BRIEFING PAPER: WHAT ARE STAKEHOLDERS SAYING ABOUT THE NATIONAL ENERGY GUARANTEE? CLIMATECOUNCIL.ORG.AU Thank you for supporting the Climate Council. The Climate Council is an independent, crowd-funded organisation providing quality information on climate change to the Australian public. Published by the Climate Council of Australia Limited ISBN: 978-1-925573-53-4 (print) 978-1-925573-52-7 (web) © Climate Council of Australia Ltd 2018 Petra Stock This work is copyright the Climate Council of Australia Ltd. All material Senior Energy and Climate contained in this work is copyright the Climate Council of Australia Ltd Solutions Analyst except where a third party source is indicated. Climate Council of Australia Ltd copyright material is licensed under the Creative Commons Attribution 3.0 Australia License. To view a copy of this license visit http://creativecommons.org.au. You are free to copy, communicate and adapt the Climate Council of Australia Ltd copyright material so long as you attribute the Climate Council of Australia Ltd and the authors in the following manner: Louis Brailsford Briefing Paper: What are stakeholders saying about the National Energy Researcher Guarantee? Authors: Petra Stock and Louis Brailsford. — Cover image: “Stack of blank paper” by sudok1 (iStock). This report is printed on 100% recycled paper. facebook.com/climatecouncil [email protected] twitter.com/climatecouncil climatecouncil.org.au CLIMATE COUNCIL I Contents Key Findings ....................................................................................................................................................................................ii 1. Introduction .............................................................................................................................................................................1 2. Submissions: What stakeholders are saying about the NEG ..................................................................................... 3 2.1 The NEG proposes inadequate emissions reduction targets for the electricity sector 4 2.2 The NEG restricts renewable energy uptake in Australia and limits state and territory action 6 2.3 New reliability measures should consider existing measures in place, be proportionate and tackle the source of the problem 9 2.4 Lack of competition and impacts on power prices must be addressed 11 2.5 Now is the time to engage in a proper consultation process 13 3. Roadmap to a Renewable Future ......................................................................................................................................15 References .......................................................................................................................................................................................17 Appendix: NEG Submissions Summary ................................................................................................................................ 18 Image Credits ................................................................................................................................................................................ 27 II BRIEFING PAPER: WHAT ARE STAKEHOLDERS SAYING ABOUT THE NATIONAL ENERGY GUARANTEE? Key Findings The Climate Council has › The NEG risks derailing Australia’s booming renewable energy and concluded that the Federal storage sector. Government’s proposed National Energy Guarantee › The NEG will not do enough to reduce Australia’s rising greenhouse (NEG) policy falls short when gas pollution levels and tackle climate change. it comes to delivering reliable and affordable power, along › The NEG has misdiagnosed a reliability problem for the national with tackling climate change. energy grid; Australia’s power supply is highly reliable. › Australia’s transition to a future powered by clean, affordable and reliable renewable energy and storage is underway, driven by the Renewable Energy Target and state and territory policies. In recent submissions a broad range of stakeholders from the energy, business, environment and community sectors expressed serious concerns about the NEG’s inadequate approach to tackling greenhouse gas pollution from the electricity sector, the lack of a demonstrated need for the reliability measure, and the potential for significant cost impacts and reduced competition in the national electricity market. KEY FINDINGS III Cost and competition concerns: Reliability mechanism concerns: › Sixty-one (61) stakeholders raised concerns about › Thirty-three (33) stakeholders raised concerns the unwarranted cost and complexity of the about the lack of a demonstrated need or clear NEG’s approach. problem definition for the reliability mechanism. › Sixty-four (64) stakeholders