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Select Committee into the Resilience of Electricity Infrastructure in a Warming World
10/02/2017
Storage technologies and localised distributed generation in Australian electricity networks

BRADLEY, Mr John, Chief Executive Officer, Energy Networks Australia

CRAWFORD, Mr Garth, Executive Director, Economic Regulation, Energy Networks Australia

CHAIR: Welcome. Would you like to give us a brief opening statement if you have one prepared? Then we will go to some questions.

Mr Bradley : Thank you for the opportunity for Energy Networks Australia to appear before you today. Our association represents Australia's energy grid, supporting all Australian customers over 900,000 kilometres of electricity transmission and distribution lines and almost 90,000 kilometres of gas distribution mains. In addition to addressing the challenges of adaptation to climate change, Electricity Networks are providing a critical enabling role in emissions abatement, recognising the need for Australia to transition towards a lower-emission economy.

Transitioning to this future will have implications for all parts of our energy supply chain and presents a very significant range of technical, economic and regulatory challenges. Our key message to you today is that, without a well-planned approach with timely action by governments to create policy and regulatory cohesion, Australia's energy system is unlikely to efficiently and securely integrate diverse technologies, large-scale renewable energy sources and customer owned distributed energy resources.

Electricity networks are providing a critical enabling role in emissions abatement in addition to addressing the challenges of adaptation to climate change in its own sector. Implications of climate change for our networks are significant, with potential for sea level rise, increased frequency and severity of extreme weather events and related events, including storms, cyclones, heat waves and bushfires. Given the long life of energy network assets, investment decisions made today must incorporate risk assessments from a whole diverse range of factors, including future climate change.

Transmission and distribution systems are enabling a relatively rapid transition of energy generation from centralised, carbon-intensive power stations to increasingly decentralised, low- or zero-carbon sources of supply. We have recently undertaken a landmark study with the national science agency, CSIRO: the Electricity Network Transformation Roadmap, our attempt to enable better outcomes for energy customers. A two-year analysis produced a comprehensive plan to keep the lights on, keep the bills affordable and decarbonise electricity. It finds that a coordinated approach to the changes in the energy system can deliver more choice and control while maintaining system security and meeting international climate change commitments. In fact, the CSIRO analysis confirms that our electricity sector could exceed its share of current national carbon abatement targets, achieving 40 per cent below 2005 levels by 2030. It is also possible for the electricity sector to maintain a reliable and stable grid while achieving zero net emissions by 2050 in line with the aspiration of the COP 21 Paris agreement.

Our road map sets out measures which could see 10 million participants using the grid as a platform for energy exchange, customers saving over $414 per year on average or total savings of $101 billion in system expenditure and zero net emissions for the electricity sector by 2050. That is a significant contribution to economic productivity.

The opportunity is there, but it relies on strengthening, not undermining, national energy market institutions and markets in which investors, whether they are utilities, new innovators or households, can make decisions without unnecessary policy risk. The greatest single risk to an efficient, secure transition is conflicting government policy frameworks in a national market and a lack of regulatory cohesion.

The road map would transform Australia's electricity system, enabling more choice and control, but it will require timely action in an integrated, outcome focused transition plan. Thank you. We look forward to discussing with you further today.

CHAIR: Thank you. You have talked about the need for a plan. Do I take it from that that you do not see a plan clearly being articulated by the current government?

Mr Bradley : I think I would say more generally that governments generally in Australia are collectively responsible for the energy policy and regulatory environment. State and federal governments through the COAG Energy Council are collectively responsible for the clarity and cohesion of that policy and regulatory framework. Whether it is the uncertainty over the future of carbon policy and the renewable energy policies that conflict in some ways and are not integrated across the country at the moment or whether it is the timely implementation of the measures that the COAG Energy Council has agreed to in the past, where a lot of reforms can sit idle for a long period of time because individual states do not progress them, there is a problem with the clarity of the energy policy and regulatory framework and the predictability of that for investors, whether, as I said, that is large-scale investors or simply mums and dads investing in solar that want to know what the feed-in tariff arrangements might be in the long term.

