National Energy Guarantee (NEG) – Where’s It At?

While perhaps not as exciting as the latest solar panel or battery technology, the evolution of the National Energy Guarantee is something worth keeping tabs on.

The 16th COAG Energy Council Ministerial Meeting was held on Friday, the focus of which was the Federal Government’s NEG. The controversial plan, according to the Government, is meant to ensure the security, reliability, affordability and sustainability of Australia’s electricity while at the same time work towards a lower emissions future.

At Friday’s meeting, the Energy Security Board’s high level design proposal for the NEG was presented along with a paper from the Commonwealth Government that included its updated position on emissions target, how emissions-intensive trade-exposed industries would be treated and the role of external offsets. These publications can be downloaded here.

The result of the meeting was a nod given to the Energy Security Board to continue development of the detailed design of the NEG for a final decision by the Council at its August 2018 meeting. While the the states and territories agreed to this, it wasn’t without concerns from some corners.

Josh Frydenberg – “Big Step Forward”

Federal Minister For The Environment and Energy Josh Frydenberg saw the meeting outcome as a win.

“There was a lot of good will in the room, and while there is still much work to do, there was a commitment to getting an outcome in August,” he said.

Mr. Frydenberg said the NEG is backed by an unprecedented cross-section of business, industry and community groups; which might be somewhat of an overreach.

Several states and territories also continue to have their doubts – and for the National Energy Guarantee to be implemented, all must vote in favour of it.

ACT – Serious Concerns

ACT Minister for Climate Change and Sustainability Shane Rattenbury indicated the NEG was far from being a done deal.

“It would be irresponsible for states and territories to sign on to this deal as it currently stands. Significant changes will need to be made to make this policy work,” he stated.

Among the ACT’s concerns was the NEG’s weak emissions reduction target and its potential to undermine the work of some states in stimulating renewable energy investment.

Queensland – Detailed Game Plan Needed

Queensland Energy  Minister Dr Anthony Lynham said he agreed today to progress the NEG so that its impact can be accurately gauged.

“We support an end game of lower prices, lower emissions, an energy market that works for industry, and other Australians having the reliability of supply Queenslanders enjoy,” Dr. Lynham stated.“But we still don’t have the detailed game plan to decide if the NEG is the way to get there.”

As with the ACT, among the Queensland Government’s concerns are 2030 emissions reduction target for the electricity sectors – a target that will soon be passed regardless of the NEG.

Victoria – Acting In Good Faith, But..

Victoria wants to ensure the NEG framework will not compromise implementation of its emissions reduction (net-zero emissions by 2050) and renewable energy (40 per cent by 2025) targets

“Significant issues remain to be addressed in the High Level Design Document and Commonwealth Design Elements paper, including setting the emissions target, EITEs, offsets, state additionality, the setting of the reliability standard, and market power mitigation and other technical matters,” reads part of a statement released on Friday.

CEC vs. Smart Energy Council Reactions

While the Clean Energy Council saw the meeting outcome as a good step towards ending a decade of policy uncertainty, the Smart Energy Council considered it a step closer towards the edge of a cliff.

Clean Energy Council Chief Executive Kane Thornton welcomed the progress, but also highlighted that the emissions reduction aspect wasn’t adequate, which will affect the strength of signals for the development of new energy generation.

“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,” he said.

Smart Energy Council CEO John Grimes was a little less diplomatic.

“Energy Ministers have kicked the can down the road, delaying a decision on the National Energy Guarantee until August. The Turnbull Government has made no concessions on their pathetic emissions reduction target,” said Mr. Grimes in emailed comments. “The National Energy Guarantee is worse than doing nothing.”

The Smart Energy Council’s position is the Turnbull Government must commit to slashing electricity emissions by at least 50% by 2030, or the National Energy Guarantee must be axed.