National Energy Guarantee

National Energy Guarantee (NEG) was an energy policy proposed by the Turnbull government in late 2017 to deal with rising energy prices in Australia and lack of clarity for energy companies to invest in energy infrastructure. The policy specifically targets energy companies in the National Electricity Market and large energy users to have a reliability obligation as well as emissions reduction obligations.[1][2]

Turnbull's successor Scott Morrison announced in September 2018 that the government would focus on cheap electricity prices; Australia would (also without NEG) make efforts to lower carbon dioxide emissions.[3]

The Labor party has since announced that it will adopt the NEG as its energy policy.[4]

History
Main article: Carbon pricing in Australia

In the years leading up to the proposed NEG, energy policy in Australia included the Rudd government's proposed Carbon Pollution Reduction Scheme, the introduction and repeal of the Gillard government's Clean Energy Act 2011, the Abbott government's Emissions Reduction Fund,[5] and proposals for an Emissions Intensity Scheme (EIS)[6] and a Clean Energy Target (CET)[7] among others. Throughout this time, energy prices in energy resource rich Australia continued to rise. In October 2017 the Turnbull government announced a new proposal, the National Energy Guarantee,[8] intended to "lower electricity prices, make the system more reliable, encourage the right investment and reduce emissions".[8] Subsidies and incentives for renewable energy will be scrapped under the plan.[2] The Labor opposition argues the plan will destroy the renewables sector,[2] but the government argues renewables can be competitive without subsidies,[2] and expects Australia will still meet its Paris Agreement obligations under the plan.[2] The Climate Council called the NEG "a woefully inadequate response" to climate change.[9]

Politics

The government via the COAG Energy Council meeting on 14 July 2017 established the Energy Security Board to coordinate the implementation of the Finkel Review authored by Australian's Chief Scientist Alan Finkel.[10] The government decided not to adopt the Clean Energy Target[11] as recommended by the Finkel Review after coming pressure from the conservative elements[12] of the Liberal Party as well as vocal climate sceptics.[13][14]

The NEG will need the support of the Australian states signed up to it to activate the scheme.[12] The reason is the states need to pass legislation to change the functioning of the national electricity market.[1] Government critics of emission reduction targets are advocating for a "hockey-stick" target, where the most reduction occurs in the years just before 2030.[15]

Reliability obligation

The reliability obligation means that energy companies need to provide a mix of energy generation sources that can be fired up on demand to meet peak loads or emergency demand.[1][2]

Low Emissions obligation

This dictates energy companies need to have in their mix of energy production from low emission sources like gas fired power stations, wind, solar, batteries or hydropower or even coal fired stations.[1][2]

Compliance

The government indicated if these regulatory obligations are not met after a period of time, the government can take action such as deregistering non complying energy providers.[1] The reliability guarantee is going to be set up bythe Australian Energy Market Commission (AEMC) and Australian Energy Market Operator (AEMO).[5]

The emissions guarantee will be established by the Commonwealth and overseen by the Australian Energy Regulator (AER).[5]

Modelling

In 2017, Federal Energy Minister Josh Frydenberg asked the Energy Security Board to undertake further modelling to determine the NEG's impact on the national electricity market.[16] The minister also forecast in the best scenario, the NEG can deliver price reduction of 6 percent of power bills.[17] It is equivalent to an average $115 annual savings from 2020 to 2030.[17] As of July 2018, the Energy Security Board's model has not been made public.[18]

References
  1. Murphy, Katharine (2017-10-18). "What is the national energy guarantee and is it really a game changer?". The Guardian. ISSN 0261-3077. Retrieved 2017-11-03.
  2. "What is the National Energy Guarantee and what does it mean for consumers?". ABC News. 2017-10-17. Retrieved 2017-11-03.
  3. 'NEG dead': Morrison to ditch energy legislation, but keep Paris targets
  4. "Crossbench joins Julie Bishop and Labor in push for energy agreement". ABC News. 27 November 2018. Retrieved 3 December 2018.
  5. "Emissions Reduction Fund". Australian Government: Department of the Environment and Energy. Retrieved 2018-06-26.
  6. Hunter, Fergus (2017-05-26). "Emissions intensity scheme 'best and most appropriate' policy, new national electricity boss says". The Sydney Morning Herald. Retrieved 2018-06-26.
  7. Martin, Peter (2017-10-17). "Out of the ashes of failed attempts, finally a chance to put the climate wars behind us". The Sydney Morning Herald. Retrieved 2017-11-03.
  8. "National Energy Guarantee to deliver affordable, reliable electricity". www.pm.gov.au. Australian Government: Department of the Prime Minister and Cabinet. 2017-10-17. Retrieved 2017-11-03.
  9. "Briefing Paper: What Are Stakeholders Saying About The National Energy Guarantee?" (PDF). www.climatecouncil.org.au. Climate Council. 2018. Retrieved 2018-06-26.
  10. Vaughan, Rebecca (2017-08-08). "Establishment of the Energy Security Board Media Release". www.coagenergycouncil.gov.au. Retrieved 2017-11-03.
  11. "Clean Energy Council - Clean Energy Target". www.cleanenergycouncil.org.au. Retrieved 2017-11-03.
  12. Karp, Paul; Murphy, Katharine (2017-10-20). "Turnbull predicts states will sign up to national energy guarantee". The Guardian. ISSN 0261-3077. Retrieved 2017-11-03.
  13. "Climate change action like trying to 'appease the volcano gods', Abbott says". ABC News. 2017-10-10. Retrieved 2017-11-03.
  14. Bourke, Latika (2017-10-11). "Tony Abbott's 'loopy' climate change speech privately funded". The Sydney Morning Herald. Retrieved 2017-11-03.
  15. Murphy, Katharine (1 June 2018). "After a week of political theatrics, the energy wars remind us this drama costs | Katharine Murphy". the Guardian. Retrieved 2 June 2018.
  16. Mills, Chanel (2017-10-26). "National Energy Guarantee Modelling". coagenergycouncil.gov.au. Retrieved 2017-11-03.
  17. Bagshaw, Eryk (2017-10-18). "National energy guarantee would cut 6 per cent off power bills in best scenario". The Sydney Morning Herald. Retrieved 2017-11-03.
  18. Mountain, Bruce. "The National Energy Guarantee is a flagship policy. So why hasn't the modelling been made public?". The Conversation.
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