There's Not Going To Be A CET, So What Have We Got Instead? And What Does That Mean For Consumers?

ABC News - Louise Yaxley | Lucy Sweeney

A National Energy Guarantee is central to the Coalition's new policy. (ABC News: Dean Faulkner)

Malcolm Turnbull has unveiled his shiny new energy policy, complete with its own three-letter acronym to replace the doomed Clean Energy Target. The Government claims the new plan — including a National Energy Guarantee, or NEG — will be kinder to hip pockets and will reduce emissions enough for Australia to uphold its end of the Paris climate change agreement.
Here's what it all means.

So what's new?
The Government is effectively putting the onus on retailers to guarantee (the G in NEG) two things: reliable supply and emissions reduction.
The first part of that means power companies would be required to use a percentage of electricity from so-called dispatchable sources such as coal, gas, batteries and pumped hydro.
This would be ready to use at short notice to stop blackouts like the one seen in SA last year.
It would also keep the power system stable at a lower price because it would be done via long-term contracts, not the short-term spot price.
The second part — reducing emissions — means they'll be scrapping subsidies and incentives for renewables and instead expecting retailers to ensure the power that they're buying is efficient enough to help Australia meet its international obligations (i.e. what we signed up to do during the Paris climate change conference).
It's not yet clear what the penalty would be for companies who fall short of that, but it's likely they would be able to make up a shortfall the following year.

Will my power be cheaper?
Malcolm Turnbull says: YES.
Spruiking the new plan, the Prime Minister said: "Your power bills are too high and rising too fast."
So how much are we talking? The typical household could save between $110 and $115 each year for a decade from 2020, according to the Energy Security Board, who costed things for the Government.

This is how the Prime Minister is spruiking his new plan (ABC News)

Here's what deputy Liberal leader Julie Bishop had to say:
"This is a very secure way of ensuring reliability, affordability and meeting our Paris commitments … it doesn't require a CET, it works on market mechanisms and will drive prices down."
But keeping the power bills down is reliant on a range of measures including state government policies.

What about reliability?
"Keeping the lights on" is the a key element of the Government's mantra.
It insists that the scheme is designed to ensure that the electricity supply will be more reliable because power companies will have to use "dispatchable" power.
The Government is already backing Chief Scientist Alan Finkel's call for more investment in batteries. His aim is to make solar power more reliable because the energy could be stored and released to prevent shortages, and the Government has adopted that plan.
This goes much further by making the power companies source some of their power from baseload sources like coal, gas, pumped hydro or even encouraging ways to reduce demand.

Will it bring down emissions enough?

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What is the Paris Agreement?

Here's a simple explanation of the agreement, and what it means for Australia.

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In November last year the Government promised to reduce emissions by between 26 and 28 per cent by 2030 as part of the Paris climate change accord.
It says that target still be met, but with no incentives or subsidies for renewables under this scheme.
The Government says renewables are becoming more competitive without subsidies, so the Renewable Energy Target is no longer necessary.
It's understood those subsidies for using renewables will be phased out after 2020.
Labor argues the new plan would destroy the renewables sector.
The Climate Council says it will mean less renewable energy than we need to tackle climate change.

Will it keep coal-fired power plants running longer?
Power companies will be forced to use baseload sources, which could keep some coal-fired power plants operating longer.
But the Clean Energy Council says these plants are becoming unreliable because of their age.
Malcolm Turnbull said solar, wind, coal, gas, batteries and pumped hydro would all be part of the energy mix.

How did we get here again?

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Explaining the Finkel report

You might have heard about this big government report called the Finkel review — here's what it could mean for Australia's energy sector.

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Towards the end of last year, the Federal Government asked its Chief Scientist, Alan Finkel, to review the energy sector after a statewide blackout in South Australia. That review focused on the sustainability of the current system, its environmental impacts, and affordability for consumers.
Dr Finkel came back with a bunch of recommendations. One of those was a Clean Energy Target, which would have seen electricity companies forced to provide a set percentage of their power from low emissions (clean) technology — things like renewables and efficient gas.
His modelling showed a CET would lower power prices by subsidising investment in clean power generation, increasing the supply of electricity. But some in the Coalition were sceptical about the CET, saying it would make for less reliable service.
And so the Government went back to the drawing board, and came up with this plan.

Will the NEG get the nod?
The Government thinks it can make these changes without federal legislation, meaning it could avoid a Senate showdown.
But they will need the backing of the states and territories, which have their own policies over energy.
Either way, the bipartisan approach to energy has died with the CET.
Federal Labor attacked the Government's approach as a capitulation to former prime minister Tony Abbott.
Labor will have to return to its own version of an energy plan that reduces emissions.

