national Policy update
Energy briefing update - August 2021
The past quarter had a lot to offer businesses looking to make energy and climate related investments. Read on for an overview of new and extended government programs from the Commonwealth and the states, as well the latest on climate science.
NEW FUNDING SUPERCHARGES TRANSITION EFFORTS FOR AUSSIE INDUSTRY
In July, funding was announced for the next phase of the Australian Industry Energy Transitions Initiative (ETI) which supports industry to accelerate the development and deployment of low emissions technologies. The next phase of the project will focus on modelling credible pathways to net zero in “hard-to-abate” sectors, and support pilot projects aligned with those pathways.
The funding will be provided through the Australian Renewable Energy Agency (ARENA) to ClimateWorks Australia and Climate-KIC to assist in the next phase of the initiative.
Learn more here.
IPCC REINFORCES URGENCY OF CLIMATE CHALLENGE
In August, the Intergovernmental Panel on Climate Change (IPCC) released its latest assessment of the climate science, including a dedicated fact sheet focused on Australasia. The IPCC finds some significant climate effects are already locked in, but that there is still time to moderate the worst impacts of climate change.
On average Australia has already warmed by around 1.4°C since 1910, and we can expect more frequent extreme events such as the 2019-20 Australian bushfire season. Cities are literal hotspots, posing risks to human health, and we’re also seeing an increase in marine heatwaves, ocean acidity and sea level rise at a higher rate than the global average.
The IPCC’s report lands amidst growing expectation that Prime Minister Morrison will commit to net zero by 2050 and potentially strengthen Australia’s 2030 emissions target.
Meanwhile, many Australian businesses are addressing the climate challenges head on. Reducing emissions through investing in smart energy management can often be an easy place to start – whether that’s in energy efficiency, demand management or renewables.
You can learn more about programs that support businesses that are looking to make energy and climate-related investments in this issue’s article Grants and incentives – what’s new and what’s closing soon?.
ARENA’S MANDATE EXPANDS
After some back and forth in the Senate, the Australian Government has passed regulations that allow Australian Renewable Energy Agency (ARENA) to invest in the five priority areas defined in their Technology Investment Roadmap, including:
$71.9 million to support new electric vehicle charging and hydrogen-refuelling infrastructure;
$24.5 million to support higher productivity and lower emissions in Australia’s heavy vehicle fleets;
$47.0 million to support large energy-using businesses to identify opportunities to adopt new technologies and increase productivity; and
$52.6 million for microgrids in regional Australia.
Learn more here.
RACE TO CERTIFY ZERO CARBON FUELS HEATS UP
Efforts to certify the provenance of renewable gas and hydrogen are stepping up in several states around the country.
In June, the NSW Government announced that gas customers across NSW will be able to buy renewable gas to help reduce their carbon emissions following the launch of Australia’s first Renewable Gas Certification scheme. The scheme will commence in early 2022.
Learn more here.
Meanwhile, in July, the governments of Queensland and Western Australia joined the ACT and Victoria as partners on the Smart Energy Council's Zero Carbon Certification Scheme. The scheme aims to accelerate development and deployment of renewable hydrogen, green ammonia, and “green” metals by providing buyers with confidence around their provenance.
Learn more here.
PHYSICAL RETAILER RELIABILITY OBLIGATION
The otherwise esoteric topic of National Energy Market (NEM) design has recently been prominent in the news. As part of its work on long-term reforms to the energy market, the Energy Security Board (ESB) has advised energy ministers on modifications to the so called ‘Retailer Reliability Obligation’ sometimes referred to as a ‘capacity market’.
So what is the new Physical Retailer Reliability Obligation (PRRO)? Currently, the NEM only pays electricity producers for what they put into the grid. In contrast, some energy markets in the US and elsewhere pay for both the electricity put into the system and just for having capacity available, hence the name ‘capacity market’. The PRRO would require energy retailers and some large energy users to obtain certificates to show that there’s enough ‘capacity’ (e.g. batteries, demand response, hydro-power and coal- and gas-power plants) to back up wind and solar and ensure that the lights remain on.
This means that the PRRO creates a market where energy retailers pay companies that have electricity generation, demand response and batteries for being ‘available’ when needed, which would potentially increase reliability but also may have implications on energy bills and keep old coal-fired generators running for additional years. There is hot debate about whether the PRRO is necessary – there are already incentives in the NEM to ensure that there’s sufficient supply of electricity, and Australia’s electricity system is incredibly reliable by global standards. Despite the headlines, the NEM has exceeded its incredibly high standard to ensure that there’s enough power to meet consumer demand at least 99.998 per cent of the time.
Of note to businesses, these reforms have not been signed off yet and will take years to design and implement. This remains an important issue to watch, but may not impact energy users for some time.
So, what’s next?
It is worth staying on top of government policies, grants and incentives so you can make informed decisions around your energy strategy, and when to make energy investments.
Sign up to receive energy briefing updates to get important updates on government policies and programs from around the country direct to your inbox.
Check out the latest article on grants opportunities that can support your business .
Click here to return to the third edition of the energy briefing update.
About Navigating a dynamic energy landscape
There is an enormous amount of information on energy in the public domain, yet it can be hard for business leaders to extract what matters for their businesses.
Navigating a dynamic energy landscape: a briefing for Australian businesses is an executive-level briefing designed to cut through the noise and help businesses confidently navigate Australia’s dynamic energy landscape.
The sector spotlights and other resources that accompany the briefing exist to support this aim.
This initiative is delivered by the Energy Efficiency Council with the support of industry and the NSW Department of Industry, Planning and Environment.
To learn more visit energybriefing.org.au.