Latest news with #CapacityInvestmentScheme
The Star
2 days ago
- Business
- The Star
Australia told to reform market for clean energy investment
Among the proposed changes is a new framework offering long-term derivative contracts to support investment in stable and dispatchable renewables and storage projects. — Bloomberg SYDNEY: A panel of independent experts has urged Australia to adopt sweeping electricity market reforms to unlock long-term investment in clean energy and improve access to hedging tools, as grid volatility intensifies. Among the proposed changes is a new framework offering long-term derivative contracts to support investment in stable and dispatchable renewables and storage projects, according to a draft review of the National Electricity Market's wholesale sector. This would address 'persistent' barriers to new investment – like the mismatch between long-term financing needs of new energy projects and short-term contracting horizons of buyers. Australia needs to speed up its energy transition or risk missing an ambitious 2030 target of doubling renewable generation. New projects and investment are stalling due to uncertainty over power market mechanisms and policy settings, threatening the nation's ambitions to become a major green energy export hub and complicating efforts to stabilise and decarbonise the grid. 'If we get the right market settings in place, we can deliver a secure, affordable, low-emissions electricity system,' said NEM Review chair Tim Nelson. Yesterday's draft report said Australia's flagship clean power investment programme, which was expanded by a quarter last week, has helped address some risks faced by investors. But it also warned that new projects are unlikely to proceed unless programmes like the Capacity Investment Scheme (CIS) are fully integrated into power markets. Unlike the CIS, the proposed Electricity Services Entry Mechanism would operate within the market's legal framework, focus support on the tail end of project life, and recycle contracts to deepen liquidity. Industry members welcomed the review, with the Clean Energy Council highlighting the 'importance of helping investors to strike long-term contracts, which is critical to providing greater revenue certainty to underpin 25 to 30-year infrastructure investments'. — Bloomberg
Herald Sun
3 days ago
- Business
- Herald Sun
New contracts, offtake agency Australia's biggest power market overhaul in 30 years
Australia's electricity market is poised for its biggest shake-up in a generation, with an independent expert panel calling for the creation of new financial instruments and a dedicated agency to buy offtake agreements for up to 20 years to help deliver Labor's renewable energy targets, without leaving taxpayers exposed. The recommendations form the centrepiece of a sweeping review commissioned by Federal Energy Minister Chris Bowen into how the National Electricity Market (NEM) should operate beyond 2030 when the grid will be undertaking momentous change to deliver the net zero emissions by 2050 agenda. Chaired by former AGL Energy and Iberdrola executive Tim Nelson, the four-person panel has concluded that the first major overhaul of the rules since its creation in 1993 will deliver new energy projects, without the direct involvement of taxpayers. The panel recommended the creation of a new derivatives market to support investment in both renewable generation and firming technologies — such as gas peaking plants — through market-based risk management tools. The panel did not direct which sources of power should be the subject of the contracts and will task the market with creating the instruments needed to ensure market stability. The proposed financial contracts would operate in a similar way to hedging instruments, allowing electricity retailers and large energy users to lock in capacity and price certainty over the medium term. That would, in turn, give developers the confidence to proceed with new projects based on market signals rather than government subsidies. In a major shift, the panel also recommended the creation of an independent agency that would enter into long-term offtake agreements — up to 20 years — with project proponents. These contracts would provide revenue certainty for developers, enabling project financing at scale. Currently, most clean energy projects rely on five-year power purchase agreements or merchant exposure to the wholesale market, which financiers say are inadequate for securing investment at the level required to meet Australia's emissions targets. Under the new model, the agency holding the long-term offtake agreements would then on-sell the contracted energy to retailers such as Origin Energy, AGL Energy, or other smaller market participants. If adopted, the recommendations would significantly shift risk away from taxpayers and onto energy consumers, while also crowding in more private capital to support the transition. At