A new technical document on the Neg’s design will be distributed ahead of Coag energy council meeting on 10 August

This article is more than 2 years old

This article is more than 2 years old

The energy minister, Josh Frydenberg, will speak to his state counterparts on Friday as the Energy Security Board finalises the design principles for the national energy guarantee (Neg) and a critical meeting of the Coag energy council looms.

Members of the Energy Security Board – the architects of the Neg – met on Thursday to sign off on a new technical document that will be distributed to stakeholders after Friday’s phone hook-up with ministers.

Guardian Australia understands the new paper will trigger a final phase of deliberations before the settled policy framework will be shared with Frydenberg and the state ministers on 2 August, ahead of the critical meeting of the energy council on 10 August.

The 10 August meeting will either make or break the national energy guarantee, with any state or territory having the power to veto the policy.

Ahead of the push to the finish line, Environment Victoria has warned that the proposed emissions reduction target for electricity under the guarantee “is woefully inadequate”.

The group says if electricity emissions are reduced by only 26-28% below 2005 levels, other sectors of the Australian economy such as manufacturing, transport and agriculture will have to reduce carbon pollution by 700m tonnes to ensure Australia meets its Paris target.

Emissions in these sectors are currently rising and the Turnbull government has produced no policy roadmap to drive emissions reductions in these sectors.

A new briefing paper from Environment Victoria warns that if emissions reductions in the electricity sector are back end loaded to the second half of the decade between 2020 and 2030 – an option favoured by some government conservatives – “then more disruptive action will be required later to meet Australia’s cumulative national target”.

“In this scenario, between 2021 and 2030, manufacturing, transport and others would need to find emissions reductions equivalent to nearly five years of the electricity sector’s current pollution levels”.

Design of national energy guarantee revealed, but key details omitted Read more

The paper also calls for the notice period for adjusting the emissions reduction target in the national energy guarantee to be changed from five years, which is the Energy Security Board’s current guidance, to three.

It notes that if the ALP wins the next federal election and implements its proposed emissions reduction target of 45% after five years have elapsed, then emissions reductions in the sector would have to occur at a rate of 15% a year.

“This would be historically unusual, disruptive to the economy and could threaten the ability of the government to achieve its Paris commitments. However, with three years notice, the rate of reductions required would be halved and are within the range of reductions achieved by a number of countries in their electricity sectors in recent years,” it says.

The National Security Board has seconded a range of experts, bureaucrats and industry players to help draft the policy in a very tight time frame, with working groups considering a range of issues in detail over the past month.



The Turnbull government’s policy would impose reliability and emissions reduction obligations on energy retailers and some large energy users by 2020.

Guardian Australia understands there has been tension behind the scenes about large energy users and their role in the new policy, including who is caught by the reliability obligations and whether the system should be opt-in rather than mandatory.

There have also been arguments about how transparent an emissions registry created under the scheme should be. Some stakeholders want the registry open to the public, and others only want to report their compliance to the regulator.

As well as differences of views over technical details, political pressures loom.

A number of state energy ministers want the emissions reduction target for electricity to be more ambitious – a demand Frydenberg is not in a position to deliver given a more ambitious target would have to be signed off by the Coalition party room.

The Labor states also want the policy to allow a future government to be able to ramp up the level of ambition for emissions reduction without facing significant parliamentary hurdles – again, a demand that is difficult for Frydenberg to deliver given a noisy pocket of opposition in the Coalition party room.

The policy faces two hurdles – the first at the August Coag energy council meeting, and the second in the Coalition party room in the event Frydenberg emerges with a sign-off from state counterparts.