Finance Finance News Abandoning clean energy target will push up power prices, industry says

Abandoning clean energy target will push up power prices, industry says

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Wind farms will be an integral part of Australia's coming no-carbon energy grid. Photo: AAP
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The Turnbull government looks set to walk away from the clean energy target (CET), a move that would raise power prices and stall investment, industry groups have warned.

In a scene-setting speech on Monday, Minister for Environment and Energy Josh Frydenberg characterised CET proposals as “handouts”, arguing that what industry wanted was “a settled bipartisan investment climate whether there are subsidies or not”.

Casting doubt on any plans to subsidise clean energy, he suggested that recent wind farm deals were done at prices “very competitive with other energy technologies”.

Instead, Mr Frydenberg raised the possibility of a scheme to subsidise dispatchable power, such as energy storage or existing coal-fired plants, saying “the market doesn’t put a premium on dispatchable power”.

The speech, at an energy summit in Sydney, was interpreted as a clear sign the government would not adopt the CET, the key recommendation in Chief Scientist Alan Finkel’s recent report on Australia’s energy needs.

clean energy target
Josh Frydenberg has laid the foundation for the government to reject a Clean Energy Target. Photo: AAP

Industry bodies warned on Monday that such a decision would push up power prices and reduce investment certainty.

“The CET holds promise as a means of clarifying the way the energy sector will be able to deliver affordable and reliable energy will ensure the sector makes its contribution to the reduction in emissions we have committed to under the Paris Accord,” said Australian Industry Group CEO Innes Willox.  

“To deliver the required levels of investment in energy, we need policy certainty and consistency. Subject to the details of its design, the CET appears to be an approach that could provide that certainty and consistency.”

Business Council wants ‘stable policy framework’

If the government were to reject the CET, it would all but guarantee a political fight over energy policy in the lead-up to the next election.

Labor has said it would back a Clean Energy Target, though it is wary of accepting a model that subsidises so-called “clean coal”.

Business Council of Australia CEO Jennifer Westacott told The New Daily companies would only invest in new energy infrastructure with a “stable policy framework” in place that could “endure through changes of government”.

The Australian Energy Council, which represents the nation’s electricity companies, warned “policy uncertainty and partisan positioning” would “continue the impasse we have had for more than a decade”.

“The results are there for all to see – a less reliable supply, more uncertainty and higher electricity bills,” chief executive Matthew Warren said in a statement to The New Daily.

“We believe the Finkel Review provided a workable blueprint to address these issues.

“Commitment to a national bipartisan policy is critical if we are to bring down energy costs, increase reliability and build a lower emissions grid.”

Bill Shorten says Labor would support a Clean Energy Target. Photo: AAP

Opposition Leader Bill Shorten described the development as “disturbing”, saying the Prime Minister was capitulating to the “knuckle draggers of the right wing of the Liberal Party”.

“If Turnbull walks away from the Chief Scientist’s report, he’s walking away from lower prices for consumers and households,” he said.

But Mr Frydenberg’s comments were welcomed by some in the Coalition’s conservative wing, which argued strongly against the Finkel report.

Tony Abbott to address climate sceptics in London

Former prime minister Tony Abbott, who will address a climate sceptics society in London this week, has said he would cross the floor of Parliament to oppose a CET.

Liberal MP Craig Kelly told The New Daily he was pleased the CET appeared to be off the table, saying the Prime Minister and Mr Frydenberg were “doing the right thing”.

“To have another system, to pay billions of dollars in additional subsidies under a Clean Energy Target is clearly something the economy could not stand,” he said.  

The government has said it will make a final decision on the Finkel report by the end of the year.

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