What is the Finkel review?
The report says Australia is at a critical point on energy generation, and without a proper plan Australians could risk having unreliable energy sources and higher electricity prices. The Finkel review gives advice to the government about how to manage this and options forward.
Why do we need it?
Electricity prices have soared and the recent South Australian blackout, which prompted the review, has raised fears about the stability of the system, including concerns about the reliability of renewable energy sources like wind and solar.
There’s also concerns about what will happen when the fleet of ageing coal-fired generators retire and what their replacements will be, with investors saying they are unlikely to pour money into new coal-fired stations.
What does it recommend?
The key point is a new clean energy target to replace the renewable energy target in 2020. It will encourage wind, gas or coal projects with carbon capture and storage generators into the market through incentives.
Under the new scheme, generators would receive certificates for the electricity they produce in proportion to how far their emissions are below a threshold. Retailers would have to buy those certificates to show that some of their electricity has come from low emission sources.
In addition, all existing large electricity generators have to give at least three years’ notice before they close to allow communities to adjust and replacement generators to develop.
Are prices going to be lower?
The review promises consumers will benefit from lower prices as more generators enter the market to complement the existing low-cost generators.
The government says prices could drop by 10 per cent.
There are also rewards for households and industries that agree to manage their demand and share resources such as solar panels and battery storage.
What's the hold-up?
Politics. A number of coalition MPs – chief among them former prime minister Tony Abbott – are not happy with some of the recommendations, mostly over concerns it could harm the future of coal and the economy.
Mr Abbott has said the clean energy target is a “magic pudding” and effectively a tax on coal. Meanwhile, an unidentified Liberal MP has reportedly said Prime Minister Malcolm Turnbull could lose the Liberal leadership over the issue if he didn’t listen to concerns.
Mr Abbott won the leadership from Mr Turnbull in 2009 because of the latter’s support for an emissions trading scheme.