CHAIR: In saying that, is it fair to say that the national energy market just is not working?

Mr Bradley : We think the National Electricity Market actually is a world-class framework. It will require significant change because of that transformation that is happening through technology trends and the take-up of distributed energy resources. It is basically, as you know very well, seeing the grid being used in a way that was never intended in its original design. It was intended to be large generation sources flowing through transmission to distribution, stepping down through the voltages to the end-use customer. Now we are looking at multilateral flows of energy but also customers participating in the market in a very different way. The potential in South Australia within 10 years is to see minimum demand being met solely from solar PV at the other end of the system from which the grid was originally designed. So, without criticising the NEM, it will need some changes. We think it is important that governments reinforce the institutional process we have got and refine the NEM rather than establishing measures which are fragmented across the country or undermine the institutions of the NEM and the ability for markets to work.

CHAIR: Whose job is it to drive that plan and to drive the necessary changes that have to happen and, as you say, are inevitable in relation to the national energy market?

Mr Bradley : We see the biggest gaps as being around the clarity of the policy and regulatory framework going forward.

CHAIR: Federally?

Mr Bradley : From all governments because all governments are in some ways contributing to the energy policy environment. States have significant regulatory and licensing obligations. The federal government has significant responsibilities for national institutions. Similarly, in carbon policy you have got states that are progressing renewable energy targets to help abate climate change at the same time as you have got national measures. So all governments are collectively responsible. We have got a forum—the COAG Energy Council—that is intended to deliver that cohesion, and that does not work effectively at the moment, as we can see through the recent public debate in the last few months. The problem for that is that we know that we need really timely action on some of those key issues identified in that road map that we have released with the CSIRO. There are some really urgent things that need to be addressed and, while the finger-pointing and uncertainty in that policy environment continues, we are setting customers up for higher cost and a less secure transition to a lower carbon economy.

CHAIR: Is it right to blame the South Australian government for the power outage this week?

Mr Bradley : One of the things we are trying to say to you today is that the blame issue and trying to rush to judgement on blame in an operational event that occurred a few days ago is part of the problem.

CHAIR: Whether you are blaming a state government or blaming renewable energy?

Mr Bradley : Blaming any party within two days of that event rather than doing a sober analysis of what happened and getting to the bottom of those issues, we think, is part of the problem. There are clearly issues in extreme weather events that South Australia has faced since the middle of last year that have contributed to significant outages, and those have been reported on by the Bureau of Meteorology, which has produced its report. It has recognised that 2016 was a very unusual weather year generally across the country. Some of those things are alluded to in recent submissions from our association.

We think, in relation to individual operational events, the lessons of those need to be worked through in a clear way rather than having an attempt to rush to judgement on what is an operational matter. I have got no view on the cause of the event this week.

CHAIR: What about the role of AEMO in all of this? Some of said that this all occurred because AEMO was asleep at the wheel. Is there something wrong with the way demand is being forecast?

Mr Bradley : There are inherent uncertainties in forecasting the expected demand in relation to weather variation. It is an inherently complex process, and AEMO is best placed to speak to their approach to undertaking that in a robust way. I would say that we would not be in a position to second-guess the decisions which led them to make those conclusions about the event and the readiness of generation capacity this week, but we do think that the South Australian system black event last year and these operational events should be reviewed to identify if there are process changes if there is a degree of insufficient redundancy and risk mitigation in the way AEMO is planning for contingent events. We think there is a process to do that, including the NEM security review being chaired by Professor Alan Finkel.

CHAIR: What is your sense of positivity or pessimism about the Finkel review and how it will be taken on board?

Mr Bradley : We think that the Finkel review has got a terms of reference and an approach which are appropriately comprehensive. The whole message in our submission is that we need a holistic approach, so the Finkel review has the scope to do that and to provide a blueprint which, hopefully, provides state and federal governments with a way forward to create that clear plan that we are calling for. We would be optimistic that, if we take an evidence based approach through that Finkel review, if it focuses on outcomes rather than trying to pick technology winners or identify the most likely solutions and instead creates resilient market frameworks within which a technology competition can occur to get the outcome we want, whether it is decarbonisation, security or energy affordability, that will be the right model. So we are optimistic at this stage.

