The policy vacuum created by the failure of the National Energy Guarantee (NEG) is sizeable and there are early signs that it is beginning to inform the investment decisions of players within the solar sector. However, it may now be far simpler for the government formed after the next federal election to create an ambitious renewables policy.
If, that is, there is a change of government after the next election.
“Vacuums have to be filled, they can’t continue forever,” says energy market observer and renewables investor Simon Holmes à Court – one of the NEG’s fiercest and most public critics. “There will be a General Election within the next seven-and-a-half months. So, going into that election will be very hard for the coalition to do without some kind of energy policy.”
Holmes à Court argues that it would have likely been difficult for the party in power after the next election to ramp up the NEG in terms of emission reductions settings – given, that is, it had the political will to do so. By contrast, and with the current policy vacuum, there is a real opportunity for the Australian Labor Party (ALP) to campaign hard on its ambitious renewables targets and ride the wave into government.
“In 2007, there was a green wave that brought [the ALP’s] Kevin Rudd into power,” says Holmes à Court. “There were the U.N. climate processes, Al Gore’s film, and all of those things greening up [sentiment in] Australia – making decarbonisation a real positive.
“I think we’re getting close to [the] 2007 [dynamic],” he continues. “Now there are bushfires in winter and 100% of New South Wales is declared to be in drought. Animals are perishing in the dirt on the TV news. We’ve got Pacific Island Nations meeting as we speak saying we need to be more aggressive on climate change. The EU is saying that walking away from Paris would undermine free trade negotiations. And then there is a deep hatred of Tony Abbott’s meddling. All of these make emissions reductions a significant issue in the coming election.”
The next federal election must be held no later than May 18. If, as Holmes à Court notes, the government is able to maintain confidence of the Federal Parliament with former Prime Minister Malcolm Turnbull’s seat up for grabs in a by-election and many on the conservative side of politics nursing deep wounds after the leadership spill. It will only take one to cross the floor to bring the government down.
“The path of complete chaos is a shorter path to good policy than going through the NEG,” Holmes à Court concludes. And he may well be right.