Submission to the NSW Net Zero Commission on Decarbonisation Pathways

CPD’s submission makes ten recommendations across the three key areas which, together, would not only ensure that NSW is able to meet its legislated emission reduction targets, but would help create a stronger, more resilient economy and ensure that the costs and benefits of the energy transition are shared equally across all communities.

The development and approvals process

While there is broad support from both government and business for increasing the pace of the renewable energy transition, the current planning system is complex and costly, with approval timeframes far too slow to meet the state’s emissions targets. In order to simplify and streamline the approvals process, CPD recommends:

1. Streamlining and strengthening support of renewable energy projects through the development approvals system by:
   
   1. Expanding the use of CSSI declarations to meet the State’s critical energy needs; and
   2. Ensuring that new coordination authorities, such as the IDA and the DCA, are well resourced and extend to most, if not all, large-scale renewable energy projects
2. Reduce the number of RFIs by improving clarity of the SEARs process.
3. Ensure communities closely or directly impacted by projects have a proportionately greater voice in consultation and objections.

Financing mechanisms that support early-stage innovation

An effective energy transition must not just focus on reducing emissions, but on supporting innovation and technological development. Government has a key role to play here by investing in new, green industries that can make the economy stronger and more resilient to global shocks. However, CPD research shows that much of this investment is directed toward later stages of development—projects private capital are already happy to invest in—rather than the earlier stages where funding can be more difficult to secure but offer far greater returns. To address this, CPD recommends:

1. Increasing the relative share of financial support for the pre-commercial stage of new industry development as compared to the commercial stage.
2. Using government purchasing to create demand signals for innovation in low-carbon industries.

A just transition focused on households and communities

The transition to a low carbon economy carries significant opportunities, however there is a key risk that the costs and benefits are not share equally among the population. This is especially true for lower income households, those in regional and remote communities, and those in communities who host renewable energy and other low-carbon industries. To ensure the energy transition produces fair and equitable outcomes across all communities, CPD recommends:

1. Including social license conditions in eligibility criteria for ESEM contracts and work with other states to set nationally-consistent standards.
2. Supporting the development of a multi-governance model that includes state and local governments, developers and representatives from First Nations and civil society organisations to manage cumulative impacts in all regions hosting multiple renewable energy projects.
3. Introducing Minimum Energy Efficiency Rental Standards (MEERS) that are at least as ambitious as in Victoria, extend coverage of energy-saving policies to demand management and apartment owners, and track energy-saving policies over time to ensure they are effective in bringing about reform.
4. Measuring impacts on households by socioeconomic status by tracking whether or not the following outcomes are being achieved:
   
   1. The percentage of households experiencing energy hardship should not increase, and should ideally decrease, as the transition accelerates
   2. The percentage point difference between cohorts of renters, low-socioeconomic households, and apartment owners, with those who own their own fully-detached houses should trend downwards over time

Tracking both intermediate and final outcomes

Meeting NSW’s emission targets will take time, effort and significant investment. It is important to continually evaluate progress towards not just achieving these targets but to identify whether sufficient progress is being made on addressing key barriers such as financing available for low-carbon technologies, streamlining planning approvals, increasing the energy workforce pipeline and clearing supply chain constraints. To do this, CPD recommends:

1. Tracking the following indicators as measures of intermediate outcomes for the transition towards a low-carbon economy:
   
   1. The amount of funding for the development of clean technologies that is not simple commercial-grade debt, such as grants, equity, concessional loans, financial guarantees, and venture capital
   2. The lead-times for planning approvals for various renewable energy projects