Greg Hunt (Flinders, Liberal Party, Parliamentary Secretary to the Minister for the Environment and Heritage) Share this | Hansard source

In responding to the Prime Minister’s energy statement and energy initiatives of this week, I want to proceed on two fronts. Firstly, I want to try to put the statement into a global context and, secondly, I want to deal with some of the specific initiatives contained within the Prime Minister’s package.

Within the global context are two critical trends that we have to examine. Firstly, we have to examine the trend in relation to transportation fuel, primarily oil and petroleum products, and secondly, we have to look at static energy or electricity and the generation of our power sources. The underlying theme in relation to both is that we have a transforming world environment. In a sense, historians talk about the long century being 1789 to 1914—the Congress of Vienna settled the boundaries of Europe in a relatively stable environment—and we have been through that in terms of energy. In energy terms, you might draw the analogy that this is 1913 and that we are going through the process of reconstructing the next great phase of human energy consumption over the coming century, and we need to look at it in terms of a radically different set of the structures.

What is the cause of that? The cause is a combination of both supply and demand at the global level. We have the emergence of China and India as two giants, and they are only just going through the early stages of the demand that they will require both in automotive and liquid fuels and in static energy or electricity requirements. Those changes are profound and dramatic. They are profound on the demand side and, as many have noted, our oil supply base is limited: it is a source with limited capacity. Our discoveries do not equal our new requirements, so over the next 50 years we will face diminishing supply relative to the increasing demand. The impact historically is absolutely clear. It will result in a price change. It will result in more than just a price change; it will result in the rationing of supply relative to demand, which will have quite a significant impact on prices and quite a profound impact on the way in which we use liquid energy resources over the coming half century. That means there has to be adaptation on a profound and global level. These changes have to occur—there is no doubt about it. That is one of the great responsibilities that members on both sides of this chamber have in our preparation for the coming half century and beyond. So that is one of the issues, along with water, that I focus on deeply as a major, personal responsibility.

I mentioned also that the second of the global trends beyond transportation fuel relates to static energy. Here there are a broader range of resources. On that front, however, it is twinned with both the supply and the environmental consequences of CO production. The global equation is about 40 billion tonnes of CO per annum, of which Australia accounts for 560 million tonnes or about 1.4 per cent of output. As somebody who has responsibility, along with the Minister for the Environment and Heritage, Senator Ian Campbell, for Australia’s environmental work, there is no question that climate change resulting from this 40 billion tonnes is a real and significant threat. We have seen an increase in global temperatures over the last century—and I rely here on my advice from the Bureau of Meteorology, for which I have responsibility—of about 0.7 to 0.8 degrees. It is predicted that there is likely to be an increase in temperature of somewhere between 1.2 and 5.8 degrees over the coming century, depending on the emissions scenarios and the effects scenarios, but they will be real and tangible. That in itself is likely to see a sea level impact of somewhere between eight or nine centimetres and 88 centimetres. Again, the effects will be real and tangible, not catastrophic but absolutely significant. Because what we put into the atmosphere in CO stays there for hundreds of years, over the longer run there will be an exponential effect, not only during this century but beyond, so I am very aware of our responsibilities not just to future generations within this century but to future generations in coming centuries.

Against all of that background we have to look at low emissions technologies. I am source neutral as to whether those low emissions technologies are clean coal, which I think is fundamentally important, nuclear technology, which accounts for about 16 per cent of the world’s static energy—and Australia is one of the suppliers of 30 per cent of the world’s current uranium products, with 40 per cent of the world’s uranium reserves, so it has a critical role and, I would argue, a moral role in helping to ensure that we provide this energy; I think it is a very important source—or whether they are other forms of renewable energy, whether through solar, hydro, thermal energy, wind or tidal. All of those have a role along with hydrogen. But none of these technologies—clean coal, nuclear, those different sources, demand reduction, fuel switching—will solve the problem alone.

The global equation that Ian Campbell has presented is that, while there will be a doubling of energy requirements over the course of this century, there needs to be a 50 per cent decrease in our emissions. Against that package, what we have is a first stage energy initiative at this point. That first stage energy initiative, which I welcome, sets out five basic areas of responsibility and immediate action.

