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National Energy Guarantee ready for detailed design and stronger ambition

The Energy Security Board (ESB) should proceed with a complete and detailed design of the National Energy Guarantee following encouraging progress on the high-level design of the policy, the clean energy industry said today.

Clean Energy Council Chief Executive Kane Thornton said the most recent policy design developed by the ESB appeared to address some of the industry’s key concerns.

“Based on our understanding of the proposal, the adoption of a central register for the emissions obligation, the use of flexible contract options to demonstrate compliance and a range of measures to address market power and competition concerns are all welcome steps forward,” Mr Thornton said.

“We remain open minded about the potential of the policy and believe this proposal warrants further detailed design and consultation. We encourage the COAG Energy Council to support this.

“However our ultimate support for the policy will be contingent on completion of an effective and detailed design of the policy and addressing concerns in relation to the emissions target.

“One of the limiting elements of the current policy is that the level of new investment – that is critical to driving down power prices – will be determined by the nature and level of the emissions reduction target under the policy. The Clean Energy Council remains concerned by the low level of the Federal Government’s proposed emission reduction target and the potential inclusion of emission offsets which would further dilute the incentive for new investment in the domestic energy sector.

“Unless the emissions reduction target is higher, there will not be enough new power generation built to replace the coal-fired power stations which will retire in the coming decades.”

The final policy should address the following concerns:

  • Ensure that the NEG is scalable and the architecture allows future governments to quickly and easily implement stronger emissions reductions.
  • Recognise the Australian energy sector has the potential for much higher emissions reduction at a lower cost than other sectors such as transport and agriculture. We therefore urge the Federal Government to increase the modest 26 per cent reduction target proposed for the energy sector under the NEG.
  • Ensure the policy architecture does not prohibit states and territories committing to and delivering on higher levels of renewable energy ambition.
  • Recognise the risk that the current emissions target presents to the investment signal for new clean energy investment from the NEG and adopt either a substantially higher national abatement target and/or a mechanism to treat the emissions from these state and territory schemes as additional to the NEG target.

“A more detailed and final policy proposal would need to address these concerns and ensure a clear and strong signal for new investment in the low-cost renewable energy needed to drive down power prices,” Mr Thornton said.

“It is also important previous investments in renewable energy are not negatively impacted and that the current momentum in the sector is sustained.”

Please contact Clean Energy Council Media Manager Mark Bretherton on 0413 556 981 for more information or to arrange an interview.