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What ACIL Allen really think about the NEG

The Greens are calling on the government to release the full modelling for the proposed final design of the National Energy Guarantee to enable scrutiny of the government’s claim that it will result in lower emissions and power bills.

“The government has only produced a spreadsheet and chart pack, which really doesn’t cut it,” said Adam Bandt.

And there are probably good reasons for not releasing the full modelling carried out by ACIL Allen Consulting considering this article written by Owen Kelp, a principal of the firm who “has previously undertaken electricity sector emission projections for the Department of the Environment and Energy and commonly undertakes electricity market projections for governments and market participants.”

Kelp writes; “There is no identified shortfall in capacity over the coming decade even with the closure of Liddell and AEMO’s own analysis supports this view. Given that the NEG Reliability Obligation is designed only to be triggered in the event of an identified shortfall of dispatchable capacity, then this measure is likely to result in nothing more than administrative overhead for the industry and consumers will bear an additional, unnecessary cost.”

Of more interest to Kelp was the NEG emissions obligation.

“The electricity market modelling that was undertaken for the ESB utilised an emissions budget of 1,352 Mt CO2 for the NEM over the period 2020-21 to 2029-30, the period covering the Paris Agreement. This represents a very small reduction over doing nothing as the Business as Usual (BAU) scenario modelled had emissions of around 1,396 Mt CO2 over the same period. Therefore, the NEG is only seeking to achieve abatement of around 44 Mt CO2-e over a 10-year period.

Reviewing the Department of Environment and Energy’s latest emission projections report reveals that the cumulative abatement target for Australia for the period 2020-21 to 2029-30 is assessed to be 868 Mt CO2 (down from 990 Mt CO2 in 2016) to meet a 26 percent reduction on 2005 levels by 2030.

Given that the electricity sector accounts for around one-third of national emissions, it must be asked why the Government is only seeking to achieve 5 percent of the required abatement from the National Electricity Market? If the ESB modelling is in accord with current Government policy, it appears that the Government is walking away from undertaking any meaningful abatement in electricity in the post-2020 period. If this is the case, it will burden the other sectors of the economy to do the heavy lifting.

Achieving abatement in some of these other sectors is extremely challenging and potentially very expensive.

An emissions budget for the NEM of 1,352 Mt CO2 is far too generous and puts too much reliance on other sectors which will likely increase the aggregate cost of meeting our 26% target. The NEM budget should be revised down to around 1,214 Mt CO2 for the emissions obligation of the NEG to make a proportionate contribution.

This approach is the absolute minimum abatement task which should be applied to the NEM as it is likely to be lower cost abatement than other sectors. Decarbonisation of electricity is likely to be a precursor for decarbonisation of other sectors, especially transport where the shift to electric vehicles to reduce transport emissions requires electrical energy from low to zero emissions sources.”

It would be very interesting to see if Mr Kelp expressed the same view to the government when they were paying him for it. Then again, I suppose that depends on what questions they asked.


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  1. New England Cocky

    Kaye Lee strikes again!!! Well done!! Exposing the urban myth that the NLP misgovernment is representing the voters.

    “Kelp writes “There is no identified shortfall in capacity over the coming decade even with the closure of Liddell and AEMO’s own analysis supports this view. Given that the NEG Reliability Obligation is designed only to be triggered in the event of an identified shortfall of dispatchable capacity, then this measure is likely to result in nothing more than administrative overhead for the industry and consumers will bear an additional, unnecessary cost.”

    “No shortfall in capacity over the coming decade” — does this mean the coal miners will have to find other markets for this now unwanted coal?

    “[The NEG Reliability Obligation ….is likely to result in nothing more than administrative overhead for the industry and consumers would bear an additional, unnecessary cost”.

    The NLP misgovernment has a strange way of reducing consumer costs by increasing administrative overheads ….

    Has any AIMN person looked for any Turdball pecuniary holdings in the coal industry?? After all, his mentor, the late Neville Wran, is reported as having had a good holding of coal industry shares.

  2. king1394

    One gets the impression that expert advice, reports and inquiries exist to mollify the populace and for the appearance of doing something. I really do not believe the MPs read much at all, and at best, have a summary run past them which has been written by a staffer, and which reflects existing beliefs and policies. This is why politicians will actually sometimes say that ‘no one’ has ever put a particular matter to them, or that the general public is not interested. They live in a bubble created by their staff which protects them from unpalatable information

  3. Barry

    If the LNP wanted cheaper power they would call for a national Resource Reservation policy. But that would affect shareholder dividends for mining companies, so guess what. CC denialists in Canberra will continue to put personal profits ahead of households & businesses. MSM will throw rocks in the grass.

  4. Ian Mckenzie

    South Australia was until the last state election now we will suck up to Canberra. The new mob want an interconector built to NSW this is a rehash of a RUDD/GILLARD idea and at that time scoffed at it as a pipe dream. It was actually supposed to run from the Eyre Peninsula by it not going ahead this state lost a great potential as a power generator.

  5. guest

    If politicians are so ignorant about emissions and climate change, why is there no on-going education in the public arena?

    The Murdoch media deliberately spreads climate denial ideology unashamedly. It deliberately sets out to obfuscate the debate.

