EDITORIAL: Baseload the winner in new electricity policy

ONLY time will tell whether the Coalition’s National Energy Guarantee will – as hoped – bring down power prices and end the instability in the electricity market. But the one thing it won’t do is end the growing backlash against coal any time soon.

Prime Minister Malcolm Turnbull claims that the policy is “agnostic” as to the source of power into the market. But by mandating minimum levels of “dispatchable” energy – mainly coal and gas – the government is effectively ordering the market to take fossil fuel first, before renewables. That’s the reliability guarantee side of the policy.

The other side, the emissions guarantee, is supposed to help Australia reach its Paris agreement obligations, but  this side of the policy is likely to result in no more than 35 per cent or so renewables in the market by 2030, leaving coal entrenched for potentially decades to come.

Electricity generation accounts for about one-third of Australia’s greenhouse gas emissions, so the smaller the share of renewables in the electricity sector, the more that other areas of the economy, especially transport, industry and agriculture, will be called on to help meet the Paris agreement.

But this is years off into the future, and for the time being at least, the Prime Minister’s main aim will be to get energy policy off the political agenda, at least for a while.

In the Hunter Region, the Coalition’s announcement must surely be seen as good news for those with employment in the power stations, or in the coal mines supplying them.

AGL chief executive Andy Vesey described the guarantee as “an important first step” and he was “keen to work together to make it work”. It remains to be seen whether the guarantee has any impact on AGL’s plans to shut Liddell in 2022.

The chief scientist, Alan Finkel, who wanted a clean energy target, said the success of the energy guarantee will depend on extensive consultation by the Energy Security Board (which recommended the policy to the government) with all of the market operators.

By its nature, the National Electricity Market is a government-built structure comprised of profit-making companies, and co-operation to bring down power prices in the name of the public interest might not come easily. Let’s see what happens when the mercury soars and the new policy is put to the test.

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