No Deal: National Energy Guarantee

State governments reject Turnbull’s dirty plan

by Greenpeace Australia Pacific

15 August 2018

If you only read the newspaper headlines you could be forgiven for thinking that Malcolm Turnbull and Energy Minister Josh Frydenberg are on the cusp of a big win with their do-nothing National Energy Guarantee (NEG).

© Greenpeace / Genevieve French

The reality of the situation could not be further from the truth. Not only is the scheme in jeopardy because of vocal opposition within the Coalition’s own ranks, but the Labor states, led by Victoria, have consistently told the government the policy is not good enough.

That was the case at COAG on Friday when the states rejected the NEG in its current form and remains the case after the NEG snuck through the Coalition party room. And like a cheap red hat among a load of whites in the washing machine, everything ended up tainted.

After laying down Victoria’s red lines, the state’s Energy Minister Lily D’Ambrosio said she would “study the Commonwealth NEG legislation thoroughly to see what concessions Malcolm Turnbull has given the climate sceptics in his party room”.

She is wise to do so, but the early signs are she won’t need to look very hard to find where Turnbull has sold out to the coal huggers.

A key compromise is the government’s pledge to underwrite new power generation with a wink and a nudge that this could include the construction of a new coal-fired power plant. If you’re waiting for damning headlines like “Turnbull’s coal compromise exposed” you’ll be disappointed.

With a few notable exceptions no one has pointed out the irony of the man who said ”I will not lead a party that is not as committed to effective action on climate change as I am” now using the carrot of a government-backed coal plant to sell a policy that will do nothing to address climate change, but will slam the brakes on renewables.

This crass political calculation may win support among the Coalition’s coal fetishists but there will be dire electoral implications for advocating a policy that goes directly against the advice of independent experts, industry, and bodies like the Australian Energy Market Operator (AEMO) and the Energy Security Board (ESB), hardly known as bastions of left-leaning, environmental activists.  

AEMO identified a mixture of renewables backed by battery storage and a small amount of gas as the cheapest and easiest way to replace the existing coal fleet. But Turnbull has once again chosen ideology over expertise and bowed to the demands of rabid backbenchers.

If the price of this rank political opportunism were only electoral it wouldn’t be that bad. However, there are now new warnings that this latest move will cost us all, through higher power prices. The house of cards around the government’s claims about the NEG reducing power prices is poised to come crashing down.

A new analysis by the Australia Institute’s Chief Economist, Richard Denniss, argues that political compromises in the NEG, such as Turnbull’s flirtation with the idea of a government-funded coal plant, will change the market so much that the government’s modelling – and claims about price reductions – will be rendered “virtually meaningless”.

Good news for the NEG’s opponents, but many of us have been saying the government’s sophistry around the scheme’s impact on prices has been meaningless from the get-go.

It is not clear what Turnbull is relying on to back his claim that the NEG will reduce power bills by $550 a year but it seems odd that the same number was trotted out by Tony Abbott when he was campaigning for the repeal of the carbon tax. Needless to say, the price drop didn’t happen then and it won’t happen under the NEG.  Independent modelling shows the NEG will actually raise prices by 25 percent.

But despite Freedom of Information requests from Greenpeace Australia Pacific and a Senate motion, the government has failed to produce the evidence to back its claims that the NEG will ease power prices. All it has offered is an Excel spreadsheet that doesn’t contain a single reference to a $550 price drop. The government is just plucking random numbers out of the air.

This non-revelation is telling, in that it shows the government is relying on a single Excel spreadsheet to justify their claim that the NEG will reduce power prices. Either that or the government is covering up the full report on the impact of the NEG because they have taken the political gamble that risking a cover-up is better than making the modelling and assumptions behind it public.

It’s time for the Prime Minister to come clean and admit that more renewables will reduce power prices. Turnbull is no longer trying to hide the fact that he cares more about securing a political victory than climate change or families’ power bills. In fact, he has hardly mentioned climate change at all, despite a string of natural disasters wreaking havoc all over the world, tumbling temperature records at home and struggling farmers blaming their woes on a climate change-exacerbated drought.

As the Earth heats up – along with the political stakes – Victoria, Queensland and the ACT must stick to their demands or risk being forever associated with climate destruction, higher power prices and state-sponsored coal. Up to now, the media have been reluctant to offer a critical look at the implications of the NEG but you can bet they will be less careful when apportioning blame for whatever malaise we find ourselves in should it pass.


By Martin Andrew Zavan, Greenpeace Australia Pacific Communications Campaigner

Greenpeace Australia Pacific

By Greenpeace Australia Pacific

Greenpeace is an independent campaigning organisation that uses non-violent direct action to expose global environmental problems and to force solutions which are essential to a green and peaceful future.