“Keeping the lights on” is a pretty low goal for energy policy, but it’s what Malcolm Turnbull has promised, after it emerged on Tuesday that a recommended Clean Energy Target had been killed and the long-standing Renewable Energy Target would follow in 2020.
The Clean Energy Target had been recommended by chief scientist Alan Finkel with Labor indicating it would support the policy, even though it was seen as a second-rate option. In its place now is a “National Energy Guarantee”, which Turnbull says will cut bills by up to $115 a year (though potentially much lower) between 2020-2030, though many are saying more ambition on renewables would lead to bigger cuts.
The policy will comprise a reliability guarantee that mandates a percentage of dispatchable energy in each state; and an emissions guarantee so Australia can meet its Paris targets. The levels of reliability and emissions intensity have not yet been set.
Mr Turnbull said the plan was “levelling the playing field”.
“Coal, gas, hydro and biomass will be rewarded for their dispatchability while wind, solar and hydro will be recognised as lower emissions technologies but will no longer be subsidised,” he said.
The bipartisan support needed to provide industry certainty doesn’t seem likely, however, with Labor energy spokesman Mark Butler saying the government was “hell-bent on destroying renewable energy”.
He also said the policy lacked evidence, with its being adopted by Cabinet without economic modelling or a Regulatory Impact Statement.
“That Coalition is now in its fifth year of government – five years of policy uncertainty when it comes to energy and climate change – and still has not got around to having any economic modelling or a RIS completed before the Cabinet signed off on this policy,” he said.
“That’s Malcolm Turnbull and Scott Morrison’s version of evidence-based policy making.”
He called the policy a guarantee without a guarantee.
Sustainable industry players not happy
The news has been slammed by renewables advocates, as it fails to provide incentives or targets for developing new projects, or look at long-term needs.
Sustainable Business Australia said it was “disillusioned” with the plan, which provided short-term supply but was not sustainable.
“There’s two key issues in energy policy,” SBA chief executive Andrew Petersen said.
“First there’s the short term secure supply of electricity and then there’s the medium to long-term issue of a decarbonised energy system for the future. Today’s announcement may well ensure supply. It is not, however, a medium-term to long-term sustainable solution for our energy needs.”
The Clean Energy Council said the government had blown a “golden opportunity” for bipartisanship by walking away from the Clean Energy Target.
“The Clean Energy Target was the best opportunity in years to lock in the long-term bipartisan energy policy needed to encourage investment in cleaner energy while improving system reliability and pushing down power prices,” chief executive Kane Thornton said.
He said while detail was lacking, reports suggested there would be a “substantial slowdown” in the current levels of renewable energy investment.
The Climate Council said the plan lacked foresight, as the economy needed to decarbonise before 2050.
“To tackle climate change, Australia’s energy system needs to reach net zero emissions well before 2050. But the policy announced today will produce less renewable energy than business as usual,” chief executive Amanda McKenzie said.
“Again the federal government has shown that politics is more important than policy when it comes to climate change.”
GetUp said it was a political fix to keep the Abbott-led conservative cabal at bay.
“This is not a plan to cut climate pollution or fix our broken national energy market. It’s a plan to keep Tony Abbott happy, and Turnbull safe from a leadership challenge,” national director Paul Oosting said.
“Frankly, at this point we’d welcome seeing Tony Abbott move his stuff back into Kirribilli House. At least then everyone would know who’s really running the country.”
Progress at today’s party room. The Clean Energy Target has been definitively dropped.
— Tony Abbott (@TonyAbbottMHR) October 17, 2017
There’s hope from some quarters
Some in industry are urging Labor to commit to supporting the new policy, however, including AGL’s Andy Vesey, who recently found himself being antagonised by the government for refusing to extend the life of the Liddell coal plant.
Govt announcement an important step, keen to work together to make it work. With bipartisan support, it will provide investment certainty
— Andy Vesey (@AndyVesey_AGL) October 17, 2017
The plan was called “plausible” by the Australian Industry Group, which also called for bipartisan support.
“If agreed and finalised, the plan announced today would clarify the future treatment of electricity sector emissions and give investors greater confidence to build the new and upgraded generation we need,” chief executive Innes Willox said.
ClimateWorks said a “positive feature” was that emissions reduction was a key plank of the policy, with federal and state governments given the task of setting an emissions trajectory for the National Electricity Market – a key feature of the Finkel Review.
“The key question now is whether the trajectory to be set for the guarantee will be strong enough for Australia to meet its current and future climate obligations under the Paris Agreement,” chief executive Anna Skarbek said.
“Having a trajectory for emissions reduction in the electricity sector will be a big step forward.”
She said ClimateWorks’ research showed it was feasible to cut emissions in the electricity sector by 60 per cent below 2005 levels by 2030.