The need to urgently modernise energy market regulation in Australia has been identified by thirteen environmental groups and local government bodies in a submission to the Commonwealth’s Finkel review into energy security. 

“The Finkel review recognises the pressing need to address the ‘energy trilemma:’ security, affordability and sustainability,” said Mark Byrne, Total Environment Centre’s Energy Market Advocate.

“At present, however, the national energy objective recognises price and reliability as being in the long term interest of consumers. It is failing in these while making no mention of sustainability.”

Because Australia has ratified the Paris Agreement on climate change, Mr Byrne said “it is critical that decarbonisation is part of the mix when regulators are making decisions that will impact on the future of the energy sector. Instead we have a situation where decarbonisation targets and the costs of climate change mitigation, adaptation, damage and delayed action are effectively ignored in a regulatory bubble.”

Recent problems related to blackouts and price spikes in several states are an indication that a ‘whole of system’ approach is needed. The energy market rule-maker, regulator and operator need to be working together with a clear mandate about aligning their processes and decisions with government decarbonisation targets.

“This would ensure, for instance, that we incentivise the rapid rollout of grid scale energy storage technologies alongside more wind and solar energy to ensure that the system remains reliable even during those peak periods when there is insufficient renewable generation,” said Mr Byrne.

“This is not rocket science,” he added. “We have provided the Finkel panel with evidence of numerous other jurisdictions which have successfully aligned climate policies with energy market regulation without higher prices or more blackouts than we have in Australia.”

A variety of options for reform have been suggested to the Finkel panel, by the thirteen groups. In the short term this could involve the COAG Energy Council issuing a statement of policy principles requiring regulators to issue “carbon impact statements” with every major decision they make.

More substantially, the panel could be required to factor decarbonisation goals and climate change costs into its decisions. In the longer term it may require amendments to the national electricity law to include decarbonisation in the national energy objective.

To access the Group Submission click here

For more info please contact Mark Byrne, Energy Market Advocate: 0403070442 [email protected].