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Kim Carr
Kim Carr says the Coalition’s energy policy could be seen as ‘an attempt to paper over’ internal divisions. Photograph: Mick Tsikas/AAP
Kim Carr says the Coalition’s energy policy could be seen as ‘an attempt to paper over’ internal divisions. Photograph: Mick Tsikas/AAP

Turnbull energy policy 'remarkably similar' to intensity scheme, Kim Carr says

This article is more than 6 years old

Labor’s industry spokesman warns Neg does not do enough to reduce prices in the short term but signals possible cooperation

The Turnbull government’s national energy guarantee has “remarkable underlying similarities” to an emissions intensity scheme in the electricity sector, according to the Labor industry spokesman, Kim Carr.

In a speech to be given to the Food and Grocery Council on Thursday, seen by Guardian Australia, Carr warns the Neg does not do enough to reduce prices in the short term but signals possible cooperation if the government provides details of how the scheme will work.

Carr also warns that the Neg reduces the electricity sector’s contribution to greenhouse gas abatement. “This inevitably means that other sectors, where that abatement is likely to come at greater cost – like manufacturing – will be required to do more if we are to meet our international obligations.”

The Neg, announced and adopted by the Coalition on Tuesday, works by imposing new reliability and emissions reduction guarantees on energy retailers and large energy users from 2020.

On Thursday Carr will say: “What’s particularly interesting, and I am not certain that the government party room has understood this, [is] the new measures have remarkable underlying similarities to the principles of the electricity intensity scheme that were rejected last December.”

Carr explains that both an EIS and the Neg involve limitations on emissions. While the EIS requires generators to trade credits in an open market, the Neg requires retailers to trade through contracts obtaining low-emissions energy from other providers, in effect setting a carbon price.

“Or to put it in another way, one model involves an open transparent market, the other is an over-the-counter transaction,” he says.

Before the 2016 election Labor proposed an emissions intensity scheme for the electricity market. Since the government unveiled the Neg, Labor has reserved its position, meaning it is unclear if it will plan to revert to an EIS, continue to call for a clean energy target or sign up to the new policy.

Carr says the new Neg policy could be seen as “an attempt to paper over [the government’s] internal political divisions rather than meeting the national interest”.

The government claims the Neg will save households “in the order of” $115 a year between 2020 and 2030, but the figure is based on an Energy Security Board estimate with no detailed modelling.

Carr criticises the government for announcing the policy before proper consultation with the states and before detailed modelling, which will not be ready until November.

“Heaven knows how the Liberal party room was able to assess the principles underlying this package without the necessary information,” he says. “It’s a missed opportunity brought about by political expedience.”

Carr labels the impact on price and reliability “modest”, noting the Neg won’t take effect for three years.

Despite saying it was “deeply disturbing” that the government had rejected Labor’s proposed bipartisanship on a clean energy target, Carr says that since the energy crisis is “the worst public policy failure in recent years” Labor is still committed to finding a “long-term coherent solution”.

“So we will look at these initiatives in a careful and considered manner.”

The industry spokesman says manufacturers are suffering from energy costs which have risen by 93% in two years, and warns that smaller players “are in desperate straits”.

Carr will champion the announcement made on Saturday that Labor would create a new $1bn Australian Manufacturing Finance Corporation to provide cheaper access to finance and loan guarantees for advanced manufacturing, including automotive and food manufacturing.

He argues that industry policy provides Australians with “hope and optimism” in the face of job losses and rising inequality. He says this is particularly important in outer suburbs, rural and regional areas, where people are “turning away from mainstream political representation”.

“Industry policy is not just about economic prosperity: it is about the legitimacy of our democracy,” he says.

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