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States take the lead in the absence of sensible national energy policy

While the federal government continues to put ideology ahead of pragmatism, the states are getting on with the job of transforming Australia’s energy sector.

When the National Energy Guarantee became the latest in the long line of Australia energy policy failures earlier this year, there was still a small ray of hope that the government could come up with an alternative, sensible energy policy ahead of the next federal election. However, this hope is all but gone now that the government has announced its policy to underwrite new generation investment, which appears far more likely to undermine new investment in energy generation than underpin it.

There was some merit to the Australian Competition and Consumer Commission’s (ACCC) original recommendation for government to provide support in years 6–15 for projects that had a corporate offtake agreement. The recommendation was designed to be technology neutral, apply to smaller/newer market participants and apply only to new generation.

But the government has chosen to ignore the ACCC’s sensible advice, instead deciding to open the scheme to existing projects, remove the requirement for corporate customer commitments, allow companies to apply from year zero, remove any meaningful emissions criterion and open it up to anyone. And to top it all off, Energy Minister Angus Taylor has alluded to underwriting future carbon risk for new coal-fired generation.

As we argued in our submission on the policy, it is clearly no longer technology neutral and moves away from the ACCC’s premise of supporting sustainable generation projects to improve competition. It could also create a massive market distortion and further undermine investment confidence. Clearly, it is not a substitute for a sensible market-based policy.

In the continued absence of a viable energy policy from Canberra, the onus has fallen on the states to provide some much-needed leadership. Thankfully, they’ve risen to the challenge, with state governments of all persuasions announcing a raft of new policies that are continuing to drive the transition towards a renewable energy future.

Policies such as the expansion of the Victorian Renewable Energy Target to 50 per cent by 2030, the provision of solar for renters in Victoria, the $2.5 billion transmission strategy to enable more renewables in NSW and the South Australian government’s Home Battery Scheme are just a few of the initiatives that have recently been announced at the state level.

These policies show that the states understand the importance of taking action now to ensure that the inevitable transition to a clean energy future is as smooth as possible. While ideological battles continue to frustrate any national progress, state governments are rolling up their sleeves and getting on with the job of sensible climate and energy policy.