The COAG Energy Council has agreed to progress to the final design stage for the National Energy Guarantee (NEG), following the presentation of a detailed proposal by the Energy Security Board (ESB).
The ESB presented a high level design of the Guarantee to the COAG Energy Council on 20 April 2018 following a two month consultation process and the review of more than 150 submissions received from a broad range of groups and individuals.
The design of the NEG will now be finalsied with the aim for it to be completed by the next COAG Energy Council meeting scheduled in August 2018.
Alongside the design document prepared by the ESB, the Commonwealth Government has prepared a document on the design elements that are its responsibility – setting the emissions target under the Guarantee, the treatment of emissions-intensive trade-exposed industries and the role of external offsets.
Minister for the Environment and Energy, Josh Frydenberg, said the decision by the COAG Energy Council was “a big step forward in delivering a more affordable and reliable energy system as we transition to a lower emissions future.
“Backed by an unprecedented cross-section of business, industry and community groups, the Guarantee is a technology neutral energy policy that will drive the right investment in the right place and at the right time to secure Australia’s energy future.
“Modelling undertaken by the Energy Security Board (ESB) shows that wholesale electricity prices will decrease by 23 per cent under the Guarantee, flowing through to households and businesses.
“The Guarantee is only one element of the Turnbull Government’s comprehensive plan for a more affordable and reliable energy system. It complements practical actions such as our agreement with energy retailers to offer millions of customers a better deal on their power bill, new laws to stop the networks gaming the system and the work we have done to ensure more gas for the domestic market before it is shipped offshore.”
APPEA welcomed the COAG Energy Council’s in-principle support for further consultation with stakeholders on the design of the National Energy Guarantee as a sensible way forward.
“The alternative to this decision would have been yet another round of political deadlock and blame-shifting,” APPEA Chief Executive, Dr Malcolm Roberts said.
“APPEA supports the NEG as the best policy option available today for cutting emissions without jeopardising reliable supply.
“The next stage of stakeholder consultation should settle, quickly, the outstanding points of detail in the design of the NEG. It is vital that the Energy Security Board receives the support it needs to deliver, promptly, a final design.
“In the meantime, there are other overdue policy reforms that state governments can take to put downward pressure on energy prices and ensure energy security.
“This week, the NT Government lifted its moratorium on hydraulic fracturing. Despite the usual activist campaigns, the environmental and economic case for the safe development of onshore gas was simply compelling.
“Victoria – which now has the most expensive wholesale gas on the east coast – should rethink its absolute opposition to onshore gas exploration and development. The science never supported this extreme position and, very clearly, neither do the economics.
“Until all jurisdictions support a co-operative COAG agenda to remove the regulatory barriers to new gas supply, the emissions and reliability objectives of the NEG will be compromised.
“Cleaner-burning and reliable natural gas remains pivotal to ensuring energy security. It is the ideal energy source to complement intermittent renewables.
“While final decisions are still to be made, the support provided by ministers today presents an opportunity to end the division and confusion around energy policy. The industry looks forward to playing a constructive role in the NEG’s detailed design.”
The Australian Energy Council (AEC) said the National Energy Guarantee is an important step towards a return to bipartisan energy policy in Australia.
AEC Chief Executive, Matthew Warren, said the decision was a critical step towards ending more than a decade of destructive political point scoring on energy policy.
“The hard work now is to complete the detailed design and implementation of the NEG so it is ready for final sign off in August (2018).
“Importantly, energy ministers today demonstrated they were willing to work together to deliver this important national reform – to finally unite climate and energy policy.
“It is crucial to complete this reform to deliver the reliable, affordable and sustainable energy system that will underpin the Australian economy in the 21st century.”
Mr Warren said the decision would instil greater confidence in investors and businesses looking to build new energy assets in Australia.
“Political agreement drives investor confidence, more capacity, more reliability and lower prices. Today’s agreement is an important injection of confidence that we can solve future challenges.”
Clean Energy Council Chief Executive, Kane Thornton, also welcomed the progress at the COAG meeting.
“The Energy Security Board (ESB) has clearly reflected on the extensive feedback from a very diverse group of stakeholders and developed a strong high-level design for the NEG architecture,” Mr Thornton said.
“The policy is now ready for a more extensive and detailed consultation and design process, to ensure it is effective and efficient. The devil, of course, will be in the detail.
“As previously stated, the level of emissions reduction currently proposed under the policy is not adequate, and the clean energy industry’s ultimate support of the policy will depend on both the detailed policy design and this issue being addressed.
“The level of the emissions reduction target will affect the strength of the investment signal for the new energy generation which is essential to help drive down power prices as our ageing power stations continue to retire.
“As previously stated, it is also important there is no negative impact on existing investments in renewable energy, that emissions offsets are not included in the NEG and that state schemes are recognised in the final design.
“We look forward to working with the ESB on a detailed design, as well as state and federal governments to address these remaining concerns.”
Energy Efficiency Council CEO, Luke Menzel, said the next several months will be critical as the detailed design of the NEG is hammered out.
“A strong pro or anti-NEG position is premature at this point as there is still so much detail to be worked through. What is positive is seeing Australia’s energy ministers engaged in a constructive process focused on resolving questions that have plagued policymakers for well over a decade.
“The new Energy Security Board is playing a very positive role, and we support their continued work on the detailed design.
“However we note there is another program of work that desperately needs to be addressed – supercharging the National Energy Productivity Plan to bring down bills and drive down emissions at least cost across the rest of the economy.”
Mr Menzel also welcomed the COAG’s decision to phase out energy intensive halogen lights from the Australian market, and introduce new minimum performance standards for LED light bulbs that will be aligned with the world leading European market.
“Phasing out energy hogging equipment like halogen lights and replacing them with super-efficient technology like LEDs is one of the quickest ways of slashing energy bills.”
“Putting minimum standards in place for LEDs will help ensure quality in the market as more and more Australians shift to the new technology.
“Again, there is detail to work through on how this new standard will operate. However minimum standards already save the average Aussie family between $140 and $220 each year on their electricity bills.
“Congratulations to Minister Frydenberg and his state colleagues for acting to expand the benefits of this sensible program to lighting.”
