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The Finkel report’s impact on energy regulation

Energy law expert Prof. Samantha Hepburn comments on Finkel Report.

Deakin Law School’s energy regulation and policy expert Professor Samantha Hepburn has considered the impact of the Finkel Report recommendations on domestic gas security following the recently-released government report. 

As one of the independent experts providing feedback on the Final Report of the Independent Review into the Future Security of the National Electricity Market, Prof. Hepburn says that the report’s focus on gas ‘raises the spectre’ of domestic gas supply and pricing.

Unveiled by Australia’s Chief Scientist Dr Alan Finkel, the report recommends a clean energy target that is technology neutral and one which Prof. Hepburn says is consistent with the increased global focus on sustainable, renewable energy production within a decarbonized economy.

‘The report recommends a low emissions target that is anticipated to operate in a manner akin to the existing RET.  Clean energy, however, is explicitly defined as emanating from sources that produce no more than 700 kilograms of carbon per megawatt.’

According to Prof Hepburn, the scope of this definition is broad enough to include not only renewable energy production such as wind and solar but also nuclear energy and gas.

‘The report indicates these resources must play a particularly important role as a transition resource – and coal production needs to incorporate carbon capture and storage technology.’

Unlike an emission intensive scheme, where high polluters purchase credits from cleaner operators (such as the transactional process within the wholesale electricity market), Prof. Hepburn says that the LET would create a separate market and this has the potential to impact gas supply and pricing.

 ‘The difficulties facing the Eastern gas market and the utility and effectiveness of the domestic gas security mechanism in this context is a particularly strong concern given that an important focus of the report is energy security. The also report reinforces the importance of developing effective regulatory frameworks for storage requirements for renewable projects,’ she explains.

Prof. Hepburn is the Deakin Law School’s Director of the Centre for Energy and Natural Resource Law (CENRL).

She says the Finkel Report highlights the importance of implementing regulatory controls over notification periods for the shut-down of coal-fired power plants.

‘Carbon intensive coal production will decrease within a clean energy framework and a carbon constrained economy, however, the increased warning of proposed closures will, the report suggests, allow for economic and social adjustment.’
Prof. Hepburn advises that the stronger focus on gas suggests that onshore gas production – both conventional and unconventional – is likely to be accelerated.

‘This will inevitably involve the reassessment of existing regulatory bans and moratoriums in some states. The report makes it clear however, that stronger evaluation of the potential environmental impacts associated with coal seam gas, shale and tight gas extraction upon water resources, the landscape and adjacent communities is critical in order to ensure longer term sustainability.’

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