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Turnbull needs to fix up climate policies, says energy regulators-AFR

Turnbull needs to fix up climate policies, says energy regulators

The Turnbull government needs to urgently resolve uncertainty over its post-2020 climate change policies to unlock energy investment and to drive down electricity and gas prices, according to one of Australia's top energy regulators.

Australian Energy Market Commission chairman John Pierce said while the 2020 Renewable Energy Target may be driving investment in wind and solar in recent years there was a big void next decade that had become a brake on energy investment.

"The government is grappling with challenges associated with emissions reductions - in terms of the objectives, the targets they have but also what is the mechanism they have to put in place to achieve it," Mr Pierce told an Energy Users of Australia Association conference in Brisbane on Wednesday.

"Wherever that emissions reduction process ends up there will be a need for massive commercial private sector investment in the energy sector. To do that the businesses need a predictable policy and regulatory environment in which to operate. "Being able to answer what mechanism is going to be put in place to get from the 2020 emissions target to the 2030 target. Unless people know what it is, then knowing where the investment opportunities are [is a challenge]. It's the inability to answer that question currently which we would suggest is a significant brake on the ability of people to be able to make necessary commercial investment decisions."

Mr Pierce - whose organisation writes the national electricity rules - said the energy market was being distorted because of the indecision over climate change policy.

"Price signals aren't working because of policy uncertainty," he said.

Australia has committed to reducing its greenhouse gas emissions by 26 to 28 per cent on 2005 levels by 2030, but the Turnbull government's Direct Action framework, including the $2.5 billion Emissions Reduction Fund and the so-called safeguard mechanism, have been criticised for not forcing big polluters to change their behaviour. A review of the federal government's climate change policies is due later this year.

The need to resolve the confusion over national climate policy was also backed by Australian Energy Market Operator Audrey Zibelman who was also speaking at the energy conference along with Australian Energy Regulator Paula Conboy. It was the first time all three energy leaders have publicly appeared since Ms Zibelman took over the job in March.

Ms Zibelman, who is charged with running the national electricity and gas market, said AEMO's number one focus is to ensure security of supply before next summer's hot weather puts a strain on the network.

Following on from South Australia's state-wide black-out last September, AEMO has been working with generators to ensure any maintenance and available supply will be ready before the end of the year.

AEMO and the Australian Renewable Energy Agency have launched a $22 million pilot program to pay businesses and consumers to reduce their consumption during times of peak demand.

Ms Zibelman said the aim of the program was to "take the peak down" with AEMO focusing on supply and security ahead of summer.

"Our concern is those areas of times, the super-peaks, those times of hot weather not in one state but multiple states or when you have prolonged outages in plants you thought you had available," Ms Zibelman said.

"In terms of supply we are working with all of the generators to make sure they are going to be available during the hot periods of the summer, from a stance of both maintenance and fuel availability. One of the concerns of last summer was having generators not able to get the fuel where we needed them, when we needed them."

All three energy bodies were concerned about the impact of high gas and electricity prices in recent years.

Ms Conboy backed a move towards demand-side management for network companies who were incentivised to control demand rather than build more poles and wires into the network. She conceded the national electricity rules were "quite prescriptive".

The energy bodies and state and federal governments are dealing with the large influx of renewable energy into the NEM with chief scientist Alan Finkel due to hand down his report into energy security next month.

Financial Review

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