We’ll keep lights on, states can worry about emissions: ESB

The chair of the newly created Energy Security Board has re-emphasised the heavy load Australia’s state and territory governments will have to shoulder on power sector emissions reductions, if the proposed National Energy Guarantee manages to win COAG approval and is introduced.

In a stakeholder briefing webcast on Friday morning, the ESB’s independent deputy chair, Dr Kerry Schott, endeavoured to tease out some of the detail of the NEG, including how it might affect the states, and their often much higher emissions reduction and renewable energy targets.

As Schott re-stated during the webinar, the federal government commissioned the ESB to engineer the NEG around its own, Paris pledged emissions reduction target of 26-28 per cent on 2005 levels by 2030.

As the Climate Council yesterday reminded us, this bare-minimum target ranks Australia among the worst developed countries on climate action; is not consistent with limiting global warming to 2°C; and is on a level that – if adopted by the rest of the world – would see the planet fried.

But that is not the ESB’s concern, and why should it be, when they have the mostly Labor states to pick up the slack.

“The amount of emissions reduction that happens in Australia is a matter for the Commonwealth and all of the state governments,” Schott said in answer to a question about whether the NEG would disincentivise the development of renewables.

“The approach that we’ve used was based on where the Australia government is coming from, which is just trying to meet their Paris commitments.

“Some states have more ambitious emissions reduction targets than that, and that can be incorporated in this approach.

“So the amount of renewables that we see in the system will be basically driven by the emissions reduction targets that the federal and state governments set.”

So how would that work?

“What would happen in those jurisdictions (with higher emissions reduction targets) is that the reliability requirement would adjust,” Schott told the webinar.

“Obviously, if you’ve got more intermittent renewables, you need to just make sure that you’ve got enough dispatchable power to keep system stable and reliable.”

“What that would mean for the retailers in (those states), is that instead of simply meeting the Commonwealth target, they would need to meet the higher state target.

“So when they’re contracting… they would need to meet that (state) emissions target, the reliability obligation that goes with that, and it would just simply use the same approach.”

Right. But will the states go for it? South Australia Energy minister and treasurer Tom Koutsantonis has said no, in this withering critique.

“What will happen (now), is there’s COAG energy council and they will decide whether to proceed with this Commonwealth approach,” Schott said.

“They may – and I certainly would if I was them – want more work done. We’re in very early days with this.

“There is a great deal of work that needs to be done. If COAG agrees to doing more work on (this approach), we’ll do some more work and see where it ends up.”