Federal and state energy ministers have made a historic decision to back renewables and storage as part of a new National Transition Plan to protect Australians into the future.
At the energy crisis meeting in Canberra on 8 June, ministers from every state and territory agreed to eleven actions to help pave the way for a clean energy future.
The crisis meeting was held due to previous warnings of a national gas shortage and developing energy crisis.
At a press conference after the meeting, Federal Climate Change and Energy Minister, Chris Bowen, said these steps are “no silver bullet, no magic answers, but material steps forward in a very positive fashion”.
Mr Bowen outlined three key steps from the meeting, which included:
- Developing a capacity mechanism, which prioritises storage and renewable energy
- A gas procurement and storage plan to be coordinated by the Australian Energy Market Operator (AEMO)
- A National Transition Plan, which has consensus from the Federal Government and all states and territories
The Federal Government has tasked the Energy Security Board with developing the draft Capacity Mechanism, which will ensure there is adequate dispatchable capacity in the system to ensure demand is always met.
The mechanism will be expert led and focused on renewable energy and storage, remain within the bounds of Net Zero by 2050, and include open consultation.
The National Transition Plan will be created by all Australian Governments in line with AEMO’s Integrated System Plan (ISP), which lays out the necessary transmission and generation infrastructure necessary to meet future demand in the National Electricity Market.
AEMO will have expanded powers to procure and store gas to be used in times of market spikes.
Climate Councillor, energy expert, former President of BP Australasia and former advisor to Margaret Thatcher, Greg Bourne, said a coordinated and clear plan can finally be developed that will meet the needs of all Australians, rather than leaving the state and territory governments to do all the work.
“Thankfully, the new Federal Government is stepping up and seizing the huge clean industry opportunities before us, and at the same time protecting Australians from future price shocks driven by volatile, expensive and unreliable fossil fuels,” Mr Bourne said.
“By using the Australian Energy Market Operator’s ISP in combination with a stronger emissions target, a national plan means our energy is likely to be more affordable, reliable, and most importantly reduce emissions without the political time-wasting that has held us back for far too long.
“It’s important to note that including coal when developing a capacity mechanism would only increase prices as well as emissions, and wouldn’t provide flexible capacity that can be called on quickly.
“After Australia’s lost decade on climate action, it finally feels like we are catching up with much of the rest of the world and embracing the future, rather than clinging to the past.”
AEC welcomes energy ministers’ decision
The peak body for energy retailers and generators, the Australian Energy Council (AEC), says the energy ministers’ communique following their meeting sends the right message to the market.
The AEC’s Chief Executive, Sarah McNamara, said, “We know there is not a quick fix for the problems in the market at the moment and that’s why we are pleased to see the focus on measured solutions that will provide a long-term benefit to consumers.
“We are also very encouraged by the federal, state and territory ministers’ commitment to work together to ensure Australia’s energy system is affordable, reliable and secure during the transition to more renewables-based generation.
“Critical to this is the ongoing work, led by the Energy Security Board, on a mechanism to ensure there is sufficient dispatchable supply available in the market as that transition is underway.
“We also welcome the decision to focus on market mechanisms to ensure supply and acknowledge there remains a lot of work to do in this area.
“At the moment, short term issues are causing genuine pain for consumers across Australia, focussing on getting reforms right will help protect Australia’s electricity networks in the future.”
Hydrogen Council praises commitment to national plan
The peak representative body for the Australian hydrogen industry, the Australian Hydrogen Council (AHC), has supported a commitment by Australian energy ministers to a National Transition Plan to move the country to a zero emissions economy is a watershed moment.
AHC CEO, Dr Fiona Simon, said it was heartening to see all ministers focussed not only on short-term issues like pricing but also the bigger picture.
“All states and territories have already committed to reducing emissions in their power grids and hitting net zero by 2050 – it’s how we get there that’s unclear,” Dr Simon said.
The AHC called for a new body to develop an evidence-based approach to planning and coordinating the transition to net zero in a white paper in September 2021.
“We said then that co-locating hydrogen producers, users and exporters in hubs isn’t enough,” Dr Simon said.
“We need to carefully coordinate work across both the gas and electricity sectors to support energy affordability for consumers.”
Experts react to the crisis meeting outcome
Other experts have weighed in on the outcome of the energy crisis meeting.
Former Origin Energy Executive, past Director of the Clean Energy Finance Corporation and Climate Councillor, Andrew Stock, said Australia must plan and implement steps to free itself from expensive, polluting and unreliable fossil fuels – and fast.
“We need the new Australian Federal Government to step-up alongside the states and territory governments and get on with showing, finally, what strong climate and energy leadership looks like,” Mr Stock said.
Senior energy market analyst and director of Climate Energy Finance, Tim Buckley, said the Labor party was elected with a clear climate and energy mandate and rather than more plans, co-ordinated actions are required urgently now.
“AEMO has done a great job on their ISP to provide a roadmap, but their mandate for reliability and affordability needs to be updated to have an explicit decarbonisation objective as well,” Mr Buckley said.
“A capacity mechanism is not going to solve the current energy crisis. Nor will consulting with CEOs of the fossil fuel firms and their lobbyists that caused this domestic eastern Australian crisis.
“Giving AEMO more powers to procure really expensive gas is ineffective. Australia is the largest exporter of fossil gas in the world.
“We need to implement the Australian Domestic Gas Security Mechanism to reserve domestic east Australian gas to meet domestic needs at a reasonable price, and let the multinational gas cartel export the surplus.”
“Australia has inherited a trillion dollars of debt from the previous government’s mismanagement. It is time to repeal all fossil fuel subsidies, cap the diesel fuel rebate at $100m per firm per year and introduce a Carbon Export SuperTax on these multinationals. The fossil fuel industry’s free ride on the back of Australian consumers and Australian industry must stop.”
