The Energy Security Board’s efforts to consult on the controversial and highly complex National Energy Guarantee got off to a bad start on Monday, when student protestors gate-crashed a public forum in Sydney, and major energy players questioned one of the major pillars of the NEG.
“We’re here to listen,” ESB chair Kerry Schott told the 150 people in attendance in Sydney and the 500 or so linked through the live webinar.
But that resolve was quickly tested when six people from the Australian Student Environment Network interrupted proceedings, arriving on stage with a megaphone and a banner, reading “Don’t reNEG on clean energy.”
Almost immediately, the audio for the webinar was removed, and the webinar suspended a few moments later.
It was as though the participants shouldn’t be exposed to such thoughts, and added to the frustrations of many in the webinar audience who had dialled in only to be told that no questions would be taken. So much for listening.
It was bad optics – and audio – from the ESB, particularly given that the NEG is widely perceived as a mechanism dreamed up by an inner core to try to fill in the policy gap that has been left open by a Coalition government that has refused all previous policy options on climate and energy.
The chief criticism of the NEG is that it is an apology for the inaction of the federal government, and a means of kicking the can of energy and climate policy down the road.
It’s not good enough to dismiss it out of hand, to pretend it didn’t happen, or as Schott described it: “Don’t you wish you were at university again.” Doesn’t everyone wish that policy makers and industry groups had a passion for something other than their own vested interest?
The perception is that the NEG is a members-only consultation, and this was only enhanced by the “participants” that had been invited by the ESB to talk to the event, the people they had agreed to listen to.
- Large retailers – Origin, Snowy Hydro, Engie/Simply Energy, ERM, Alinta, and new retailer Powershop;
- Lobby groups and industry bodies like the Minerals Council of Australia and the Clean Energy Council;
- Financial institutions such as Macquarie Group and the Australian Stock Exchange;
- Consumer groups such as St Vincent de Paul, Energy Consumers Australia, and the Energy Users Association;
- And a sole representative of “new technologies”, the world’s largest supplier of “demand response”, EnerNoc.
They only got about 5 minutes each to speak to the audience, but the ESB would not likely be comfortable with what they heard – it confirmed the criticisms of last year that this design risks reducing competition and forcing prices up, not to mention stifling new projects.
Almost all – including, remarkably, the big retailers – took issue with one of the fundamental pillars of the policy design, the proposal to require retailers to use contracts to meet one or both of the two obligations: emissions and reliability.
We go into this in more detail here. But retailers such as Origin said it would likely reduce liquidity and so push up prices. This was echoed by most of the others, along with the bankers and the ASX.
“It’s too complicated, it would give jobs to an army of bureaucrats,” Simply Energy said. Origin Energy said the reliance on contracts was “problematic” and could “reduce liquidity”. Macquarie said it would raise barriers to new and smaller competitors.
The result of all this? Higher prices, of course (and still no decent emissions target).
“We are concerned that what we will end up with is a gold-plated market solution in the same way that we ended up with a gold-plated network,” said the Energy Users Association, which represents medium and large energy users (companies and manufacturers).
Others simply talked their books: Snowy Hydro wanted only “synchronous” generation to count for the reliability target (i.e. Snowy 2.0 and other pumped hydro, rather than battery storage).
The Minerals Council worried about the future of “baseload” and 24/7 power (i.e. coal).
They were represented by Patrick Gibbons, the former advisor to environment minister Greg Hunt whose government tore down a perfectly reasonable policy, the Labor/Greens carbon price, and tried to tear down the renewable energy target along with it.
(And we should remember that Sid Marris moved the other way, from the Minerals Council to prime minister Malcolm Turnbull’s office, where he is climate advisor. No, really).
The ESB is consulting, and wants input, but it hasn’t got much time. Its 58-page discussion paper addresses more than 60 questions, but it has only given itself four weeks to digest these before taking a “high level” plan to COAG energy ministers for approval in April.
Assuming this gets the nod, they will then go back and consult for another three months before presenting a detailed policy by August.
That process will seek to address the enormous complexity of this proposal, along with its unknown links with other policies such as day-ahead markets, emergency reserves and demand response mechanisms. What will follow is a major re-writing of the electricity rules.
One should not question the genuine interest of finding a solution by the members of the ESB. As one noted, the four better ideas (CPRS, carbon price, EIS, CET) have all been dumped and they are only dealing with fifth-best on behalf of a government that will not respect the science, or technology.
But fifth-best is a complex beast because it tries to hide the true nature of what they want to do – lower emissions. And one suspects that while they might insist that they are “listening”, they’ve already made up their mind on a number of key suggestions.
As Andrew Stock, from the Climate Council, complained:
“Four hours listening to the ESB webinar and not one invited “stakeholder” representing the environmental side of the NEG design!
“The ESB clearly isn’t listening to the community when it comes to concerns about power pollution and climate change.
“All invited stakeholder groups talked to was cost, complexity and reliability. With no serious ESB intention for any questions, this consultation process is not a patch on Finkel’s – it’s rushed, narrow, exclusive and Sydney-centric”.
So, on this occasion, let’s give the last word to the students, who in 2040 and 2050 will be facing the impacts of whatever is decided now by politicians and the policy elite.
“The National Energy Guarantee will continue the coalition’s appalling track record of electricity price hikes, energy failures and emissions increases. In their current term, Turnbull’s Coalition government have already overseen an increase in greenhouse gas emissions and electricity prices,” they said in a statement.
“The National Energy Guarantee is based on a market model that has not worked anywhere else. It would further stall desperately needed reductions in power prices and greenhouse gases.
“It is a giant step backwards when the rest of the world and vast majority of Australians support mass investment in affordable renewable energy.”