A NEG with no emissions ambition

An energy policy devoid of emissions reductions is what the federal government, led by Prime Minister Turnbull, is now proposing. In what is an extraordinary capitulation to a rabble of coalition climate-policy wreckers lead by former PM Tony Abbott, the federal legislation required to set an emissions reductions target will not be introduced into parliament.

The NEG had been targeted and promoted as addressing the energy ‘trilemma’, securing lower costs and prices, while reducing emissions and ensuring security of supply. It now addresses a plain old dilemma – kind of. It was also the policy set to replace the Renewable Energy Target (RET) – which will terminate in 2020.

The states, and the ACT, will now be asked to agree to and pass legislation enacting the reliability component of the NEG. There will be no clean energy ambition or target, nor any emissions reductions.

“The NEG can operate to create investment certainty without an emissions intensity standard,” said Turnbull at a rather extraordinary press conference today, flanked by Treasurer Scott Morrison and Energy Minister Josh Frydenburg. “At this stage, we cannot secure sufficient support… but the important thing, in addition to get lower electricity prices, is to keep the lights on. We think it would very valuable to continue with a reliability guarantee.”

Early indications, however, is that they will be great reluctance to do so – wasting many months’ effort in negotiating the policy.

“The NEG is dead,” said ACT Energy Minister Shane Rattenburg – a Greens representative, in an official statement. “Federal energy policy is being determined by the worst, climate change denying elements of the Liberal Party.”

Others took to less formal means to respond, but were no less scathing. Queensland Energy Minister Anthony Lynham described, on Twitter, as it as being: “Sad that national energy policy has descended into chaos and confusion.”

Victoria’s Lily D’Ambrosio, fresh from announcing her government’s proposal to subsidise over 2 GW of small-scale solar, told the Guardian Australia that, “I am not sure Malcolm Turnbull knows what the NEG is anymore, or if it still exists.”

Cost reduction, not emissions

The Turnbull Government’s strategy to press pause on the NEG emissions reduction legislation comes with a complete reposition of its policy towards energy cost reduction. This had been signalled for some time in the government’s messaging, but now it is formalized in its policy agenda.

“Our energy policy remains the same, but we will not present a bill into House of Representatives until we know that it will be carried,” said Turnbull. “Obviously we need the support of a sufficient number of our colleagues, which means substantially all.”

At the press conference, Turnbull was repeatedly reminded that with bipartisan support, the NEG emissions reductions legislation may well have passed. A point that Opposition Leader Bill Shorten was quick to emphasise.

“We would like to talk about energy prices, as long as it includes more renewable energy, lower prices and less pollution,” said Shorten in a press conference alongside Shadow Energy Minister Mark Butler. “The real problem is Mr Turnbull believes bipartisanship is when he can get the two wings of his own party to agree, he is not talking about us. I say to Malcolm, you have my number, we are down the hall from you, on other issues we have worked together.”

By contrast, Turnbull, Morrison and Frydenburg did all they could to distance coalition policy from Federal Labor’s.

“I have not discussed the measure with the opposition but the reality is that Labor’s position is quite clear, they want to drive prices up… 45% [emissions reduction] instead of 26%,” said Turnbull. “We are poles apart from Labor when it comes to energy policy. That’s the difference, Labor is for higher electricity prices.”

Replacing the NEG, Turnbull pointed to a series of measures the government will take aiming to put downward pressure on prices. Largely following on from the Australian Competition and Consumer Commission (ACCC) recommendations, the measures will beef up the ACCC and the Australian Energy Regulator’s role – and provide them with an additional $32 million in funding.

The new measures have been cherry-picked from the ACCC’s recent report, and will take a multifaceted approach to delivering lower prices – from underwriting some dispatchable generation investment, to price regulation, and the ability to direct and punish some market participants. At the extreme, the measures could involve utility divestment, a recommendation that the ACCC had shied away from. They could also, it seems, be used to force a generator to keep facilities, like the aged Lidell, running.

In a positive sign for the solar sector, there was no mention of the ACCC’s recommendation to wind up the Small Scale Renewable Certification scheme early.

At today’s press conference, it appeared likely that the states will also have to agree to work with the Commonwealth to enact the regulations. Whether they will do so, in light of the NEG fiasco, remains unclear.

Business groups and utilities have, not surprisingly, reacted angrily to the measures having previously lined up in the support of the NEG.

The NEG, it appears, is dead. Long live the RET?