House debates

Wednesday, 27 October 2021

Bills

Offshore Electricity Infrastructure Bill 2021, Offshore Electricity Infrastructure (Regulatory Levies) Bill 2021, Offshore Electricity Infrastructure (Consequential Amendments) Bill 2021; Second Reading

12:15 pm

Photo of Dave SharmaDave Sharma (Wentworth, Liberal Party) Share this | Hansard source

I want to acknowledge the important opportunity here to speak on the Offshore Electricity Infrastructure Bill 2021 and the associated legislation. Why are these bills important? They are important for two reasons, as I see it. Firstly, Australia has the potential to be a global offshore wind superpower. We have one of the largest coastlines in the world. Our offshore wind resources are comparable to those of the North Sea, between Britain and Europe; the United Kingdom generates almost 10 per cent of its electricity from offshore North Sea wind resources. Even in Australia, if all the current offshore wind generation proposals were built the energy capacity from those would be greater than that from all our current coal-fired power stations. This is an immense potential resource, but to date we have not had the regulatory or legal framework to allow these things to proceed. These bills provide that framework.

The other important element of these bills is to allow the grid stabilisation function. We know that as more renewables come into our electricity generating supply we need to find a way to stabilise them, because renewables, by their very nature, are intermittent in their generation; the sun doesn't always shine and the wind doesn't always blow. You can either stabilise those over time by having electricity or energy storage facilities—things like pumped hydro schemes and large-scale batteries—or by distributing the power over distance.

These bills will allow us to do things like build the Marinus Link and the various interconnector projects which will allow us to connect, in the Marinus Link case, the mainland with the offshore pumped hydro storage capabilities of Tasmania, and allow that to act as a stabilising force for our grid and allow greater renewable penetration into the grid. These bills provide the regulatory framework to allow offshore electricity infrastructure projects, including transmission and generation projects in Commonwealth waters. Both of those will be important—the generation side, because of our offshore wind capabilities, and the transmission side, which will allow us stabilisation grids.

Some of the projects that could be enabled by this legislation include what I mentioned before: the Marinus Link, which will support Tasmania's hydro capability acting as the Battery of the Nation; also important, offshore wind projects in their own right like the Star of the South project, which is a proposed offshore wind farm off the coast of Gippsland, in Victoria, which has the potential to provide almost 25 per cent of Victoria's electricity consumption; and the Sun Cable, an important export opportunity for Australia—a proposed international transmission infrastructure line that will allow us to export solar power through a direct current cable, a DC cable, from Darwin to Singapore and beyond there into the region.

These bills establish a licensing scheme for offshore electricity infrastructure projects and empower the minister—in this case, the Minister for Energy and Emissions Reduction—to declare areas suitable for offshore electricity infrastructure. This is a regime that requires public notice and consultation prior to any final declarations, which will mean that potentially affected stakeholders, including existing maritime users, fishermen and the like, are able to make submissions and make their views known. It allows the minister to grant these licences which will allow project proponents to undertake offshore infrastructure activities in these specified areas.

The legislation also establishes the statutory authorities to administer and regulate this framework. NOPTA and NOPSEMA, which are the already-existing regulatory bodies involved in granting offshore oil and gas prospecting and exploration licences, will now take on, under this legislation, the administration and regulation of functions of these activities. They've already got significant experience in regulating offshore activities through their existing capabilities.

When we talk about this, we need to bear in mind Australia's record on renewable energy generation and, indeed, emissions reduction, for that matter. Too often, in this debate, people who argue for more ambition seek to denigrate or diminish or discount what we've already achieved. I don't think you can have the basis for a factually sound and reasoned and rational debate unless you acknowledge what's gone before and the journey we've made to date, before you talk about some of the challenges of the future.

Despite what you might hear and despite what some people would have you believe, Australia has a very good record on both renewable energy generation, installation of renewable energy capacity, and emissions reduction. Our latest emissions reduction figures show that our emissions have reduced by 20.8 per cent since 2005. Over the same period our economy is 45 per cent larger, our population is about 20 per cent larger and a large part of that emissions reduction, or more of it, has come from our domestic economy. If you view Australia as a domestic economy alone, our emissions reductions have been 35 per cent. That's because a lot of our emissions are in export related industries—some 40 per cent of them.