present, Labor's main mechanism to support new clean energy investment is the Capacity Investment Scheme (CIS), launched in 2022, which provides developers with guaranteed revenue floors. But critics argue the CIS exposes the government to too much financial risk and stifles private sector innovation. The panel's proposed model seeks to preserve the investment momentum created by the CIS while reorienting the scheme toward a market-driven approach that also ensures dispatchable capacity to maintain grid reliability. The review is one of the most anticipated interventions in energy policy since the NEM's inception nearly three decades ago. At that time, coal supplied more than 80 per cent of electricity. That figure has fallen sharply as coal plants retire earlier than expected and wind and solar generation rise. The Australian Energy Market Operator expects the country's remaining coal fleet to be fully retired by 2037, significantly increasing pressure to deliver new capacity in time. Sources said the panel's embrace of a market-based model that is technology agnostic is likely to gain more support from state governments. Previous attempts to update market rules under the former Morrison government were blocked — particularly by Victoria — over concerns that the changes would prop up coal and gas generators. That proposal, dubbed 'CoalKeeper,' was intended to provide investment certainty but failed to gain consensus. By contrast, the new proposal aims to deliver certainty through private capital and long-term market mechanisms — rather than taxpayer-funded lifelines. Originally published as New contracts, offtake agency Australia's biggest power market overhaul in 30 years Read related topics: Climate Change
Sky News AU
5 days ago
- Business
- Sky News AU
Labor told 'implied carbon prices', fixing broken renewables approvals key to lowering emissions in Productivity Commission report
A new report from the Productivity Commission has called on Labor to introduce reforms which would produce a similar effect to an "enduring, national carbon price". The interim report, titled: "Investing in cheaper, cleaner energy and the net zero transformation", is part of a series requested by Treasurer Jim Chalmers ahead of the Albanese government's economic roundtable. In it, the Productivity Commission warns the government must move to address "the gaps and overlaps in emissions reduction incentives, speed up approvals for clean energy infrastructure, and create a resilience-rating system for all housing to meet our clean energy targets and adapt to climate change". By doing so, the report says Labor will be able to both lower the cost of cutting emissions, while also maximising the opportunities presented by the energy transition to boost the economy. The Commission places heavy emphasis on a market-based approach, arguing both the Renewable Energy Target and the Capacity Investment Scheme, both central to Labor's net zero agenda, be scrapped in favour of direct incentives in the electricity sector. It also calls for the creation of a new independent agency which would determine a set of "carbon values" against which all emissions reduction policies would be assessed. The agency would set "carbon values" based on the "implied carbon prices" needed to meet Australia's emissions. By doing so, the Commission argues Australia could meet its internationally agreed climate targets at the lowest possible cost. "Our recommendations align with many of the benefits conferred by a broad-based, enduring, national carbon price – a policy that many, including the PC, have consistently argued for," the report said. In addition to factoring in the price of carbon while assessing emissions reduction plans, the report also calls for major reforms to the approval process for renewables projects. "We need to build a large amount of clean energy infrastructure to meet climate targets and ensure reliable and affordable energy supply. But our sluggish and uncertain approval processes are not up to the task," Commissioner Martin Stokie said. "Getting to yes or no quicker on priority projects would meaningfully speed up the clean energy transition." The Commission argues for substantive changes to the Environment Protection and Biodiversity Conservation Act, including the introduction of national environmental standards, improved regional planning and clear rules about engaging with local communities and Aboriginal and Torres Strait Islander peoples. It also recommends the appointment of an independent Clean Energy Coordinator-General to work across government and break through roadblocks, as well as the creation of a "strike team" to rapidly asses priority projects. Other recommendations included in the report include an increase to the number of facilities covered by Labor's emissions reduction program for industry, the Safeguard Mechanism, and the abolishment of a fringe benefits tax exemption for electric vehicles.
