As state and federal governments prepare to meet today to discuss the National Energy Guarantee, regional industries are once again calling for the states and the Commonwealth to put aside their differences aside in the interest of stable energy policy.
A team of industry groups from rural sectors have banded together to support the federal Coalition’s NEG. Regional industries are struggling under the weight of vaulting power prices, with many processors questioning their economic viability.
The ag industries are responding to threats from Victoria and the ACT to block the NEG, as well as to a group of Coalition backbenchers including Tony Abbott and Barnaby Joyce, who publicly speculate on the prospect of voting against their own side when it comes before parliament.
“We are calling for all-of-Government, bi-partisan support for the NEG framework, to be forthcoming immediately following tomorrow’s COAG meeting,” said National Farmers’ Federation president Fiona Simson.
“We hope that the Coalition’s NEG nay-sayers will heed the call from farmers that the consternation on energy policy must stop.”
National Irrigators Council chief executive Steve Whan said the “agriculture sector needs stability and certainty”.
“The NEG is only part of a complex puzzle of actions needed at State and Federal level to get prices down, but it is an important step. It's not perfect but it is the only option capable of getting critical bipartisan support,” he said.
The NEG is a “technology agnostic” scheme which requires retailers to source a minimum amount of “dispatchable” power (i.e gas, hydro or coal) while also ensuring other sources comply with greenhouse emission reduction targets (likely to be so-called intermittent wind and solar power).
The rationale is that stable, long-term policy will encourage private investors to develop more efficient energy generation.
Even though the Coalition has released scant detail on the workings of the new policy and the NEG’s full impact is difficult to forecast, the industry groups say stable energy policy is essential to entice the scale of investment needed to lower energy costs.
The Australian Consumer and Competition Watchdog was commissioned to investigate the National Energy market. It said the National Energy Market was “broken” and released a comprehensive plan which it said would lower retail energy prices by 25 per cent.
The NEG is a crucial element of the roadmap to lower power prices, the ACCC said. However, it’s reduction strategy really hinges on four regulatory issues which are outside the NEG’s remit.
That is - gold plating of the electricity network to jack up prices, lack of competition among vertically integrated distribution networks, a complex electricity market which lacks transparency, and a merits review system which allows networks to challenge price rulings from the Australian Energy Regulator in court.
What’s more, there is serious conjecture over the NEG’s ability to deliver on the Malcolm Turnbull’s promise that the policy will lower household power prices by $550 a year.
And there’s a possibility that the NEG’s target of a 26 per cent reduction in carbon emissions from electricity emissions will fall short of Australia’s responsibilities under the Paris climate agreement.
This shortfall could leave other industries to pick up the slack, and the next two on the list below power generation are transport and agriculture.
Nevertheless, the ag sector wants energy policy certainty above all else.
“Now is not the time to be getting bogged down in a philosophical debate over a number,” Ms Simson said.
“The NEG framework provides for targets to be dynamic – for Government to amend targets subject to an adequate notice period and proper process.
“By supporting the NEG at tomorrow’s COAG, States and Territories are not endorsing an emissions target. This debate can be had in Federal Parliament.
“States and Territories would also not be prevented from pursuing additional renewable energy or emission reduction policies if they so decide.”
Mr Whan said the ag sector had argued for a national coordinated energy plan “for years”.
“Energy Ministers now need to work in the national interest,” he said.
“I note the vigorous debate on emissions targets, and clearly the stationary energy sector needs to do its fair share to achieve agreed targets, but we need to be clear that the NEG as a mechanism will operate with whatever targets Australia's parliaments might agree”