Meeting on Friday between energy ministers almost derailed by disagreement over how Energy Security Board should proceed

The Victorian energy minister Lily D’Ambrosio has written to the Energy Security Board asking for new detailed analysis to be provided on the national energy guarantee, as the stand off between the Turnbull government and the states over energy policy shifts into its decisive phase.



The federal energy minister Josh Frydenberg secured agreement on Friday for further work to be done on the Neg, but the process was almost derailed by a backroom skirmish about the riding instructions for the Energy Security Board before a critical meeting in August.

The Energy Security Board was established last year by the Commonwealth and the states to provide advice about the proposed energy policy overhaul, and given it is a joint body, there has been sensitivity behind the scenes about who instructs it.

Sign up to receive the top stories every morning

Victoria and Queensland wanted a detailed form of words recorded in a joint communique setting out specific lines of inquiry for the Energy Security Board to pursue before the Coag energy council reconvenes in August for a meeting that will either tick or torpedo the policy – but Frydenberg refused.

The argument played out at a private dinner the ministers attended in Melbourne before Friday’s meeting.

The wording of the joint communique distributed after Friday’s meeting is entirely non-specific, saying the Energy Security Board “will consult with jurisdictions on the specific details of the design” and the meeting “noted that the states have raised issues that will require further work ahead of the August meeting”.

Victoria has now written to the Energy Security Board setting out the issues Labor states want addressed, including the treatment of their renewable energy schemes and targets, and the consequences of future adjustment to the proposed emissions reduction target of 26% on 2005 levels by 2030.

The letter, seen by Guardian Australia, sets out five specific lines of inquiry, including the impact of the targets and their interaction, and the impact of scaleability of the national target; ensuring that regulators have sufficient powers to ensure compliance with the emissions reduction obligations; ensuring competition concerns are addressed; and seeking more detail about how the Neg will work with pre-existing concepts like the strategic reserve in the national energy market.

The whole subject of emissions reduction, and all the components required to achieve it, is a deeply sensitive issue within the federal Coalition, and Frydenberg has insisted Canberra will unilaterally determine those elements of the policy.

While welcoming Friday’s progress, Frydenberg made it entirely clear that the Commonwealth would not be budging on the 26% – a figure both the Labor states and many experts argue is entirely inadequate.

Data released this week on renewables compiled by Green Energy Markets and funded by the progressive activist group GetUp suggests the Neg will deliver no meaningful emissions reductions in its own right because the capacity of renewable projects now under construction already exceeds what is required to achieve the 2030 Neg target.

The federal energy minister also insisted that any emissions reduction undertaken at the state level would count in the national target. That issue, the relationship between the national target and the state schemes, is a major source of conflict with some state governments.

Labor states urged to reject 'woefully inadequate' emissions reduction target Read more

Frydenberg declined to say whether or not energy companies would be allowed to lower their emissions by the purchase of offsets, which some of the jurisdictions don’t support.

“We remain open on the issue,” Frydenberg said. “I’m not going into further detail on it other than to say we retain an open mind on the issue of permits.”

Energy ministers will participate in a telephone hook up in June to check progress before the Energy Security Board produces a detailed design of the scheme in July, and the Coag energy council reconvenes in August.

Despite the continuing flash points, and the fact several states are refusing to sign on in the absence of detail, Frydenberg is sounding upbeat about the chances of landing a deal on the policy in August.

“I am confident that all the issues that were discussed today and last night with the ministers can [be worked] through, and that we can land a position in August which is in the national interest,” Frydenberg told reporters after the meeting.

“From the Turnbull government’s perspective, from the Commonwealth’s perspective, the national energy guarantee is Australia’s best chance to integrate energy and climate policy and deliver cheaper, cleaner, more reliable power to all Australians.”

“If we don’t seize this opportunity, what we will see is higher prices, lower reliability, and more expensive government interventions, and that is not a positive way forward for our country.”