Page 1357 - Week 04 - Thursday, 12 April 2018
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The reality is that the NEG, if implemented in its current form, would be detrimental to the ACT’s efforts on climate change as well as detrimental to ACT electricity consumers. In fact, expert analysis shows that the NEG in its current form is likely to fail each of its key promises. Rather than solve reliability challenges in the electricity grid, reduce greenhouse gas emissions and save households money, the evidence suggests that the current iteration of the NEG would do just the opposite. According to expert analysis commissioned by the ACT government to assess the NEG design, the NEG risks “locking in inefficiently low ambition on emissions reductions … put[ting] upward pressure on power prices” and it “may even fail to improve reliability”.
How foolish and negligent it would be for the ACT to automatically sign up to the NEG, as Ms Lee insisted yesterday I should immediately do. She said my comments critiquing aspects of the NEG design were “reckless”. What would be really reckless would be to ignore the significant body of evidence showing that the NEG design would have poor outcomes both nationally and for ACT residents. Anyone who cares about a good outcome for the ACT or the climate, a reliable grid and reasonable costs for consumers should closely interrogate the NEG’s design. As the ACT’s climate and energy minister, I think it is incumbent on me to try to ensure a good outcome on the national energy guarantee.
As well as various specific problems in the NEG’s current design, there are key areas of the NEG that remain dramatically undeveloped. The critical detail is not yet available. We have nothing more than the outlines that have been issued by the Energy Security Board. To give just one of many examples, we have no idea how the reliability obligation will work in practice. We do not know what will be categorised as “dispatchable” power. Indeed, as the ACT-commissioned analysis points out:
… there is room at this stage for the levers the NEG introduces to allow specific technologies to be favoured for political ends.
This is troubling because, if one thing is clear, it is that the federal government developed the NEG in an intensely political environment. In fact, it has been designed deliberately to meet the demands of its recalcitrant climate change sceptic backbench. This is the backbench that wants to prioritise coal, build new coal plants and nationalise coal infrastructure, and that thinks that “climate change is crap”. The risk, then, that the NEG parameters will operate to artificially prop up dirty, ageing coal plants in Australia is high. This unnatural and uneconomical market intervention would come at an enormous cost to taxpayers and to the environment.
Why would anyone sign up to the NEG without seeing further critical detail to allay these kinds of risks, unless they value their political party over achieving a good outcome for Australian energy consumers? I am not in the business of signing blank cheques and, frankly, this is not Married at First Sight. We have time to look at the detail before deciding whether we want to commit.
One of the many energy market experts to have criticised the NEG, Dr Bruce Mountain, wrote in his analysis of the proposed reliability and emissions obligations
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