Links

• Coalition signs off on new energy plan to replace Clean Energy Target
• Australia shuns clean energy target in policy overhaul
• Australia rejects clean energy target for cheaper power
• Coalition defends energy plan by attacking Labor's record
• Axe the Clean Energy Target? The ACCC doesn't think so
• Australia wind and solar power overtake gas in September

Malcolm Turnbull Convinces Party To Unite On Energy Policy

The Guardian - Katharine Murphy

Prime minister wins party room backing despite Tony Abbott bid for delay, but policy may be resisted by states

Malcolm Turnbull releasing the Coalition’s energy policy on Monday. Photograph: Mike Bowers for the Guardian

Malcolm Turnbull has secured party room backing to impose new reliability and emissions reduction guarantees on energy retailers and large energy users from 2020.
But the emissions reduction trajectory, the most internally sensitive component of the reform, will require new legislation, and the government has been advised to implement the new scheme with the support of state governments passing complementary laws – which could render Turnbull’s reworked proposal dead on arrival.
While the government characterised its new energy guarantee as a “game changer”, Labor quickly blasted the decision to dump the clean energy target recommended by the chief scientist, Alan Finkel. A handful of government MPs, including Tony Abbott, expressed objections to the emissions reduction element of the overhaul during party room debate.
Labor has also zeroed in on the price aspects of the scheme. The government contends its new energy framework will lower prices for households by between $100 and $115 per year, but the opposition suggests those estimates are rubbery, given serious modelling has not yet been undertaken.
After months of internal controversy, the government on Tuesday dumped the clean energy target favoured by Finkel in favour of a new “national energy guarantee” which will impose a reliability and emissions reduction guarantee on retailers and some large energy users.
With Coalition conservatives fiercely opposed the Finkel clean energy target on the basis it would provide ongoing subsidies to renewable energy, the prime minister and the energy minister have sold the policy internally as an end to picking winners, and the beginning of technological neutrality.
The new rules would oblige retailers to meet a percentage of their load requirements with flexible and dispatchable power resources which can be scheduled by the energy market operator depending on the requirements of the system.
The emissions reduction obligation, like the reliability requirement, will require retailers to enter into contracts for the supply of energy at a certain emissions level. If retailers don’t meet their new obligations on a persistent basis, the penalty is market deregistration.
The government says the new emissions reduction target for electricity will likely be 26% on 2005 levels by 2030.
But if that’s where the target is ultimately set, that will require other sectors of the economy to do most of the heavy lifting if Australia is to have any hope of meeting our target under the Paris climate agreement.
Heavy emitters exposed to international competition will be excluded from the emissions reduction obligation, and speaking to reporters on Tuesday, the prime minister said there was “potential for back-ending a fair bit” of the emissions reduction task for electricity because of declining costs.
As foreshadowed by Guardian Australia, retailers will also be able to use international permits to help meet their abatement obligations.
The existing federal renewable energy target will peak in 2020 and run through to 2030, with projects grandfathered, which means the existing rules and frameworks continue to apply until the scheme wraps.
During Tuesday’s party room discussion, Tony Abbott, Matt Canavan, David Gillespie and George Christensen raised concerns about the policy, and Abbott argued that the government should delay any decision.
Given there was some dissent, Turnbull asked MPs whether they wanted to continue the discussion later in the afternoon or next week – but the overwhelming view in the party room was to settle the issue by agreement on Tuesday.
The government has elevated electricity prices to the centre of the political debate, and is claiming positive price impacts as a consequence of the energy guarantee when compared with the impact of Finkel’s clean energy target.
The Energy Security Board, which is a regulatory body set up by the Council of Australian Governments (Coag) to implement the Finkel review, has told the government the guarantee “could lead to a reduction in residential bills in the order of $100 to $115 per annum over the 2020-2030 period”.
It contends an end to the policy uncertainty will prompt a reduction in wholesale prices of 20% to 25% a year over the same period.
But John Pierce, the chair of the Australian Energy Market Commission, made it clear the figure was based on only preliminary analysis. He said more detailed analysis would be carried out in the lead-up to the Coag meeting in November.
He said “firmer estimates of those price effects” would be provided later in the year.
In question time on Tuesday, Labor asked Turnbull whether the Energy Security Board had provided lower figures to the government about the level of household savings associated with the policy.
The prime minister said the “only information I have” was the $100 to $115 figure, and he rounded on Labor for pursuing the question.
“The leader of the opposition is impugning the integrity of the members of the Energy Security Board,” the prime minister said.
Australia’s energy sector says no policy solution will fix the current problems unless there is bipartisan support for the reforms to create certainty for investors.
Labor is reserving its position on the package. The shadow climate minister, Mark Butler, said the government’s new framework was thin on detail, lacked proper modelling, and was little more than “bare bones”.
Butler said the government has presided over an “utterly shambolic process”.
Finkel was more diplomatic. He told reporters he had been consulted on the government’s alternative proposal at a late stage, and he had not seen any economic modelling underpinning the national energy guarantee.
But Finkel gave the proposal, cautious endorsement, suggesting the approach was “logical” and would likely to have a similar price impact to the clean energy target modelled in his review.

