The Problem with the NEG

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One wonders why our politicians aren’t required to abide by the same ethics as the medical profession … “First do no harm”.

If they did then it is likely that the National Energy Guarantee (NEG) detailed draft would not have seen the light of day.

The NEG promised three outcomes:  reliability of electricity supply,  a lowering of electricity prices and a lowering of Greenhouse emissions. Our analysis suggests that it will have no impact on the first and second outcomes, but have the opposite impact to that intended on the third. In other words it will do more harm than good.

Its most glaring problem is that the target it sets for low emissions generation is likely to be lower than what will be achieved anyway when currently underway generation projects are completed, meaning the retailers who are liable for achieving the low emissions will find they over-achieve their targets by doing nothing. This lack of ambition is compounded by the NEG allowing retailers to accumulate the over-achievement as bankable credits which can then be carried forward and used to offset any under-achievement if government targets are increased in the future.

A second issue is the lack of transparency regarding retailers and the government’s compliance with stipulated targets. Despite advances in emissions accounting practices and standards that have been developed over the last decade, much of these have been ignored in the NEG, meaning double counting of credits becomes possible and the government will be able to make claims regarding their own performance which cannot be verified.

Of particular concern to the VCMA is that the national GreenPower program which allows consumers to choose how much renewable energy is in their mix, is likely to become unworkable. Furthermore, independent GreenPower providers who are responsible for providing much of the flexibility and transparency of the program appear likely to be excluded entirely.

The VCMA has made the following three submissions in response to the Government’s Draft Detailed Design. See link.

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