Energy and environment minister downplays Monday’s comments about a possible scheme for the electricity sector after internal pressure

This article is more than 3 years old

This article is more than 3 years old

The energy and environment minister, Josh Frydenberg, has folded in the face of internal pressure, declaring the Turnbull government will not pursue emissions trading as part of adjusting its climate policy to meet Australia’s international emissions reduction targets.



In media interviews on Monday morning Frydenberg explicitly said a looming review of the government’s Direct Action climate change policy would canvas the desirability of a trading scheme for the electricity sector.

But after backbenchers and one cabinet minister – Christopher Pyne – dissented vociferously from that view over the course of Monday, Frydenberg told 3AW on Tuesday night he had not flagged an emissions intensity trading scheme for the electricity sector.

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“It’s always been our policy to have a review. I didn’t mention an emissions intensity scheme – that’s not in any document to the Coalition has put out,” the minister said on Wednesday night.

“The Turnbull government is not contemplating such a scheme. We are not advocating such a scheme”.

“What we are focused on is driving down electricity prices and … energy security.”

He said an emissions trading scheme was “not the policy of the Turnbull government”.

The recanting followed a day of canvassing government dissenters. Coalition sources have told Guardian Australia Frydenberg spoke to a number of opponents of carbon pricing over the course of Tuesday.

On Tuesday night, the former prime minister Tony Abbott also weighed into the poisonous internal debate.

He told Sky News: “I’m sure the last thing ministers want to do is reopen questions that were settled for our side back in 2009.”

“We’re against a carbon tax. We’re against an emissions trading scheme. We’re against anything that’s a carbon tax or an ETS by stealth,” Abbott said.

“We are the party of lower power prices and should let Labor be the party that artificially increases [electricity] prices under Greens pressure.”

The terms of reference for the Direct Action review Frydenberg outlined at the beginning of the week include considering policy mechanisms to reduce emissions on a “sector-by-sector basis” – which was interpreted by analysts as a green light for the review to consider an emissions trading scheme in the electricity sector.

On Monday Frydenberg went a step further, telling the ABC the government would look at an emissions intensity scheme for the electricity sector as part of the review of Direct Action.

“Now, as you know, the electricity sector is the one that produces the most emissions; around a third of Australia’s emissions come from that sector,” the minister told the ABC’s AM program.



“We know that there’s been a large number of bodies that have recommended an emissions intensity scheme, which is effectively a baseline and credit scheme.

“We’ll look at that.”

Frydenberg’s initially positive comments on Monday are in line with advice to the government from the Climate Change Authority, from the energy industry and the CSIRO.

On Tuesday Australia’s electricity and gas transmission industry called on the Turnbull government to implement a form of carbon trading in the national electricity market by 2022 and review the scope for economy-wide carbon pricing by 2027.

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While Abbott once characterised carbon pricing as a wrecking ball through the Australian economy, the new report, backed by the CSIRO, says adopting an emissions intensity scheme is the least costly way of reducing emissions, and could actually save customers $200 a year by 2030.

Some stakeholders believe the Finkel review into energy security and Australia’s climate commitments may also float the desirability of an emissions intensity scheme for the electricity sector when it presents its preliminary fundings to Friday’s Coag meeting of the prime minister and the premiers.

Business and Australia’s energy sector has been calling on the government to deliver policy certainty in order to allow an orderly transition in the electricity sector from emissions intensive sources of power generation to low emissions technologies.