The Prime Minister Malcolm Turnbull has, once again, made last minute changes to the National Energy Guarantee (NEG).
When the states threatened to walk away from the NEG, Mr Turnbull responded by making the emissions target regulated rather than legislated. This means that a minister is able to change the target without the support of the parliament. Over the weekend, Mr Turnbull came under pressure internally with several backbenchers, led by former Prime Minister Tony Abbott, wanting to get rid of the targets all together.
A number of changes to the NEG were announced on Monday 20 August, 2018. These changes include providing additional controversial powers to the ACCC where they will have the ability to:
- Force power stations to stay online; and
- Force divestment of companies.
Mr Turnbull also reverted to making the emissions target a legislated target, however conceded that the current parliament was unlikely to agree on a target. Mr Turnbull has urged for the NEG to go ahead with an emissions target being set some time in the future once there is a possibility of agreement.
The centrepiece of the NEG was supposed to be certainty. If the current Government is unable to set an initial target even at the current international commitment, it is difficult to see investment flowing from the NEG. The additional powers of market intervention will also be looked on very sceptically from the outside. ACCC was opposed to AGL buying generation in New South Wales and now they may get a vehicle for forcing a divestment.
In the short term, it is unlikely that Labor will want to agree on the NEG or anything else which will put this to rest as the political fallout continues for the Coalition.
If you would like to know more about the NEG, call Edge on 1800 334 336 or 07 3905 9226.