Kelvin Thomson (Wills, Australian Labor Party) Share this | Hansard source

That was a remarkable speech from the member for Paterson. He was speaking the renewable energy projects which have sprung up in recent years and was talking about the merits and values of those projects. He made many worthwhile and important points. But the remarkable thing is that the very projects he was extolling have been made possible either by the renewable energy target, which this government is determined to cripple, or by the Australian Renewable Energy Agency, which this Australian Renewable Energy Agency (Repeal) Bill 2014 proposes to abolish! The member seemed oblivious to the fact that his government is determined to kill off the very projects that he was talking up.

The Labor government established the Australian Renewable Energy Agency, known as ARENA, in 2012 as an independent agency designed to improve the competitiveness of renewable energy technologies in Australia and to increase the supply of renewable energy to Australia's electricity market. ARENA works to reduce the cost of renewable energy technology development and to increase its use in Australia. ARENA provides financial assistance for the research, development, demonstration and commercialisation of renewable energy and related technologies; develops skills in the renewable energy industry; and promotes renewable energy projects and innovation, both nationally and internationally.

ARENA currently supports more than 190 renewable energy projects, drawing more than $1½ billion in private sector investment. There are currently a further 190 renewable energy projects in the pipeline which have the potential to draw more than $5 billion in private sector funding. Seventy per cent of ARENA funding has gone to projects in rural and regional Australia, creating jobs for the future in these areas. The Liberal government's proposal to axe ARENA puts these projects in jeopardy. This bill risks the investment arrangements already in place for existing projects, and puts a complete freeze on future investment arrangements.

The Liberal Party is quick to cry foul and make hysterical claims about sovereign risk if a Labor government takes any action which impacts on any company's bottom line, but the way in which it subjects the renewable energy industry to constant policy changes and rough handling, beggars belief. These are real industries, providing a real service in a carbon constrained world. They are the industries of the future.

Experience from renewable energy markets overseas has shown that stable, long-term policy support provides the renewable energy industry with the required incentives to expand the renewable energy market. A clear commitment from the federal government on the policy framework surrounding renewable energy in Australia, such as the renewable energy target, provides the long-term certainty needed to encourage the growth of Australia's renewable energy industry.

The number of countries with renewable energy targets more than doubled between 2005 and 2012, with at least 118 countries—over half of the world's countries—now having renewable energy targets in place. Of these, 109 countries have policies to support renewables in the power sector. Currently, 19 of the G20 member countries have some sort of renewable energy support policy, and all of Australia's top 10 trading partners have policies to promote renewable energy. So we are not out there, on this matter, on a limb or on a frolic of our own; this is what countries right around the world are doing.

A central reason for this is the potential for renewable energy to create jobs. World wide, an estimated five million people work directly or indirectly in renewable energy industries. Global investment, in 2010, reached US$243 billion—an increase of 30 per cent from 2009. So, countries right around the world are recognising the benefits of renewable energy as a central element to remaining economically competitive.

Recent research indicates that France, Japan, the United Kingdom, South Korea and Germany are currently best prepared to be competitive in the global low-carbon economy. These countries, by moving first in adopting policies that support renewable energy and low-carbon technologies, will experience superior rates of learning, better cost reduction, and are currently best prepared to be competitive. Meanwhile, Australia is the only country in the G20 which has become less prepared for the low-carbon economy since 1995, and faces some of the biggest challenges in remaining competitive in a low-carbon future—ranked 16 in the G20 behind Argentina, South Africa, Saudi Arabia and Russia.

If Australia continues with a lack of commitment to policies that support renewable energy then the cost of shifting to a low-carbon economy will be higher, and we will risk losing our international competitiveness. Of overriding importance is the need for policy stability and certainty so investors commit funds that will grow the industry and Australia can catch up in the global race to transition to a low-carbon economy.

Labor's renewable energy policies have been a success story, yet they are all now under attack from the Liberal government. In addition to the bill before the House to abolish the Australian Renewable Energy Agency, the government had legislation before the parliament to abolish the Clean Energy Finance Corporation. We have been reading in the papers in recent weeks that the Prime Minister wants his Renewable Energy Target Review Panel to recommend scrapping the RET all together.

It is a mystery as to why the Liberal government wants to put an end to such successful policies that deliver savings to Australian households, create Australian jobs, drive investment in Australian industries, and are good for Australia's environment. During our time in government, wind power tripled, jobs in the renewable energy industry tripled to more than 24,000, and Australian households with solar panels on their roofs skyrocketed from around 7,000 to over one million. Some of the wind and solar farms in Australia are the biggest in the Southern Hemisphere. Investment in these projects was being driven by the renewable energy target, and when Labor was in government Australia ranked in the top four most attractive places in the world to invest in renewable energy projects. Since the election of the Liberal government, and since the scare campaign against renewable energy, Australia has fallen to ninth on the global index.

