Mark Butler (Port Adelaide, Australian Labor Party, Shadow Minister for Environment, Climate Change and Water) Share this | Hansard source

and Science, as he is at pains to stress in this place. You will have your chance, Minster for Industry and Science. The Prime Minister, as the opposition leader, voted for the Renewable Energy Target, in 2009, and he took the coalition's support for the Renewable Energy Target to elections in 2010 and in 2013. Although the Renewable Energy Target policy, before the framing of the actual legislation, was often described in an everyday sense as 20 per cent by 2020, it was quite clear that the coalition was expressing support for the large-scale target that existed in legislation before the 2013 election of 41,000 gigawatt hours. The bipartisan support that the renewable energy industry, through the Renewable Energy Target in particular, has enjoyed goes right back to 2001, when the then Howard government, involving, again, the now Minister for Industry and Science, developed the first mandatory Renewable Energy Target, back in 2001. That bipartisan support has been critical to underpin the confidence of investors—both investors here in Australia, but more recently investors from overseas—to come and put their money on the table for investments that run for many years, for 15 to 20 years in many cases. Obviously these are investments that, in the ordinary course of things, would span at least a couple of changes of government.

Because of that bipartisan support and the investor confidence that came from that, we have had extraordinary success, particularly during the last term of the Labor government, from 2007 to 2013. There have been billions of dollars invested in Australia's renewable energy industry, both in the small-scale part of the sector, particularly rooftop solar, but also in large-scale renewable energy investment. During our term in government between 2007 and 2013, Australia's wind power tripled in just six years. There were a whole range of wind farm projects, particularly over the southern part of the continent, but also some iconic projects were developed, particularly, towards the end of our term in government, often with the support of the Australian Renewable Energy Agency, ARENA, and the Clean Energy Finance Corporation. In 2013 alone, the Gillard government was able to announce the largest wind farm in the Southern Hemisphere, the Macarthur wind farm in Victoria. It was supported by a range of proponents, including AGL. Later in that same year the largest PV solar farm in the Southern Hemisphere was announced, again being built by a range of partners including AGL, in Nyngan and in Broken Hill, in Western New South Wales. This really highlighted the degree to which Australia had become a world leader in renewable energy development—in the small-scale sector, but particularly the large scale sector. Ernst & Young does a quarterly index called the Renewable energy country attractiveness index, which is broadly regarded around the world as one of the leading indices of renewable energy investment. In 2013, in the June quarter, before the change of government, Australia had joined the powerhouses in this area—Germany, China and the United States—as one of the four most attractive countries on the face of the earth in which to invest in renewable energy.

Over that course of time, during our time in government—and it will not be of any surprise to anyone hearing those statistics—the number of jobs tripled in this industry. That was a period that included—which those opposite often choose to forget, but all the rest of us know—the global financial crisis. There are not many industries that over that period were able to triple the number of jobs. And they were not just the core jobs in renewable energy; there were spin-off jobs in manufacturing that had been in many cases operating for some time, in places like Portland and Tasmania, building components for wind towers. But also in my own part of Adelaide, in northern Adelaide, Elders IXL, a very old family company that had work in appliances and more recently in automotive components, took the decision to invest in a factory in northern Adelaide to build, using Australian steel, the frames that were used to support the PV solar panels in the wind farm at Nyngan and Broken Hill—around two million panels on about 100,000 steel frames made from Australian steel, great manufacturing jobs in the north of Adelaide.

Also over this period a huge success story was emerging in rooftop solar. The Small-scale renewable Energy Scheme, or SRES, part of the renewable energy target legislation, has underpinned an explosion in the number of solar panels on the rooftops of Australian homes. When we came to government around 7,400 households in Australia had rooftop solar panels. By the time we left it was more than 1.2 million. In 2014 alone, in spite of the uncertainty that had afflicted the renewable energy industry because of the Prime Minister's reckless attack on the Renewable Energy Target, there were still about 186,000 Australian households with rooftop solar panels added to their roofs, with about 3½ thousand per week being added on average. Just to give that some context, only 14 years earlier, at the turn of the century, in 2000, an average of two households a week—not 3½ thousand but two—were having solar panels added to their roofs, exemplifying the degree to which this has genuinely been a revolution.

