Australian governments agree to proceed with NEG design

The Council of Australian Governments (COAG) Energy Council agreed today to move ahead with a detailed design of the National Energy Guarantee (NEG), whose final version needs to be ready in August.

In mid-October 2017 the federal government announced that Australia would develop a “truly technology-neutral” NEG with two main components -- a “reliability guarantee” which will ensure that energy retailers deliver enough dispatchable energy from coal, gas, pumped hydro and energy storage systems, and an “emissions guarantee”.

The Clean Energy Council’s CEO Kane Thornton welcomed the decision at the COAG meeting today, but stressed again that the currently inadequate level of emissions reduction proposed under the policy needs to be reviewed.

“The level of the emissions reduction target will affect the strength of the investment signal for the new energy generation which is essential to help drive down power prices as our ageing power stations continue to retire,” Thornton continued.

Owen Kelp, a Principal at ACIL Allen Consulting, who has previously done electricity emissions projections for the energy department, argues in an article on Renew Economy that the levels of emissions reduction proposed for the electricity sector are too unambitious. Between 2020 and 2030, the period of the Paris Agreement, the electricity market modelling undertaken for the Energy Security Board (ESB) envisages an emissions budget of 1,352 Mt carbon dioxide (CO2) for the National Electricity Market (NEM), while emissions stand at around 1,396 Mt CO2 in these 10 years under the business as usual scenario modelled. Kelp explains that with the electricity sector contributing so little to targeted emissions reductions, other sectors of the economy would have to do much more and pay more for it.

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