National energy objectives update: future trials to be assessed against potential for emissions reduction


One of the principles under which regulatory sandboxing trials are assessed in the Australian Energy Regulator ’s (AER) Regulatory Sandboxing Trial Project Guidelines is whether the trial project is likely to contribute to the achievement of the national energy objectives – the National Electricity Objective (NEO), the National Energy Retail Objective (NERO) and the National Gas Objective (NGO).

These objectives govern and guide the energy market bodies and their activities under the relevant national energy legislation.

The energy objectives promote efficient investment in, and efficient operation and use of, energy services for the long-term interests of consumers of energy with respect to price, quality, safety, reliability and security of supply of energy, as well as the reliability, safety and security of the national electricity system.

What has changed?

On 19 May 2023, Energy Ministers agreed to an amendment of the national energy laws[1] which adds emissions reduction to all three energy objectives. Subsequently, the Emissions Reduction Objectives Act 2023 was passed by the South Australian Parliament (the lead legislator for the National Energy Laws) and assented to in September 2023.

Specifically, the NEO, NERO and NGO has been amended to state that the objectives cover:

the achievement of targets set by a participating jurisdiction-

  1. for reducing Australia’s greenhouse gas emissions; or,
  2. that are likely to contribute to reducing Australia’s greenhouse gas emissions.

How will future sandboxing trials be affected?

Incorporating emissions reduction into the energy objectives means that energy market bodies will need to balance consideration of emissions reduction with the existing considerations of price, quality, safety, reliability, and security in applying the energy objectives to their activities.

For the Energy Innovation Toolkit this means that proponents applying for future sandboxing trial waivers or trial rule changes will need to consider whether a proposed trial would contribute to the achievement of the updated energy objectives.  

The innovative trial principles prescribed in the National Energy Laws direct the AER and AEMC to take into account whether the trial is like to contribute to the achievement of the updated energy objectives as we assess trial waiver or trial rule change applications.

The relevant Bill commenced for the Australian Energy Market Commission on 21 September 2023. The AER will apply the updated NEO to the regulatory sandboxing function two months from this commencement date, on 21 November 2023.[2]

Where can I learn more?

To learn more about the revised energy objectives, see the Energy Minister’s consultation page for incorporating an emissions reduction objective into the national energy objectives.

To understand more about how trials will be assessed and governed, see:


[1] Statutes Amendment (National Energy Laws) (Emissions Reduction Objectives) Bill 2023

[2] Statutes Amendment (National Energy Laws) (Emissions Reduction Objectives) Act 2023.