We will be filing live on the announcement of the Coalition government’s new energy plan. A press conference is expected at 1.15pm AEDT.
The government has already flagged that the proposed Clean Energy Target will be scrapped, in favour of a “national energy guarantee”, which will require retailers to contract a certain amount of “baseload” capacity, and a certain ratio to meet emissions targets.
Butler says it is clear that the Coalition government is “hell-bent” on destroying renewable energy – which under the modelling will account for just 28-36 per cent by 2030. If that’s true, we’d be interested to know what the Coalition proposes in its place.
12.30AEDT: Turnbull has put this on his Facebook page … claiming a “significant breakthrough” that was “truly technology neutral.”
He says the Energy Security Board has recommended the plan, which is bit strange since they only met for the first time a few weeks ago.
Instead, it appears to have come directly from the Australian Energy Market Commission, although it may have gotten some endorsement from the ESB, which does not take into account emissions targets.
From Turnbull’s Facebook page:
“I want to tell you – first – that today I am announcing a national energy guarantee that will deliver affordable and reliable electricity for you and your family.
The Guarantee is made up of two parts:
✔A reliability guarantee to ensure that energy is always available
✔An emissions guarantee to contribute to Australia’s international commitments
The Guarantee builds on our existing energy policy including:
✔ ensuring energy retailers offer consumers a better deal
✔ delivering more gas for Australians before it’s shipped offshore and
✔ building Snowy 2.0 to stabilise the system
✔ stopping network companies gaming the system
Together, our energy policies, including the guarantee, will cut the average household energy bill.
Greens leader Richard di Natale said: “Alan Finkel has been comprehensively shafted. This represents the complete capitulation of Malcolm Turnbull’s leadership.”
“One the one hand you have Abbott wanting to throw goats into volcanoes. On the other, you have Malcolm Turnbull trying to put lipstick on a pig.”
Progress at today’s party room. The Clean Energy Target has been definitively dropped.
— Tony Abbott (@TonyAbbottMHR) October 17, 2017
12.0AEDT: John Grimes, from the Australian Solar Council, told the ABC the new policy was “dumb, in terms of economics and dumb in terms of science.”
The ABC asks: “Is this policy better than nothing?”
Grimes: “absolutely not. this perpetuates uncertainty. It puts sand in the saddle bags of the renewable energy sector.”
12.43AEDT: Former CEFC CEO Oliver Yates, ABC TV interview: “The policy… as it stands… appears to be far too low in its ambitions in relation to the climate change target, it takes no consideration of Australia’s national carbon budget.
“The way that this policy is currently framed, it appears that what the government are doing is that they’re trying to limit the electricity sector’s obligation to reduce emissions to a smaller percentage than what is economically sensible.
“Everybody knows that the sector that can make the best and cheapest form of reduction in carbon emissions …. is the electricity sector.
“So instead of actually reducing emissions in the sector which can do it (cheaply) for consumers, they’re going to require other sectors of the economy to suddenly start making significant carbon reductions at a higher economic cost than the electricity sector would do it.
“So there is a real question of whether we’re robbing Peter to pay Paul here and just shifting our carbon emissions to another sector which will actually be more expensive for the economy.”
12.45AEDT: RenewEconomy has been making some calls, and struggling to find details. Turns out that the level of the reliability options and the portfolio guarantees have not been decided.
What is intriguing is that this appears to be a recommendation from the Energy Security Board, which according to its chairperson Kerry Schott only met for the first time in September. They must have been busy.
She said then that harnessing demand management in Australia, means “we can all stop worrying about building new plants of any description.” Hmmm.
12.55AEDT: Coalition MP says that the mechanism will force energy retailers “to buy coal, gas, for every megawatt-hour of renewable energy they purchase.”
This is exactly what Reneweconomy warned when Frydenberg was trying to sell Finkel to the Coalition party room, and which he so vociferously denied in subsequent calls to RE. But there we go.
13.20AEDT: (Press conference begins)
13.30AEDT: Malcolm Turnbull: “This is part of a comprehensive plan to ensure that energy is affordable, reliable and responsible. …Why is (this energy plan) so much more affordable? It provides investor certainty, which the market has been crying out for.
13.35AEDT: Federal energy minister Josh Frydneberg: “This is a credible, workable, pro-market policy that delivers lower electricity prices. It means no subsidies, no taxes, no trading systems.
