Industry calls for NEG resurrection to end 'cycle of hope and despair'
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Industry calls for NEG resurrection to end 'cycle of hope and despair'

Industry is urging Federal Parliament to salvage the National Energy Guarantee as Labor contemplates adopting the contentious policy that triggered the Turnbull government's implosion.

Business groups and other stakeholders have despaired at the loss of almost a year of intense work and negotiation over the energy plan, which promised to provide investor certainty and consistent market rules after more than a decade of policy upheaval.

Senior Labor sources have confirmed the opposition is seriously considering resurrecting the National Energy Guarantee, subject to discussion with stakeholders, believing it could achieve the bipartisan support needed to broker an enduring ceasefire in Australia’s climate wars.

Business groups want Labor to consider adopting the national energy guarantee.

Business groups want Labor to consider adopting the national energy guarantee.Credit:Paul Jones

Business groups are believed to be lobbying Labor to revive the policy, saying it is the best way to quickly address the problems of electricity affordability, reliability and emissions reduction in the electricity sector.

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Industry had vocally supported and helped develop the complex policy, and is bitterly disappointed in the Morrison government's decision to bin it.

Former Environment and Energy Minister Josh Frydenberg spearheaded the NEG.

Former Environment and Energy Minister Josh Frydenberg spearheaded the NEG.Credit:Alex Ellinghausen

Former Environment and Energy Minister Josh Frydenberg spearheaded the policy and has expressed disappointment in its demise. Fairfax Media understands he personally rang industry stakeholders involved in consultation to apologise for the outcome.

One recipient told Fairfax Media: "It was to his enduring credit that he did make those calls to people who had been working hard on getting this outcome. He thanked us for all the effort and apologised that he wasn’t able to get it though."

Australian Industry Group chief executive Innes Willox told Fairfax Media on Thursday that the principles behind the guarantee "remain sound".

"Finding a solution to the deep uncertainty of energy and climate policy remains urgent, and there is much in the NEG to build on. We would encourage all sides of politics and all levels of government to consider this," he said.

The policy would have been cemented in national electricity law – a difficult task that required unanimous agreement of the states but which would have made the plan "highly credible", he said.

Energy Users Association of Australia chief executive Andrew Richards, whose organisation represents major electricity consumers such as manufacturers, said he would like to see Labor adopt the guarantee.

Mr Richards said the transition away from fossil fuels to renewable energy was inevitable. But without a federal policy, and bipartisan backing, the transition would be more expensive and risky, he said, adding that this reality was "the missing piece in the Coalition’s thinking on this".

"This is a contest inside the Coalition that needs to be resolved and until then ... we continue to have this cycle of hope and despair," he said.

The federal cabinet this week tore up emissions reduction legislation for the electricity sector and Energy Minister Angus Taylor on Thursday told Parliament that his government’s "unambiguous, unrelenting focus ... in electricity markets is to get the prices down while we keep the lights on".

A future Labor government would seek to reduce Australia’s emissions by 45 per cent by 2030 but it is yet to outline how it would achieve this.

Labor’s climate change and energy spokesman Mark Butler said the party was talking to energy stakeholders about the government’s decision to drop the national energy guarantee, indicating he was open to taking on the plan.

The Energy Users Association says the transition to renewable energy is inevitable but needs federal policy to make it less costly and risky.

The Energy Users Association says the transition to renewable energy is inevitable but needs federal policy to make it less costly and risky.Credit:Tim Ireland

"This was a policy that Scott Morrison himself said had broader support than any initiative he had seen in his 10 years in Parliament,” Mr Butler said.

However Labor's potential adoption of the guarantee may be challenged internally by those who believe a Coalition opposition is unlikely to back it, and a future Shorten government should instead pursue a bolder policy.

Labor Environment Action Network national co-convenor Felicity Wade said market-based mechanisms such as the guarantee were complex and difficult to sell to voters.

"Why wouldn’t we be thinking about much simpler more direct pathways? The thing we most need is an increased supply [of clean and reliable energy] into the electricity sector ... to bring down emissions and bring down prices," she said.

This might involve extending the renewable energy target, which peaks in 2020, and legislating energy storage capacity to ensure reliability, she said.

Nicole Hasham is environment and energy correspondent for The Sydney Morning Herald and The Age.

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