Energy ministers power up renewables transition with new deal

Energy regulators will be forced to focus on reducing emissions alongside their existing goals of keeping power affordable and reliable after a rewriting of the rules governing the electricity market agreed to by state and federal energy minsters.

In the latest sign of accelerating political momentum on climate change since Labor won the federal election,energy ministers met in Canberra on Friday and agreed to change the electricity market’s official objectives for the first time in 15 years to enshrine the environmental clause.

State and federal energy ministers met in Canberra on Friday and agreed on reforms to drive the clean energy transition.

State and federal energy ministers met in Canberra on Friday and agreed on reforms to drive the clean energy transition.Alex Ellinghausen

Federal Energy Minister Chris Bowen said the measure would provide greater certainty to drive large-scale clean energy investments that would be vital to achieving targets for net zero emissions.

“Australia is open for business,” Bowen said on Friday afternoon following the meeting.

“Australia is determined to reduce emissions,we welcome investment to achieve it and we will provide a stable and certain policy framework.”

Following the announcement,electricity generators signalled support for the energy ministers’ “overall intent” but said they opposed the new environmental clause.

The Australian Energy Council,whose membership includes power giants AGL,Origin and EnergyAustralia,said carbon emissions would be better addressed through policy and regulations that were separate from the national energy objective.

“Any change to the national energy objective may take away from its original purpose and create less,not more certainty for decision makers,” chief executive Sarah McNamara said.

Australia’s national electricity objective is a set of goals that govern investments in and operation of electricity services across the country and has previously been limited to ensuring price,quality,safety and reliability and security of supply of electricity.

Renewables developers have insisted the lack of an environmental objective has delayed Australia’s clean energy transition and blocked the market settings needed to reward investment in green power projects.

“Australia is determined to reduce emissions,we welcome investment to achieve it and we will provide a stable and certain policy framework.”

Federal Energy Minister Chris Bowen

Bowen said adding an environmental target sent a clear message to the nation’s energy market operators that they “must include emissions reductions in the work they do”.

“Now and into the future,they will need to cater for a requirement on behalf of all the governments of Australia to reduce emissions,” he said.

The ministers also signed an agreement to co-operate on the building program for huge new power line links that are needed to connect new renewable energy projects across state borders,and to develop new rules to empower the market operator to access private company information and better forecast potential energy supply shortfalls.

The Clean Energy Council said its members had been calling for the change to the market’s objectives for more than a decade and its adoption would help drive investment in green energy.

“These decisions provide clean energy investors with further confidence and certainty that have been missing through years of inaction and neglect,” chief executive Kane Thornton said.

“Today we’re seeing a clean,green light for low cost renewable energy from hydro,solar,wind and storage to become the dominant source of Australia’s energy needs.”

A coalition of major renewable energy investors agreed,saying the inclusion of the emissions objective was long-overdue.

“It will ensure that future market design,and proposed investment in new infrastructure,must take into account the emission reduction benefits,” said Simon Corbell of the Clean Energy Investor Group,which represents a group of 19 companies including Neoen,Macquarie and Tilt Renewables.

Climate change and energy minister Chris Bowen was joined by the state and territory energy ministers for a press conference.

“Clean energy investors will strongly welcome the leadership shown by ministers today to take control of the energy reform agenda.”

Victorian Energy Minister Lily D’Ambrosio said the Andrews government had pushed for climate change to be included in the market’s objectives since 2016,“but were blocked by federal Liberal National governments”.

The ACT and Queensland governments have led calls for the emissions clause in recent years.

Queensland’s Energy Minister Mick de Brenni said Friday’s agreement was a “step change” after years of inaction.

He took a thinly veiled swipe at the former federal energy minister,Angus Taylor,claiming that “governments of the recent past have not allowed the discussion to be had”.

NSW Energy Minister Matt Kean said the Morrison government had ignored its role in the clean energy transition.

“When there’s no action at the Commonwealth level,the heavy lifting is left to the states and territories,and that’s what’s been happening,” Kean said.

“Now we’ve seen everyone leaning into the opportunity,which is this global[energy] transition.”

Kean said cooperation between state and federal governments would create certainty for private investors,which will be needed to fund the hundreds of billions of dollars required to transition electricity grid infrastructure from a fossil fuel system to a clean energy system.

“For the first time,all of us are aligned in the direction we need to take our nation,” he said.

“The enormous opportunities of modernising our electricity system underpins our manufacturing industry,which means investment,jobs and new era of economic prosperity for our country.”

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Nick Toscano is a business reporter for The Age and Sydney Morning Herald.

Mike Foley is the climate and energy correspondent for The Age and The Sydney Morning Herald.

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