June 8, 2017 / 8:13 AM / 2 months ago

Australia energy review could pave way to policy compromise, keep lights on

Storm clouds can be seen behind chimneys at the Bayswater coal-powered thermal power station located near the central New South Wales town of Muswellbrook, Australia, March 14, 2017.David Gray

MELBOURNE (Reuters) - A highly-anticipated review of Australia's energy security is set for release on Friday amid hopes it will pave the way to ending a decade of bitter division that has claimed the careers of two prime ministers and led to a string of blackouts.

The report by Australia's chief scientist, Alan Finkel, is expected to help drive a political compromise between providing cheap, reliable energy and pushing to protect the environment.

The Finkel Review was commissioned last October after tornadoes knocked down transmission lines in South Australia, triggering a state-wide blackout that left homes without power for up to eight hours and hobbled industry for as much as two weeks.

The outage was a wake-up call for politicians whose bickering over emissions targets and carbon prices since 2007 left the power industry in the lurch and killed major investment in generation, except rooftop solar and wind power.

The review is widely expected to recommend the introduction of a "technology-neutral" low emissions target (LET), with support for such a system gathering momentum over the last week among both the conservative government and opposition Labor leaders, who had previously preferred other approaches. The office handling the review declined to discuss its contents.

"We are acutely aware that there is an energy crisis in this country which needs a constructive, mature approach, particularly from the two major parties in the Parliament," Labor shadow minister for climate change and energy, Mark Butler, told Reuters in emailed comments.

Storm clouds can be seen behind chimneys at the Bayswater coal-powered thermal power station located near the central New South Wales town of Muswellbrook, Australia, March 14, 2017.David Gray

"We want to see the detail of the LET and we want to consider it carefully," he said.

Labor has long preferred an emissions intensity scheme which would set limits on how much carbon a power generator could emit and give tradable credits to those that produce less than the limit.

FILE PHOTO - Sheep graze in front of wind turbines that are part of the Infigen Energy's Capital Windfarm located on the hills surrounding Lake George, near the Australian capital city of Canberra, Australia, July 17, 2015.David Gray/File photo

However, Prime Minister Malcolm Turnbull has ruled out an emissions intensity scheme to appease the right wing of his party, which is worried about the demise of the coal industry.

A low emissions target would set limits on carbon emissions per megawatt hour of power generated.

"What is needed is policy that will achieve bipartisan support and be technology neutral," Australian Energy Council Chief Executive Matthew Warren said in emailed comments.

"Without it we will not see enough certainty to encourage the billions of dollars of investment that will be required to meet emissions reduction goals while maintaining reliable supply."

Turnbull has announced plans to expand hydropower to support the grid, while trying to shore up gas supplies for generation and remains committed to cutting carbon emissions by 26-28 percent below 2005 levels by 2030 to meet the Paris climate accord.

Reporting by Sonali Paul

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