The Advertiser
5 days ago
- Business
- The Advertiser
Emissions reduction 'central' to boosting productivity
An answer to Australia's languishing productivity lies in its response to the threat of climate change, an independent government advisory body has found. Adapting to growing climate-related risks while also reducing emissions and transitioning to clean energy will enable higher productivity growth and living standards, according to an interim report by the Productivity Commission. The findings come as Treasurer Jim Chalmers prepares to convene a roundtable in search of a solution to the nation's lagging productivity. "Australia's net zero transformation is well under way," commissioner Barry Sterland said. "Getting the rest of the way at the lowest possible cost is central to our productivity challenge." By minimising the costs of reducing emissions through careful policy design, resources would be freed up for more productive activities, the interim report found. It recommended ensuring incentives to invest in technology that can achieve reductions. The Renewable Energy Target and the Capacity Investment Scheme, for example, will not support new investment in renewables after 2030, which means new market-based incentives should be implemented to eventually replace them. The report also recommends incentivising heavy vehicle operators to reduce emissions. Long-overdue reforms to Australia's main environment law would also better protect the natural world by introducing national standards and improving regional planning, while speeding up approvals for infrastructure to make energy cheaper. Though Australia has already set targets to cut greenhouse gas emissions 43 per cent by 2030 and achieve net zero emissions by 2050, the interim report found Australia will face significant climate-related risks regardless of emissions reductions. This means adapting to climate change is integral to growing productivity. The government has been urged to boost resilience to climate perils, which would lower the cost of disaster recovery and help maintain quality of life while Australia grapples with the impacts of climate change. Australians' homes in particular must become better adapted to climate risks, prompting the Productivity Commission to call for a housing resilience rating system and resources to help households, builders and insurers more easily identify upgrades. Dr Chalmers' roundtable will convene later in August and some invited to attend have already called for similar reforms. Former Treasury secretary Ken Henry in July urged the government to overhaul the nation's environment laws or risk Australia missing its most important economic goals. An answer to Australia's languishing productivity lies in its response to the threat of climate change, an independent government advisory body has found. Adapting to growing climate-related risks while also reducing emissions and transitioning to clean energy will enable higher productivity growth and living standards, according to an interim report by the Productivity Commission. The findings come as Treasurer Jim Chalmers prepares to convene a roundtable in search of a solution to the nation's lagging productivity. "Australia's net zero transformation is well under way," commissioner Barry Sterland said. "Getting the rest of the way at the lowest possible cost is central to our productivity challenge." By minimising the costs of reducing emissions through careful policy design, resources would be freed up for more productive activities, the interim report found. It recommended ensuring incentives to invest in technology that can achieve reductions. The Renewable Energy Target and the Capacity Investment Scheme, for example, will not support new investment in renewables after 2030, which means new market-based incentives should be implemented to eventually replace them. The report also recommends incentivising heavy vehicle operators to reduce emissions. Long-overdue reforms to Australia's main environment law would also better protect the natural world by introducing national standards and improving regional planning, while speeding up approvals for infrastructure to make energy cheaper. Though Australia has already set targets to cut greenhouse gas emissions 43 per cent by 2030 and achieve net zero emissions by 2050, the interim report found Australia will face significant climate-related risks regardless of emissions reductions. This means adapting to climate change is integral to growing productivity. The government has been urged to boost resilience to climate perils, which would lower the cost of disaster recovery and help maintain quality of life while Australia grapples with the impacts of climate change. Australians' homes in particular must become better adapted to climate risks, prompting the Productivity Commission to call for a housing resilience rating system and resources to help households, builders and insurers more easily identify upgrades. Dr Chalmers' roundtable will convene later in August and some invited to attend have already called for similar reforms. Former Treasury secretary Ken Henry in July urged the government to overhaul the nation's environment laws or risk Australia missing its most important economic goals. An answer to Australia's languishing productivity lies in its response to the threat of climate change, an independent government advisory body has found. Adapting to growing climate-related risks while also reducing emissions and transitioning to clean energy will enable higher productivity growth and living standards, according to an interim report by the Productivity Commission. The findings come as Treasurer Jim Chalmers prepares to convene a roundtable in search of a solution to the nation's lagging productivity. "Australia's net zero transformation is well under way," commissioner Barry Sterland said. "Getting the rest of the way at the lowest possible cost is central to our productivity challenge." By minimising the costs of reducing emissions through careful policy design, resources would be freed up for more productive activities, the interim report found. It recommended ensuring incentives to invest in technology that can achieve reductions. The Renewable Energy Target and the Capacity Investment Scheme, for example, will not support new investment in renewables after 2030, which means new market-based incentives should be implemented to eventually replace them. The report also recommends incentivising heavy vehicle operators to reduce emissions. Long-overdue