"Australia faces several overlapping energy crises. We have lost our cost advantage, and energy is increasingly unaffordable for trade-exposed industry and households. The reliability of supply is under question, first in South Australia but eventually everywhere. We are not on course to achieve our emissions reduction commitments. And the investment needed to address these challenges is being strangled by a crisis of confidence and credibility, brought on by a decade of short-lived policy and political polarisation.
"The Finkel Review is a desperately needed opportunity to overcome the divisions and short-term thinking that have plagued Australia and unite around a plan for affordable, reliable and clean energy. The Review's final report deserves close consideration. Ai Group will determine our final response after working through the recommendations with our membership. But our immediate impression is that Dr Finkel and his team have consulted widely, listened closely, and delivered a sound blueprint.
"There has been much focus on the recommendations around emissions reduction, including either an Emissions Intensity Scheme (EIS) or a Clean Energy Target (CET). While these are quite distinct policies they have some features in common. Both are technology neutral market mechanisms that could work well with careful design. And neither can work without sustained cross-party consent. If Australia's political parties put a higher value on brand differentiation than on durable policy, we will be condemned to an electricity system that is uninvestable, unaffordable, unreliable and high-emitting.
"While the approach to emissions reduction is clearly critical, much more than this is needed to deliver the flexibility our electricity system requires to adapt to the massive changes underway. The bulk of the Finkel Review is about these other reforms – to security standards, the incentives for demand-side participation, and much more. We need to consider the full Finkel Review – and be ready to deliver a comprehensive set of measures.
"It will take time to digest the Review's recommendations and understand their interplay. For instance, the Review concentrates on issues facing the Eastern electricity market, but a national emissions mechanism will have implications for Western Australia and the Northern Territory too.
"We commend Dr Finkel and his colleagues for their work. The challenge now, for governments and stakeholders alike, is to take seriously the crises we face and the solutions the Review has offered. We need consensus-building and pragmatism in the pursuit of shared goals: an electricity sector that sustains Australian prosperity and competitiveness as we meet our climate commitments," Mr Willox said.
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