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16 January 2024
Ms Edwina Johnson
Assistant Secretary, Safeguard and CBAM Review
Net Zero Industries Division
Commonwealth Department of Climate Change, Energy,
the Environment and Water
Submitted online at: http://consult.dcceew.gov.au
Dear Ms Johnson
Submission: Safeguard Mechanism Implementation – Production Variable
Updates and International Best Practice Benchmarks
CS Energy welcomes the opportunity to provide a submission in response to the exposure
draft National Greenhouse and Energy Reporting (Safeguard Mechanism) Amendment
(Production Variables Update No.2) Rules 2023 (draft Rules).
About CS Energy
CS Energy is a proudly Queensland-owned and based energy company that provides
power to some of our state’s biggest industries and employers. We employ almost 500
people who live and work in the Queensland communities where we operate. CS Energy
owns and operates the Kogan Creek and Callide B coal-fired power stations and has a 50%
share in the Callide C station (which it also operates). CS Energy sells electricity into the
National Electricity Market (NEM) from these power stations, as well as electricity generated
by Gladstone Power Station for which CS Energy holds the trading rights.
CS Energy also provides retail electricity services to large commercial and industrial
customers throughout Queensland and has a retail joint venture with Alinta Energy to
support household and small business customers in South-East Queensland.
CS Energy is creating a more diverse portfolio of energy sources as we transition to a new
energy future and is committed to supporting regional Queensland through the development
of clean energy hubs at our existing power system sites as part of the Queensland Energy
and Jobs Plan (QEJP).
Key recommendations
Clause 7 of the National Greenhouse and Energy Reporting (Safeguard Mechanism) Rules
2015 (the Rules) provides that the default emissions intensity does not apply to individual
electricity generating facilities while the average emissions intensity of the generating sector
Brisbane Office Callide Power Station Kogan Creek Power Station
PO Box 2227 PO Box 392 PO Box 41
Fortitude Valley BC Qld 4006 Biloela Qld 4715 Brigalow Qld 4412
Phone 07 3854 7777 Phone 07 4992 9329 Phone 07 4665 2500
Fax 07 3854 7300 Fax 07 4992 9328 Fax 07 4665 2599
CS Energy Ltd ABN 54 078 848 745 www.csenergy.com.au
is less than 0.539t CO2-e/MWh. This condition has been maintained as investors have responded to government measures supporting the entry of new renewable generators and the closure of coal-fired generators in South Australia, Victoria and New South Wales.
The draft Rules include new international best practice emissions intensity benchmarks to be applied to new facilities undertaking specified activities. This includes an electricity benchmark of 0.177t CO2-e/MWh, based on the emissions intensity of a Norwegian plant using carbon capture and storage (CCS) technology.
CS Energy considers it is essential to a smooth transition to 82% renewable electricity that the effect of clause 7 of the Rules extends to new entrant generators as well as covering existing plant. The Commonwealth Minister for Climate Change, Energy, the Environment and Water acknowledges in the Annual Climate Change Statement 2023 that:
Gas is an important firming technology. Gas-fired electricity generation will continue to
play a key role as dispatchable power during periods when insufficient renewable
generation or stored electricity is available. The Government’s Future Gas Strategy,
expected to be released in 2024, will outline the approach to ensuring affordable and
secure gas supply while achieving emissions reduction targets through the energy
transformation. (p.28)
Gas-fired generating plant that does not include CCS technology will have an emissions intensity in excess of the proposed benchmark intensity. It is extremely unlikely that new commercially operating gas-fired plant built in Australia in the foreseeable future will use
CCS technology. If new entrant gas-fired generators – including those using hydrogen as a fuel - do not benefit from clause 7 of the Rules, then the smooth transition to 82% renewable electricity, sought by Commonwealth Government policy, will be placed at considerable risk as the costs and risks facing gas-fired plant increase in response to effect of the Safeguard Mechanism (SM).
Clause 7 of the Rules means that the SM genuinely acts as a safeguard of electricity emissions intensity, underpinning the effects on the sector’s emissions intensity of the
Renewable Energy (Electricity) Act 2000, associated legislation, other Commonwealth policies and the wide range of State schemes. With this in mind, CS Energy encourages the Commonwealth to maintain the SM’s sectoral average approach to electricity emissions intensity. As noted above, the default intensity serves as a safeguard cap on the sector’s average emissions intensity. If the default intensity were reduced below the sector’s average intensity, then the benchmark emissions intensity would be triggered, impeding the entry of the new gas-fired plant essential to the transition to 82% renewable electricity.
This remains a prudent and effective approach to achieving the Commonwealth’s and State
Governments’ objectives in concert with the other measures in place.
Yours sincerely
Dr Alison Demaria
Head of Policy and Regulation
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