NEG olive branch: Carbon emissions cut review

The Turnbull government has made a concession to wavering states concerned at locking in what they see as an insufficient target.

The Turnbull government’s NEG report confirms it would allow a review of emissions reductions in 2024.

The Turnbull government will allow a review of carbon emissions cuts midway through the first decade of its National Energy Guarantee, in a concession to wavering states concerned at locking in what they see as an insufficient target.

The government’s final report to the states on the NEG confirms it would lock in the 26 per cent emissions cut until 2030, but allow a review in 2024 of the emissions reduction trajectory from 2025 to 2030.

The report, obtained by The Australian, also makes clear that energy retailers could also offset 5 per cent of their emissions abatement by purchasing Australian carbon credits, generated by forest projects, green farming or other emissions reduction projects.

In another key detail, the report makes clear that energy-intensive trade exposed industries would be fully exempt from meeting the cost of emissions abatement for the energy they use.

The NEG Final Detailed Design paper states: “Between 1 January 2024 and 30 June 2024, the Government will undertake a review of the existing legislated targets under the Guarantee for the five years from 1 July 2025 to 30 June 2030 to ensure they remain appropriate.”

While the review could recommend a different emissions reduction target, any change to the 26 per cent target would have to be made through legislation.

Labor governments in Victoria, Queensland and the ACT hold the key to the government achieving agreement on the NEG mechanism.

However, even if they agree to the framework, federal Labor has signalled it will attempt to block federal legislation on the NEG target.

Labor energy spokesman Mark Butler said the final design showed Malcolm Turnbull “remains beholden to the extreme-right anti-renewable members of the Coalition by locking in an inadequate 10-year pollution reduction target”.

“The Energy Security Board has confirmed that the Government’s 2030 target of a 26 per cent cut will essentially have been met in the first year of the NEG,” he said.

“There is no need to defer a review of the Turnbull Government’s disastrously weak targets to 2024, as is now being proposed; we already know the Turnbull Government’s 26 per cent target is grossly inadequate.”

The final government design was given to the states earlier this week with a final paper from the NEG architects, the Energy Security Board.

The ESB paper warned states would deny consumers lower power prices and spark a collapse in green energy investment if they failed to support the NEG.

The document included modelling forecasting households would save $550 a year on electricity bills over a decade, including $150 a year directly from the NEG, and the remainder due to renewable investments already in the pipeline. Previous forecasts put the annual saving at $400, ¬including $120 from the NEG.

The updated modelling predicted continued connection of renewable generation projects would plunge by 2020-21 in the absence of the NEG, due to extended policy uncertainty.