States withhold support on NEG – say it “needs more work”

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Victoria, the ACT and Queensland have held off on approval of the NEG prior to its “uncertain passage” through the Coalition party room, and pending proposed changes.

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(AAP Image/Mick Tsikas)
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Victoria’s Labor Government has withheld its support of the federal Coalition’s proposed National Energy Guarantee, postponing approval – along with the ACT and Queensland governments –until the policy allows for a ratcheting up of emissions targets.

State energy minister Lily D’Ambrosio said Victoria had moved with “other jurisdictions” to hold off on approval of the NEG at the much anticipated COAG Energy Council meeting in Sydney on Friday, prior to its “uncertain passage” through the Coalition party room.

The Coalition party room will debate the emissions component of the policy next Tuesday, but the states have made it clear that they will not support the policy unless there is movement on emissions – and particularly the need for regular reviews. It could be a month before final agreement is reached, if at all.

The states and territories were under intense pressure from the government and big business lobby groups to waive the mechanism through on Friday, despite the reservations. But they held firm.

“The National Energy Guarantee needs more work and we have always been clear – we won’t sign up to any scheme that threatens Victoria’s renewable energy industry and the thousands of jobs it’s creating in our state.”

“We’ll continue to seek improvements to the NEG and carefully consider whatever comes out of Malcolm Turnbull’s party room,” she said.

In a statement released late Friday morning, D’Ambrosio said Victoria would only support the NEG once the following conditions were met:

• Emissions reduction targets can only be allowed to increase over time and never go backwards;

• Future targets will need to be set by regulation;

• The targets will need to be set every three years, three years in advance; and

• Establishment of a transparent registry, with access by regulators and governments to ensure the NEG is working in the best interests of consumers.

The minister said that the CoAG energy council had also received assurances from federal energy minister Josh Frydenberg that it would take measures to strengthen the transparency of the NEG registry, giving access to the relevant state regulators.

Speaking to reporters after the meeting, D’Ambrosio said it was “far too soon to sign off” on the policy.

“We stand ready, we remain ready, we are not walking away from the table,” the minister said. “We need to make sure that we, as responsible leaders, make the right decisions.

“Our conditions remain… they are sensible ones, they will make the NEG far more workable, more resilient and more responsive to changing environments.”

And she added: “Higher emissions targets will lead to the requirement of more renewable energy generation to be built. The more renewable energy generation that is built, the lower electricity prices will get.”

The comments come as some mainstream news outlets report that the states and territories have approved the bill, although that seems to mean they have not rejected it outright, but instead agreed to let it go to the next step – which is the LNP party room.

The Murdoch-owned Australian, meanwhile, is reporting the meeting’s outcome as a “win” for Frydenberg.

Victoria had previously warned that it would not throw its full support behind the NEG until, among other conditions, the federal government had regained some control over its climate-denying conservative wing.

“We can still get this right – but only if Malcolm Turnbull stares down the climate-crazies in his party and puts a workable scheme on the table that doesn’t hurt local jobs and households,” D’Ambrosio said on Wednesday.

ACT energy minister Shane Rattenbury told reporters after the meeting that the Capital Territory was “still at the negotiating table, talking about a number of key issues we’re concerned about.”

Chief among those concerns, he said, in comments outside the meeting, were the worries being expressed by the renewable energy industry, about how the NEG would affect its growth.

“This is a sector that’s providing new jobs, and providing the cheapest form of new energy generation,” he said, adding that concerns it would be thrown into a new investment drought was “one of the key reasons we don’t support the NEG in its current form.”

And in a statement released after the meeting, Rattenbury said: “We look forward to further negotiations with the Commonwealth, and other jurisdictions, after the NEG has gone to the Coalition party room and the draft Federal legislation has been released.

“We’d be doing everyone a disservice to accept a NEG that doesn’t genuinely address affordability, the climate challenge, or reliability. Until the concerns can be addressed, the Commonwealth stands in the way of real progress,” said.

Queensland acting energy minister Cameron Dick told reporters after the meeting that his state, too, still had a number of concerns about the NEG, as it currently stood, including its passage through the Coalition party room.

“Queensland always stands for positive common sense reform that transitions our nation to a renewable energy framework and keeps electricity prices down.

