COAG energy meeting kicks the can down the road

Australia faces at least six more months without a national energy policy. The meeting of the Council of Australian Governments (COAG) Energy Council deferred until April 2018 any decision on whether to adopt the Federal Government’s National Energy Guarantee (NEG) plan.

The states did not sign up for the NEG, but asked for more modelling, guaranteeing a continuation of the policy uncertainty which passes for Australia’s energy policy.

South Australia, the state most opposed to the proposed NEG, asked for the modelling to also be conducted against the former Clean Energy Target and Emissions Intensity Scheme. It was supported by the ACT.

That proposal was rejected, but the Government did agree to further modelling of the NEG by its new Energy Security Board (ESB). It will report back in April – six months away and after the South Australian election, due in March.

Queensland was absent because of the state election the next day. Western Australian had little to say – it is not part of the National Electricity Market.

That proposal for more modelling and deferred adoption was agreed by the other states, and in the Council’s Communique:

“The Council will consider the design of the Guarantee following work undertaken by the ESB in April 2018. All jurisdictions will be involved in undertaking further analysis with the ESB. The ESB will consult with stakeholders through this process.”

In other words, nothing happened. Malcolm Turnbull claimed a victory because the South Australia ACT proposal was defeated, and Environment and Energy Minister Josh Frydenberg said it meant the states had agreed to the NEG.

This assertation was rejected by the Victorian Labor Government, which says it has neither accepted nor rejected the NEG, but just wants to see more evidence that it will work.

South Australia has now announced that it will commission its own modelling of the NEG’s effectiveness against alternative energy policies. SA Energy Minister Tom Koutsantonis said there had still been no explanation from the Commonwealth as to why a Clean Energy Target was no longer acceptable, and that a NEG would “stifle investment in renewables, keep dying, uneconomic coal power stations alive longer, and enriches the generators with the most market power.”

He was scathing of the Council’s inaction.

“If you truly believed the NEG was the best option to drive down power prices, why wouldn’t you agree for it to be compared against other mechanisms? The answer is that the NEG is in truth the third best option. That simply isn’t enough and can’t be supported by South Australia.

“We have had no explanation from Josh Frydenberg or the ESB why the Clean Energy Target, which was recommended by Chief Scientist Alan Finkel, or an Emissions Intensity Scheme, previously supported by Malcolm Turnbull, is no longer being considered.

“To proceed, the NEG would require unanimous support at COAG, so this policy is either years away, or won’t happen at all. What we want for South Australia is energy self-sufficiency, more competition from renewables and to break up the market power of the big gentailers [generators and retailers] created by the privatisation of the Electricity Trust of SA. A NEG would do nothing to achieve those goals.”

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