The shadow climate change minister Mark Butler says Labor won’t support the Turnbull government’s new energy policy if it dumps the clean energy target recommended by the chief scientist, Alan Finkel.



With the Turnbull government expected to press ahead with its new energy policy this week after consideration by the cabinet and the party room, Butler issued a clear public warning on Sunday that the loss of the clean energy target meant there was no prospect of bipartisan agreement between the major parties.

Butler said Labor had been prepared to keep an open mind on the clean energy target, even though it was not the opposition’s preferred policy option, because the model had been thought through by the chief scientist and endorsed uniformly by stakeholders across the community.

“So what we’re very worried about and what people in the community who care deeply about the energy crisis are worried about is the increasing likelihood that Malcolm Turnbull is walking away from the clean energy target under pressure from Tony Abbott,” Butler told the ABC on Sunday.

Butler declared if the prime minister dumped the clean energy target, “then he won’t get the support of the Labor party”.

Asked again whether dropping the clean energy target was a dealbreaker for the ALP, Butler replied: “Of course.”

The government has spent the last month or so signalling it won’t adopt the clean energy target modelled in the Finkel review, and last week queried whether renewable energy required subsidies now the technologies were becoming cost-competitive with coal and gas.

The clean energy target has been opposed from the outset by Abbott and a small group of conservatives within the Coalition party room, including the Nationals MP George Christensen, who has said several times he won’t vote for it.

As well as ideological opposition from some quarters of the party, some government MPs have also been concerned that their main political pressure point from the voters is rising prices and network reliability.

Despite the arguments in the Finkel review that a clean energy target would lower electricity prices compared with business as usual, some Liberals equate subsidies for renewables with higher power price increases.

As well as comprehensively overhauling the national electricity market rules to ensure more dispatachable energy is made available to the market, the government’s new energy policy is also understood to include measures to lower greenhouse gas emissions.

On the rule changes, the Australian Energy Market Operator has asked the government to adopt a day ahead market – where the market operator identifies the energy demand for the next day, hour-by-hour, then generators bid in via reverse auctions to supply the market – as a clear market signal to bring more dispatchable power into the grid.

The energy minister, Josh Frydenberg, has also said a number of times the government intends to remain within the Paris international climate agreement, which involves an undertaking that Australia will reduce emissions by 26-28% on 2005 levels by 2030.

If the government dumps the clean energy target, it is possible they could set a new emissions-reduction trajectory, and use the architecture of the existing Direct Action policy, including more funding to the existing Emissions Reduction Fund and adjusting the existing safeguard mechanism, to encourage abatement.

The government has also flagged the use of international permits through its review of the Direct Action policy.

It is understood Labor is prepared to look at an alternative plan for abatement if the government produces one this week, but the opposition isn’t prepared to support an alternative to the clean energy target unless it is a serious policy mechanism dealing with the problem of carbon risk.

Going in to what will be a critical political fortnight, Labor is increasingly of the view that the government, with its new energy policy, cannot successfully balance Abbott’s demands and the opposition’s demands.

The government began the process of laying the ground for its new energy policy almost 12 months ago by signalling it might adopt an emissions intensity trading scheme for electricity, then dumping that, then subsequently setting up the Finkel review, which proposed the clean energy target, which the government is now backing away from.

The recommendations of the Finkel review have support across the board – from the energy sector, from business groups, from environmentalists and state governments – and it was hoped the clean energy target could be a policy that Labor, federally, could support.

Bipartisanship is particularly important in energy policy because it stabilises the investment framework and removes carbon risk, so energy companies know which assets to invest in, and financial institutions know which technology will be viable over the long term.