Links

• Tony Abbott's climate frolic is strange and sad – and all about politics
• Coalition defends energy plan by attacking Labor's record – as it happened
• Coalition balks on Finkel target but will unveil energy and emissions policy
• Alan Finkel defends clean energy target as Coalition turns its back
• Frydenberg signals government poised to abandon clean energy target
• Turnbull rejects efforts to ‘dumb down’ energy debate into renewables v coal
• Turnbull ignored advice that renewable energy not to blame for SA blackouts
• Coalition's renewable energy target won't last forever, says Turnbull

The Turnbull Government's New Energy Policy Will Shave $2 Off Your Weekly Power Bill

Fairfax - Nicole Hasham

Households will be an average $2 a week better off under a reinvention of Australia's energy and emissions policy – and the Turnbull government has refused to guarantee even those meagre savings.
It emerged on Tuesday that the savings could start as low as $25 a year, or 50¢ a week.

The government's energy policy explained
Here's what you need to know about the national energy guarantee - the government's newest energy policy.

Despite pitching the policy as a salve to the hip pockets of price-weary power consumers, the government also concedes that the predicted cost saving was based on preliminary analysis, and detailed modelling has not yet been carried out.
The government on Tuesday sought to reset the national energy debate by announcing energy companies will be forced to meet mandated standards of reliability and emissions reduction, which would reduce the risk of blackouts and drive prices down.
Polls show voters are deeply concerned about soaring power bills, and the government's ability to address the problem is a key element on which the policy will be judged.
Mr Turnbull described the measure as a "game-changer ... that will ensure that we have affordable power".
"It provides investor certainty, which the market has been crying out for for a long time. It reduces volatility, which, of course, has been driving up prices," Mr Turnbull said.
Known as the national energy guarantee, the policy is based on a unanimous recommendation by the independent Energy Security Board, chaired by Dr Kerry Schott.

Prime Minister Malcolm Turnbull sells the policy during question time on Tuesday. Photo: Alex Ellinghausen

The board advised the government that the guarantee could cut residential bills by an average $100-$115 a year in the decade to 2030.
Wholesale prices were expected to drop by up to 25 per cent a year over the same period.

Energy officials need to do more work to determine the exact potential household saving. Photo: Matt Davidson

Australian Energy Market Commission chair John Pierce on Tuesday told Sky News that under other modelling scenarios, households would save just $25 a year in 2020 – or 50¢ a week.
The annual household saving spruiked by the government is greater than the $90 predicted under the clean energy target recommended by Chief Scientist Alan Finkel – the prospect of which the government has abandoned.
However Mr Turnbull on Tuesday repeatedly refused to guarantee the price saving would be achieved.
He referred inquiries to Mr Pierce, a member of the advisory board who said the figures were based on "analysis and modelling of the market and the alternative schemes that we've looked at in the past".
Mr Pierce said the board would undertake "detailed analysis and modelling" of the proposal ahead of a November meeting of the Council of Australian Governments to provide "firmer estimates of those price effects".
He said the policy would drive down household bills in three ways.
The measures would end policy uncertainty, leading to increased investment, and hence, electricity supply.
The mechanism would also use existing market contracts to find a more efficient mix between dispatchable and low emissions energy, and competition would be improved because energy retailers would enter contracts with the lowest-cost energy providers.
Labor's energy and climate change spokesman Mark Butler on Tuesday said the government was unwilling to guarantee price savings to households and had "confirmed no modelling has been undertaken".
"At best it would appear that the broad analysis that has been undertaken would involve a 50¢ per week saving for households in three years time, perhaps rising to as much as $2 a week."
"It's now incumbent on Malcolm Turnbull to release some real detail about this policy so we can all understand what the impact would be," Mr Butler said.

Links

• Malcolm Turnbull unveils the government's new energy policy
• Meet the NEG: Turnbull's new climate and energy policy
• Turnbull's change to suit the political climate
• PM's energy policy seeks to cut costs, mandate use of 'reliable' coal, gas
• Tony Abbott launches warning shot on climate policy