CHAIR: Thank you. Senator Back, do you have any questions?

Senator BACK: Yes. I am obviously very interested in the whole process. As a Western Australian, I tend to sort of bristle a little bit when I hear of this National Electricity Market in the sense that there seems to be a perception—and, indeed, some bureaucrats—

CHAIR: We always know that you just want to secede anyway!

Senator BACK: think that there is a whopping big cable that goes across the Nullarbor Plain. The last time I looked, we had not seceded, so I thought WA was still part of the federation. So it really would be better for me if it was called the eastern Australian electricity market rather than the National Electricity Market.

My question really goes to your introduction. Whichever way we proceed, taking into account new technologies as well as existing technologies, the whole process has got to be orderly, doesn't it? You have made the observation that it is a role for governments. There seem to be some people saying the federal government seems to be the only party involved in this process, but, unless it was our role to have the wind blowing the other night so the turbines kept going, I cannot really see that that is the case. I think it is a coordinated approach that is necessary. To what extend do you think that is capable of actually being achieved given the rapid change that we are seeing with the introduction of solar energy? How best do you see it? By way of answering, have you made a submission to the Finkel review? I would be very keen on where you see your organisation being in that space.

Mr Bradley : Effectively, I agree with the premise of your question, which is that there is a need to try and create an orderly way forward out of the relative amount of chaos that exists at the moment. The road map is really the attempt to do that. The broad message in the road map is there is going to be a lot of uncertainty about the way the future will play out and energy futures will play out, depending on your view about what is happening with technology costs, and solar and storage, or the advances that might happen in carbon capture and storage or hydrogen solutions and the potential role that those types of technologies could play.

There is a really fierce technology competition underway. At the same time, there is a consumer revolution about the way in which they interact with technologies and the way that smart homes and the internet of things might allow them to do it without having to consciously become experts in energy—instead, having automated solutions.

What I am trying to describe is a situation where there is a lot of uncertainty in the market environment. What is essential is that we want to achieve low-cost outcomes for customers, that we do not duplicate investments unnecessarily, that we do not have unnecessary policy and regulatory risk, driving in extra duplication or inefficient responses to the key outcomes we need in the system.

Customers could drive 25 to 40 per cent of all system expenditure between now and 2050. The significance of that is it is going to be over $200 billion worth of expenditure that is actually determined by customers or their agents. In that environment, neither the industry nor governments can command and control the way in which the system develops. All we can do is send incentives. So that is government sending incentives, which is around carbon abatement, through outcome based carbon policy. In the industry's case, it is sending incentives about the potential rewards for customers that could use their solar and batteries to help reduce the need for network expenditure and rewarding customers for those kinds of services.

The road map is a plan where, within 10 years, we could see over $1 billion in rewards or payments, effectively, going to those customers with solar and storage for helping to avoid us needing to invest in network expenditure. Over the period to 2050, we could avoid $16 billion worth of network expenditure. That is the model that our sector is really promoting. It is a much more integrated grid that works on incentives.

Senator BACK: We are getting different inputs. We just had ABARE the other day put out a document, I quote different figures at different times and others quote different figures. We see the current contribution of the renewable energy certificates that have gradually gone from $35—it was $82 when I started talking about it, recently—to now $88 a REC and going up to $92.

The consumer has really become very focused now on electricity prices, both the household and everyone who flows from it. Small businesses are now saying that next to the cost of their labour bills electricity is starting to get, in some instances, up to being their second-highest costs. Are you of the view that now is the time for someone like the Productivity Commission to step back and do a full analysis on retail electricity prices in Australia, to give us a line in the sand as to where we are now, before we can all start moving towards how we think the future is going to look?

