NEG does not end the climate wars

The key Labor states of Victoria and South Australia have left the door open to the National Energy Guarantee while maintaining their rage against the Turnbull government for shifting the policy behind their backs.

…Grattan Institute energy program director Tony Wood said Labor will seek concessions for its support so as not to be seen to have rolled over.

These could include guarantees the Turnbull government will not renege on the emissions reduction target once set – which Labor can tighten if it wins the election due in 2019 – and some sort of boundaries around the reliability guarantee so that it does not unduly penalise states with higher wind and solar shares such as SA.

…Meridian Energy Australia chief executive Ed McManus said the electricity market is requiring more fast, short bursts of additional supply capacity as renewable energy penetration increases. he was supported by Infigen chief Ross Rolfe and other energy executives.

Mr McManus said it was less common for the market operator to find that “we are suddenly sort of energy for the next three weeks” – where another coal plant would be a suitable replacement – than to find it needs a short burst of extra power for a few hours or even minutes.

There have been fears that the reliability standard could be costly for states with ambitious renewable energy targets, such as Queensland, Victoria and South Australia.

But Mr McManus said the reliability standard – which is yet to be written – shouldn’t be onerous because they won’t need to cover a large proportion of the energy supplied by retailers.

“I don’t think it’ll be all that expensive and the amount we’ll need will not be all that much,” he said. “It’s going to trend towards demand response, batteries, pumped hydro and gas.”

I think that’s right. But it doesn’t really end the climate wars. All the NEG does is bury the carbon price inside retailer and gentailer accounts so that it’s harder for Tony Abbott to complain about it. The climate wars will now be fought over the emissions reduction target instead, which will need to raised a lot as the Paris process intensifies.

In the end it really doesn’t matter whether it’s an ETS, RET, CET or NEG. They are all just different ways of putting a price on carbon with different people paying the cost each time.

So while Tony Abbott and his brand of loons is still around there is no end to the war and no stable context for investment.