The Business Council of Australia (BCA) welcomes the opportunity to comment on the NEM Wholesale Market Settings Review being conducted by an independent expert panel supported by the Department of Climate Change, Energy, the Environment and Water.

Australia and the world are transitioning to a net zero future where all anthropogenic sources of emissions will have been mitigated - either by avoidance or removal of those emissions. The scale, breadth and complexity of the transition to net zero has been referred to as the next industrial revolution by some commentators and equated with world war mobilisation efforts by others. Dr Alan Finkel recently wrote:

The transition to net zero emissions is the most difficult economic transition undertaken by humanity. Not the most difficult transition since the Industrial Revolution. Not the most difficult since the Second World War. This economic transition is the most difficult, ever. It is driven by externalities, not convenience or
economic benefits.

Two recent reports by the BCA argue that the key to achieving our economic goals and the net zero goal is to make Australia one of the most attractive investment destinations in the world, by becoming a more competitive place to do business. The Net Zero Australia study estimated a cumulative capital investment of $7 to 9 trillion could be required to transition our economy to net zero.

The BCA's recent Big Five Questions release ahead of the 2025 Federal Election, highlights the point that future proofing our environment and economy relies on a smooth transition to a modern energy system - one that is reliable, affordable, low emission and eventually net zero. We note that this will involve the full breadth of Australia's grid and off grid electricity markets and related infrastructure, as well as Australia's gas markets and related infrastructure.

Notwithstanding progress made over the past 20 years, Australia's aging energy system needs to be rebuilt into a modern energy system over the next 20 years. If we are to have any real chance of meeting this enormous investment challenge, Australia's governments need to align on three things urgently.

1. A comprehensive and durable national energy transition plan - substantial, timely and efficient flows of capital into energy assets and infrastructure require clear and stable long term investment signals from the energy policy framework.
2. The private sector continues to be the primary driver of energy sector investment - notwithstanding the critical role of energy policy, private capital and markets are best placed to deliver an energy mix that is reliable, affordable and low emissions.
3. A technology agnostic portfolio of energy mix options - the complexity associated with balancing energy reliability, affordability and low emissions necessitates that all demand and supply side technologies be 'on the table' for consideration by the market and the community over time.

We note that the conclusion of the NEM Capacity Investment Scheme in 2027 is the catalyst for this review and that the review's scope is limited to the wholesale electricity market in eastern and southern Australia.

Notwithstanding this, we would expect this review to adopt a wider, long term perspective that considers the integrated nature of our energy system and the energy needs of our economy to 2050 and beyond. Policy frameworks that acknowledge the connection between electricity and gas markets nationwide and the long term nature of energy assets and infrastructure are critical to creating robust and durable long term investment signals.

We endorse the panel's commitment to building on the work already undertaken by the Finkel Review and the Energy Security Board (et al.) given the depth and quality of thinking and consultation undertaken as part of these processes.

While the panel has usefully outlined five core topics for early input and engagement, we believe it is worthwhile taking a step back at this initial consultation stage to consider the approach being taken when examining and responding to these topics.

Ultimately, the success of this review will depend on multipartisan support for its recommendations from Australia's governments.

Read our full submission here.