Liberals clash as NSW seeks to revive NEG
The NSW government has defied Canberra by demanding the resurrection of the NEG.
The NSW government has defied Canberra by demanding the resurrection of Malcolm Turnbull’s dumped National Energy Guarantee as part of a policy revamp that also calls for coal plant extensions and potential market interventions to ensure stable power for the state after Liddell shuts in 2022.
Just a week after reappointed Energy Minister Angus Taylor ruled out reviving the NEG, recently installed NSW Energy Minister Matt Kean fired a shot at the Coalition by calling for an effective nationwide policy.
“We need a national framework that properly integrates climate and energy policy,” Mr Kean will say in a Sydney speech today.
“That’s why the NSW government still supports the National Energy Guarantee and will continue to support a national mechanism that integrates climate and energy policy, which provides business with the freedom to innovate.”
Federal Labor took the NEG to the election as part of its policy platform and it enjoyed broad support among big business as a way of ending a decade of climate wars.
However, Scott Morrison says the Australian people rejected Labor’s more ambitious climate ambitions.
Instead, the Coalition will forge ahead with elements of the policy, including the retailer reliability obligation to ensure enough generation to meet power users’ needs.
Mr Kean, part of the “moderate” NSW Liberal left faction, says the state has gained little from political volatility on both energy and climate.
“Since the Howard government, successive state and federal governments have been acting and reacting on climate and energy,” Mr Kean will tell a Committee for Economic Development of Australia event.
“This political instability has increased uncertainty, exacerbated risk, stalled investment and contributed to the problem, rather than helped to solve it. The climate wars have not delivered for the people of NSW.
“I know there are some on both the left and the right who want to continue this fight. But it is time for a new approach to climate and energy policy.”
The state’s energy reset will focus on keeping the lights on, cutting power bills and taking “decisive and responsible” action on climate change.
The biggest immediate challenge is ensuring the power grid stays affordable and reliable while also lowering emissions.
With AGL Energy’s 1680MW Liddell coal plant due to shut in 2022, Mr Kean argues the state needs to take a pragmatic approach to its generation mix.
It will encourage the extension or upgrades of other coal facilities to ensure the state avoids a repeat of the sudden exit of Victoria’s Hazelwood plant in 2017, which caused a supply shortage and high prices in the national electricity market.
Currently, up to 80 per cent of NSW’s electricity is produced by coal-fired power.
“During this transition, private operators may need to upgrade coal-fired power plants to ensure they can supply their customers and provide more time for firmed renewable generation to be built,” Mr Kean says.
“Coal mines in NSW will continue to supply power stations at home and overseas.
“This does not mean that we have given up on taking action on climate change. Rather, it reflects that our economy and economies overseas need to smooth the transition to low-emissions electricity generation.”
NSW will also consider a new intervention mechanism should it be faced with a lack of supply.
“The electricity system is too big to fail. Put simply, it is unacceptable for the state to be left with insufficient capacity to address peak demand.
“We need to transition our generation, not our expectations.
“Accordingly, if the need arises, the NSW government will act. Our strong preference is that we never have to.
“We strongly prefer to create sufficient certainty so that governments don’t have to step in as the provider of last resort.”
New generation sources to replace Liddell’s capacity may also be fast-tracked to ensure the state is not left empty-handed.
“Liddell’s capacity will be replaced by a combination of increased interconnection to other states and increased generation in NSW.
“We are working closely with industry and will expedite these investments to ensure they are delivered on time,” Mr Kean says, while noting a new coal station, even if economic, would take seven years to build and not be ready in time for Liddell’s closure.
In a potential nod to Santos’s long-delayed Narrabri project, awaiting planning approval, the government will also work to improve its native supplies given it currently relies on other states for 95 per cent of its gas needs.
“While approval processes need to take their course, we also support more gas being made available to the state.
“This may be through import terminals, pipelines or local sources of supply, but whatever the case we need to ensure that the state has a secure supply of gas.”
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