The Australian Energy Market Commission (AEMC) has released updated guidance for stakeholders on how it considers the new emissions reduction component of the national energy objectives when making rules and conducting reviews.
The guidance is part of the AEMC's guide on how the national energy objectives shape its decisions and incorporates advice from energy ministers on the interim value of greenhouse gas emissions reduction.
When quantifying the estimated costs and benefits of a proposed reform that affects emissions, the AEMC will use these interim values to help determine if the reform is in the long-term interests of consumers.
In making our decisions, we will continue to consider emissions impacts alongside impacts on energy prices, quality, safety, reliability and security. Having a value for emissions reduction will help us do this in a transparent and consistent way. This is a decision-making tool, not a new cost for consumers.
The updated guidance also includes additional information on how the AEMC will estimate the quantity of emissions impacted by proposed reforms, considering impacts across Australia, the energy sector, and related sectors where relevant.
Our rules may affect transport, household, and industrial emissions. When estimating the impact of our rules on emissions, we'll take into account binding government policies that also reduce emissions, while recognising that case-by-case consideration will be needed. The guidance aligns with the advice from energy ministers.
Separately, the AEMC has updated the guide to reflect the recent change to the national gas objective to refer to ''covered gas'' rather than ''natural gas''. Covered gases include natural gas, hydrogen and biomethane, and blends of those gases.
The Australian Energy Regulator (AER) is also publishing draft guidance for electricity networks on valuing emissions reductions in their regulatory investment tests, ensuring consistency across the three energy market bodies.
Background
The national energy objectives were amended in September 2023 to include emissions reduction, requiring the AEMC to consider the impacts of its rules and recommendations on achieving Commonwealth, state and territory emissions reduction targets, as well as targets likely to contribute to reducing emissions (such as renewable energy and electric vehicle targets).
The AEMC publishes a list of the relevant targets and updates it as required.
The AEMC published initial guidance in September 2023 and completed a rule change in February 2024 to harmonise the national energy rules with the updated national energy objectives.
For more information, please refer to the updated guidance and the AER's related guidance.
Media: Jessica Rich, 0459 918 964, media@aemc.gov.au