States split on need for options to NEG

State energy ministers voted at the COAG Energy Council meeting in Hobart on Friday to undertake further work on the design and function of the proposed National Energy Guarantee (NEG) scheme for consideration at a meeting in April next year.

However, South Australia and the ACT are standing their ground in demanding that modelling for a future national energy policy considers all options alongside the proposed National Energy Guarantee scheme.

Following the meeting of the COAG Energy Council, the South Australian government announced it will push ahead and commission modelling of alternative energy policies after the Council voted against a proposal to model a Clean Energy Target and an Energy Intensity Scheme in parallel to the National Energy Guarantee.

SA Energy Minister Tom Koutsantonis moved the amendment, supported by the ACT, in an effort to ensure the Council could make a fully informed decision next year on which mechanism is the best to drive lower emissions while lowering price and increasing reliability.

Mr Koutsantonis said there had still been no explanation from the Commonwealth as to why a CET was no longer acceptable. He said that a NEG would stifle investment in renewables, extend the life of dying, inefficient and uneconomic coal power stations, and entrench the monopoly behaviour of large gentailers.

“We have had no explanation from Josh Frydenberg or the Energy Security Board as to why the CET, which was recommended by Chief Scientist Alan Finkel, or an EIS, previously supported by Malcolm Turnbull, is no longer being considered.

“To proceed the NEG would require unanimous support at COAG, so this policy is either years away, or won’t happen at all. What we want for South Australia is energy self-­sufficiency, more competition from renewables and to break up the market power of the big gentailers created by the privatisation of ETSA. A NEG would do nothing to achieve those goals.

Mr Koutsantonix said it was clear from the Energy Security Board’s report into the NEG that it “stifles investment in renewables, keeps dying, uneconomic coal power stations alive longer, and enriches the generators with the most market power.”

ACT Minister for Climate Change and Sustainability Shane Rattenbury said the NEG proposal “seems to prevent states and territories that want to go further towards a clean energy future from achieving additionality.”

“We are concerned that that the NEG proposal could stymie the development of renewable energy. The AEMC modelling shows that the NEG will add little new renewable energy investment, and would only add an additional 1-4% of renewable energy capacity over ten years, compared to the business as usual scenario.

“As a jurisdiction that will have 100% of our electricity coming from renewables in two years time, under the proposal put forward, we would be doing the heavy lifting and allowing others off the hook. This is not something that we can accept.

“We are also concerned that the NEG is only modelled to 2030. As to investor certainty, no-one I’ve spoken to in the energy sector says ten years suits their investment cycle. Investors and consumers need clear policy direction from our Federal counterparts about what we can expect until, and onwards, from 2050.”

Victoria, New South Wales, Tasmania and the Commonwealth voted against commissioning the further work on alternatives to the NEG through the Energy Security Board, although the Victorian Minister for Energy, Environment and Climate Change, Lily D'Ambrosio, said her government was concerned about the lack of detail in the NEG proposal.

“We won't be signing up to anything that undermines Victoria’s nation-leading renewable energy and climate change policies. Otherwise the only guarantee is that we won’t support it”, she said.

Queensland, a signatory of the four-state Climate Declaration which also includes South Australia, the ACT and Victoria, was not able to vote due to the pending election at the weekend.

The Prime Minister, Malcolm Turnbull, has stated that the details of the NEG will be “fully fleshed out” by the time the COAG Energy Council meets again in April.

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