The NEG’s dead – let states and territories lead on energy

The decision to abandon any attempt to legislate a target for emissions reductions in the electricity sector leaves Australia with no nationally agreed direction for the development of clean energy generation over the next decade.

The dumping of the National Energy Guarantee emissions target has also highlighted the failure of the national arena to implement and sustain a policy setting that addresses the energy trilemma of an affordable, reliable and sustainable electricity sector.

A key characteristic of renewable energy development is its distributed, decentralised form. Instead of a small number of large generators feeding power through transmission and distribution networks to electricity customers, clean energy generators are located at multiple locations across our states and regions.

From wind and solar farms built where there is an excellent resource, to millions of roof top solar generators, renewable energy is disrupting the traditional way we organise and regulate our power systems.

It is just as clear that this disruption extends to our politics. Federal political structures are proving incapable of responding to, planning for, and managing this transition. Look to the CPRS, ETS, EIS, CET and NEG. It is clear that the institutional interests and political inertia that exists in national policy making makes it unable to effectively respond to the challenges climate change and clean energy technologies are presenting to our society.

So the NEG is dead – where to now? It’s time we looked to the model the renewable energy sector itself is built upon, a decentralised and distributed framework.

In the Australian federation the states and territories have responsibility for energy policy. Forward-looking jurisdictions have their own state and territory based renewable energy targets, and many states also have their own emissions reductions targets.

Some, such as Victoria and the ACT, have legislated renewable energy and carbon emissions targets. Others, Tasmania, Queensland, SA and NSW, have renewable energy or emissions reduction targets which are settled government policy but without a legislated basis. Across the jurisdictions most agree that emissions need to be net zero by 2050.

States and territories have been the innovators in driving and supporting renewable energy development. The development of reverse auctions for large-scale renewable energy generation, awarding long-term offtake agreements (contracts for difference) was first implemented by the ACT government and has subsequently been adopted by the Victorian and Queensland governments.

These policies have been influential and effective. The ACT reverse auction program is widely credited with keeping the wind energy industry in Australia alive during the period of the Abbott government’s review (and subsequent investment uncertainty) of the federal RET scheme between 2013 – 2015.

AEMO in its recently released Integrated System Plan identified that it was those states with legislated renewable energy targets who were capturing the majority of renewable energy development nationally between now and 2025 – Victoria seizing 38 per cent of committed renewable energy development, and Queensland close behind with 33%.

By contrast NSW, with no renewable energy target, but the largest share of NEM demand, saw only 14 per cent of new renewable energy development. Victoria will shortly award contracts for a further 650MW of large-scale renewables, while Queensland is conducting a tender for 400MW.

Sub-national governments have also been innovators in relation to storage – just look to South Australia’s Tesla big battery and the ACT’s 5000 site distributed battery project. States and territories have also championed policies and projects for innovations such as hydrogen fuel deployment, electric vehicle rollouts and community benefit sharing from renewable energy development.

What is clear is that sub-national governments can act more quickly than the federal government on energy and climate, and with greater innovation. Perhaps it’s because state and territory leaders are held more directly accountable for the impacts of climate change, and the fire, flood or storm response that follows, than the federal government ever is.

Energy affordability and jobs creation in the renewable energy sector are also critically important areas that voters, especially in regional areas, are judging state and territory governments on.

Closer to the action, and more directly accountable than the federal level of government, states are responding by embracing the opportunities renewable energy presents. The Victorian Labor government’s recently announced solar rooftop scheme to provide grant funding and no interest loans for 650,000 Victorian households to install rooftop solar and cut their energy costs is a clear example.

While sub-national government action is often derided as sub-optimal, the track record of the federal level of government is dismal.

With the demise of the NEG, it’s time for forward-looking state and territory governments to build on their record of success and innovation in supporting renewable energy development.

A complementary series of reverse auctions to support investment in renewable energy generation and storage, grant programs to support innovation and transmission augmentation and smart policies to mandate local jobs, community benefit sharing and supply chain development can give us the trajectory we need to decarbonise our electricity supply sector by mid-century.

States have the constitutional powers, the track record and the ability to act decisively on climate and energy, let’s all work with that now.

Simon Corbell was previously ACT Deputy Chief Minister and Minister for Climate Change and Energy.  He is now the Victorian Renewable Energy Advocate and an advisor on renewable energy development