Malcolm Turnbull just dumped the Chief Scientist's key renewable energy plan for 'guarantees' from power companies

Photo: Getty Images.

The Australian government has dumped the key recommendation of a review into Australia’s energy market by Chief Scientist Dr Alan Finkel to reduce carbon emissions in favour a scheme its calling the “National Energy Guarantee”.

The proposal for a clean energy target, also known as a “low emissions target” (LET) is the only one of 50 recommendations made by Dr Finkel not adopted by the government.

Cabinet voted against a target last night and the new plan was backed by the party room today.

The Finkel review was commissioned by the Turnbull government in the wake of mass blackouts in South Australia last year and made 50 recommendations. The Chief Scientist recommended a clean energy target saying it was “the most effective mechanism to reduce emissions while supporting security and reliability”.

But issue had already seen four Labor states split from the federal government, declaring they would proceed with their own emissions targets.

Dr Finkel’s report warned that that while governments have committed to lower emissions: “the pathway is blocked by uncertainty about how to get there”.

Today Prime Minister Malcolm Turnbull took to social media to hail the Coalition’s plan as a “significant breakthrough” and “an opportunity to break free of the climate wars of the past”

He said the two-part guarantee involved “no subsidies, no certificates and no tax”.

Turnbull said he’d asked the newly formed Energy Security Board (ESB) – a recommendation of the Finkel review – established in August “to build on the excellent work of the chief scientist”.

The ESB, chaired by Dr Kerry Schott, was was established coordinate implementation of the Finkel report, but the Prime Minister presented it today as the body behind the proposal to dump a clean energy target.

He said the National Energy Guarantee was the board’s recommendation for “lower power prices and more reliable power supplies”.

“Energy companies will have to guarantee the reliability of their energy supplies to ensure the lights stay on,” he said.

“And they will have to guarantee their energy sources will enable us to meet our emissions reduction commitments.”

The PM said the guarantee will deliver “lower power prices”, but he stopped short of saying consumers will pay less, instead declaring: “This means that electricity bills will be lower than currently forecast and lower than they would have been under a clean energy target”.

He later said the ESB estimates typical household bills will fall by an average of $110-$115 per year over the 2020-2030 period.

Addressing the key concern by Dr Finkel that “ongoing uncertainty is undermining investor confidence, which in turn undermines the reliable supply of electricity and increases costs to consumers”, Turnbull said the government’s plan was “truly technology neutral”, “doesn’t involve the government picking winners”, and would be backed by the energy sector.

“The Energy Security Board has assured us the scheme will give certainty to investors and therefore encourages investment in all forms of power,” he said.

There was “a place for all power sources” Turnbull said, appearing to appeal to sections of his own party backing coal-fired power over renewable energy.

AGL boss Andy Vesey called for bispartisan support on the government’s guarantee, saying that would “provide investment certainty”.

The speed of today’s announcement caught many by surprise after energy minister Josh Frydenberg said just last week that the government would “respond before the end of the year” to the clean energy target, as calls to dump the proposal grew, especially from the backbench, led by former prime minister Tony Abbott.

Abbott welcomed today’s decision as “progress”.

He argued that past energy plans “subsidised some industries, punished others and slugged consumers”.

Prior to Turnbull’s announcement, Coalition backbencher Craig Kelly, said the guarantee “superior” to Dr Finkel’s clean energy target proposal.

“This plan does more to tackle the issue of reliability, and it also will help put further downward pressure on prices,” he said.

The backbench maintained strong opposition to any form of low emissions target after the government had already rejected plans for an emissions intensity scheme. They have also been pushing to end subsidies for renewable energy while some, such as former minister Matt Canavan, have pushed for a government investment board to loan Indian multinational Adani $1 billion for its planned Carmichael coal mine in Queensland after banks declined to fund the project.

Last week Dr Finkel made a last-minute plea to keep the clean energy target as a “useful tool” for a “managed transition” of the energy sector.

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