20/03/2017

Australia's Peak Business Lobby Calls For Emissions Intensity Scheme

The Guardian - 

The Business Council has joined Energy Networks Australia, Energy Australia, AGL, the Climate Change Authority, the National Farmers Federation and the CSIRO in calling for a carbon market mechanism. Photograph: Lukas Coch/AAP
The nation's peak business body has joined the growing calls for an emissions intensity scheme (EIS) and argued coal-fired power stations should give three years notice for closure in its submission to the chief scientist's electricity review.
Jennifer Westacott, the chief executive of the Business Council of Australia (BCA) also called for no further changes to the renewable energy target (RET), given it was the foundation significant investments. She also said there was no need for state-based targets.
Westacott, representing the biggest businesses in the country, argued that in the medium to long term, an EIS was both technology-neutral and would provide the policy signal currently missing to drive investment in energy.
"Australia's 2030 emissions target has been set," Westacott said. "What's missing is the signal that will support the investment needed for the electricity system.
"A signal such as an emissions intensity scheme for electricity is both fuel- and technology-neutral and preserves the broadest range of options to meet future emissions reduction targets.
"It also creates an incentive for investment in lower emissions generation technologies."
But she warned that if an EIS was imposed too quickly, it could lead to multiple closures in regional communities and place more pressure on energy security.
"Without access to competitively priced gas, an emissions intensity scheme could lead to multiple closures within one region in the short term, placing pressure on system security and regional communities all at once," Westacott said.
She said an emissions cap should be applied to coal-fired power stations to ensure they do not extend their operating lives.
"While less efficient than an emissions intensity scheme, the transition may be easier to manage and provide clearer signals for new investment in the electricity system in the short term," she said.
The BCA's submission is the latest to urge the chief scientist, Alan Finkel, to recommend an EIS for the energy sector, effectively imposing a carbon price. Other groups calling for an EIS or carbon market mechanism include Energy Networks Australia, retailer Energy Australia, electricity provider AGL, the Climate Change Authority, the National Farmers Federation and the CSIRO.
Energy policy remains front and centre for the federal government following Malcolm Turnbull's meeting with gas chiefs to address domestic shortages and his plan for a 50% expansion in the Snowy Hydro scheme.
Finkel is investigating the best way to provide security for the national electricity market at a time of rapid change in climate and technology.
After the energy and environment minister, Josh Frydenberg, openly canvassed an EIS as one of Finkel's options, conservatives in the Coalition party room including senior government minister Christopher Pyne objected vociferously. It led to Turnbull and Frydenberg dumping the scheme within days and was noted by the former Liberal senator Cory Bernardi as one of the last straws that drove him to establish his own party.
Notwithstanding the split, Finkel's preliminary report gave guarded support to an EIS 24 hours after the government ruled out the scheme.
The Coalition won the 2013 election on the back of Tony Abbott's anti-carbon tax policy and subsequently dismantled the carbon market system implemented by the Gillard government, with support from the Business Council.
On Thursday, Westacott said numerous modelling exercises had demonstrated an emissions intensity scheme for electricity would manage carbon abatement objectives at the least cost.
"An emissions intensity scheme provides a subsidy for less emissions-intensive generation with the cost of the scheme paid for by more emissions-intensive generators," Westacott said. "The net effect should be no increase in price for customers."
As the government prepares for the closure of the Hazelwood on March 31 with the loss of 1,000 jobs, Westacott said better market information was required to support the transition of the electricity sector, including three years' notice for power station closures.
"To enable effective system planning and support efficient decision making, the quality of market information could be improved by publishing aggregate fuel supplies for each region over a period of time," Westacott said.
"To support a managed transition of the electricity sector, a three-year notice period for the withdrawal of large generators and consumers could be considered. This would also give communities time to adjust.
"We also need stable policy frameworks with minimal government intervention in markets to support electricity investment. Policies that suddenly shift from one place to another or see governments entering markets risk jeopardising, or at the very least confusing, this investment."
As the Turnbull government continues to attack state renewable energy targets, Westacott backed the federal government by saying state based RETs were not necessary but urged the Coalition not to change the federal RET again.
"Although renewable energy targets are a source of market distortion, the RET has underpinned significant investments and it should be left alone," Westacott said.
"To make further changes would have a chilling impact on investment right across the sector. There is also no role for state-based renewable energy targets."
The BCA has argued the recommendations must ensure security of supply and restore community confidence in the national electricity market while creating conditions for energy investment to improve energy affordability.
It also recommends all energy options should be kept on the table, including nuclear power, coal, gas-fired generation and capture and storage. Finkel is expected to make recommendations within the next four months.

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