SYDNEY, July 30, 2018 – Josh Frydenberg’s blatantly political attempt to calm growing opposition to the National Energy Guarantee (NEG), by asking the states to first vote on the policy’s mechanism before a second meeting on the emissions reduction target is a ploy that changes nothing and should be rejected by the states.The compromise is aimed at allaying the concerns of State and Territory energy ministers who fear that Tony Abbott and other coal huggers on the far right of the Coalition could undermine the final legislated version of the NEG.
“Frydenberg and Turnbull’s cynical tactics will provide no reassurance to State and Territory leaders, who rightly see the NEG for the crude political compromise it is,” Greenpeace Australia Pacific Campaigner Charlotte Cox said.
“The Premiers would be fools to trust Malcolm Turnbull to honour a non-binding commitment to do even half of what is required to reduce emissions.
“If Andrews and Palaszczuk sign up to this seriously flawed mechanism, they will have played themselves out of the game. The final design of the NEG will be at the mercy of an Coalition party room dominated by the extreme views of climate deniers and coal fetishists that Turnbull and Frydenberg have proven unable or unwilling to rein in.”
An analysis of the NEG by Prof. Bruce Mountain, director of the Victoria Energy Policy Centre, reveals the mechanism at the centre of the NEG is excessively complex and hard to implement.
The NEG’s complexity will increase compliance and administration costs for generators, that we know will ultimately be passed on to consumers as higher bills. The design of the Reliability Guarantee element of the NEG is particularly complex, and will be hard for bureaucrats to implement. For comparison, France, which has a similar system, required seven years from legislation to implementation of their energy reliability scheme; the Energy Security Board (ESB), on the other hand, believes that it can be implemented in Australia in seven months.
What’s more, many of the assumptions that the ESB’s design is based on are self-evidently flawed. The modelling, by ACIL Allen, assumes that:
- All existing state government renewables targets will be removed.
- The cost of wind and solar in 2020 will be twice as much as current contracted prices (when in fact renewable energy prices are going down all the time and a recent report by Reputex shows a NEG with a 45 percent emissions target will bring down power bills 25 percent further than the NEG with a 26 percent target)
- The total amount of additional intermittent renewable energy capacity to be built between 2020 and 2030 without the NEG will be less than the amount of rooftop solar alone in just the first five months of this year
Other problematic aspects of the mechanism include the absence of a defined penalty for retailers who repeatedly fail to comply with the emissions intensity requirement of the NEG and perverse incentives, such as the absence of any meaningful credit for retailers who lower their emissions below the required level.
“The ESB modelling is a joke and the government’s own consultants have admitted as much by saying publicly that the Coalition has walked away from undertaking any meaningful abatement in the electricity sector post 2020,” Cox said. [1]
“This latest ploy by Frydenberg is a fig leaf. Daniel Andrews and Annastacia Palaszczuk cannot avoid the truth – if they sign onto the NEG mechanism, they’re choosing to sign onto a future with higher power prices and increased emissions. This is a political fix, and there is no upside to it.”
Notes:
[1] https://acilallen.com.au/insights/neg-emissions
To read the Reputex report:
www.greenpeace.org.au/research/neg-report
For interviews:
Greenpeace Australia Pacific Communications Campaigner, Martin Zavan
0424 295 422