The NEG is a mess


The NEG has faced opposition from all sides. At all times, the progress of the hastily-conceived solution to a stalemate on post-2020 electricity-sector policy has been laboured. It now looks like it might not even make it, with the most pugilistic of opponents taking furious swings in an attempt to revive waning political fortunes.

And in a worrying sign for the renewable sector, and rooftop solar in particular, Australian Competition and Consumer Commission (ACCC) recommendations calling for government support for dispatchable generation and for the pre-emptive winding back of rooftop solar subsidies, appears to being used as a bargaining chip to gain the support of the most recalcitrant members of the coalition party room.

Even the adoption of cherry-picked ACCC recommendations may not be enough for the NEG to survive. Former Prime Minister Tony Abbott and former Deputy Prime Minister Barnaby Joyce may look to cross the floor and vote against enabling NEG legislation, causing not only embarrassment for Prime Minister Malcolm Turnbull, but fatally wounding the policy.

If the Federal Coalition was to lose the votes of Abbott, Joyce and potentially others, it would need the support of Federal Labor to secure passage of the bill. Labor would presumably want concessions, like requiring an increase on the meagre 26% emissions reduction target. In the very least, Labor is signalling that it would require a mechanism, whether it be enacted by reviews, regulation or legislation, be included allowing the ramp up the emissions reduction target in the future.

“There has got to be the ability to lift the targets attaching to the NEG – is a position that many, many businesses in the energy industry and beyond have said inevitably will have to occur so there is the ability to do that through the 2020s,” said Shadow Energy and Environment Mark Butler, speaking to ABC RN Drive yesterday afternoon.

Labor has already signalled that it would look to the Senate to ramp up the 26% target – although its ability to do so with an unruly cross bench might be questionable.

Butler didn’t rule out considering ACCC recommendations to underwrite dispatchable electricity generation.

“We think this is an important and a serious recommendation from the ACCC,” said Butler. “We’ve said on a number of occasions we think it should be the subject of further discussion between governments and also with industry.”

The tone taken by the Federal Opposition is a markedly different one from that taken by Tony Abbott.

“It’s a bit sad that a government that was elected promising to end Labor’s emissions obsession, to abolish the carbon tax, now seems to be developing emissions obsessions of its own,” Abbott said on the ABC’s 7:30 last night.

ABC political correspondent Louise Yaxley noted in a column this morning that Abbott is deploying eerily familiar rhetoric in his criticisms of the NEG – that of former Prime Minister John Howard, in 2001, when he was referring to asylum seekers arriving by boat.

“This is why it’s so important to get out of Paris, to say that we will control what happens in this country and the circumstances under which it happens,” said Abbott. Australia signed up to the Paris Climate Accord while Abbott was PM.

Backbench energy committee

The Guardian Australia reported this morning that Abbott joined a “lengthy” coalition backbench energy committee meeting last night to consider the NEG, and opposed it. Seven other committee members voted the policy proceed with the committee’s backing to the party room.

The report, by Guardian political editor Katharine Murphy, stated that Liberal MPs Craig Kelly and Ken O’Dowd “were unhappy but accepted there would be further discussions” in the party room.

Kelly appeared on Sky News, where he is an astoundingly frequent guest, this morning to set out his position on the NEG. When asked why he had gone back on his previous support for the policy that was granted as it: “tackles the fundamental problem we have in this nation of not enough dispatchable power.”

Answering, Kelly said: “The original NEG… the reliability obligation was meant to be placed upon the intermittent generators. The other initial discussions were that the 26% reduction of CO2 emissions would be backloaded out to 2030… that has now changed.”

Other potential NEG opponents have reacted favourably to the ACCC briefing received yesterday. The Sydney Morning Herald reports that Nationals MPs George Christensen and Scott Buchholtz spoke favourably of the prospects of coal, potentially in the form of upgrades to existing plants, in providing dispatchable generation under ACCC recommendations.

“The ACCC briefing instils more confidence in me about the future for investment in new baseload power generation, but obviously that’s dependent on the government’s response to their report. The response looks promising given reports today,” said Christensen.

But what then for the Labor states expressing ongoing concerns about the NEG, most notably Victoria? Building in requirements that favour coal and lock in emissions would likely lead them to walk away from the NEG – and all states and territories must sign off on the policy and pass their own enabling laws.

The NEG, a hasty compromise from the outset, looks like it is being bashed into new shapes to satisfy the most extreme positions and fierce opposition with the coalition. At the same time, calls continue to mount for the modelling that delivered the much-vaunted $550 a year in household electricity bill reductions to be revealed – a move that would leave exposed the foundations on which the policy was built. What’s left of the NEG today is shaky at best. At worst, it’s a mess.

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