Federal Labor blasts ‘pathetic’ NEG targets

Labor has condemned Malcolm Turnbull’s national energy guarantee, declaring it will ­stifle investment in renewables.

Labor energy spokesman Mark Butler ruled out any prospect of a deal. Picture: AAP

Federal Labor has rejected Malcolm Turnbull’s national ­energy guarantee, declaring its “pathetic’’ emissions cuts will ­stifle renewable energy investment, threatening to extend a decade-long policy deadlock that has sent electricity prices soaring.

Labor hardened its position on the NEG yesterday as the government offered an olive branch to wavering states, pledging a review of the policy’s 26 per cent carbon emission targets after its first four years.

The concession was contained in a new NEG design report, obtained by The Australian, which also revealed energy retailers would be able to offset 5 per cent of required emissions reductions by purchasing Australian carbon credits.

The ruling follows a revelation by the designers of the NEG that the energy sector will have achieved a 24 per cent cut to 2005-level emissions by the time the policy gets under way, meaning power companies will be able to fully offset the remaining 2 per cent emissions cut they are ­required to make by 2030.

The decision by federal Labor will increase pressure on ALP governments in Queensland and Victoria to reject the latest design of the NEG, which is set to be ­debated at a meeting of state and territory leaders on August 10.

Even if the leaders sign on to the latest blueprint, Energy Minister Josh Frydenberg will have to win federal parliamentary support for the government’s emissions reduction targets in the scheme, forcing it to rely on crossbench votes to overcome Labor opposition.

Ahead of the Council of Australian Governments meeting next month, pressure on the Victorian government was compounded as its top energy adviser urged the Andrews government to reject the plan.

Victorian Energy Policy Centre director Bruce Mountain said the NEG was not required to meet the government’s emissions target and would “pointlessly impose higher costs on consumers”.

In a report to the state government, Dr Mountain said the NEG’s emissions accounting system was also completely untested, unlike the well-understood ­renew­able energy target or carbon trading models used overseas.

As Mr Frydenberg visited a coal-fired power station in north Queensland with Nationals MPs Michelle Landry and Ken O’Dowd, Labor energy spokesman Mark Butler ruled out any prospect of a bipartisan deal to get the NEG through parliament.

“Labor can’t agree to an ­arrangement that will tie the hands of future governments for at least a decade, arrangements that would see wholesale power prices higher than they should be, no cuts in pollution, and jobs and investment in this really important industry of renewable energy absolutely smashed,” Mr Butler told the ABC.

He said the NEG was designed to appease pro-coal forces aligned with Tony Abbott in the Coalition partyroom by locking in an ­“un­realistic” target.

The Senate crossbench, which would be required to pass the ­reform, is deeply divided on the question of climate change and emissions cuts.

One Nation’s Pauline Hanson has called for the government to renege on its Paris commitment to cut carbon emissions while senator Tim Storer has warned of “the existential threat posed by human-induced climate change”.

The commonwealth’s final detailed design report to the states confirms the government will seek to lock in its 26 per cent emissions cut until 2030, but allow a review in the first half of 2024 “to ensure targets from 2025 to 2030 remain appropriate”.

It is unclear from the report whether the review would enable a variation of the legislated 26 per cent target by regulation, or whether any new target would have to be separately legislated.

The concession is aimed at Victoria, Queensland and the ACT, which have been critical of what they say is a lack of ambition in the NEG emissions target.

All three governments declined to comment yesterday.

The government ruled out the use of international carbon permits but said it would allow retailers to purchase Australian Carbon Credit Units, which are created by accredited projects including farming, forestry and waste-management initiatives.

The final design paper also confirmed designated emissions-intensive trade-exposed industries, such as aluminium smelting, would be exempt from meeting the cost of carbon emissions cuts. Exempt emissions would have to be made up by other energy users.

The final government design was given to the states earlier this week with a final paper from the NEG’s 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 renewable energy industry yesterday questioned whether the NEG would save the industry or harm it.

Smart Energy Council chief John Grimes said the government was rushing with “unholy haste” to seal a deal with the states without revealing details that could derail billions in investment and destroy thousands of jobs. “We have tens of thousands of people employed in the renewable energy industry,” Mr Grimes said.

However, Australian Energy Market Operator chief executive Audrey Zibelman said she wanted to see the NEG passed so that the industry could “get on” with ­investment to drive down prices.

ADDITIONAL REPORTING: ANDREW WHITE