The first deals with the question of high petrol prices, which have risen in part because of specific events in the global environment but more particularly because of the underlying trend of increased demand caused by China and India. That has manifested itself in the LPG vehicle support scheme, which provides $670 million over eight years to encourage the uptake and use of liquid petroleum gases and alternative fuel. It is a very important initiative. It is not going to solve everything for everybody, but it is an important step in providing alternatives for as many people as possible and in decreasing pressure on demand for liquid petroleum. That scheme provides a $2,000 grant for approved and fitted LPG conversion of a motor vehicle for non-business use, and a $1,000 grant for new LPG dedicated or dual fuel petrol-LPG vehicles for non-business use—in other words, factory produced vehicles. It is important for Australia’s own producers.

One initiative on which I have been working behind the scenes with some of the finance providers is to see whether concessional loans could be made available to people to fill the gap that they have to pay—which may be between $500 and $1,500—for this LPG conversion. That would give them the ability to make that payment over time rather than up front. I am hopeful that we may be able to achieve something on that front.

Secondly, the ethanol infrastructure scheme is a very important development. It is not a total solution—and anybody who presents it as that is misrepresenting the situation—but I have no doubt that it is an important contribution both in terms of the provision of cleaner fuel and of biofuels. It is not the total solution, but it is an important part both of our clean energy mix and of our use of additional biofuels as a means of taking pressure off the price. There is $17 million there to enable service station operators to upgrade their equipment and to increase the sale of ethanol blended fuel. Essentially, that is in the form of a $10,000 payment once any conversion to allow the sale of LPG is complete, and a $10,000 bounty after an ethanol blend sales target is reached. It is a nice combination.

The third area is in relation to the renewable remote power generation program. Here there is just over $120 million over a period of four years to extend and expand that program, which encourages the replacement of diesel generators with renewable energy sources for power generation and water pumping, whether that is wind or solar—which are the two most likely options for those renewable areas—twinned with solar cells and other forms of battery storage. Battery storage on a grand scale is one of the great technology challenges we face. This is an important area.

In terms of the deeper structural changes over the coming years, the assistance for Geoscience Australia of $134 million in total for exploration promotion and development is extremely important. We need to look for major new oil sources. Secondly, looking at geothermal energy is an option. The early work that we have seen coming out of the Cooper Basin is of high importance. We have a generation capacity in Australia of 45 gigawatts—45 billion watts. That is the Australian equation at the moment. The figures that we hear about from the Cooper Basin and other geothermal energy sources are quite significant—anything from one gigawatt to 10 gigawatts of new capacity. That is profoundly important, on the scale of the Snowy Mountains scheme. We will see whether that tests up to what is promoted, but it does offer enormous potential.

Finally there is the future transport fuels options package. That is work that Minister Macfarlane has commissioned. From the presentation on the other side of this chamber, it was as if the Labor Party is the only set of people thinking about gas to liquids and coal to liquids. That is false. There is important work being done there and it is extremely important to Australia’s energy security that we master this clean coal technology and we master the coal-to-liquids conversion and gas-to-liquids conversion.

The Bass Strait depleted wells offer an extraordinary capacity to make a huge inroad into Australia’s CO emissions through geosequestration. Coal-fired power stations adjacent to depleted wells gives us an almost unique chance to reduce the 60 million tonnes of CO emissions that come out of the Latrobe Valley to 10 million tonnes. Those are the figures which Monash Energy, a subsidiary of Anglo Coal, which is itself a subsidiary of Anglo American, have given to me as being distinctly possible. So in one hit, in one area and in one sector we would be able to reduce Australia’s CO emissions by about 10 per cent—and that is not on the never-never; we are looking at a time frame there of about eight to 10 years.

So that is the package. I believe that it helps deal with the deeper structural challenges which Australia faces in terms of our transport oil, our static energy and our CO emissions. I think it is an important step. It is not the end of the process but I commend it to the House with my full support.

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