Mr Bradley : There are a couple of things there. The Australian Energy Market Commission produces an annual report around retail prices and the drivers of retail cost to customers and the outlook. We think that is a credible resource that is produced regularly and is taking stock of the retail price outcomes. But what we see is important here—and, I guess, the call for the plan—is to look forward to what future prices will be, depending on what kinds of incentives and market frameworks we establish now.

As we said in our opening comments, depending on how policy frameworks are established, whether or not we have clear carbon policy, whether or not we have incentives being provided by networks and other parts of the supply chain for customers, for their own resources, customer bills can be $400 per year higher, on average. But that will also mask a lot of cross-subsidies in inequitable outcomes across the customer base. So customers who can take up solar and storage, who might have roof capacity or financial capacity to do that, and can participate in that market will, effectively, do well in a future environment if we stick with our current policy settings. But part of their cost of the system will be transferred to other customers.

That could be worth about $600 per year for a medium-sized family without solar and storage. They could have a bill that is $600 higher than it needs to be. There are large numbers, in terms of the financial impact when, as you say, electricity is one of the most significant elements of the cost of living. That is why a new grade of plan, like the road map, we think is really worth commending to the committee for its consideration.

Senator BACK: My final point is that, consistent with what you are saying, that $600 to a low socioeconomic family is just massive, isn't it?

Mr Bradley : Absolutely. On average at the moment electricity costs are around two to three per cent of household income. On average it is a relatively small share, while still being important in terms of the cost of living, but for those households on lower incomes it can be a very significant proportion of their discretionary or available income, as you know. That is why we have put quite a lot of work and analysis around individual customer cohorts within this forward analysis. If we do not send those signals then this will happen under current frameworks—it will play out this way—where those costs will be shifted in a way that we cannot manage and cannot see until it is too late.

Senator BACK: I agree with that.

Senator McALLISTER: Thank you, gentlemen, from appearing. I was interested in your earlier testimony about the potential for distributed technology to avoid network costs. We are focused on the cost of energy supply, particularly for cohorts who are vulnerable to price spikes. We know that network costs were the most significant component of the cost increases experienced over the last decade. Can you talk a little bit more about how that works. It is a technical question, and I think it would be interesting for us to understand just how those offsetting arrangements might work.

Mr Bradley : What we and a lot of jurisdictions overseas, including New York state, where the incoming CEO of the Australian Energy Market Operator is coming from, and the UK and Europe, are looking at are the ways in which you can incentivise these fleets of millions of distributed energy resources to contribute towards lowering the cost of the centrally delivered infrastructure. The kinds of resources we are talking about are not only solar—or solar with smart inverters, particularly—or storage; they are also sophisticated demand response programs. There are aggregators of demand response that will offer customers a simple interface to allow them to control devices like hot water or pool pumps, so that they can respond on call and help beat the peak and manage the peak lopping that, I think, you were alluding to.

A significant proportion of the energy network investment is driven by just a few hours—as low as 40 hours per year—that can determine the peak requirement at individual locations within the network. It has been previously estimated in a Productivity Commission study that Australia could have saved $11 billion if it had been able to address that peak more effectively prior to the most recent period from 2007 to 2011.

What the road map is identifying is what we call second-wave incentives, where we see networks being able to locationally value DER and the support that can be provided from distributed energy resources within particular locations in the network, providing either a discounted network charge or an actual payment or rebate for being able to call on that in the right place at the right time. In order to avoid augmenting the network and spending money on poles and wires, that response has to be equivalently firm—you have to know it is going to deliver—otherwise you are going to have the outages for the rest of the community, and networks have regulatory obligations to avoid that outcome. This is a framework which basically says that, if you can establish that level of confidence that the distributed resources are going to perform in the right place at the right time, you could save $16 billion in network infrastructure between now and 2050.

Senator McALLISTER: Are the impediments to confidence found in technical challenges or in market structure—commercial challenges—or both?

Mr Bradley : Sorry, could you repeat that.

Senator McALLISTER: In terms of having this firm response, are we looking at technical impediments, or is the principal reason market design?