The RET review, the attempts to axe ARENA and the CEFC, and the Prime Minister's false rhetoric about the impact of the RET on power prices has stalled investment in the renewable energy industry. It is risking jobs and businesses. A recent Newspoll, published in The Australian on Wednesday 20 August, showed that 98 per cent of Australians support renewable energy. And recent research released by the Climate Institute, the Australian Conservation Foundation and the WWF has highlighted that under a scenario where there was a termination of the RET then coal fired power generators would reap an extra $25 billion in profit between 2015 and 2030. I suspect that herein lies the real reason behind the government attacks on the RET. The RET has been such a resounding success that vested interests in the energy sectors are not happy with renewable energy gaining a larger than expected share of the electricity market.

Under the current ownership arrangements, EnergyAustralia is the company that would stand to gain most. Its potential extra profit would be about $1.9 billion if the RET were reduced, and $2.2 billion if it were abolished. If AGL purchased Macquarie Generation it would become by far the biggest beneficiary of reducing the RET, with combined extra profits of $2.7 billion if the RET were reduced. Origin Energy's total extra profit would be about $1.5 billion. Origin Energy owns the power station that would emit the largest amount of additional pollution under a reduced RET.

What the modelling also established was that abolition of the RET would see no reduction to household power prices, and carbon emissions would climb by 15 million tonnes a year on the back of a nine per cent increase in coal-fired power. When I had discussions with Tim Sonnreich from the Clean Energy Council he pointed out, and the council points out, that scrapping or scaling back the renewables target would see electricity prices rise, not fall, due to greater use of gas in the energy sector at a time when gas is soaring in price.

The modelling commissioned by the Climate Institute, the Australian Conservation Foundation and WWF indicated that for a household consuming 6½ megawatt hours of electricity annually, which is the New South Wales average, reducing the renewable energy target would add about $35 to the annual power bill—most of this increase will take place after 2020. An abolition of the renewable energy target would add about $80 a year to the annual power bill. This puts to the sword the claim made by the Prime Minister in July that the RET is significantly driving up power prices, and reveals that the government is more in the thrall of climate change denialism than having a genuine concern for cost–of-living pressures.

The same modelling also indicated that reducing the renewable energy target would cost the federal budget about $680 million in extra funding to meet Australia's target of five per cent emissions reductions by 2020, in addition to the socialised costs amounting from higher levels of pollution, which the model estimated conservatively to be $14 billion. I think it is ironic that this is a government that talks about direct action, the renewable energy target is direct action, yet the government makes spurious arguments to try to justify its abolition.

The review into the RET that was set up by the government was headed by a known climate change denier. Even then, according to reports, it found that the RET did not add significantly to household and commercial power bills and, in fact, it accounts for only three per cent of an average household electricity bill. The government's apparent intention to ignore its own stacked inquiry reflects a predetermined view of climate change by this government. They do not believe in it—full stop. The tragedy of the removal of RET is that it will jeopardise around one per cent of GDP in committed capital investment. It is regrettable that we have got a government that is more concerned with the ideological outcome or the vested interest than it is with a sound and visionary policy, which is what the renewable energy target is. This is real sovereign risk, not that bogus sovereign risk levelled at the mining tax or recently by the trade minister when he was talking about the budget in the Senate. If we have abolition of the RET, this will be done with no lead time, in the teeth of the policy taken to an election.

I also make the point that we have seen the abolition of the carbon price and that underscores the ongoing importance of the renewable energy target. It is now the only game in town, the only national initiative directed at reducing Australia's greenhouse gas emissions—the last hope. Scrapping it at this point is removing Australia's only remaining substantial carbon abatement policy, with all of the negative flow-on effects that that will have for the local and global emissions mitigation effort, as well as exposing Australia to big risks in terms of future international policies. If the government is genuinely concerned about the significant power price increases, which have taken place—I have spoken in the House about this previously—it needs to look at the overinvestment in power distribution networks which accounts for three-quarters of the increases that have occurred.

I note that Miles George, the managing director of the renewable company Infigen Energy, has said either scaling back or terminating the RET 'would be devastating'. He said that the creation of sovereign risk would be significant and that the very issue had been raised by prospective foreign investors, including Canadian pension funds which the Prime Minister sought to woo on one of his overseas trips in June. He said:

Infigen's shareholder base of over 20,000 investors has invested in renewable energy in Australia on the basis of a fixed target of 41,000 gigawatt hours by 2020. This is no different to investors in private or public partnerships acquiring a toll road concession or a port lease. If the government pulls the rug from under institutional investors in renewable energy, we shouldn't expect those investors to come back to buy other infrastructure assets here.

It is high time the Liberal government stopped undermining and white-anting renewable energy. Australia has what it takes to be leading the race in developing a renewable energy industry: world-class renewable energy resources, a skilled workforce and a proud history of innovation. We need to exploit this comparative advantage and embrace the huge opportunities that our renewable energy provides; otherwise we risk falling behind. The community is calling for it, business is ready to invest and we and future generations will benefit from this investment.

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