NEG: The National Energy Guarantee explained
Here’s a quick rundown of the National Energy Guarantee policy and how it works.
Energy Minister Josh Frydenberg is due to meet with state and territory leaders on Friday, for a COAG meeting which is set to determine the fate of his signature National Energy Guarantee policy.
If the NEG gains the support of COAG, the Coalition partyroom and the parliament, it could end more than a decade of partisan squabbles over climate and energy policy and give Malcolm Turnbull and Josh Frydenberg a much-needed boost.
A failure to secure support would be hugely damaging for Mr Turnbull, who lost the Liberal leadership to Tony Abbott in 2009 over his decision to back then Prime Minister Kevin Rudd’s Carbon Pollution Reduction Scheme.
So what exactly is the NEG?
The promise: First proposed by the Turnbull government in October 2017, the NEG promises to deliver cleaner, cheaper and more reliable power. It will be the first time climate and energy policy have been combined.
How will it work?
• Energy retailers will be required to sign contracts agreeing to supply a minimum amount of dispatchable energy to meet community needs at all times.
• Electricity sold to consumers must have an average emissions level which accords with Australia’s international emissions reduction commitments.
• Australia’s current target is a 26-28 per cent per cent reduction on 2005 level emissions by 2030. Then prime minister Tony Abbott signed up to the target in Paris in 2015. He has since called for it to be abandoned.
• The target would be legislated and reviewed every five years. Future federal governments could legislate to lift it.
• States and territories could still set their own more ambitious targets.
• Stable energy policy is intended to encourage new investment.
• New supply coming into the market would drive down wholesale power prices.
What households will save:
• According to the Energy Security Board, households can expect to save $550 a year (relative to 2018) on their power bills through the 2020s, of which $150 is directly a result of the guarantee.
What the energy mix will look like:
• It’s technology neutral so there will be no subsidies for renewables or fossil fuels.
• Renewables will make up 36 per cent of the national energy market generation within 11 years, up from the current 17 per cent.
• Without closing any coal-fired stations the share of coal-fired generation will fall to 60 per cent from 75 per cent.
When will it begin?
• The reliability guarantee is due to begin in 2019, and the emissions target would replace the Renewable Energy Target from 2020.
What’s next?
• Energy and climate minister will meet in Sydney on Friday for a chance to sign off on the Energy Security Board’s final design.
• The coalition partyroom will consider it in Canberra next Tuesday.
• States and territories will get a final say and if approved the plan will go out for public consultation.
• It would then need to pass federal parliament, requiring the co-operation of Labor and/or the crossbench in the Senate.
What the key players have said:
• Prime Minister Malcolm Turnbull
“My government is committed to cheaper, reliable electricity. That is what the NEG will deliver. It’s been endorsed by the party room already and it will be endorsed again. It’s got absolutely overwhelming support.”
• Energy Minister Josh Frydenberg:
“This is politicking and posturing (from Labor states) ahead of Friday’s meeting, because the states know all well and good that what will hopefully occur on Friday is that we agree to the design of the national energy guarantee subject to a phone hook-up after the policy has been through the federal Coalition partyroom.”
• Labor Energy spokesman Mark Butler:
“We know that the surest way to bring down power prices is to build more renewable energy, but under Malcolm Turnbull’s pathetic emissions reduction targets the NEG will not see one large-scale renewable energy project built for the entirety of the 2020s, stifling investment and pushing power prices up.”
• Victorian Labor Premier Daniel Andrews:
“(Liberal party room support) is at best uncertain, I think if you went and had a chat with Tony Abbott he’d give you a very clear view of what his priorities are, and I think he’s got significant support in the Prime Minister’s party room. We are not signing up to the NEG until the Prime Minister can demonstrates that he’s actually got the numbers in his own government to deliver on the commitments he is making.”
• Queensland Premier Annastacia Palaszczuk:
“What we need to see is very clear certainty from Malcolm Turnbull’s party room when it comes to the National Energy guarantee. There will be discussions on Friday, but how can you commit to something when you’re given a blank piece of paper.”
• Former prime minister Tony Abbott:
“I think the National Energy Guarantee still needs an enormous amount of work. I think there is a real problem with the partyroom being asked to accept something which is driven by the Labor states and territories because I want us to support Coalition policy not Labor Party policy.” “And it also claims that prices will fall, well frankly pigs might fly.”
• Liberal backbencher Tony Pasin:
“I don’t agree with the assertion that it has met with the approval of the partyroom.”
• Liberal backbencher Craig Kelly:
“Realistically we would need more time to consider this. There is a lot of complex detail yet to be released.”
• Business Council of Australia CEO Jennifer Westacott:
“The voice of business is united on this — we must work together to implement the NEG and deliver policy certainty in the energy sector.”
With AAP
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