A Clean Energy Target (CET) has been abandoned by the Federal Government in favour of a National Energy Guarantee (NEG) to deliver “affordable and reliable energy”.
The NEG means renewable energy like wind, solar power and hydro will no longer be subsidised.
Prime Minister Malcolm Turnbull says the new NEG will reduce electricity prices more effectively than a CET.
Key features of the NEG are:
- A reliability guarantee will deliver the right level of dispatchable energy (from coal, gas, hydro and batteries) for each state. It will be set by the Australian Energy Market Commission (AEMC) and Australian Energy Market Operator (AEMO).
- An emissions guarantee will be set to contribute to Australia’s international commitments. The level of the guarantee will be determined by the Commonwealth and enforced by the Australian Energy Regulator.
Energy retailers across the National Electricity Market will also be required to deliver reliable and lower emissions each year.
Loss of Clean Energy Target a missed opportunity
Abandoning a Clean Energy Target will result in a “substantial slowdown” in clean energy investment. That’s according to Clean Energy Council Chief Executive Kane Thornton.
“The CET was the best opportunity in years to lock in the long-term bipartisan energy policy needed to encourage investment in cleaner energy while improving system reliability and pushing down power prices,” he said.
“We believe energy storage and demand management can provide much-improved reliability at times of high stress compared to the current system.”
A recent Climate Council poll showed three-quarters of Australians (77%) recognise the importance of a CET.
Climate Councillor Andrew Stock claims the decision to walk away from a CET is a “major mistake”. In addition, Mr Stock said the NEG will produce less renewable energy than ‘business as usual’.
Figures published in The Australian newspaper show renewable energy share pegged to 28-36 per cent by 2030 under the new policy.
What the National Energy Guarantee means
According to Mr Turnbull, the National Energy Guarantee will lower electricity prices. He said it will also make the system more reliable and encourage the right investment. It will also reduce emissions without subsidies, taxes or trading schemes.
“It is truly technology-neutral, offering a future for investment in whatever technology the market needs – solar, wind, coal, gas, batteries or pumped storage.”
While the plan recognises wind, solar power and hydro as lower emissions technologies, the government will “level the playing field” by scrapping clean energy subsidies.