Mr Bradley : The initial stage of tariff reform and demand-based tariffs for all customers, which we highlight in the road map in the submission, is important for establishing a fair and efficient base for all customers. Once you have customers that are rewarded for their use of the network and the costs of the service they require of managing their network use, then you can move to provide specific incentives in these locational spots in the network to help you to avoid building infrastructure. So, firstly, there is an information capability on the side of the industry itself, which our businesses are working to address as quickly as possible. Some of that is assisted in Victoria, where you have smart meters and that sensing capability.

But then there is also the ability to provide that through a network program. In South Australia, SA Power Networks has 100 batteries in Salisbury that are in customer premises, and the network can call on that four or five times a year during those peak demand events. It is only four or five times that they might need to draw on the energy from the storage unit—the Tesla Powerwall—in the customer's premises, but the rest of the time the customer gets the benefit of that in helping to moderate their electricity bill. So, there are those kinds of business models and new service models emerging that remove the impediments you are talking about.

Senator McALLISTER: Obviously we are having a very significant national debate about the future of the electricity market, and a significant question in that debate is whether or not networks are capable of integrating intermittent sources of supply. Your submission suggests, I think, that this is an inevitable feature of the future market and that we just need to get on with it. Can you talk about how your organisation views that challenge.

Mr Bradley : I agree with your summation that it is inevitable. We see the integration of renewables as being a core capability of both transmission networks and distribution networks. That said, we think their integration should be driven by outcome-based carbon policy rather than specific technology targets. All our projections say that, under outcome-based carbon policy, you will see very significant levels of renewables. So, as you say, it is inevitable, but we are going to have to deal with that.

For the transmission sector and the high-voltage grid, the key challenges that come up are around the loss of synchronous generation and the need to look at inertia markets and fast frequency responses that help to keep grid stable. There is a process that the Australian Energy Market Commission are progressing in relation to that, and we think that that is the right process to establish a clear market for those services that we can see an efficient response to. Again, it is about leveraging markets to get the cheapest way for customers to solve the new problem in the new era, while we get the benefit out of large-scale renewables.

The distribution system was originally set up to be a pretty passive system. In terms of the extent of infrastructure, there are hundreds of thousands of kilometres of distribution lines that were all set up to be relatively passive. So we do not really know what is happening on the network, when household customers are using energy, because we do not have the monitoring there. The transition there to integrate renewables into the distribution system is to move towards much more active management—having good sensing, so you can see the power quality, the voltage rise, the fluctuations and power quality occurring in the network, and you can anticipate and respond to that, either through the kinds of services we were talking about before, of orchestrating distributed energy resources, or through things within the distribution system. But that is the new job of distribution businesses around the world in the period to 2050.

Senator ROBERTS: Thank you both for coming in today. My questions are going to be mainly to Mr Bradley. The first one is: in your opening comment you mentioned the role of the networks in addressing climate change. You repeatedly mentioned climate change. You then went on to specifically mention severe weather, sea level rises and others. Could you tell me what empirical evidence you rely upon for the making those statements.

Mr Bradley : Our industry has close regard to the independent science, including the science of the national science agency, CSIRO, the Bureau of Meteorology and also evidence from respected international agencies around these issues. As I say in the submission, this is what has led the industry to develop a climate risk and resilience manual, because climate change is a pretty significant risk to long-lived infrastructure, whether it is networks or any other kind of long-lived infrastructure. It is simply prudent business management for us to be able to look at the resilience of that infrastructure in relation to those expected or forecast changes, whether they are significant heatwaves that might impact on the performance of assets, sea level rises, storm surges that could be driven by climate change, or potential for increased intensity of cyclones in those parts of Australia that are subject to them.

Senator ROBERTS: I am presuming that, when you say 'climate change' in the second context that you have just raised now, you mean that climate change that is supposed to be being caused by the human production of carbon dioxide; is that right?

