Hey! It’s the NEG! Putting the ‘neg’ back into….substantial eNErGy reform. Right?! Sexy.

It’s a policy based on an eight page letter. That means that the policy is young. Super young. Still too early to call if it’s actually any good, or if it’ll do what it’s supposed to do. If this policy were a person, it would be vomiting on your shoulder and shitting in your hand – it’s that young. (Did I mention I’m the father of a four month old?) It also means the following things are longer, and possibly more substantial, than the National Energy Guarantee:

  • The first issue of the recently relaunched ‘Archie’ comic, where Archie plays sick guitar to try and win back Betty (22 pages);
  • The television script of the episode of Golden Girls where Blanche’s blind sister comes to visit (over 25 pages long);
  • The insipid love letter I wrote to my teenage crush but never sent – I may have also cited the lyrics of Hanson, The Whitlams and a Shakespeare sonnet I didn’t understand but thought I made me seem smart-sexy – but it was TOTALLY ROMANTIC AND SHE WOULD’VE DUG IT OK? (8 and a half pages).

This policy is important because Turnbull’s made it important. He’s hoping it’ll turn his poll numbers around and solve a lot of complaining from greenies, coal advocates and, you know – those of us in the country who use electricity.

There are three dimensions to this – the history of the policy, the substance of the policy, and the politics of the policy. Let’s go.

The History

This isn’t a new problem. You can check out our deep dives on Aussie Energy Policy and Climate Change to get caught up – so we’ll keep this brief. But basically, We’ve been trying to get some kind of action on Australian Energy Policy since John Howard in 2007. A decade of political cat fights later, the Turnbull government reached out to the Australian Chief Scientist (yeah, there’s such a thing), and commissioned a report. They ended up following a lot of the recommendations in that report, but there was one that proved tricky: a clean energy target. An emissions target to keep Australia on track to meet its international agreements on not clogging up the atmosphere. (And the CET was just the latest, of course. Before that we had a RET – a renewable energy target.)

But some didn’t like the sound of a clean energy target. Sounded a bit too hippie. Bit too greenie. Sounds a bit too much like you couldn’t walk down the street without being accosted by a wind turbine or having your eyes set on fire from a solar panel. Next thing you know it’ll get into schools, and our children will be taught they can get their energy from anywhere and do anything. (That’s a joke about marriage equality – this Friday’s the last day to get your vote in.) And what about our precious coal? Our lovely coal?!

So the government went to the panel of ‘experts’ – the Energy Security Board. Problem being that this board hasn’t been great in the past. In fact, they may be to blame for high electricity prices to begin with. Nevertheless, they’re experts – so Turnbull says we trust them. They wrote an eight page letter outlining recommendations and policy. And that’s how we get to the NEG.

The policy

So it does two things. And for both, it puts the onus of responsibility on the retailer – so the folks who are buying raw power and selling it to you – AGL, Origin, those guys.

First, it’s a policy that will demand a certain level of ‘dispatchable’ power is available at all times. This is to address concerns that our power grid isn’t reliable. It’s answering the idea that if we switch to power that is mostly wind or solar powered, if the sun don’t shine or the wind don’t blow, the lights will go out. We need a base level of power that we know for sure is ready to go at any time. This is particularly helpful to the people of South Australia, who suffered rolling black outs through a lot of last Summer, when power demand was high.

So power retailers will need to keep a certain amount of power in reserve at all times that comes from a reliable source – hydro, battery, coal or gas.

Secondly, it will require retailers to keep at a certain level of emissions – the numbers will keep us in line with the agreements we made at the big Paris Climate meeting back in 2015. So it fulfils our international obligations.

Our Energy Minister says that this means by 2030, 28-36% of our energy will come from renewables, with 24% coming from ‘intermittent power’ (wind and solar). This leaves about 64% as not renewable.

This is all in place to kick off in 2020. But only from the ‘National Energy Market’ – which, funnily enough, excludes the Northern Territory and Western Australia. This could mean that after 2020, these two regions could have no federal emissions policies.

The Energy Security Board says this will save the average Aussie household up to $115 a year on their power bill. Importantly, however, there’s very limited economic modelling on this. (Remember, it’s an eight page letter.) In fact, the government’s commissioned more economic modelling to be done. This hasn’t stopped them from claiming the policy as a money saver in the headlines, however. Which brings us to…

The politics

Poor Malcom. He’s just come off his 21st Newspoll that has him losing ground to Labor in public opinion. Why is that important? Because he cited 30 crappy Newspoll’s as one of the reasons why he got rid of Abbott back in 2015. Betcha he’s hating on past Malcom REAL hard for that one.

So the NEG is something he wants to hang his hat on. How can he assure Aussies that power bills will go down, that we’ll go clean, but not too clean, that Aussie miners will still have jobs in ten years…he’s putting his chips on the NEG.

But it’s far from a done deal. The NEG’s pressure on retailers mean that the federal government has to do some deals with the state governments. And that’s no easy thing. Many of the Labor Premiers have reflexively said they’re against the policy. At a federal level, however, the Labor Party is considering it’s position. They want to end the climate wars, and they’ve said they agree to a bipartisan solution in principle – but they’re concerned about several areas of the policy, both politically and as a matter of governance. They’re still sorting out their messaging.

The NEG’s a crappy acronym, but it’s got the word ‘guarantee’ in it – which is mis-leading. Turnbull’s promising he’s going to keep electricity prices down. But in reality, he doesn’t know if he can actually deliver on that promise.

At this stage, Turnbull’s hoping that by Christmas we’ll be talking about how he got electricity and gay marriage sorted in 2017. Thumbs up on his report card and a good Newspoll in his stocking.

Picture at the top is by Riccardo Annandale.

We’ll be back on Friday with the news.

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