CET ditched in favour of new policy

The Turnbull government has decided to drop the Clean Energy Target in favour of new policy designed to deliver “more affordable and reliable electricity”.

The government will accept the recommendation of the Energy Security Board (ESB) for a new National Energy Guarantee. The Guarantee is made up of two parts (a reliability guarantee and an emissions guarantee) that will require energy retailers across the National Electricity Market to deliver reliable and lower emissions generation each year.

The Australian Energy Market Commission (AEMC) and Australian Energy Market Operator (AEMO) will set up a reliability guarantee with an aim to deliver the right level of dispatchable energy (from ready-to-use sources such as coal, gas, pumped hydro and batteries) needed in each state. An emissions guarantee will be set up to contribute to Australia’s international commitments. The level of the guarantee will be determined by the Commonwealth and enforced by the Australian Energy Regulator (AER).

Energy Networks Australia welcomed the policy. “While the government’s commitments to target reliability and system security are important, any policy can only succeed if it can garner a broad political commitment that lasts beyond a single election cycle,” Energy Networks Australian Interim CEO Andrew Dillon said.

The measures will need careful review, but stable energy and carbon policy will help meet the grid modernisation challenge, keep the lights on and make power bills more affordable, said Dillon.

“There are a range of policy options that can effectively manage the energy transition to deliver lower costs to customers without picking technology winners.

“We have to get beyond schoolyard debates about which is the best policy. This country has learnt the hard way that no climate policy will work if it is only in place for a couple of years.

“To be successful, both sides of politics and all levels of government must work together to provide certainty to investors — whether they are utilities, new innovators or households — so they can make decisions without unnecessary political risk.”

Dillon said Energy Networks Australia would study the National Energy Guarantee closely to understand its impacts on energy networks and consumers, as well as actively participate in the consultation process.