The COAG Energy Council has released the National Electricity Law (NEL) amendments for consultation following the endorsement of the National Energy Guarantee (NEG) by the Coalition Party Room.
On behalf of the COAG Energy Council, the Energy Security Board will consult on the amendments for four weeks. Following this, it will take another two weeks to refine the legislation before a decision can be taken on the implementation of the Guarantee.
The NEG has been proposed as Australia’s future energy policy and is designed to retain existing resources and encourage new investment in the National Energy Market (NEM), whilst ensuring that emissions standards are met, and the system operates reliably.
If implemented, the NEG will comprise of two parts, a reliability guarantee and an emissions guarantee. The reliability guarantee requires electricity retailers to invest in enough dispatchable energy resources (such as coal, gas, hydro, battery storage, demand response) to cover a set amount of their peak load in a region if a shortfall is predicted, whilst the emissions guarantee requires electricity retailers to meet a defined emissions level for the electricity they purchase from the wholesale market.
Tania Constable, Chief Executive Officer for the MCA has shared her thoughts on the NEG, stating that Australian businesses and households ‘need the NEG to help lower electricity prices and improve reliability’.
“The Minerals Council of Australia support the NEG and locking in the 2030 emissions reduction target of 26 per cent in legislation to help deliver certainty for business and families,” the CEO announced, “Australia has an abundance of resources in every state – coal, gas, solar, wind and the minerals to support them – yet we are a nation at war over energy.”
“If this policy is blocked by those who put politics ahead of the national interest, then Australia will continue to have a dysfunctional energy system,” she shared, “it’s time for the Australian Government and the States to put aside their political differences on energy and support businesses, families, jobs and our future by backing the NEG.”
Key points for the National Energy Guarantee include:
- The Australian Academy of Technology and Engineering supports the introduction of the National Energy Guarantee; however, Australia needs an economy-wide strategy for climate change mitigation, not just an emissions guarantee for a subsection of the electricity generation sector.
- Adopting the proposed emissions reduction trajectory implies that all economic sectors will need to achieve a 26 per cent reduction in emissions by 2030 to achieve the Government’s current emissions reduction target. While there are clear pathways in the electricity generation and electricity end-use sectors to achieve and exceed this target, it will be challenging and likely more expensive to do so in the transport, direct combustion and agricultural sectors.
- The proposed emissions reduction trajectory in the electricity sector lacks ambition, is expected to be achieved by projects that are already planned and will slow investment in the electricity sector post-2020 thus putting jobs and growth in the clean generation, energy storage and smart grid industries at risk.
- The electricity sector makes investments that have long payback periods and life spans and the emissions guarantee requires a long-term trajectory to allow the sector to plan for the future.
- The emissions reduction trajectory should be informed by the independent advice of the Climate Change Authority, and subject to regular reviews allow the ambition to be increased if the sector is performing well on emissions reductions, reliability and affordability.
- It is inequitable for non-Emissions Intensive Trade Exposed (EITE) consumers to subsidise EITE activities and, as such, EITE activities should be included under the Guarantee.
- ATSE strongly recommends that carbon offsets are not permitted in the proposed design of the NEG.
The full National Energy Guarantee submission can be accessed here.