Last Friday’s decision by the Queensland, South Australian, Victorian and ACT Energy Ministers to ask the Australian Energy Market Commission to develop design options for implementing a Clean Energy Target takes us a step closer to the policy certainty the energy market so urgently needs.
Earlier this month, the South Australian Government, together with Tesla, delivered another win for renewables with a commitment to provide much needed reliability through large-scale battery storage. Last week the Queensland Government joined New South Wales in committing to getting to zero emissions by 2050 and declared it intends to be a leader in the low carbon economy.
The thing is, business doesn’t much care who delivers policy certainty as long as someone does.
The recommendations in the Finkel report are too important to cherry-pick, they work together to deliver certainty and a more stable pathway on the way to a carbon constrained future. Remove one of those recommendations, like a Clean Energy Target for example, and you’re left with a car without wheels. Implement Finkel in total, and there will be significant new investment in energy generation across the country which will begin to moderate energy prices.
Business can’t afford to wait for certainty and our customers cannot wait as well because the price of inaction is a decline in the rate of investment in new energy infrastructure, which means a decline in supply and a rise in energy bills.
AGL has sought to create our own certainty by seeking to invest ahead of closure of our own assets, as we are doing in South Australia, and setting out firm closure dates for our coal plants, well in advance.
We’ve committed to net zero emissions by 2050 and our business decisions are consistent with that pledge.
Of course, once the policy architecture is in place, both AGL and the entire market will be able to invest with increased confidence and a new wave of energy infrastructure spending will be unleashed.
Some people have chosen to take energy costs into their own hands, with almost one-in-four Australian homes now equipped with rooftop solar. In Queensland 30 per cent of households have solar panels.
As someone responsible for deciding where millions of dollars of shareholders’ money should be invested, we carefully weigh all of these signals against risks from policy uncertainty.
AGL has made a considered investment decision that new coal-fired power won’t be part of our portfolio, but renewables will. We have decided to invest our shareholders’ money in this way because we interrogated the numbers, thoroughly.
That’s the reality. I’m not saying there will be no investment in new coal – just that AGL won’t invest there. My observation is that whenever I get a jibe from someone over this, it’s never someone who’s willing to put their hand in their own pocket to invest in new coal-fired power themselves.
The Finkel Review called for $900 billion in new investment over the next 30 years to ensure reliability of our energy supply.
We stand ready to contribute to that investment and we’ll invest most in regions where we have the greatest policy certainty.