This article is more than 2 years old

This article is more than 2 years old

Josh Frydenberg has declined to bring his national energy guarantee back to the Coalition party room for a full discussion before a make-or-break meeting of energy ministers.



Frydenberg rebuffed a push by the former prime minister Tony Abbott during Tuesday’s Coalition party room meeting for another round of internal consultations about the government’s policy, saying he would bring enabling legislation for approval after the energy ministers signed off on it.

The energy minister is due to meet his state and territory counterparts in August in an effort to secure agreement for the national energy guarantee, a policy that will impose reliability and emissions reduction obligations on energy retailers from 2020.

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Abbott took on Frydenberg during a discussion among MPs about the negative political impact of high power prices, demanding to know whether the national energy guarantee was a fait accompli.

According to government sources, the New South Wales National Andrew Gee kicked off Tuesday’s conversation by telling colleagues that high power prices were killing businesses in his electorate.

Abbott then chimed in, arguing that Frydenberg should bring the national energy guarantee back to the party room for discussion before the critical August meeting, and querying whether emissions reduction under the policy would be linear or backend-loaded in the second half of the decade to 2030.

The Liberal MP Craig Kelly – the chair of the backbench committee on environment and energy – has already argued that Frydenberg does not have a complete mandate from the Coalition party room to do a deal with state governments, which is a necessary component of implementing the national energy guarantee.

Kelly said in April the party room had not yet agreed to an emissions reduction target for the electricity sector of between 26% and 28% by 2030 – which is a core feature of the policy that the government regards as settled.

Also up in the air, according to Kelly, is a regulated level of carbon intensity for the electricity market under the new scheme, and a settled trajectory for any emissions reduction – how fast the mandated pollution cuts are phased in over the decade to 2030.

But Frydenberg insists the party room has agreed on all the key principles of the policy, giving him the imprimatur to move forward with the energy ministers’ council and then pursuing the necessary draft legislation once the deal with the states is settled.

Only Abbott argued on Tuesday in favour of bringing the policy back for a full discussion.

Frydenberg responded to Abbott’s question about the trajectory for emissions reduction by saying it would occur at “least cost” – which some MPs interpreted as meaning the minister would agree to a trajectory which would see emissions reduction backend-loaded to the second half of the decade – the so-called “hockey stick” curve.

Sources said the energy minister had also put offsets on the table during Tuesday’s discussion about the reduction trajectory.

State governments want Frydenberg to agree to a more ambitious emissions reduction target than the government’s proposal of a 26% cut on 2005 levels by 2030 but the Coalition’s contested internal dynamic makes that impossible.

As well as concern about the low target, some states are also worried about the use of offsets. Frydenberg has flagged that he might allow energy companies to buy offsets to reduce their emissions under the national energy guarantee.

There is speculation Frydenberg could take offsets off the table as a sweetener for the states and territories now objecting to the policy on the basis it lacks ambition on emissions reduction, and it doesn’t give jurisdictions credit for the work they are doing under their renewable energy schemes.

Frydenberg told colleagues on Tuesday the use of offsets in the scheme was “under consideration”.

Frydenberg to warn Abbott allies against 'extreme ideologies' on energy Read more

On the sore point of high prices, the energy minister told colleagues that power prices were already on the way down in Queensland but reductions in the wholesale price of electricity would take longer to flow through to other states, including New South Wales and South Australia, because of hedging in forward contracts in the national energy market.

Kelly also contributed during Tuesday’s discussion, raising a Newspoll survey showing that 37% of voters believed the Coalition would deliver a better policy on reducing power prices and energy security than Labor, and 39% thinking Labor had a superior plan.

The poll underscores the fact that energy policy in Australia remains polarised, with voters dividing on partisan lines. It said 76% of Coalition voters backed Malcolm Turnbull and Frydenberg to lower power prices and deliver a secure grid, and 73% of Labor voters endorsed the approach from Bill Shorten and the shadow energy minister, Mark Butler.

Kelly told colleagues the government was losing the energy argument in the public domain and needed to be more aggressive in countering Labor’s policies.