POLICY NEEDS TO DELIVER RELIABLE AND AFFORDABLE ENERGY SUPPLY

The Minerals Council of Australia welcomes the National Energy Guarantee announced by the Federal Government as a constructive approach to addressing the long-running energy policy challenge confronting Australia.

The primary aims of Australia’s energy policy need to be restoring reliability and lowering costs, while contributing to emissions reductions. The two parts of the Guarantee, in valuing reliable energy supply and lower emissions generation, offer the potential of delivering on these goals.  We look forward to further details on how the Guarantee will work in practice including how retailers will discharge their obligations.

As the MCA has noted in recent submissions, Australia has lost its energy competitiveness and this is impacting on the country’s ability to compete in international markets.  Indeed, over the last decade Australia has moved from having some of the cheapest to some of the most expensive energy in the developed world.

The Australian Competition and Consumer Commission’s Retail Electricity Pricing Inquiry preliminary report has highlighted the roles played by network costs, increased wholesale prices, retailer margins and environmental schemes in driving energy price rises.

The MCA welcomes the Government’s acceptance of advice from the Energy Security Board that technology-neutral policy signals are needed to drive investment in reliable and affordable power supplies.

The ESB has also advised the Government that the proposed new approach is expected to deliver lower wholesale electricity prices compared to certificate-based subsidy schemes.

The MCA has consistently endorsed  a technology-neutral approach to the provision of new power generation and called for the exercise of caution around subsidy schemes which are currently costing households and businesses more than $3 billion a year.

The proposed new Reliability Guarantee will provide incentives to maintain flexible, dispatchable sources of power supply to improve the reliability of our electricity grid and reduce the risks of power outages. However, the challenge into the future will be to ensure that there is enough new low-cost, reliable power generation to replace the 8,000 MW of old baseload plant which is expected to retire by 2030. 

The MCA also acknowledges the Government’s Emissions Guarantee, with scope for the use of domestic and international carbon units and measures to support the competitiveness of trade-exposed industry sectors.

It will be important for the Government to consult with industry on the detailed design and implementation of the new Reliability and Emissions Guarantees, and any associated measures.

The MCA will continue to engage with Government on the need for reliable, affordable and low emissions energy supplies to deliver a power system which restores Australia’s international competitiveness.

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