reforms to Australia's main environment law would also better protect the natural world by introducing national standards and improving regional planning, while speeding up approvals for infrastructure to make energy cheaper. Though Australia has already set targets to cut greenhouse gas emissions 43 per cent by 2030 and achieve net zero emissions by 2050, the interim report found Australia will face significant climate-related risks regardless of emissions reductions. This means adapting to climate change is integral to growing productivity. The government has been urged to boost resilience to climate perils, which would lower the cost of disaster recovery and help maintain quality of life while Australia grapples with the impacts of climate change. Australians' homes in particular must become better adapted to climate risks, prompting the Productivity Commission to call for a housing resilience rating system and resources to help households, builders and insurers more easily identify upgrades. Dr Chalmers' roundtable will convene later in August and some invited to attend have already called for similar reforms. Former Treasury secretary Ken Henry in July urged the government to overhaul the nation's environment laws or risk Australia missing its most important economic goals. An answer to Australia's languishing productivity lies in its response to the threat of climate change, an independent government advisory body has found. Adapting to growing climate-related risks while also reducing emissions and transitioning to clean energy will enable higher productivity growth and living standards, according to an interim report by the Productivity Commission. The findings come as Treasurer Jim Chalmers prepares to convene a roundtable in search of a solution to the nation's lagging productivity. "Australia's net zero transformation is well under way," commissioner Barry Sterland said. "Getting the rest of the way at the lowest possible cost is central to our productivity challenge." By minimising the costs of reducing emissions through careful policy design, resources would be freed up for more productive activities, the interim report found. It recommended ensuring incentives to invest in technology that can achieve reductions. The Renewable Energy Target and the Capacity Investment Scheme, for example, will not support new investment in renewables after 2030, which means new market-based incentives should be implemented to eventually replace them. The report also recommends incentivising heavy vehicle operators to reduce emissions. Long-overdue reforms to Australia's main environment law would also better protect the natural world by introducing national standards and improving regional planning, while speeding up approvals for infrastructure to make energy cheaper. Though Australia has already set targets to cut greenhouse gas emissions 43 per cent by 2030 and achieve net zero emissions by 2050, the interim report found Australia will face significant climate-related risks regardless of emissions reductions. This means adapting to climate change is integral to growing productivity. The government has been urged to boost resilience to climate perils, which would lower the cost of disaster recovery and help maintain quality of life while Australia grapples with the impacts of climate change. Australians' homes in particular must become better adapted to climate risks, prompting the Productivity Commission to call for a housing resilience rating system and resources to help households, builders and insurers more easily identify upgrades. Dr Chalmers' roundtable will convene later in August and some invited to attend have already called for similar reforms. Former Treasury secretary Ken Henry in July urged the government to overhaul the nation's environment laws or risk Australia missing its most important economic goals.
Perth Now
5 days ago
- Business
- Perth Now
Emissions reduction 'central' to boosting productivity
An answer to Australia's languishing productivity lies in its response to the threat of climate change, an independent government advisory body has found. Adapting to growing climate-related risks while also reducing emissions and transitioning to clean energy will enable higher productivity growth and living standards, according to an interim report by the Productivity Commission. The findings come as Treasurer Jim Chalmers prepares to convene a roundtable in search of a solution to the nation's lagging productivity. "Australia's net zero transformation is well under way," commissioner Barry Sterland said. "Getting the rest of the way at the lowest possible cost is central to our productivity challenge." By minimising the costs of reducing emissions through careful policy design, resources would be freed up for more productive activities, the interim report found. It recommended ensuring incentives to invest in technology that can achieve reductions. The Renewable Energy Target and the Capacity Investment Scheme, for example, will not support new investment in renewables after 2030, which means new market-based incentives should be implemented to eventually replace them. The report also recommends incentivising heavy vehicle operators to reduce emissions. Long-overdue reforms to Australia's main environment law would also better protect the natural world by introducing national standards and improving regional planning, while speeding up approvals for infrastructure to make energy cheaper. Though Australia has already set targets to cut greenhouse gas emissions 43 per cent by 2030 and achieve net zero emissions by 2050, the interim report found Australia will face significant climate-related risks regardless of emissions reductions. This means adapting to climate change is integral to growing productivity. The government has been urged to boost resilience to climate perils, which would lower the cost of disaster recovery and help maintain quality of life while Australia grapples with the impacts of climate change. Australians' homes in particular must become better adapted to climate risks, prompting the Productivity Commission to call for a housing resilience rating system and resources to help households, builders and insurers more easily identify upgrades. Dr Chalmers' roundtable will convene later in August and some invited to attend have already called for similar reforms. Former Treasury secretary Ken Henry in July urged the government to overhaul the nation's environment laws or risk Australia missing its most important economic goals.
