The federal government will not know until September, and possibly later, whether it will land its National Energy Guarantee after the Labor states agreed to take deliberations to the next stage but reserved their right to torpedo the policy at the very end.
Energy Minister Josh Frydenberg, whose next challenge comes on Tuesday when he must convince the Coalition party room to adopt the policy, urged the states to make a decision before mid-October when the Victorian Labor government goes into caretaker mode ahead of its November 19 state election.
Victoria is the lead Labor state in demanding changes to the NEG and is under pressure from the Greens and activist groups to kill the policy. Following Friday’s meeting of state and territory energy ministers in Sydney, Victoria’s Minister Lily D’Ambrosio refused to rule out deferring her decision until after the state election.
Mr Frydenberg said this would create chaos.
“We’re working to a tight timetable because Victoria goes into a caretaker mode by the end of October. Parliament only sits for a couple of weeks in December, and then early next year, NSW goes into caretaker mode,” he said.
“You need to pass both federal and state legislation. We need to get this done.”
Business groups also called for a swift decision to avoid “condemning Australian industry to years more of damaging uncertainty”.
To begin in 2020, the NEG will require power retailers to source electricity that meets reliability and emissions reduction targets. The states will legislate for the mechanism of the NEG and federal Parliament will set the targets.
In what both Mr Frydenberg and scheme co-designer Kerry Schott described as a “big step forward” on Friday, the state and territory energy minsters aside their differences for the time being.
While the Labor states did not drop their demands for changes to the NEG, they agreed not to kill the policy but let it progress to the next stage which is deliberation by the federal Coalition party room on Tuesday.
“There was a lot of politicking and posturing before today, a lot of eleventh hour demands,” Mr Frydenberg said.
“When it came to the discussion today, the NEG went forward to the next stage. That’s the sign of progress today.”
Despite a determination by Tony Abbott and his followers to scuttle the policy, Mr Frydenberg Prime Minister Malcolm Turnbull and Resources Minister Matt Canavan were optimistic the NEG would receive majority support on Tuesday.
Should the party room approve the federal legislation which determines such details of the NEG as its emissions reductions target, then separate draft legislation for the policy mechanism that must be passed by the states, will be released for a four week consultation period before the states will be asked to give a final sign-off.
But the Labor jurisdictions of Victoria, Queensland and the ACT said they would refuse to support the mechanism if they were unhappy with the target details, even though these are the purview of the federal Parliament.
The Labor states’ key conditions are that the emissions reduction target never go backwards, that the target be set by regulation instead of legislation, that it be set every three years and three years in advance, and there be a transparency registry to ensure the NEG works in the best interests of consumers.
The key demand is setting the target by easier to change regulation, instead of legislation but Mr Frydenberg said again that this was non-negotiable.
“We”re not negotiating on the regulation versus legislation, Victoria knows that, we made it very clear over the last few days, and of course, when it comes to the federal Parliament, that’s where the debate will be had,” he said.