Mr Bradley : I guess what we are focused on is the potential impacts of climate change, and certainly we do recognise the anthropogenic causes of climate change. We do not dispute that science, but it is not really our core business, in that—

Senator ROBERTS: Could you please send to me the references upon which your body now makes its policy which provide you with the empirical evidence. The reason I ask that is that I recently asked the CSIRO—in fact, the first thing I did as a senator was that I asked the CSIRO—to provide me with a presentation on the empirical evidence upon which they give their advice. They do not have any. I received that presentation. I have sent them a submission now, a response, that is based upon 50 different datasets from around the world including their own, including the Intergovernmental Panel on Climate Change and including NASA. There is no empirical evidence proving that human production of carbon dioxide affects the climate in any way. There is empirical evidence that shows it is impossible for human production of carbon dioxide to affect our global climate. I am requesting you, please, to send me the evidence on which you have based your policy.

CHAIR: Mr Bradley, you can of course explain whether you think you can answer those questions. You do not have to answer just because Senator Roberts has his own issues with the CSIRO.

Mr Bradley : There are two things I would observe on that. One is that at page 6 of our submission we cite the federal government's report on climate science and the impacts of climate change, which gives a little bit more detail around the kind of commonly accepted consensus around the risks of climate change to Australia and those things that are alluded to in our submission. The other observation is that we are aware that the CSIRO will be with you later today, so, as we have alluded to their research, we expect that it is probably best that you direct those questions to them, Senator.

Senator ROBERTS: So you cannot send it to me right now, but I have taken note of page 6 of your submission.

Mr Bradley : That has the link in there for you.

Senator ROBERTS: Thank you. You also mentioned that your activities will help abate climate change. Can you tell me how?

Mr Bradley : Yes, absolutely. Whether it is transmission networks or distribution networks, they are critical enablers to allowing the decarbonisation of the electricity sector, whether it is to meet the current national targets of 26 to 28 per cent below 2005 levels by 2030 or more ambitious targets. If there is a view that across the economy you may see the electricity sector need to contribute more than its proportional share of those national targets, then it is really important that electricity networks are ready and able to enable that change in the generation mix at the wholesale level but also at the distribution level, as I was referring to earlier.

So what you will see in the road map report that we have provided to the committee is an analysis of two separate abatement outcomes, one under a counterfactual scenario, which is effectively achieving an extension of the existing COP21 commitments out beyond 2030, basically the same rate of climate change abatement as we would be on track for achieving—

Senator ROBERTS: Climate change abatement?

Mr Bradley : Sorry, carbon abatement; my apologies.

Senator ROBERTS: And, when you say 'carbon abatement', you mean carbon dioxide abatement?

Mr Bradley : Yes. CO2 equivalent abatement. It would achieve the same rate of progress out to 2050. Or there is the road-map scenario that achieves significantly greater abatement and—

Senator ROBERTS: Can we home in on that word 'outcomes'? What outcomes did you refer to in 'outcomes based' when you responded to Senator McAllister's question?

Mr Bradley : What we are focused on there is outcome based policy—that is the phrase that we refer to. What we are alluding to is that the outcome we are after in Australia's energy transition is the abatement of CO2 equivalent carbon emissions.

Senator ROBERTS: Thank you. That is all I needed.

Senator McALLISTER: Mr Bradley, you did mention your preference for outcome based policy, and I am interested to know what you think that might broadly look like for the sector you participate in. Since we are on it, I think that would be helpful.

CHAIR: Yes, I think that is a good idea, thanks, Mr Bradley.

Mr Bradley : With policies focused on the outcome of CO2 emissions rather than specific technology targets in terms of gigawatts or specific technologies, our analysis, including the analysis of the CSIRO, indicates a much less expensive transition to achieve the same level of abatement. There is analysis that is cited in our report, in the submission that we have provided, in our road map, by Jacobs, which indicates that customers could save $200 per year on average in their bills to achieve the same carbon abatement outcome if we had technology-neutral carbon policy.

Senator ROBERTS: That is carbon dioxide again?

Mr Bradley : If we had technology-neutral CO2-equivalent carbon abatement policies rather than technology specific policies.

