Australian Government Debates New Energy Policy, Considers Role of Coal

5 July 2018

Australian lawmakers are in the process of negotiating the National Energy Guarantee (NEG) policy, which was proposed in 2017 in response to energy cost concerns in the Oceanic nation. Proponents say that the NEG could answer concerns over energy affordability, reliability, and emissions reductions targets in a single policy, while detractors have cautioned that it could increase the country’s reliance on coal and complicate its ability to meet international climate commitments. 

The new policy will need both federal-level approval, as well as the sign-off from Australia’s individual states and territories. Australian energy minister Josh Frydenberg is set to discuss the planned NEG with state and territory energy ministers in early August. 

Last week, Frydenberg defended the prospect of new coal-powered plants, highlighting in particular the importance of ensuring reliable energy supplies. 

“I would welcome a new coal-fired power station for our country because it supplies reliable baseload power and it has served us well in the past and will continue to serve us well in the future,” he said, according to comments reported in The Guardian. 

 “Coal has a very important role in our energy mix, and I have no doubt it will have for many, many years to come, possibly forever,” Prime Minister Malcolm Turnbull has also said, though opposition lawmakers have come out to criticise the stance. 

For example, Mark Butler, the Labor parliamentarian from Adelaide who serves as Shadow Minister for Climate Change and Energy, said that “Australia's energy future is renewable, not a coal fantasy.” In a statement delivered via Facebook, Butler cited statistics from the government’s most recent Resources and Energy Quarterly report to demonstrate that the coal industry is not in Australia’s future interests. 

Emphasising the importance of assisting coal communities, he added that lawmakers should “manage the ongoing transition in our economy, including the long term structural decline of thermal coal, with policies to create new jobs and industries and deliver a just transition to thermal coal communities.” 

Meanwhile, the Australian Senate also voted last week on a motion “to facilitate the building of new coal-fired power stations and the retrofitting of existing base-load power stations,” which narrowly failed by a 34-32 vote margin. Some Liberal Party lawmakers have continued to insist that the NEG must assist coal plants, either through retrofitting or new plant construction. 

Australia is one of the world’s top producers and exporters of coal, and the fuel is one of its top “export earners,” according to government statistics. Mining is also one of Australia’s key industries, and domestic debates on climate action have often involved balancing a fine line between the need to curb emissions while also ensuring that jobs and growth do not take a major hit. 

Years ago, for example, the country under the leadership of then-Prime Minister Julia Gillard of the Labor Party put in place a national carbon tax, which was meant to evolve into an emissions trading scheme after a few years and be linked to the EU’s carbon market. The plan drew heated controversy, however, over its potential implications for coal exports and domestic jobs, and was ultimately repealed in 2014 after the Liberal Party came to power, then led by Tony Abbott. (See Bridges Weekly, 17 July 2014) 

International climate commitments

Facing additional questions from the opposition Labor party, Turnbull said last month that the NEG was “designed to ensure you have dispatchable power, reliable power, affordable power and you meet your Paris emissions targets,” according to comments reported in The Guardian. 

He was referring to the UN’s Paris Agreement on climate change, the landmark accord governing post-2020 international climate action, which has been in force since late 2016. 

However, some climate watchers have questioned the Australian government’s ability to meet its Paris targets under current policies. For instance, Climate Action Tracker (CAT), an independent research group tracking countries’ climate action and commitments, noted in its most recent report that the Australian government has not shown sufficiently that it is on track to meet its Paris pledges, as outlined in its nationally determined contribution (NDC). These NDCs are domestic-level plans that are the building blocks of the Paris deal, and which countries will need to update over time, with a view to making them more ambitious. 

Climate Action Tracker’s assessment suggests that emissions have risen over the last three years, and current policies will lead the country to “far exceed” its Paris NDC target, which the organisation also suggests is too lax. 

As part of the NEG, the government has emphasised a 26 percent reduction of emissions in the electric sector, which is in line with the overall emissions reductions target of the NDC. However, critics warned that this could create complications in making those emissions cuts via other sectors. 

How Australia will fulfil other climate pledges made in different international forums, most notably the G20, is also an open question. Australia, along with the other G20 members, have agreed in the past to phase out “inefficient fossil fuel subsidies.” 

The government made this commitment multiple times since 2009, along with other G20 countries, including in the joint communiqué issued at the 2014 G20 Summit in Brisbane, Australia. 

ICTSD reporting; “No end to climate wars if energy pact offers concession to coal, Labor warns,” THE GUARDIAN, 26 June 2018; “Energy minister would welcome new coal-fired power plant,” THE GUARDIAN, 25 June 2018; “Coalition backs Hanson motion for new coal-fired power stations,” THE GUARDIAN, 27 June 2018.

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