The Minerals Council of Australia (MCA) welcomes the opportunity to comment on the Energy Security Board’s National Energy Guarantee Draft Detailed Design Consultation Document.
The MCA wants the National Energy Guarantee (NEG) to work. The reason is simple - reliable and affordable energy is central to our economy and to the mining sector.
The National Electricity Market (NEM) in Australia is facing serious challenges including the erosion of baseload generation capacity which is already adversely impacting Australia’s industrial sector and households.
The announced close of Liddell Power Station will likely expose the fragility of the NSW power system. It is critical the NEG address this issue.
The MCA believes a technology neutral approach should be adopted for all low emissions energy sources where no one technology is favoured to the exclusion of others.
Any policy approach should aim to reduce energy costs in Australia and retain a focus on securing reliable lowest cost dispatchable energy supply that is available 24/7, while meeting emissions reduction targets.
The MCA recommends:
1. The 26-28 per cent emissions reduction target be embedded into legislation – this will provide the certainty required for businesses to invest in lowest cost dispatchable generation.
2. All state-based schemes be covered by the national target.
3. The government allow for the uncapped use of domestic and international offsets to minimise the cost of meeting Australia’s climate change obligations.
4. Emissions intensive trade exposed industries be accorded the same treatment as under the Renewable Energy Target.
5. The requirement that generators must allocate all of their generation and associated emissions by the reporting and compliance date be
a. removed; or
b. all generation accredited prior to the enactment of the NEG legislation be placed into the proposed unallocated pool.
6. Consideration be given to creating an opt-in arrangement for the Large User Reliability Obligation instead of the proposed opt-out provision.
7. All eligible contracts for meeting the Large User Reliability Obligation be grandfathered from the date the NEG legislation is passed.
8. Further work is required on whether the enactment of the Reliability Obligation will trigger Regulatory Change provisions within existing contracts.
9. The ESB consider benchmarking wholesale electricity prices based on the Long Run Marginal Cost of a portfolio of power generation technologies in Australia and comparable countries.
Consideration be given to the ACCC’s recommendation government underwrite long-term energy contracts to secure private-sector investment in new low-cost power generation.