National Energy Guarantee faces early test in states going to polls

A clash with the states comes before any test for the Senate in Malcolm Turnbull’s political strategy to win back voter trust on energy.

The Prime Minister needs state and territory leaders to agree to this package if it is to succeed, for the simple reason that the states run the rules that shape the national electricity market. With three Labor premiers speaking out against the scheme, Turnbull faces an uphill battle to get his way.

A key complication is the Queensland state election due within months, the South Australian election in March and the Victorian election in November next year. The premiers may calculate that a fight with the Prime Minister is just what they need.

Turnbull has key advisers on his side. While the states have asked the Australian Energy Market Commission to advise them on the design of a clean energy target — their “go-it-alone” idea — they may not get the answer they want.

The chairman of the AEMC, John Pierce, was one of the key members of the Energy Security Board who proposed the new national energy guarantee and said it would keep household prices lower.

It will take until early next year to see if the states accept the logic of a national approach.

There is no such deadline for the Senate. Turnbull is likely to need legislation to ensure the electricity sector cuts greenhouse gas emissions by 26 per cent by 2030, in line with the Paris target Tony Abbott endorsed as prime minister.

Climate activists think the electricity generators must do more than 26 per cent, but it is not clear Labor would vote for a higher target. There are political risks on both sides in that vote but the test for Bill Shorten is significant. He will struggle to attack the government on household energy bills if he wants emission cuts beyond 26 per cent.

When will this vote be? The government does not say. At this point, it looks like Turnbull has passed up a chance to force Labor to vote one way or the other.