For folks who aren’t hardcore climate and energy policy tragics, it might be hard to stay on top of the various twists and turns in the debate about the national energy guarantee. This is a good weekend to take stock.



If you were watching events on Friday, you’ll know the federal energy minister Josh Frydenberg has persuaded the states and territories to keep going with the Neg, but just hold that thought. To understand all the dimensions of this debate properly, and I think there’s value in laying it all out – we’ll need a brief recap, then we’ll need to look over the horizon to chart where it’s all going.

The Neg is supposed to deal with two problems. The policy’s reliability and emissions framework is aimed at ensuring the lights stay on at something like an affordable price for energy users, and emissions decrease in the electricity sector so we have some vague hope of meeting our international climate commitments.

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The Neg is entirely a creature of its circumstances. The government isn’t in a position to argue for a carbon price or an emissions trading scheme, or for a continuation of the renewable energy target after 2020 as a rebadged clean energy target – which was an idea put forward by the chief scientist Alan Finkel.



Because of the great, persistent, internal unreason that descends within the Coalition whenever the words carbon abatement are uttered, the government has locked itself out of conventional policy approaches, so it had to conjure up something entirely new, and when you are a government trapped in that universe, the policy will reflect the compromises you’ve had to make to get there.

So the Neg isn’t perfect. Not even close.

Frydenberg is also being shadowed at every turn by Tony Abbott. Abbott, more than any other person, has created the energy mess Australia finds itself in. You’d think his previous miscalculations might trigger a bout of quiet introspection, or even remorse, but no such luck. Our former prime minister is nothing if not relentless, always up for another round of virtue signalling, followed by vandalism.

Tony Abbott (@TonyAbbottMHR) Important that COAG today put reducing price ahead of reducing emissions. The NEG will be good policy if and only if it really does deliver long term certainty; and if HELE coal fired power stations can enter the system without price penalty or restriction

Fortunately, at least in this early point in the proceedings, there is a mild structural check on rampant Abbottism because there are a whole bunch of players – businesses, energy companies, consumers – who are now so worn down by the consequences of 10 years of brain-dead sloganeering and hyper-partisan claptrap that they now just want this problem fixed.

Aided by a broad coalition calling for action, Frydenberg has worked assiduously, doing his best within the constraints he faces, determined to deliver the fix.

The states and territories, who are partners in this joint venture because any one of them has the power to torpedo the policy because of the way the national electricity market is structured, are trying to manage their serious doubts about the commonwealth plan and remain at the table long enough to see if a deal can be done.

So that’s act one of this process. That ended Friday.

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We are now about to embark on acts two and three – the decisive phase of the Neg.

During act two, which will play out between now and August, states and territories will be given more detail about the scheme, and once they have that detail, they will know whether there is a deal to do, or whether there isn’t.

Assuming the commonwealth and the states can come to terms, assuming the scheme is not torpedoed at a meeting of the Coag energy council in August (and right now I assume nothing), then we’ll move into act three, which is the Canberra end of proceedings.

Frydenberg will have to come back to the Coalition party room to secure sign off on legislation enacting the national emissions reduction target for electricity, and determine a trajectory for how fast that emissions reduction happens.

The government will also have to make a decision and get internal sign off about whether energy companies will be able to buy offsets to reduce their emissions, and the treatment of activities that are emissions intensive and trade exposed.

These questions will be resolved while there is a rising public clamour about what happens with emissions reduction in the rest of the Australian economy – a new front that Frydenberg really doesn’t want to open given his plan for electricity is not yet settled, and the colleagues are already skittish.

So in Coalition terms, Frydenberg faces a challenge comparable to climbing Mount Everest without oxygen, and that’s in normal conditions. That’s assuming the government doesn’t blow itself up between now and the end of the year, which on current indications, looks entirely possible.

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But persisting with the idea that Frydenberg can put this deal together through a sheer act of will, that he can scale Everest minus his oxygen tank, that’s not the end of it either.

He still has to get legislation through the parliament. To get it through he’ll have to ensure any internal dissidents intent on “look at me” mischief making don’t do anything spectacularly unhelpful, like crossing the floor.

Then Labor will need to be persuaded to sign up. I think if Frydenberg can push through the various obstacles, the states and the colleagues, federal Labor is more likely to sign on than not, with clearly articulated caveats and conditions.

While that’s not yet a certainty, given at least some of Labor’s calculation will depend on the political contest they think they are in at the time the decision has to be made, the alternative is the ALP starting this whole process over from scratch in the event they win the next federal election.

I suspect that thought alone would give some in Labor nightmares, as would the thought of starting from scratch when their only viable dancing partner in the parliament is the Greens – a party in the midst of something of an identity crisis, a phenomenon that works against a spirit of compromise.

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As a price of entry, the Greens would want at a minimum a much higher emissions reduction target, a plan for shutting down coal fired power and structural adjustment assistance for workers, more subsidies for renewables, and significant government intervention in the electricity market including more generation to future-proof the grid once the transport fleet starts rolling over at pace to electric cars.

To cut a long story short, we could be back at Groundhog Day, where Labor attempts post-election to implement a climate and energy policy that the Greens insist needs to be made more ambitious, which then prompts opposition leader Peter Dutton to demand repeal.

For anyone who has lived through the colossal public policy failure of the past decade, the thought of enduring that zero sum cycle again will be enough to trigger a cold sweat.

However this story ultimately ends, this much is clear: it’s going to be a mind-focusing few months.