The renewable energy target and associated policies has also been a roaring success in starting to bring down carbon pollution levels in Australia's electricity sector. That is central to the challenge we have as a nation in our response to climate change, because electricity generation is the largest source of carbon pollution in our economy. Australia has a very emissions-intensive electricity sector, particularly in generation. It is more emissions-intensive than China and about 90 per cent more emissions-intensive than the OECD average. So, getting carbon pollution down in electricity generation is a central part of the national response to climate change. In 2012-13, the first year of the operation of the carbon price mechanism in the national electricity market, carbon pollution was reduced by seven per cent, in just that one year. That was due in part to a reduction in demand, but only in small part. Two-thirds of that reduction in carbon pollution from the national electricity market was because of a change in energy mix, a significant reduction in the market share in the NEM of coal, particularly brown coal, and an increase by 25 per cent in the renewable energies share of the national electricity market. That reduction continued in 2013-14, a reduction of four per cent in carbon pollution levels from the national electricity market. But, unsurprisingly, given the termination of strong climate change policies and the attack on renewable energy investor confidence, carbon pollution levels have started to rise over the past 10 to 12 months on this government's watch.

South Australia is a great example—and I do not say that just because I am from that state—of the inroads that can be made on carbon pollution levels through strong investment in renewable energy. Since 2005—in less than a decade—in spite of having largely equal demand from our electricity generation over that period, carbon pollution levels have been reduced by a third, from nine million tonnes on average in 2005 to about six million tonnes of carbon dioxide equivalent, in part due to some expansion in electricity generation through gas but overwhelmingly because of the enormous investment in renewable energy, particularly wind and solar generation in that state.

Also, something that is very important in terms of the political backdrop to this debate is that the renewable energy target has helped to keep downward pressure on household and business power prices. For the Prime Minister, this is really where this all went off the rails. In an interview with Sydney broadcaster Alan Jones in the earlier part of 2014 the Prime Minister claimed that the renewable energy target was, to use his words, 'pushing power prices up'. In the subsequent several months four significant pieces of modelling came out, including by the Prime Minister's own hand-picked panel, the Warburton review panel, which confirmed that the expansion of renewable energy capacity in the system operated to put downward pressure on power prices, particularly wholesale power prices, flowing through in terms of power bills for households and small businesses.

Because of that extraordinary success, the sector was on track to achieve the large-scale target of 41,000 gigawatt hours, and, again, the Prime Minister's own hand-picked panel, the Warburton review, confirmed that there were enough projects in the pipeline to achieve that large-scale target. But the Prime Minister's ambush on this policy in the first half of calendar year 2014 caused investor confidence, which had been sky-high only 12 months earlier, to absolutely crash. The 2014 figures from Bloomberg New Energy Finance confirmed that a shocking picture immediately followed the Prime Minister's attack. Investment in the large-scale part of the market in Australia collapsed by 88 per cent in 2014 alone. At a time when renewable energy investment around the world soared by 16 per cent and in China soared by 32 per cent, investment in Australia collapsed by 88 per cent. The total money invested in 2014 saw us drop, in aggregate terms, from 11th in the world in terms of dollars invested to 39th, behind countries such as Myanmar, Honduras, Panama and others which became bigger investors in renewable energy than Australia. Billions of investment was at the edge of the cliff and thousands of jobs were at risk.

Labor have great ambitions for renewable energy in Australia. From our point of view, the renewable energy target for 2020 and the associated policy framework, such as ARENA and the Clean Energy Finance Corporation, is just a beginning for further investment and further expansion in renewable energy. Australia is blessed with some of the most extraordinary renewable energy resources in the world. We have extraordinary wind resources, particularly across the southern half of the continent, solar resources across pretty much the whole of the continent, marine resources, particularly in the Southern Ocean, and much, much more. We want a base that will see further investment in renewables, not less investment. Our very clear view is that the Australian people take the same view on that.

Labor could have sat back and watched this fairly tragic story unfold after the Prime Minister's attack on the renewable energy target and said, 'They are the government. They need to pick up the mess.' We reflected on that. We took the view that our very serious concern about the long-term damage that would be done to Australia's reputation as a safe investment destination, particularly in energy and renewable energy, required us to go to the table and do all that we reasonably could to restore investor confidence, which, after all, has been our overarching objective through this.

