The Labor states will seek a watertight undertaking that their renewable energy schemes and targets will remain undisturbed by the Turnbull government’s proposed national energy guarantee at a critical meeting on Friday.
The Victorian energy minister, Lily D’Ambrosio, told Guardian Australia she would work constructively towards achieving a national consensus on energy policy “but we’ve got thresholds – red line issues – that we are not going to compromise on”.
State and territory energy ministers will meet this Friday with their federal counterpart, Josh Frydenberg, to determine whether the national energy guarantee proceeds to the next stage of work. The expectation from stakeholders is the proposal will proceed to the next hurdle, which is detailed design.
But Victoria is making it clear Canberra will not achieve a final sign-off later this year in the absence of a guarantee that state targets and renewable energy schemes will continue under the new arrangements.
D’Ambrosio said she would also need to be clear about the practical consequences of any unilateral adjustments to the scheme by future federal governments without reference back to the energy council of Coag. “We are not going to sign up to anything sight unseen.”
The Victorian minister objected to the fact the Turnbull government was insisting it would determine the emissions reduction framework for electricity, both the target for emissions reduction, and the trajectory – without reference to the states and territories.
Frydenberg, she said, had telegraphed in advance of Friday’s meeting that the commonwealth would determine emissions reduction and whether or not energy companies would be able to buy offsets to reduce pollution “but we haven’t had the conversation about whether or not that is workable”.
“Will that approach have any perverse consequences for the Neg? We don’t know. What will that do to our state targets? There is no guarantee in the design that our targets will be honoured – nowhere in the documents does it say that.”
D’Ambrosio said it was possible the commonwealth would move independently to legislate its proposed 26% cut – a target she characterised as “pathetic and weak” – and then seek to back-end load the emissions reductions to the final couple of years of the decade between 2020 and 2030, without reference to other participants in the national electricity market.
She said the commonwealth had also failed to take into account the fact it was now cheaper to achieve ambitious emissions reduction in electricity than in other sectors of the economy, such as transport and agriculture. “Frydenberg needs to explain which of the sectors in the non-energy economy will have to carry the greater burden of cutting emissions to meet the Paris obligation. Will it be farmers, or the transport sector or manufacturing?
“Those sectors and others will now have to carry a greater burden and consumers ultimately will have to pay higher costs to achieve abatement in non-electricity areas.”
The Turnbull government’s Neg would impose a reliability obligation and an emissions-reduction requirement on energy retailers and a small number of large electricity users from 2020.
Ahead of Friday’s meeting, a range of stakeholders are urging the commonwealth and the states to come to terms on the proposal, and end a decade of rancorous partisanship on climate and energy policy.
Key business, energy and social welfare groups issued a joint statement on Wednesday characterising the Neg as “a plausible basis for compromise by all sides”.
But the group added caveats. “To earn our support the final design will need to preserve competition; harness existing market structures; operate efficiently and equitably; help deliver the electricity we need at the lowest sustainable cost; be scalable and investment-credible; and from the outset help deliver Australia’s long-term Paris agreement emissions reduction commitments. This should be achievable.”
It also urged the Turnbull government to take action beyond resolving the Neg, saying the government needed to resolve a national climate change policy framework for the whole country, not just the electricity sector.
Environment groups and the ACTU declined to participate in Wednesday’s joint statement. Green groups are urging the Labor states to insist on increasing the level of ambition in the emissions reduction target, because as it stands, the national target will drive no new abatement.
Data on renewables compiled by Green Energy Markets and funded by the progressive activist group GetUp suggests the Neg will deliver no meaningful emissions reductions in its own right because the capacity of renewable projects now under construction already exceeds what is required to achieve the 2030 Neg target of a 26% cut on 2005 levels by 2030.
The Clean Energy Council – which was one of the signatories to the joint statement – said it was “open-minded about the potential of the policy and believe this proposal warrants further detailed design and consultation”.
The group’s chief executive Kane Thornton said the states and territories should keep pressing ahead on the Neg, but he warned support for the concept was not open-ended. “Our ultimate support for the policy will be contingent on completion of an effective and detailed design of the policy and addressing concerns in relation to the emissions target”.