“And what it does do is it creates a more reliable, affordable energy system that helps us meet our international climate commitments. … It builds on the excellent work of … Alan Finkel. This is a response to his 50th (recommendation) which was a Clean Energy Target.”
13.38: Energy Security Board chair Dr Kerry Schott says “most importantly, the obligation to have a reliable power system is now intimately linked with an emissions reduction target. If you don’t have those two things linked together, you have a danger of an increase in intermittent renewables, without having reliable and dispatchable power to go with it.
“The other thing that we have recommended… is that the reliability standard… is basically dictated by physics. …So we set a reliability standard across the market, and then that gets translated into original standard, which is effectively state by state.”
13.40AEDT: Turnbull says “the mechanism” will be reviewed annually, to factor in any changes in energy market that have not been taken into account.
13.46AEDT: Reporter asks PM if renewables can stand on their own to feet, without subsidies. His response…
MT: “The answer is yes. This is one of the important things to recognise… They are now competitive with new builds of thermal power. There is no need for a subsidy. They can compete on a level playing field.”
(RE notes further comments on this subject made by Oliver Yates earlier: “The RET is not a subsidy, it is an obligation just like what the government is proposing here. That is what you’re calling a subsidy. “When the government turns it on its head and says, well, now I’m going to require electricity users and electricity retailers to have a certain percentage of dispatchable power. They’re claiming that is not a subsidy. …It was never a subsidy … there was an obligation to have a certain energy mix. Now what the government is saying here, is rather than say they want to have a mix of renewable energy, what they’re saying is actually, they’re requiring an energy mix … of what they call dispatchable energy, which, obviously will be what they talk about as being coal and gas.”)
On the future of the RET…
Frydenberg: The point about the RET is it didn’t account for, one, the geogrpahical focus of a lot of that build, which went to SA, and it didn’t account for the need for storage and back-up.
Audrey Zibelman says what AEMO likes about this mechanism is “it actually signals what the system needs, which is that we need a portfolio of resources that meet all of the objectives of policy.”
Reporter asks what the mix of intermittent renewables might look like in 2030 in order to meet emissions targets …
Frydenberg: The advice by the AEMC, the early analysis is, that (by 2030) renewables will be around 28-36 per cent, and of that, the intermittency, which is the wind and solar, will be around 18-24 per cent. This is a very important point. Not all renewables are the same. Hydro power is baseload power, it’s dispatchable power. Wind and solar need battery storage or pumped hydro in order to have that level of dispatchability. This is extremely important to understand…”
Reporter notes that if one-third of Australia’s emissions reduction task will be done by the electricity sector, under this plan, that leaves two-thirds of the job ahead needing to be picked up by other sectors. Asks who’s going to be doing the heavy lifting?
Josh Frydenberg says he wants to point out “it is often an inconvenient truth that Australia has its lowest emissions intensity on a per capita and GDP basis in 27 years…”
Reporter: “But there is still two-thirds of the job to go…”
Frydenberg: “I would think about the positive of this announcement today, rather than any other challenges in other sectors which will be for another press conference.”
PM on electricity bill savings under this plan.
“This is reducing the cost burden on Australian families and businesses from high energy costs… (it) involves a number of measures….” handballs the question to AER’s Paula Conboy…
Conboy: “Going forward, we’re improving the tools that we use in terms of making sure that it’s only the efficient costs that are being passed through to consumers. We’re undertaking a review of the rate of return that the networks can earn on their asset bases. And also ensuring that when they’re looking at needs on their systems, that they’re not only looking at network needs, but they’re also looking at non-network alternatives, to ensure that … only efficient costs are being passed on to consumers.”
AEMC’s John Pierce: “The effect that we would expect from this (policy) compared to what they have now, where we have prices higher than they need to be because of the policy uncertainty, will be a reduction in uncertainty, triggering investment, expanding supply, and lowering prices. …We also suspect that because there are no certificates, and we’re using contracts, that will also reduce prices and improve the ability of new entrants to come into the market, and improve competition.”
13.58AEDT: Press conference ends as PM says “Question Time calls!”
15.15AEDT: ABC reports South Australia premier Jay Weatherill response to federal energy policy announcement:
Weatherill: “This is a complete victory for the coal industry. Malcolm Turnbull has demonstrated his complete inability to stand up to vested interests and stand for public interest.”
(This story will be continuously updated).