Speaking the Melbourne Economic Forum on energy yesterday, Dr Finkel said he is confident the Turnbull government will introduce a version of the CET as recommended in his Independent Review into the Future Security of the National Electricity Market.
However, he also warned that delays could make the current situation worse – a comment on State Governments adopting their own CET, leading to a patchwork of uncertain energy policies across the country.
“The government is working avidly to try to come up with a way of perhaps varying our core recommendation in a way that will be acceptable in parliament or certainly in the party,” Dr Finkel to the forum.
“I think every day that goes by until there’s agreement on integrating emissions and energy policy, there’s more opportunity for interventions at state and federal level, there’s more uncertainty that dissuades investors from making decisions that they would otherwise make that would be good for the system.”
Important role for gas
Dr Finkel’s report found that the gas and electricity markets are closely connected, and that gas-fired generation can provide a low emissions substitute for coal.
While contribution of gas to electricity generation has declined largely due to higher gas prices and tighter supplies, the report calls for gas market reforms to be driven by the COAG Energy Council and government initiatives to improve supply and affordability.
To improve transparency in all aspects of the gas market, the report finds that:
- AEMO should have better oversight of gas supply contracts for gas-fired generators.
- Governments should work with communities and industry to enable the safe exploration and production of unconventional gas, including ensuring that landowners receive fair compensation.
- Gas industry performance data should be transparent, clear and accessible. This should include seismic activity, fracking fluid composition, aquifer purity and fugitive emissions.
However, the report admits that domestic gas prices are likely to remain high despite market reforms.
