Energy, resources and environment - Quarterly update
Market Intervention on gas and coal prices
- In late December, Prime Minister Anthony Albanese and state leaders approved a cap on wholesale gas and coal prices.
- The price cap for gas will see producers not being able to charge more than $12 per gigajoule. Similarly, the price cap for coal will be restricted to $125 a tonne for uncontracted thermal coal sold out of New South Wales and Queensland, where the largest share of the nation’s coal resources lies.
- The price cap will run for an anticipated 12 months, with laws being rushed through parliament.
- The industry has expressed concern about the cap to gas prices and considers that the government’s response will ultimately lead to higher prices for households and manufacturers.
- Major gas suppliers have indicated that they will not offer domestic manufacturers contracts while they study the federal government’s price cap. Some households have seen gas prices increase in the range of 26-36%.
Reforms to federal environmental laws
The Commonwealth government has announced new reforms to Australia’s outdated environmental laws, including:
- establishing a federal environmental protection agency (Federal EPA);
- a “nature market” to measure biodiversity and issue certificates for projects to offset negative environmental impacts; and
- the ability for First Nations people to develop national standards for projects.
The proposed Federal EPA will enforce compliance under the proposed legislation, regular public reporting, and imposing standards across projects for information and undertakings. The Federal EPA will also monitor and verify the operations of states, territories and other Commonwealth authorities.
Australian Energy Market Operator (AEMO) recent activity
AEMO published its Engineering Roadmap to 100% Renewables report on 1 December 2022. The report illustrates AEMO’s best view of engineering and operational requirements for 100% instantaneous renewables operation. The report provides a technical assessment of steps for the industry to prioritise in the transition to 100% renewables. The key actions required to achieve the operation of 100% renewables are captured in the following themes:
- power system security;
- system operability; and
- resource adequacy and capability.
Separately, AEMO has also launched its world-first Connections Simulation Tool to enable users to run simulations against AEMO’s power system model for new projects connecting to Australia’s National Electricity Market (NEM).
Australian Renewable Energy Agency (ARENA) recent activity
On 27 October 2022, ARENA welcomed its expanded funding and a new budget program announced in the 2022-2023 Federal Budget:
- $146.1 million is to be delivered over five years as part of driving a national fund for projects to decarbonise road transport, supporting ARENA’s electric vehicle charging highway networks, smart charging and vehicle-to-grid charging projects;
- $60 million in new funding to expand the existing $100 million large-scale battery storage funding round;
- $188.4 million to fund ARENA’s program to roll out 342 community batteries across Australia, providing access to battery storage to households; and
- $83.8 million to develop microgrid technology across First Nations communities.
On 23 November 2022, ARENA published an industry report, ‘A Roadmap for Decarbonising Australian Alumina Refining,’ providing a framework for future policy and investment decisions in the transition to net zero.
Australian Securities & Investment Commission (ASIC) greenwashing infringement notices
- ASIC has stated that greenwashing is a current ASIC priority, issuing eight infringement notices for alleged greenwashing in 2022, and started 2023 with further action against a listed company.
- ASIC indicated it will continue to closely monitor sustainability claims and take action where representations cannot be substantiated or are factually incorrect.
This article provides general commentary only. It is not legal advice. Before acting on the basis of any material contained in this article, seek professional advice.