FR3.2 Implement an Orderly Transition

There is an urgent need for a clear and early decision to implement an Orderly Transition that includes an agreed emissions reduction trajectory, a credible and enduring emissions reduction mechanism and an obligation for generators to provide adequate notice of closure.

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<li>The Panel recommends that the Australian and State and Territory governments agree to an emissions reduction trajectory for the National Electricity Market.</li>

<li>Both a Clean Energy Target and an Emissions Intensity Scheme are credible emissions reduction mechanisms because they minimise costs for consumers, are flexible and adaptable, and satisfy security and reliability criteria. Both mechanisms are shown to deliver better price outcomes than business as usual.</li>

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With the additional context that a Clean Energy Target can be implemented within an already well understood and functioning framework, and has better price outcomes, the Panel recommends a Clean Energy Target be adopted.

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<li>To support the orderly transition, the Panel recommends a requirement for all large generators to provide at least three years' notice prior to closure. The Australian Energy Market Operator should also maintain and publish a register of long-term expected closure dates for large generators.</li>

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These recommendations are made in the context of the need for a Generator Reliability Obligation and the Energy Security Obligations. (Recommendations 3.3 and 2.1).