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May 10 2023

Budget: Positive steps for the transition, but more to be done on capacity

The energy industry welcomes steps in the Budget to progress the energy transition, and is looking forward to seeing more details on the Federal Government’s underwriting of critical firming capacity, according to the peak body for retailers and generators, the Australian Energy Council.

The Capacity Investment Scheme, which was agreed by all Energy Ministers last year, is intended to underwrite revenue for a mix of zero emissions dispatchable generation and storage. To date there has been little information on its scale or how it will operate, and industry remains unclear as to what role the scheme will play in what is already a highly complex environment for investors.

The AEC’s Chief Executive, Sarah McNamara, said, “As coal plant continues to leave the market additional firming capacity will become vital to ensuring grid reliability. The Capacity Investment Scheme is a cornerstone of how that will be achieved. We look forward to engagement with the design work supported in this budget over the coming months.”

Ms McNamara welcomed funding to establish a Guarantee of Origin Certificate scheme to track and certify the emissions heritage of energy sales, as well as support for implementing priority reforms to the operation of the Australian Carbon Credit Unit (ACCU) scheme.

“Ensuring the integrity of emissions certification will become increasingly valuable as we move towards net zero emissions,” Ms McNamara said.

The AEC also applauded the direct bill rebates for vulnerable households and funding to improve energy efficiency for those unable to afford or invest in home upgrades themselves.  

“These are effective and targeted ways to help the most vulnerable deal with cost-of-living pressures. Home upgrades and improving energy efficiency have been shown to make a significant difference to household energy costs, and this measure will help bridge the gap between those currently benefiting from new energy technology and those who have so far been unable to participate.

“Encouraging greater electrification and investment in energy efficiency measures through additional small business tax deductions should help them enjoy ongoing savings on their energy bills,” Ms McNamara said.

About the Australian Energy Council

The Australian Energy Council is the peak industry body for electricity and downstream natural gas businesses operating in the competitive wholesale and retail energy markets. AEC members generate and sell energy to 10 million homes and businesses and are major investors in renewable energy generation. The AEC supports reaching net-zero by 2050 as well as a 55 per cent emissions reduction target by 2035 and is committed to delivering the energy transition for the benefit of consumers.

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