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Ai Group comment on Labor's energy policy

"The Federal Opposition's energy policy announced today contains useful steps that could help address the ongoing crisis of an electricity system that currently combines high prices with high emissions and declining reliability. But Labor's policy also carries significant risks to energy users without careful design and bolder thinking," Ai Group Chief Executive Innes Willox said today.

"Deeper emissions targets means dramatic change to an electricity system already under strain. Energy users will require assurance that this change will also achieve lower prices and maintain reliability. We should aim for globally competitive electricity prices, which our current system is no longer delivering. Without efficient emissions policy design that goal will not be met.

"A revised National Energy Guarantee, as an efficient market mechanism, is still achievable through agreement with the States. It would be greatly preferable to a policy whereby the Government directly underwrites new generation projects. Both major parties now propose some version of the latter. If adopted, underwriting needs independent administration, close coordination with the energy market authorities, and a long-term approach to investment guidance. Without this the risk is that underwriting undermines the market, slugs taxpayers and raises long-term electricity costs.

"Other elements are positive. Finance for strategically important transmission projects can support efficient development and reduce risks to energy users. Energy efficiency improvements are a must. Even populist handouts for batteries could be genuinely helpful if they come with incentives to use those batteries in ways that support the wider grid.

"The deep challenges of our electricity system will remain urgent whoever wins the next Federal Election. Ai Group will continue to advocate for reform to restore our energy advantage in a low emissions world," Mr Willox said.

Media enquiries: Tony Melville – 0419 190 347