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Australia Edges Toward New Energy Policy After Decade of Turmoil

  • States and territories give cautious backing to new plan
  • Energy Minister Frydenberg targets final policy by August
Buildings in the financial district stand illuminated at night in Sydney, Australia, on Friday, Sept. 29, 2017. A bungled transition from coal to clean energy has left resource-rich Australia with an unwanted crown: the highest power prices in the world. Photographer: Cole Bennetts/Bloomberg

Australia may agree the final rules of its contentious National Energy Guarantee by August after winning cautious backing from states and territories for a policy the ruling Coalition hopes will end a decade of policy paralysis.

Energy ministers from Australia’s six states and two territories signed off on a preliminary deal to back the scheme at a Council of Australian Governments meeting held in Melbourne on Friday, according to an emailed statement from the COAG Energy Council. The government appointed Energy Security Board has been instructed to develop the detailed design of the guarantee ahead of a follow-up meeting due August.

The decision “is a big step forward in delivering a more affordable and reliable energy system as we transition to a lower emissions future,” Energy Minister Josh Frydenberg said in an emailed statement Friday. “There was a lot of good will in the room, and while there is still much work to do, there was a commitment to getting an outcome in August.”

While the basic concept of the guarantee has attracted preliminary support from influential business lobby groups and some of the nation’s biggest corporations including BHP Billiton Ltd., it faces a more difficult task to win unanimous political backing. The majority of states and territories are governed by Labor, the main political opponent to Prime Minister Malcolm Turnbull’s ruling Liberal-National coalition.

Queensland and Victoria states remain concerned by what they see as the guarantee’s modest target of reducing 2005 emission levels by 26 percent by 2030. Queensland’s Labor government, which plans a 50 percent renewable target by 2030, said it “had not been provided the information it needed to make a call.” Victoria, also governed by Labor, said it will ensure the framework of the guarantee has no impact on its renewable energy targets of 40 percent by 2025 and net-zero emissions by 2050.

In October Turnbull ditched plans to set renewable power targets as part of the guarantee, which aims to lower electricity prices and require generators to guarantee reliable supply and limit emissions. The nation, one of the world’s biggest coal and gas exporters, has been mired in an energy crisis that has pushed up local power prices and cast doubt on the reliability of its grid.

A decade of political dithering and climate policy missteps have set its patchwork power system adrift, ratcheting up manufacturing costs and hurting consumers with a doubling in electricity prices since last year and rising risks of blackouts.

READ MORE: Why Energy-Rich Australia Suffers the World’s Priciest Power

Advocates for renewable energy have warned Turnbull’s decision to walk away from a clean energy target will mean a decline in clean-energy investment, leading to a jump in power prices. The government has argued that falling costs mean the technologies no longer need government subsidies to compete against traditional energy sources.

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