NEGative Resistance
Dr Barry Manor, Sustainability Consultant, looks at how National Energy Guarantee (NEG) came about, what it means and how it is being received.
When the Chief Scientist, Alan Finkel, released his report into the energy sector 49 of his 50 recommendations were accepted by the federal government. The 50th, on the Clean Energy Target, was rejected. In its place is the NEG, designed to be a policy framework with three key pillars. The NEG is designed to reduce emissions, to keep electricity costs down and to ensure the electricity supply is reliable for all Australians.
It is essentially a framework for developing an energy policy and there have been extensive consultations with stakeholders in the lead up to its release. The NEG needs the support of all the states and territories (just one veto kills it) as well as the Coalition party room, where coalition flat-earthers still ask for more coal to make energy reliable. External consultants were engaged by the Energy Security Board (ESB) to model aspects of the NEG, showing how it would improve energy supply reliability, reduce emissions and keep costs down. The ESB would not release that modelling, so this lack of transparency by the government reasonably creates distrust.
The massive boom in solar energy generation being built in Australia is driven in part by an environmental certificate scheme related to the renewable energy target (RET). The certificates are created when renewable energy capacity is built. They have a monetary value that helps to subsidise the building of that renewable system or increase the financial savings of the electricity produced in the longer term. Australia is on track to reach the 2030 target of 26% by 2022 (probably before the NEG comes into effect!). Some industry analysts are concerned that when subsidies associated with the Renewable Energy Target decrease after 2022, there will be no further development of the renewable energy sector for ten years. Others say solar is so cheap to build that it doesn’t need any subsidies. Our electricity industry accounts for 35%, the largest single sector contribution of greenhouse gas emissions and is the cheapest way for Australia to make significant reductions in emissions. It is absurd to think that building new coal fired power stations will reduce electricity prices. Coal-fired power stations cost much more than new solar ones. Some renewable power sources are already approximating base load power by having storage available. A number of external advocates like the Clean Energy Council and the Smart Energy Council are not seeing eye-to-eye so there is very little agreement about how the NEG should look. Liberals are concerned about their political longevity after the recent by-elections and Josh Frydenberg does not have unanimous support in the coalition party room. The most significant development in energy policy for a decade comes after the explosion of renewables in Australia driven by economics and NOT policy. A decent energy policy can provide investment certainty for the future but will we achieve that with such NEGative resistance?