This deal does that. The deal that has been struck between the government and the opposition, as the two major parties of government and two parties of alternative government in this country, does that. This restores confidence in the rooftop solar sector. Confidence had been damaged by recommendations from the Warburton review that that program be scaled back. It was recommended that that hugely successful and very, very popular program in the Australian community be scaled back. In particular, the Warburton review focused on potentially scaling back the small-scale scheme from a ceiling of 100 kilowatts, which is particularly important for small businesses and organisations such as nursing homes and the like, to just 10 kilowatts. I am very glad that, following a strong campaign from the industry, coordinated by the Solar Council, we have been able to restore confidence in that part of the market through this deal.

This deal and this legislation also restore confidence in the large-scale renewable energy target. The Labor Party would far prefer that the Prime Minister had stuck to his election promise to roll out 41,000 gigawatt hours of large-scale renewable energy by 2020. But, given we have lost 18 months of investment during this period of time, 41,000 gigawatt hours is broadly not obtainable anyway. So 33,000 gigawatt hours as the new large-scale target is something that we are confident, based on all of the advice we have, will restore investor confidence to the large-scale part of the industry. It will require, as the Minister for Industry and Science has indicated on a couple of occasions now, that the industry pretty much double the existing large-scale renewable energy that it has built over the last 15 years in the next five years. So it is a very substantial and reasonably ambitious bill task for the large-scale sector, but every indication shows that it will be able to be achieved.

The Clean Energy Council indicates that the 33,000-gigawatt-hour large-scale target will mean that about 30 to 50 large projects will be built over the next few years, involving about $10 billion in investment and 6,500 jobs. In broad terms, there will need to be 6,000 megawatts of capacity added. The industry has said for some time now that there are more than 6,500 megawatts of capacity involved in projects that have already received project planning approval. Almost all of them are either large solar or wind projects. So we are very confident that we have restored investor confidence and that we can achieve this target.

On the basis of the deal set out in this legislation, the government says that we are likely to be in a position in 2020 of having around 23.5 per cent of Australia's electricity delivered by renewable resources. That depends on what you think will happen in the rooftop solar program and also where you think electricity demand might be by the end of the decade. But it may well be that we will even be close to 25 per cent of Australia's electricity being delivered through renewables. Although Labor is disappointed that we were not able to see the rollout of the previously agreed large-scale target of 41,000 gigawatt hours, there is no question that this deal still provides a strong platform for further growth during the 2020s.

Now Labor want to focus on the future. There are exciting technologies emerging almost every week, it would seem, in this industry—in the solar sector, the wind sector and many other emerging renewable sectors such as marine and geothermal. Particularly exciting technologies have started to emerge this year in the area of storage, large-scale renewable projects and also particularly households and small businesses. Labor want to start talking now. We have been able to move on from this controversy. We want to start talking to the industry and the community now about our ambitions for the future.

The Leader of the Opposition has indicated that, if we are elected at the next election, be that this year or next, it would be our proposal to move to lift the large-scale target for 2020. We think particularly in the out years of the decade that there is extra capacity there. We would only do so, obviously, in a way that was consistent with market stability. The Leader of the Opposition has also indicated that we are already talking with industry stakeholders about post-2020 arrangements. In order to do that in a measured and orderly way, we think that those discussions need to start this year and next so that any legislation that would start to build a platform for post-2020 arrangements was able to be put in place, at the latest, by mid-2018. We are very confident now with this platform that we can have those discussions.

Labor will also continue to defend the work of the Renewable Energy Agency, ARENA, and the Clean Energy Finance Corporation from the attempts by this government to abolish those two organisations. We will do everything that we can in the Senate and in the community to continue to prosecute the arguments for keeping those two very, very important organisations.

Before I address the remaining point of disagreement around native wood waste, I want to say, firstly, a few more words about the process that led to this legislation. We took the view—I think the government took the view, ultimately, as well, as does the industry—that bipartisan agreement in this area, particularly for the large-scale target, is critically important. This is not a deal you can land with the crossbench.

Investors will not invest for multi-year projects on the basis of a deal done with the crossbench. They want to know that the two parties of government have agreed with the core elements of this policy. That was the view we, the opposition, took early on. I thank the shadow minister for resources and energy, the shadow Treasurer and the Leader of the Opposition and his office for the very resolute view they came to, early, that we needed to sit down with the government to see if we can resolve this controversy.

