House debates

Thursday, 28 August 2014


Australian Renewable Energy Agency (Repeal) Bill 2014; Second Reading

11:07 am

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

I still have a lot of business cards left over, I can say! It is hard to get them all out in four weeks! But I was able to announce a wonderful project—the AGL solar project in northern New South Wales. It is a project split between Nyngan and Broken Hill, together amounting to about 155 megawatts. This is the largest PV solar farm in the southern hemisphere. As it happens—not that ARENA was involved in this—we were, only a few months after, able to announce the largest wind farm in the Southern Hemisphere, demonstrating the degree to which Australia had become a world leader in this area. With 155 megawatts of PV solar—equivalent to about 50,000 households with three-kilowatt solar systems on their roofs—it is a very, very large project, with about two million panels.

ARENA had provided about $167 million to this—the largest ever grant, I think, that ARENA had provided. The New South Wales government matched this with a grant of $64 million. Also, obviously, there were a whole range of different bits of private finance, particularly from AGL. It is a project worth about $440 million. It has a power purchase agreement—a PPA—with AGL, given AGL's involvement. But it also involves some wonderful knowledge acquisition and sharing opportunities involving the University of Queensland and the University of New South Wales. This had everything. It is a very big project, creating a lot of jobs in northern New South Wales and regional New South Wales.

The project reflects—and the member for Riverina will be interested in this—that 70 per cent of ARENA funds are distributed to rural and regional Australia. The renewable energy sector is, almost by definition, a regional industry—at least the large-scale part of the sector. This is where the jobs are going: to regional Australia. But there are knock-on impacts beyond the actual project itself in northern New South Wales. There is a factory in Salisbury in northern Adelaide, for example, that is using Australian steel to construct about 100,000 frames on which those two million panels will be placed. So the panels are being manufactured by Australian workers using Australian steel in northern Adelaide and being sent over to northern New South Wales to build this farm. These are the sorts of knock-on job opportunities that come with this work.

The second project—that, I think, was actually mentioned by the minister in his second reading speech—is the Carnegie Wave Energy project. This really is cutting-edge technology. It is based in Fremantle and is working very closely with the Department of Defence—particularly the Garden Island naval base—to provide clean power and desalinated water through the extraordinary wave energy resources that Australia has, particularly around the Southern Ocean. A $13 million grant from ARENA, plus some finance from the Clean Energy Finance Corporation and private finance as well, means that the Carnegie Wave Energy group really is a world leader in wave energy. Wave energy has extraordinary opportunities for a range of countries, but particularly Australia, given the Southern Ocean resources.

Another opportunity that I think ARENA has identified is exemplified in the Coober Pedy Renewable Diesel Hybrid project. Coober Pedy is a significant opal mining town in outback South Australia, the sort of town that has always been off grid and has always relied upon diesel generators to provide the community's power. EDL, a very reputable company in this area, has partnered with ARENA and a range of other partners to put together a very important demonstration project to show the capacity to provide cleaner energy to those off-grid communities that have traditionally relied upon diesel generators. About 50 per cent of the power under this project for Coober Pedy will be provided by the very abundant solar and wind resources that I can tell you from experience are available in outback South Australia.

These are just three projects of the 200 that have involved about $1 billion of grants from ARENA, leveraging about $1.8 billion in matching investment from the private sector, which, as I said, has involved about a 70 per cent weighting towards rural and regional Australia.

ARENA is part of a suite of policies that the previous government put in place, many of which were building upon Howard government policies to ensure that Australia was able to take the enormous opportunities in this area and become a world leader. We were having so much success in this area. By the middle of last year, the main global index in this industry, the Ernst & Young Renewable energy country attractiveness indices, which is published every three months, showed that Australia had reached one of the top four places to invest in renewable energy in the world, with the big powerhouses in this area. China, the US, Germany and Australia were the top four places in the world to invest in renewable energy.