“We’ve made that commitment, and we’re transitioning, and we need that commitment at a federal level,” he said.

“We’ve expressed a number of concerns today. And next week will be a very important week in Canberra. Every day this week … a different (LNP) politician has come out and offered different criticisms about the NEG.

“This is a government with a wafer thing majority. So let’s see what happens in the party room next week. That’s very important.”

“We can only take it one step at a time.”

The meeting’s outcome has been greeted with relief by industry group the Smart Energy Council, which said Victoria’s “strong statement” on the NEG was “a massive win for all of us.”

“State and Territory Governments have asked the Federal government to get its house in order first, before determining a position on the NEG,” said SEC chief John Grimes in an emailed statement.

“That is exactly the right strategy.

“The Smart Energy Council calls on all State and Territory governments to hold the line, unpack the detail, set out their own ‘red line’ conditions, and not be bullied into passing the NEG, which remains, in its current form a dud policy,” Grimes said.

“The current NEG does not reduce power bills or emissions and won’t stimulate investment in renewable energy.

“There is a lot of work to do to whip the NEG into shape before it’s worth considering.”

The Clean Energy Council – which on Tuesday was a signatory to an open letter co-signed by a “broad array of energy stakeholders” calling on the states to approve the design of the NEG “as soon as possible” – said the outcome of the COAG meeting constituted a “sensible step forward.”

CEC chief Kane Thornton said the industry believed the policy framework of the NEG could work if the emissions reduction target was substantially increased and a range of other design issues were addressed.

“The NEG is a complex reform that requires careful consideration and design. Today’s discussions must be followed by genuine negotiation on the outstanding critical issues,” Thornton said.

“Many of the conditions proposed by jurisdictions such as Victoria, Queensland and the ACT are reasonable and are supported by the clean energy industry, including the call for more frequent reviews and the inclusion of a mechanism that prevents the emissions reduction target being cut in the future.

“We call on the Federal government and all state and territories to keep cool heads and negotiate in good faith to find a compromise that will provide the long-term investment certainty needed to deliver new clean energy generation,” he said. 

The Australian Industry Group – which has been a key lobbyist in the push for the states to green light the NEG this week – described the meeting’s outcome (through gritted teeth) as a “positive step,” but warned a “real decision” would have to be made next month.

“The COAG Energy Council will soon have to make a real decision or risk condemning Australian industry to years more of damaging uncertainty,”  Australian Industry Group CEO Innes Willox said.

“In mid-September, the critical legislation to amend the National Electricity Law will be ready for a real decision. That decision should be to approve the Guarantee mechanism and commence implementation.

“Only the COAG Energy Council has the power to actually finalise the Guarantee mechanism. Only the federal Parliament has the power to actually agree an emissions reduction target, and that outcome can be revisited whenever the Parliament wishes,” Willox added.

“No good purpose is served by making one element of the package hostage to the other.  An agreement as quickly as possible is to the benefit of all, especially Australian employers and their workforces who are being put at risk by indecision.”

AGL CEO Andy Vesey, who had also called for the NEG to be waved through today, must also have got the “positive steps” memo.

The Business Council Australia, another big supporter of the NEG, has remained quiet, but before the meeting Tweeted that delaying its passage today would take negotiations back to ground zero.

Update: Frydenberg said the meeting had moved the NEG “one step closer” by agreeing to release the exposure draft of the National Electricity Law amendments that will implement the Guarantee, following a COAG Energy Council teleconference on 14 August and the passage of federal legislation through the Coalition Party Room.

“The Guarantee is designed by the experts, backed by industry, business and consumer groups and supported by independent modelling which shows the average household will be $550 a year better off under the National Energy Guarantee and existing policies underway,” Frydenberg said.

(Actually, the $550 claim is bogus, because most of it – $400-  comes from the renewable energy target).

“The National Energy Guarantee is in the national interest because it will deliver the investment certainty the sector needs, while lowering power bills, enhancing Australia’s economic competitivenessand strengthening the reliability of our energy system,” he said.

 

Sophie Vorrath

Sophie is editor of OneStepOffTheGrid.com.au and deputy editor of its sister site, RenewEconomy.com.au. Sophie has been writing about clean energy for more than a decade.

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