PIAC provided a response to the Australian Energy Regulator’s (AER) consultation on their guidance on enacting the amended national energy objectives.
The consultation relates to the Statutes Amendment (National Energy Laws) (Emissions Reduction Objectives) Bill 2023 currently before the South Australian Parliament. The Bill will add emissions reductions to the national energy objectives, to sit alongside the existing objectives of price, quality, safety, reliability, and security.
PIAC commends the AER and other market bodies for their work preparing to enact the amendment as soon as possible.
We argue that the AER’s approach should take as a base line assumption that all processes underway when the amendment takes effect will be impacted by the change, meaning that the AER’s decisions in relation to them will include the new emissions reduction consideration. The bar for being excepted from this should be set high.
We also laid out principles for the design of the needed Value of Emissions Reduction metric, as the Bill includes a provision enabling the AER (and other regulators) to develop their own metric for valuing emissions if needed. These principles include that it:
- is set high enough to create meaningful emissions reductions;
- weights emissions reductions according to when they occur – with earlier reductions being valued higher than later ones;
- values avoidance and reduction ahead of the use of offsets; and
- is annually revised and adjusted to ensure that the emissions pathway remains viable to meet Australia’s commitments in terms of total allowable maximum emissions.