    Barny Joyce tells us that ordinary people do not care about the Paris Agreement. Why is that? Has Barny been explaining to the people what the Paris Agreement is about?

    The backbencher Abbott is telling us that emissions is the wrong target to address; the target should be reduction in costs and coal should be in the mix. Renewables, he says, do not work if the sun does not shine and the wind does not blow. There will be many blackouts and our industry will fail and backup will be required. Is that what has happened in SA?

    Well, we see how Abbott employed Turnbull to wreck the NBN. Abbott is grossly ignorant about technology. And I for one do not believe anything he says. He is a self-confessed liar.

    What is needed is a far better educated public who know what the scientists are telling us, but just looking around, there is not much climate science and plenty of distracting talk about anything but climate science.

    Climate science is available if we look in the right places, but the effort seems too much for people to undertake without compulsion. Can we let that situation continue? Or do we just let things roll along so that the longer we delay real action, the more expensive it will be – more expensive that a domestic power bill?

    Perhaps the problem is that people do not like to be preached at, preferring to believe only what they think, not what someone else tells them. It is just so sickening to hear some of these people air their ignorance in public, especially if they hold high positions in the government of the country.

  6. Kaye Lee

    After Tony’s appearance on 7:30 report tonight, I felt compelled to comment on his facebook page…

    “Tony, I know, by your own admission, that you don’t read reports, but one would think you would at least do some research before you go on national tv and make an idiot of yourself. For the record, since you obviously haven’t read it, the NEG is proposing an emissions reduction from the NEM of about 5% (44 Mt CO2-e over a 10-year period of the required 868 Mt) of the paltry reductions target we have signed up to.

    That would mean we would have to make very costly reductions in other sectors to even come close to the target YOU signed up for which you said was “a definite commitment” and a “good, solid economically responsible, environmentally responsible target”.

    Your own chief of staff admitted you deliberately lie for personal political gain. “It wasn’t a carbon tax, as you know. It was many other things in nomenclature terms but we made it a carbon tax. We made it a fight about the hip pocket and not about the environment. That was brutal retail politics” and here you go doing the same crap again – lying – because you want your old job back. This has nothing to do with what is good for the country and everything to do with the rejection and relevance problems of yesterday’s man.”

  7. paul walter

    The 7.30 was a dismal effort. Sales looked stunned like she’d been concussed by its end.

  8. OldWomBat

    Hi Kaye, on a different tack: is there any way to get a summary of the budget cuts and budget additions to health, education, ABC, SBS etc. by year, since the lnp assumed power 5+ years ago. For example all we hear is when they claim to have increased spending on education, but this needs to be placed in the context of where funding stood 5 years ago so that a true picture of what has been done becomes clear. Thanks for your excellent research and the clarity of your articles.

  9. Matters Not

    I thought Leigh was perhaps a little over the top tonight when she went to the ABC vast library of tapes, made a selection which showed Abbott’s gross hypocrisy over many years and in his own words and then had the audacity to present same on national TV. And at peak hour. (Does she think she’s Ellen Fanning.)

    While it was good journalism it reflected poorly on the ABC – at least from the LNP point of view.

    Gee Leigh’s a hard hitting journalist and I’m sure Tony will tell her that when they next meet socially in the immediate future.

    Shakes head.

  10. Florence Howarth

    I love listening to extreme neoliberals demanding the government put taxpayers money at risk by underwriting coal. Demanding the marketing is prevented from operating by government interference.

  11. Kaye Lee

    Abbott is such a numpty.

    The former leader urged Australians to heed warnings from the chief executive of Tomago Aluminium, Matt Howell, who runs the nation’s largest aluminium smelter and has warned about need to keep using coal-fired power to sustain industry.

    “Now he is the man who should be listened to,” Mr Abbott told the ABC.

    Yet Tomago Aluminium was a signatory to a letter from the Business Council of Australia on Monday hours before Mr Abbott’s interview, urging MPs to back the NEG and blaming policy uncertainty for driving up prices.

    “We call on federal, state and territory parliamentarians to take the necessary steps to implement the Guarantee without further delay this week,” said the joint statement led by BCA chief Jennifer Westacott.

    The letter was endorsed by Alcoa, BHP, BlueScope, Rio Tinto, Shell Australia as well as Tomago Aluminium.


    Though I must say, with that lot rushing to endorse this policy, it underlines how little it will affect them.

  12. Nigel Drake

    Kaye, the electors in Warringah are the numpties.

  13. Kronomex

    Well whoop-de-do, the LNP mob (except for Mr. No and his mates) have “signed off” on the NEG. Big deal, that’s like a bunch of preschoolers agreeing for more lollies before they approach the keeper (so to speak). Let me guess it’s, “A great victory for the country.”


    I expect they now believe that the the opposition and other parties will fall over themselves to sign on the dotted line and it will be all said and done. What a bunch of morons.

  14. diannaart

    I hear both Turnbull and Abbott displayed a rare moment of honesty when they called each other “idiots” in parliament over the NEG proposal.

  15. helvityni

    A case of the kettle calling the pot black and vice versa…or maybe just uncivil language use in high places….we don’t need to go to Trumpland to witness it.

  16. Joseph Carli

    helvityni……I’m on facebook..send me a message and I’ll send a link back …ok?

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