Mr Deputy Speaker, you may be a little bit dismayed, but you will not be surprised that our position in that table has been plummeting ever since. Every quarter we drop a couple of places, because the uncertainty that has been created by the extraordinary breaches of election promises by this government means that investment, particularly in the large-scale sector of renewables, has completely frozen.

In the first six months of calendar 2014, about $40 million was invested in the whole of the large-scale renewable sector. Across the world, we reckon that about $80 billion in the same period was invested not in household rooftop solar but in large-scale renewables. Australia had been one of the four best places to invest—$40 million out of $80 billion. It is an extraordinary turnaround in investment fortunes.

This government's approach to renewable energy policy is, frankly, inexplicable. This has been an out-and-out success story. Thousands of jobs have been created over our period in office. The number of jobs in the renewable energy sector more than tripled. Billions of dollars have flowed in investments, starting from John Howard's mandatory renewable target in 2001-02. We reckon that so far there has been about $18 billion or $19 billion of investment because of the renewable energy target and supportive financing mechanisms such as ARENA's, with about $18 billion more in the pipeline between now and 2020, which, as I said, is essentially frozen because of this government's views on renewables.

There has been downward pressure on wholesale power prices in particular but, as a consequence, on retail power prices as well. We know that to be true. Four reports have been published in the last few months, all of which have confirmed that renewable capacity has a downward or a suppression effect on wholesale and retail power prices. Even the government's own modelling for its RET review, conducted by ACIL Allen, confirmed that. It was not published; it was leaked by people who attended a workshop. But even that modelling confirmed that this does not drive up power prices; it suppresses power prices for consumers.

Lastly, there was a significant reduction in carbon pollution, particularly over the last couple of years because of the addition of renewable capacity. You can see that in the National Electricity Market data. But you can particularly see it in a state such as South Australia—my own state—that has been such a leader in the addition of renewable capacity. Our carbon pollution, in the five years from 2008-09, from our electricity sector dropped by 25 per cent. It is down by a third since the mid-part of the last decade, about 2004-05. It is down significantly because of not only the addition of renewables capacity—I see people in the government advisers box keep shaking their heads, which is very helpful! —but also the switch to gas-fired power, which is obviously also going through significant change.

Who knows where this government is headed on this debate? We all have a very bad feeling about this, particularly because of the signals being sent through the media in the lead-up to the release of the RET review. The media coverage has shown, firstly, that this government seems utterly committed to breaching its clear election promise on the renewable energy target but also that this government is at war with itself over what the landing point on the renewable energy target should be.

It has been very difficult to work out whether the Minister for Industry, who has primary portfolio responsibility for the RET, and the Minister for the Environment agree. It would appear on media reports this morning that they do not. In any event, even if they did, they clearly do not agree with the Prime Minister and the Prime Minister's office on this matter. So two things are crystal clear.

This government is set to breach the clearest possible election promise on the renewable energy target and, through this bill, is also breaching an election commitment to keep ARENA in place. The second thing is that, whatever the final outcome is, there will be a devastating blow to investment and jobs in the renewable energy industry.

Before I conclude, I go back to the minister's second reading speech. The second reading speech explains the purpose of this bill very clearly: 'The purpose of this bill is to achieve $1.3 billion in savings as outlined in the 2014-15 budget.' We know that was done through legislation passed in the Senate a few weeks ago, with the support of the government, which continues to retain about $2.4 billion in section 64 of the ARENA Act for ARENA to continue its important work. If the minister was being straight with the parliament, that that was the purpose of this legislation, then this legislation should be withdrawn. Its work has been done in other ways, with another piece of legislation as part of the carbon repeal package. ARENA has a proven track record. No-one has come in and argued against that. The minister did not say that ARENA has not done its job. All he said was that he wanted to achieve $1.3 billion in savings. This bill, if it is not going to be withdrawn by the government, because the purpose of it has already been achieved, will be opposed by the opposition in this House and in the other place.


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