Market Update | 18 August

• Energy Consumers Australia (ECA) has published the report “Stepping Up”, presenting key findings on the benefits of the all-electric home, calling for a national and multilevel government plan to electrify
• Consultation opened up on the fourth proposed offshore wind energy development zone in Australia just off the coast of NSW Illawarra region
• Australia’s largest banks have had their performance toward their commitment to net zero and climate commitments assessed in a first-of-its-kind report

The state-based ESCs and PRCs this week saw low liquidity, alongside industry anticipation of the next round of consultation on the PDRS and potential impacts there might be on current activities for PRC creation. The PDRS has so far met targets of creation, and changes to activities have been raised by IPART to meet the rising targets going into 2024. The weekly VEEC creation remains low with high VEU holdings pending registration. The weekly certificate registration and synchronous low trading activity is comparable with recent average traded weekly volumes. LGCs saw higher liquidity and are tracking stronger in the Cal24 and 25s, joining ACCUs for marginal gains between the Generics and HIR.

ECA ‘Stepping Up’ Report Released

In this week’s market update, the ECA has released a new report, “Stepping Up” outlining the economic and financial benefits to electrifying our homes all backed by data and key findings from the CSRIO and Dynamic Analysis. The report explores what some of the most inherent barriers are for households, the level of understanding in the community around consumer benefits, and the need for the nation to have a multilevel plan at implementing this through policy, financial incentives, and education. “Consumers want to know what the energy transition means for them – and what the costs and benefits are,” ECA’s  Interim CEO, Jacqueline Crawshaw said.

The modeling shows that by 2030 the average difference in total energy costs, including transport, between a typical fossil-fuelled home and an all-electric home (without solar and a battery) will be $2,250 per year.

Offshore Wind Development Consultation  

While homes look to electrify, the nation looks for large-scale opportunities to inject renewables into the grid.

The federal government has initiated consultations for its fourth offshore wind energy development zone, focusing on the Illawarra region in New South Wales. The proposed zone spans over 1,400 square kilometres, extending from Wombarra to Gerringong, situated 10 km to 30 km offshore. The area’s strong offshore wind resources, significant port infrastructure, and industrial role prompted its selection. Federal energy minister Chris Bowen stated that this draft development zone could host up to 4.2GW of offshore wind capacity, aiding the region’s transition from coal to renewables. Consultations will remain open until October 16, encompassing six community information sessions in the Illawarra.

The launch of this consultation coincides with the opening of expressions of interest for the second declared offshore wind development zone off the coast of the NSW Hunter region. Australia’s first official offshore wind development zone was established in the Bass Strait in December 2022. Another proposed development area, the Southern Ocean zone, aims to stretch across 5,100 square kilometres from Victoria to South Australia and could potentially host up to 14 GW of offshore wind capacity. Overall, the Australian government has designated six zones for offshore wind development. This move is celebrated as “unalloyed good news” by Minister Chris Bowen, bringing potential jobs, clean power, and opportunities for renewable energy projects in the Illawarra region.

Australia’s Major Banks Evaluated on Net Zero Progress

In a first-of-its-kind assessment, Australia’s major banks have been evaluated on their progress toward net-zero commitments and climate initiatives. The report, titled “From laggards to leaders: An assessment of Australian banks’ climate commitments,” reveals that while all five major banks have pledged to achieve net-zero emissions, significant disparities exist between their stated commitments and their actual policies and practices. The Australian Conservation Foundation (ACF) scored the banks out of 100, with Commonwealth Bank receiving 62, followed by NAB (55), Westpac (47), Macquarie (46), and ANZ (35).

The evaluation highlighted gaps in policies related to fossil fuel lending, leaving room for continued financial support of coal, gas, and oil industries. Macquarie stands as the only bank limiting lending to new or expanded coal projects, while CBA is the sole bank prohibiting direct lending to new oil and gas projects. Notably, none of the banks have policies restricting lending to firms engaged in new oil or gas projects. ANZ came under scrutiny for not disclosing a comprehensive analysis of how climate change impacts and net-zero transition might affect the bank.

The report underscored that Australia’s banks are not fully integrating climate action into their governance structures. Jonathan Moylan, ACF’s corporate campaigner and report co-author, expressed that while the banks have made headline commitments, significant gaps persist in their policies, performance, and transparency regarding net-zero goals. “Banks must be central in helping Australia seize the enormous opportunities of a renewable-powered economy. Mr Moylan stated. “As Australia heads into what looks to be another summer of extreme weather, banks need to strengthen their policies to stop propping up projects that fuel the climate crisis”.

This evaluation aims to prompt banks to strengthen their policies and contribute effectively to climate change mitigation and sustainable economic transformation.