An Energy Security Fund is to be established that will fund the transition in the energy sector to less polluting energy sources. 

 

The Energy Security Fund includes three key initiatives:

 

  • Payment for closure - the Government will seek to negotiate the closure or partial closure of some of Australia’s most emissions intensive electricity generators to remove up to 2,000 megawatts of capacity before 2020. This will start the process of replacing existing, highly emissions intensive electricity assets with cleaner energy generation and give new investors time to develop replacement generation capacity. The payment for closure will be on an agreed basis and managed in an orderly way so as to not risk energy security.
  • Assistance for strongly-affected generators - there will be transitional assistance provided to the most emissions-intensive coal fired power stations in Australia, which would be most impacted by the carbon price. This assistance will be provided as a mixture of payments and permits.
  • Loan support - the Government will offer short-term loans to generators to help finance their purchase of carbon permits and support the re-financing of existing debt if commercial loans are unavailable.

 

Assistance estimated at $5.5bn over the five years to 2016-17 will be provided to strongly affected generators, with $1bn available in 2011-12. This will be followed by annual alocations of 41.704 million free  carbon permits per year between 2013-14 and 2016-17.

 

Overall, the carbon price plan is forecast to reduce CO2 emissions by the electricity sector by almost 500 million tonnes by 2030.

 

A new Energy Security Council, consisting of energy and financial market experts and energy market bodies, will also be created to advise the Government on support measures to address energy security risks.

 

The Government will request the Australian Energy Market Operator (AEMO) to expand its planning scenarios for the future development of the electricity grid to prepare for the clean energy transformation and greater integration of renewable energy.