ANU experts have their say on energy policy

18 October 2017

The Federal Government has announced a new energy plan that sees an emphasis on affordable and reliable power and will not adopt the Clean Energy Target recommended in Australia's Chief Scientist Alan Finkel's review of the energy sector.

A number of ANU experts have provided their opinion on the Government's new policy.

Professor Ken Baldwin, Director, ANU Energy Change Institute

"The National Energy Guarantee has thrown the electricity sector into more policy turmoil by putting in jeopardy a bipartisan approach to energy and climate policy. By removing the Clean Energy Target it fails the technology neutrality test because it does not impose the true cost of greenhouse gas emissions on fossil fuel generation. Further, it is not clear whether the NEG can do the heavy lifting for the rest of the economy that will be needed to meet our Paris targets. Inevitably carbon pricing will be adopted around the world, and only when a future Australian government aligns with this will the energy industry find the policy certainty needed to unlock the logjam  in renewable energy investment."
 

Paul Burke, Fellow, Crawford School of Public Policy

"The announced national energy guarantee has potential, with much depending on how the emissions and reliability mechanisms are calibrated.

"The emissions guarantee is an emissions intensity scheme. It would need to be set ambitiously if it is going to help us achieve a relatively rapid move to a low-carbon electricity system.

"The reliability guarantee could help to encourage investment in energy storage and other dispatchable energy capacity. We would run into high costs, however, if electricity retailers were mandated to maintain too much in the way of dispatchable capacity.

"A key feature of the proposal is the ability for retailers to contract among one another to make up for any shortfalls in their own electricity portfolios. This adds flexibility to how compliance can be achieved.

"It is likely that renewables plus pumped hydro and battery technologies will be at the heart of our future electricity system. The government's proposal, if well calibrated, could help to facilitate a transition to this system of the future.

"Australia has pursued many ideas for policies to reduce emissions. Economists typically recommend a simple carbon price, an approach that has a lot of attractive features. But the government's proposed approach for the electricity sector is one that also has potential. Questions remain over how emissions reductions will be achieved in other key sectors of the economy."


Professor Andrew Blakers, ANU College of Engineering and Computer Science

"The cheapest way to meet the Paris emissions target is by increasing the renewable energy share of electricity to 50 per cent. As the Prime Minister points out, pumped hydro storage (including Snowy 2.0) is highly effective and cost competitive. Pumped hydro can be built fast enough to stabilise any amount of solar and wind at lower overall cost than any fossil fuel alternative."
 

Dr James Prest, Australian Centre for Environmental Law & Centre for Climate Law and Policy

"Any policy measure whatever its name that subsidizes coal or other fossil fuels runs counter to both Australia's commitment under Article 2(1)(a)(v) of the Kyoto Protocol to the UN Framework Convention on Climate Change to 'Progressive reduction or phasing out of market imperfections, fiscal incentives, tax and duty exemptions and subsidies in all greenhouse gas emitting sectors that run counter to the objective of the Convention and application of market instruments'." (http://unfccc.int/kyoto_protocol/items/1678.php )

"It also directly contradicts the commitment to end fossil fuel subsidies made by Australia as one of the signatories to a G20 Summit Statement in 2016."


Professor Frank Jotzo, Director, Centre for Climate Economics and Policy

"The NEG package is yet another attempt to craft an electricity sector policy that the rival parts of the Coalition could live with. Whether it will be put in place and survive depends on the fragile politics within government, on whether the States support it, and on what stance the federal Labor party takes on it. 

"Whether it will work in practice and be effective depends on detail that has not yet been decided or released. By how much it could cut emissions depends on the relative stringency of the reliability part which favours fossil fuel generators, and the emissions part which favours new renewables. Expectations clearly are for an environmentally very weak scheme, though the settings could be changed in future. It is third best compared to just a straight price signal on carbon emissions.

"The reliability aspect of the scheme is only sketched in the documentation available so far. It appears highly interventionist and it is not obvious how it could achieve its goals. Reliability problems in Australia's power supply occur on hot summer days, and contracting for an average supply of coal or gas power over a year does not necessarily help cover the spikes in demand. To achieve this, a much more fine grained scheme would be needed that also allows for demand side reductions. The electricity market will generally do better at this than a planning approach as the NEG seems to imply."


Dr Matthew Stocks, Research School of Engineering

"Electricity is the easiest and cheapest sector to reduce our carbon emissions. However, electricity generators operate for decades and require long-term certainty to reduce risk and promote development. Australia needs a bipartisan approach to develop a stable energy policy, as we saw at the introduction of the renewable energy target, to give the industry the confidence to plan for the future."


Professor Tom Faunce, ANU College of Law & Medical School

"Nations with stable incentives for investment in the renewable energy sector will see growth in their economies and in employment rates. Coal-fired power stations and fracking pollute the environment and create fewer new jobs than a booming renewable energy sector. If Australia doesn't create a stable platform for renewable investment it will be left behind in the race for next generation clean energy technologies."


Professor Llewelyn Hughes, ANU Crawford School of Public Policy

"Any energy policy has to meet two conditions: first to create a stable platform that gives business the confidence to invest in long-lasting energy infrastructure. Second to ensure this platform is consistent with Australia's global climate obligations. The government's challenge is to build a bipartisan consensus that meets these conditions, something it has failed to do as yet."


Professor Elmars Krausz, Research School of Chemistry

"Our Paris Agreement is for a reduction at a date (in 2020) which is beyond the term of the current government. Abandoning the clean energy target leaves no clear mechanism whereby the Paris Agreement reduction can be achieved."