Australia’s NEG not dead as Labor opposition revives policy

The Australian government’s failed National Energy Guarantee has been resurrected by the country’s opposition Labor Party.

Labor leader Bill Shorten pledged this week to “pursue a bipartisan market mechanism, such as a National Energy Guarantee” to deliver on its pledge to achieve 50 percent renewable energy and a reduction in carbon emissions by 46 percent on 2005 levels, both by 2030.

The latter target is considerably higher than that set by the governing Liberal-National Coalition, which has committed to meeting a 26 percent reduction in carbon emissions by 2030 as set out in the Paris agreement.

One investor who spoke to Infrastructure Investor welcomed the announcement, saying it was “overwhelmingly positive” for the sector.

“The NEG wasn’t a perfect policy, but I’d be happy to see it enacted on the current basis,” he said. “Affirming the higher emissions reduction target is good – everyone knows it has to happen, so the sooner politicians start speaking honestly and publicly about it, the better.”

The NEG was the Coalition’s flagship energy policy and aimed to reduce emissions while improving reliability and lowering power prices for consumers. The emissions reduction component proved to be a sticking point, though, leading to former prime minister Malcolm Turnbull being forced out of office by his own party in August.

Energy minister Angus Taylor, appointed subsequently by new prime minister Scott Morrison, has committed to reviving the reliability obligation of the NEG without the emissions reduction component.

A federal election can be held no later than 19 May 2019 and latest polling indicates a swing in support towards Labor, which would likely lead to them winning a majority in the House of Representatives and forming a government.

In addition to the prospect of the NEG being revived, Shorten and shadow energy minister Mark Butler committed to providing an additional A$10 billion ($7.3 billion; €6.4 billion) to the Clean Energy Finance Corporation over five years from 2019-24, doubling the original commitment.

This money would be used to support large-scale generation and storage projects, including solar and wind farms, to provide concessional loans for the purchase of solar and battery systems, and to boost investment in energy-efficiency projects and community renewable schemes, Shorten and Butler said in a statement.

Future renewables projects could be supported by federal government-backed contracts for difference, too, which are already used in states including Victoria and Queensland.

Labor would also provide A$5 billion in working capital to “future-proof” the energy network through upgrades to transmission and distribution networks, which are privately owned in many states including New South Wales and Victoria.

In the statement, Shorten and Butler said: “Labor’s preference is to achieve a bipartisan agreement on energy policy. But Scott Morrison and the Liberals are too divided and too out of touch to agree on an energy policy that can lower prices, boost renewables and address climate change.

“Labor is prepared to work with the Liberals, but we will not wait for them.”