Those were constructive and mature negotiations, largely conducted with the Minister for Industry and Science and the Minister for the Environment. I thank both those ministers and their officers for the way in which those negotiations proceeded. I also thank on behalf of the opposition the frank advice we received from the industry and stakeholders, the Clean Energy Council, the Solar Council, Solar Citizens and many other organisations that were active participants in this process.

The bill now sets a new yearly large-scale target between now and 2020—or new targets every year between now and 2020—which we understand has been the subject of consultation with the sector and the Clean Energy Regulator. They now have our support as well. The bill also provides full exemptions for the emissions-intensive trade exposed sector. This follows strong advocacy by the Leader of the Opposition on that point—particularly in relation to the aluminium sector but also in relation to a number of other parts of manufacturing—by Tasmanian members of the Labor caucus, led by the member for Franklin, by the member for Corio, in relation to operations around Geelong, by the members for Newcastle, Charlton, Shortland and Hunter and the member for Makin, in my own state of South Australia, Labor's parliamentary secretary for manufacturing. I thank them all for their support and advice.

The bill provides for the Clean Energy Regulator to prepare annual reports on the progress of the renewable energy target. Opposition takes the view that this will be a useful addition to the debate, although we do trust that the report on power prices will look at the net impact of power prices of this scheme—not just the impact of the certificates but also the impact the scheme has on wholesale power prices—in order to give a true reflection. The bill also removes the two-yearly reviews, which I think we now all agree will provide much more certainty for investors. As the minister said in his second reading speech, the major parties have agreed to work cooperatively to resolve any issues that may arise with the operation of the renewable energy target to 2020. The opposition indicates its support for all those elements of the bill.

I talk now to a part of the bill that Labor cannot support. That is the reinsertion of native wood waste into the scheme. It is worth repeating that Labor has approached these negotiations and the debate around this bill with an overarching objective of restoration of investor confidence in the renewable energy industry. Advice we have received from the industry, more broadly, and those parts of business that fund the industry, through equity or debt, has been that this question of native wood waste is not material to the question of broader investor confidence. It will not impact on broader investor confidence, either way.

As I have said publicly on a number of occasions, our view is that this attempt to reinsert native wood waste into the renewable energy scheme is nothing more, nothing less, than a cynical red herring that was foisted on the government negotiators at the last minute and which they put on the table, again, at the last minute. It is not an issue that was raised with me, at any point, during negotiations—they went for some 12 months—with the industry as something that was a critical issue for them.

Labor's position on this question should be very well known, and for anyone who has an interest in this it should come as no surprise. It was the Labor government that took this provision out of the renewable energy scheme some years ago. It was inserted originally under the Howard government. It was a Labor government that removed this element of the Howard scheme, from the scheme, some years ago. It was also the Labor government that proposed attempts to reinsert native wood waste over the last couple of years. So it should come as no surprise that the Labor Party opposes this attempt again.

We take the view that native wood waste is neither clean nor renewable, in the sense that term is used in the modern parlance for the renewable energy scheme. Boosters of this provision like to pretend that what we are talking about here is small amounts of waste, small amounts of refuse, that are left on the forest floor after some harvesting. Small amounts are raked up, put into a pile and then put into a wood furnace. It is not the case. That is not an accurate way to describe the work this provision put forward by the government seeks to do. We know that the definition of native wood waste would involve the whole of any tree that is harvested but not ultimately saw-lopped. It would involve all the remaining parts of a tree that were harvested from a native forest, except that part of a tree that was saw-lopped.

Labor is not willing to see the renewable energy scheme used to provide an alternative to the hard work, the really serious questions, that need to be debated around the future of our traditional logging industries, not just in Tasmania but more broadly around Australia. We are not willing to see the renewable energy scheme used to provide an alternative to the hard work that was under way during the Tasmanian forest agreement between industry, the CFMEU representing workers in the industry, environmental organisations and the Tasmanian and Commonwealth governments. The cynicism of those, particularly from the Tasmanian state Liberal government, who would now seek to insert native wood waste back into the renewable energy scheme, given the damage that they did to the Tasmanian forests agreement, is breathtaking. It is simply breathtaking.

To that end, I indicate that during consideration in detail and the third reading of this bill, I will be moving amendments that have already been circulated in my name. Firstly, to remove the provisions in this bill that seek to reinsert native wood waste into the scheme, and, secondly, to amend the act to prevent any future regulation being made by the government to reinsert native wood waste into the scheme. I commend the amendments when they come before the House, to the House.

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