raised concerns Consultation process concerns: about the impact of the NEG on competition in the national electricity market. › Thirteen (13) stakeholders highlighted the lack of adequate consultation on the NEG. Emissions reduction target concerns: › Fifty-three (53) stakeholders raised concerns about the need for stronger action on climate change. › Forty-four (44) stakeholders highlighted the inadequacy of the proposed target for reducing electricity sector emissions in 2030. › Thirty-three (33) stakeholders highlighted the need for longer-term pollution reduction targets beyond 2030. › Twenty-eight (28) stakeholders argued state and territory targets should be additional to the NEG, or that the NEG emissions reduction target should be at least equivalent to the aggregate of state and territory policies. › Forty-nine (49) argued offsets should not be used as part of the NEG, or be strictly limited. climatecouncil.org.au 1 BRIEFING PAPER: WHAT ARE STAKEHOLDERS SAYING ABOUT THE NATIONAL ENERGY GUARANTEE? 1. Introduction Australia continues to lack an enduring In March, the Energy Security Board and credible national climate and published submissions on the NEG from energy policy to reduce greenhouse gas more than 140 organisations and individuals pollution from the electricity sector. (COAG Energy Council 2018b). Submissions came from a broad range of business and The Federal Government proposed community stakeholders: energy users, the National Energy Guarantee (NEG) energy companies, renewable energy after opposing the Finkel Review’s final and storage companies, gas companies, outstanding recommendation for a Clean industry bodies, unions, environmental Energy Target. The NEG proposes two groups, financial and legal organisations, separate, disconnected policy mechanisms investors, regulators, researchers, state and referred to as the “Emissions Guarantee” and local governments, community services, “Reliability Guarantee”. farmers and health professionals. To read the submissions in full go to COAG Energy The Climate Council has found the Federal Council (2018b). Government’s proposed NEG falls short when it comes to delivering reliable, Numerous submissions raise concerns affordable power while tackling climate about the NEG’s inadequate approach to change (Figure 1). tackling greenhouse gas pollution from the electricity sector, the lack of a demonstrated Until the release of the NEG Draft Design need for the reliability measure, and the Consultation Paper on 15 February 2018 potential for significant cost impacts (COAG Energy Council 2018a), there was very and reduced competition in the national little information available and negligible electricity market. public engagement on the proposed NEG design. Following the release of the This briefing paper summarises key Consultation Paper, stakeholders were concerns from the Climate Council and provided with a three-week window of raised by other stakeholders about the Federal opportunity to respond. Government’s proposed NEG. INTRODUCTION 2 Figure 1: How does the National Energy Guarantee Measure Up? HOW DOES THE NATIONAL ENERGY GUARANTEE MEASURE UP? EMISSIONS Policy Principle How does the NEG measure up? Cut greenhouse gas pollution in the electricity Inadequate emissions target for the electricity sector by at least 60% (below 2005 levels) by 2030 sector of 26% (below 2005 levels) by 2030 Reach zero emissions in the electricity sector - well before 2050 No international osets Osets may be allowed RENEWABLE ENERGY Policy Principle How does the NEG measure up? Achieve at least 50 to 70% renewable energy by 2030 28 to 36% renewable energy by 2030 Meet or exceed the total of state and territory State and territory policies can contribute to renewable energy targets but not exceed the set level under the NEG RELIABILITY Policy Principle How does the NEG measure up? Address unreliability of ageing, inecient coal and Ageing coal and gas generators may qualify gas generators, especially during heatwaves Encourage new investment in zero pollution No zero pollution requirement for renewable energy and storage technologies when dispatchable power and where needed well in advance of coal closures 3 BRIEFING PAPER: WHAT ARE STAKEHOLDERS SAYING ABOUT THE NATIONAL ENERGY GUARANTEE? 2. Submissions: What stakeholders are saying about the NEG Concerns about the NEG range from More than 60 business and community the proposal’s cost and competition stakeholders raised concerns about the implications, the inadequate approach unwarranted cost and complexity of to tackling climate change and the lack the NEG’s approach (which places the of a clear need or problem definition for requirement on electricity retailers to be the reliability component. met through their contracts,