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Will the Federal Government Climate Change Review affect the price of Large-Scale Generation Certificates?

A commitment by the Federal Government to reduce emissions by 2030 will see a Climate Change Review conducted this year. The government is focused on meeting our international emissions reduction commitments while also maintaining energy security and affordability. The focus of this review is to look at a range of options to reduce emissions by 26 to 28 percent below 2005 levels.

The review will consider the integration of climate change and energy policy, the impact of state-based policies on the national approach, the role of the Emissions Reduction Fund and its safeguard mechanism, complementary polices, and potential goals beyond 2030.

While the review does not explicitly mention the Renewable Energy Target (RET), there could be consequences for the RET. There is currently a concern that there will not be enough new renewable generation built in time to meet the 2020 target. This has led government backbenchers and some business people to call for the RET to be abolished. In the past, reviews into the RET scheme have caused the prices of Large-Scale Generation Certificates (LGCs) to reduce. Despite assurances that the current RET scheme will not be affected, discussion surrounding climate change policy may still affect the price of LGCs as the market factors in uncertainties.

The Climate Change Review is expected to be concluded by the end of 2017.

If you’d like to discuss what this means for your energy portfolio, please contact us here or on 07 3232 1115