and the 5 year review is also too infrequent. (The reliability assessment, for instance, is updated every year).
“Labor won’t support any policy that locks in the government’s weak pollution targets and strangles renewable investment,” Labor climate spokesman Mark Butler said in an emailed statement.
In a later statement he said:
“Labor has expressed misgivings about a number of elements of the government’s latest energy policy, the National Energy Guarantee.
“The Government is now proposing an emissions intensity trading scheme that operates through a clearing house, described as an emissions registry.
“While there are still a range of details to work through, this improves upon the Government’s original proposal as it would allow greater transparency and competition, and underpin a properly functioning market in carbon emissions.
“Labor remains deeply concerned, however, about other elements of the government’s proposal including its intention to use the NEG to lock-in weak pollution reduction targets.
“Not only would this strangle jobs and investment in renewable energy, it would also impose additional costs on other sectors of the economy like manufacturing and agriculture which do not have low cost pollution reduction technologies available to them.”
It is also unacceptable that in the absence of strong national renewables policy, the Government is attempting to restrict the ability of state government to continue to pursue ambitious renewable energy programs.
Federal Labor will never agree to a policy that seeks to tie the hands of a future Federal Labor government in implementing our clear commitment to 50 per cent renewable energy by 2030. Malcolm Turnbull’s proposal would, according to Bloomberg New Energy Finance, see a cut of up to 95 per cent in renewable energy against current levels and see the loss of thousands of jobs.