Senator ROBERTS: The third group of questions I have is partly a comment and partly a question. You mentioned that blame is a bad word. I happen to agree with you wholeheartedly. Blame does very little; it does a lot of damage. But in my opinion responsibility is essential. In our society we tend to confuse responsibility and blame. South Australia has been on a very slippery slope now for a number of years. It has by far the highest costs in this country and amongst the world's highest costs. We know that stability is compromised in its power supply. Its security is compromised. The reliability is compromised. The price is destroying manufacturing. Manufacturing is dying in South Australia. Is there something I am missing? South Australia is a basket case because of its renewable energy policy.

CHAIR: I would take offence at that.

Senator ROBERTS: So I am asking: is there something I am missing in the chain of putting responsibility on the Premier of South Australia?

Mr Bradley : What I think you are highlighting is the outcomes that occur through poorly coordinated and integrated national and state policy and regulatory environments. Under the national Renewable Energy Target, there is effectively an incentive for renewables to be developed in those locations or jurisdictions where there is the best resource and best economic opportunity in terms of the combination of funds from RET certificates and also from National Electricity Market revenues. That is occurring at a national level. As we have seen Australia get to world-leading rates of solar PV penetration, and we have seen in South Australia world-leading rates of renewables in the wholesale market in South Australia—

Senator ROBERTS: And world-leading electricity prices.

Mr Bradley : because of those levels of penetration of renewables that we are reaching, it really is essential now that we cannot afford to have inconsistent or fragmented policy frameworks across state and federal governments. Stability in South Australia is something that AEMO has been working on with the transmission provider there, ElectraNet, as you start to see the loss of inertia and the kinds of implications that that can have for system security. Those things are manageable. There are technical solutions and there are market solutions to manage those things, and the road map indicates that this can all be addressed in a way that actually works our way through the challenges and takes advantage of the opportunities of innovation in renewables and other sources of generation, but it just will require a more cohesive approach from the COAG Energy Council and state and federal governments working together to integrate carbon and energy policy.

Senator ROBERTS: Let me check my understanding then. You say South Australia is not responsible; it is really the NEM that is, and that has been driven by a RET that has driven an incentive to develop RETs amongst the states, and what is now needed to fix the problem is COAG. Let me question then something else you raised. There is the issue of uncertainty in the game now. I would say that is partly because there is no evidence driving this whole scam and also because of poor policy. When I was out at Charleville recently, which is a town of 3½ thousand people—

CHAIR: Let us get to the question, Senator Roberts.

Senator ROBERTS: I am; I am going to give the context, Chair—the Charleville mayor said, when we sat down after meeting, that the first thing that was her concern as the mayor of Charleville was high energy prices, in a state that has the best clean coal and abundant reserves. That was impacting the local abattoir, which is a big employer there. This is regional Queensland. So what is happening now, as you pointed out, is that we are destroying investment in generation.

CHAIR: I am still waiting for the question.

Senator ROBERTS: It is coming, because I am going to give you the context. The Prime Minister had said he is not interested in coal. Now he has said he is interested in coal. Annastacia Palaszczuk, who is the Premier of the state with the best coal reserves in the world, is saying she is not going to build coal-fired power stations. That is compounded by rent seekers, vested interests, ideologues, political weakness in facing up to the issues, and UN frameworks. And now, all of a sudden, as Australia is becoming a basket case following South Australia's lead, we have Donald Trump coming out and saying it is all a scam. How will that fit us when it comes to our international competitiveness unless we face up to these issues and start telling the truth on climate?

Mr Bradley : Australia has a national commitment to the COP21 agreement to achieve 26 to 28 per cent below 2005 levels by 2030. We have national obligations, and there is a national consensus across all parts of the political environment about the need to address climate change and carbon abatement. What our analysis is telling us is that we need to balance the 'trilemma', as it is referred to, in energy in relation to the affordability and security issues as we achieve that decarbonisation. The science is telling us and the analysis we have done of the system tells us is that those things can be managed in an orderly way if we have clear and well-integrated carbon and energy policy frameworks and regulatory frameworks that investors can respond to.

Senator ROBERTS: Thank you.

CHAIR: Thank you, Mr Bradley. Mr Crawford, thank you for coming in. We appreciate your time this morning.