Author: Katharine Murphy
Posted on: The Guardian | April 10th, 2018

The energy minister, Josh Frydenberg, will warn colleagues “extreme ideologies” and polarisation in the climate and energy debate will only lead to more policy paralysis, and ultimately sanction short-termism and heavy-handed government intervention.
Frydenberg will use a speech to the National Press Club on Wednesday to send a clear internal message as he intensifies efforts to secure agreement for the proposed national energy guarantee from state and territory ministers at a meeting of the Coag energy council in just over a week’s time.
With the government battling leadership instability and another bout of internal jockeying triggered by the loss this week of the 30th consecutive Newspoll, Frydenberg will present his policy as a vehicle to end a decade of rancorous political warfare over climate change.
With colleagues actively disrupting the efforts of the leadership to bed down the national energy guarantee by calling for the nationalisation of the Liddell power station, and for the government to build new coal-fired power plants, Frydenberg will counsel colleagues to put down the cudgels.
According to an extract of his speech circulated before Wednesday’s event, Frydenberg will say it is time to provide “a frank assessment of the polarised political debate on energy and climate, and the high price we are paying for it”.
In an implicit smackdown to Tony Abbott and other conservative rebels, he will say: “It’s time to tell some home truths. This is a practical problem, not one which extreme ideologies can solve.
“We need to find sensible, workable, affordable market-based solutions that meet the requirements of the Australian people. The alternative is policy paralysis, more expensive short-term government interventions and higher prices that will be paid by the public either as a consumer or taxpayer.”
Frydenberg will argue the national energy guarantee is the most practical means of delivering more affordability and reliability in the energy system while meeting the emissions reduction targets set down in the Paris agreement.
He says the guarantee “has the fundamental virtue of using the effectiveness of the market” to solve the problems in the national electricity market and provides an opportunity to free the policy debate from the disputes of the last decade.
Frydenberg says it is time for everybody to reflect “on the enormity of change underway in the energy system, which has turned accepted wisdoms on their head, disrupted traditional business models and exposed a failure of policy, which is reflected in poor market outcomes”.
In order to deliver the policy, Frydenberg must first secure agreement from state and territory governments, and then move to an intensive design phase that will bring the policy back to the Coalition party room for debate.
The proposed national energy guarantee would impose emissions reduction and reliability targets on energy retailers from 2020. Malcolm Turnbull and Frydenberg secured in-principle party room backing for the policy last October but a number of design decisions still have to be made and legislated.
Decisions still outstanding include the precise emissions reduction target for the electricity sector, which Frydenberg wants to set at 26% by 2030. There is an internal push to back end load the cuts to the second half of the decade rather than plot a steady downward emissions reduction curve over 10 years.
The design of the scheme, and the balance between reliability and emissions reduction targets, will influence the life expectancy of coal-fired power in the energy mix, which will in turn influence the attitude of some government MPs to the scheme.
Frydenberg has to run a different gauntlet with the states. Several Labor states and the ACT have objected to the proposal on the basis that it is not sufficiently friendly to renewable energy and won’t help Australia meet its Paris commitments.
A new poll by the progressive thinktank the Australia Institute, published before Wednesday’s press club speech, finds that a majority of Australians would back an increase in the current emissions reduction target to at least 45% by 2030.
The states have an effective veto power over the national energy guarantee because it needs to be implemented through changes to the national electricity market rules, which requires federal/state cooperation.
If Frydenberg emerges over the coming months with agreement to proceed from the states, and also manages to carry the party room through the design stage of the policy, the government will then have to find the numbers in federal parliament to pass the necessary legislation.
While some stakeholders think the guarantee is entirely suboptimal as a policy, others are pushing Labor to back the scheme on the basis that bipartisan creates certainty.
Labor has raised a number of concerns about the proposal but has yet to signal definitively which way it will jump.
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