COAG Energy Council ministers give the go ahead to NEG

State and territory energy ministers, headed by Federal Energy Minister Josh Frydenberg, decided on Friday to continue discussions on the National Energy Guarantee (NEG).

The ministers, who form the Council of Australian Governments’ (COAG) Energy Council have agreed to send the NEG policy to the final design and drafting legislation stage before a vote at the Council’s next meeting, due in August.

The group agreed to the goal of finalising the new policy by the end of 2018, for implementation over the next two years.

Proposed by the Energy Security Board in October 2017, the NEG looks to encourage new investment in clean and low emissions technologies while allowing the electricity system to continue to operate reliably.

The NEG would force electricity retailers to ensure minimum standards of emissions reduction and reliability of supply.

Australia has set a goal of cutting emissions from the main power grid serving eastern Australia – the National Electricity Market – by 26 per cent from the levels in 2005 by 2030.

“The federal government’s position is very clear … the Commonwealth will set the emissions reduction targets for Australia and the way in which we will meet them,” Frydenberg said after the meeting.

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While the states have agreed to keep talking about the NEG, some states are unhappy about the set target for emission cuts, arguing that the set target is too low to drive any new investment.

The ACT, Victoria and Queensland have higher targets for cutting their emissions, and are angry the NEG will not recognise the extra work they propose to do.

But organisations such as the Energy Efficiency Council and Chemistry Australia have supported the COAG Energy Council’s decision to further develop the NEG.

“The new Energy Security Board is playing a very positive role, and we support their continued work on the detailed design,” Energy Efficiency Council CEO Luke Menzel said in a statement.

“A strong pro or anti-NEG position is premature at this point as there is still so much detail to be worked through. What is positive is seeing Australia’s energy ministers engaged in a constructive process focused on resolving questions that have plagued policymakers for well over a decade.”

Chemistry Australia, the national body representing Australia’s chemicals and plastics industries, also welcomed the COAG Energy Council’s Friday decision.

“We support a policy that allows the market to invest in the most effective mix of technologies, and delivers benefits for both industrial and residential customers. There is still a lot of detail to come, but it is promising to see in-principle agreement by all states and territories,” said Chemistry Australia CEO Samantha Read.

“Today’s outcome is a step towards greater certainty in energy policy for industrial energy users and Australia’s valuable manufacturing supply chains. It’s a step towards improving the environment for investment, employment and growth to support a competitive Australian economy,” she said.