The Queensland and Victorian governments are hedging their bets about the Turnbull government’s national energy guarantee ahead of the circulation of key design details expected during the next 48 hours.



Queensland’s energy minister, Anthony Lynham, said on Thursday the state was still reviewing the stakeholder submissions to the Energy Security Board and “those submissions highlight that a lot of critical issues still need to be resolved”.

Lynham said Queensland was still considering whether or not to support the national energy guarantee, and the state would remain “resolute in our commitment to a 50% renewable energy target by 2030”.

Victoria echoed that view. “We won’t be signing up to anything that undermines or puts a break on Victoria’s nation-leading renewable energy agenda and climate change policies,” the state’s energy minister, Lily D’Ambrosio, told an economic conference on Thursday.

She said if the commonwealth proposal undermined renewables “the only guarantee is that we won’t support it”.

Energy ministers will meet next Friday to decide whether to sign off on the national energy guarantee and are expected to receive a briefing in the next couple of days about the key design principles.

The Neg would impose a reliability obligation and an emissions reduction requirement on energy retailers and a small number of large electricity users from 2020.

The Turnbull government anticipates it will ultimately secure agreement from the Labor governments in Victoria and Queensland, but the ACT government has signalled its preparedness to take a hard line if the commonwealth is inflexible about elements of the scheme.

The energy minister, Josh Frydenberg, moved on Wednesday to extend a peace offering to the territory government in Canberra, signalling he was happy to see emissions reduction reported nationally, not regionally.

Going into next Friday’s talks, the ACT is keen to ensure the national scheme does not penalise its efforts to deliver 100% renewable energy by 2020, and regional reporting of emissions reductions would be problematic because the windfarms supplying power to Canberra are located in South Australia, Queensland and northern New South Wales.

Frydenberg also used the opportunity of the speech to the National Press Club on Wednesday to send a clear public message that state-based renewable schemes would be allowed to continue under the guarantee – which clears a significant point of opposition around the Coag energy council table.

One state determined to oppose the scheme can effectively torpedo it, because changes to the rules governing the national electricity market requires a consensus among the participants.

Frydenberg also faces a difficult internal process with colleagues, because if the states ultimately clear the scheme, key design elements will have to be legislated, triggering more debate within the Coalition party room about the scale of emissions reduction in the electricity sector and beyond, and the speed at which the pollution cuts take effect.

In an effort to frame the internal debate over the next few months, Frydenberg used his speech on Wednesday to deliver a warning to colleagues about the consequences of a fresh frolic on energy policy, arguing consumers would bear the consequences through higher energy prices.



Debate about the national energy guarantee persists as the Turnbull government has committed $50m to a hydrogen energy supply chain pilot project being delivered by a consortium of Japanese and Australian companies, including Kawasaki Heavy Industries Ltd, J-Power (Electric Power Development Co. Ltd), Iwatani Corporation, Marubeni and AGL.

The pilot project will convert brown coal from the Loy Yang mine in the Latrobe Valley into hydrogen for export to Japan for use in the transport sector.

The AGL chief executive, Andy Vesey, said the project was part of a transition plan for coal communities. “As Australia transitions to a carbon-constrained future, creating new sources of prosperity and growth in communities which host conventional coal power stations is a critical priority,” he said.

“This project may spark a reinvigoration of Latrobe Valley’s energy industry by generating a competitive edge in a new market,” Vesey said.

Environment Victoria was unimpressed, saying converting coal into hydrogen made no sense when hydrogen could be produced from renewable sources like wind and solar.

We've seen governments try to subsidise wacky #coal projects like this in the #LatrobeValley before & they delivered zero jobs.



This is just switching one way of polluting for another — It's time for real sustainable solutions!https://t.co/gt3VlZp6yu — Environment Victoria (@EnviroVic) April 12, 2018

“At this stage, the project has none of the approvals it needs, nor has it been through a rigorous environmental impact assessment,” said Environment Victoria campaigns manager, Nicholas Aberle.

“This boondoggle is just another example of companies pretending that the Latrobe Valley can’t produce anything other than coal. It distracts from the real task of planning a truly diverse economy.”