What are the figures elsewhere around the world? We recognise that climate change is a global problem and that emissions reduction is a global challenge. Over the commensurate period, from 2005 until now, emissions have been reduced in Canada by one per cent; New Zealand by four per cent; the OECD average, for modern advanced economies, is seven per cent; Japan by 10 per cent; the United States by 13 per cent; and Australia by 20.8 per cent. The only group within the OECD that has bettered that is the EU, which has reduced its emissions by 23 per cent—in large part because they've outsourced or offshored a whole lot of their industrial and manufacturing capability.

Australia is installing renewable energy generation at a record pace. We installed seven gigawatts of renewable energy last year, which is about eight times the global average of renewable energy generation. One in four Australian homes now have rooftop solar. In fact, in 2020 we had 378,451 rooftop solar installations in Australia, which is a world record. Renewable energy in Australia is now some 27.7 per cent of our electricity generation. That's the 2020 figure. It produces about 63 gigawatt hours. That figure was up 3.7 per cent from the previous year. Of the seven gigawatts of renewable energy installed last year, we had three gigawatts in small-scale solar, two gigawatts in large-scale solar and others in wind. So in 2020, as you can see, we've already made quite a transition in our energy mix. Coal is about 62 per cent still, on average, of our electricity generation; renewals is about 28 per cent; and gas—often, peaking gas—is around 10 per cent.

What this bill will do is allow more renewable energy to go into the grid, because it will provide access to new resources, offshore wind, but it will also enable the stabilising infrastructure—particularly, the Marinus Link and other interconnectors—to go ahead. This is an important point that we've been debating in the House, over the last few days, the legislation. I know some people think we should be legislating a net zero by 2050 target. To me, that confuses the purpose of legislation. It confuses ends with means. To start with, our emissions reduction target is an international commitment. It's a treaty-level commitment. It's one we make on things all the time.

The way you make a commitment internationally is you deposit an instrument or a ratification, or you deposit a new commitment with the treaty body repository. For Australia, net zero by 2050 will be contained in what's called a nationally determined contribution and it will be deposited with the custodian of UN Framework Convention on Climate Change. That's how you make an international commitment.

Legislation is the means to allow those commitments to take effect. This piece of legislation, for instance, the offshore electricity infrastructure bills, will provide us with one of the tools we need within our toolkit in order for that goal to be met—just as the recapitalisation of ARENA and new regulations for the Australian Renewable Energy Agency will provide another tool to allow this goal to be met.

To me, it would be like if we wanted to legislate to limit inflation to two per cent or end childhood poverty or enforce reconciliation with our Indigenous peoples. You don't legislate for those things. Those things are policy goals, and you put in place legislative bills and tools to allow you to meet those goals. For inflation, it might be the independence of the Reserve Bank that you legislate for. For childhood poverty, it might be childhood assistance or childcare programs. For Indigenous reconciliation, it might be you legislate for a voice to parliament. But this is what the purpose of legislation is for, and I think it's important in this debate that we don't confuse ends with means. Legislation here is a means to an end; it's not an end in itself. You don't affect social policy change and you don't affect economic policy change with a bill. You do it with the assistance of the legislation, but you do it with the executive arms of government.

That takes me to my next point, which is the issue we've been discussing this week, which is net zero and our Long Term Emissions Reduction Plan. I think this is a very important announcement the government has made this week, which is committing Australia to a firm target of net zero emissions by 2050. It has a number of important elements which I think work with the grain of consumer behaviour, capital market behaviour, the economy as we've got it and technology. What our Long Term Emissions Reduction Plan lays out, which was released accompanying the target, is how we plan to get to net zero.

The lowest hanging fruit here is actually electricity generation. That's where we've made the most gains to date. This is what this bill will allow us to make the furthest gains in, and that's where the easiest and the cheapest emissions reductions are likely to come from—by putting more renewables in our electricity grid. The next gains are likely to be from electrification of the transport sector, and that's why we're doing things like investing large amounts in electric vehicle charging stations and transmission infrastructure but also things like hydrogen hubs to conduct the research and development and seek the commercialisation of hydrogen as a liquid fuel.

The harder to make abatements, or mitigations, are going to be in sectors like agriculture and some industrial processes and fugitive emissions from things like mining. And, as the Long Term Emissions Reduction Plan lays out, these sources of emissions will either need to be abated with new technology or offset in some way, and that is going to be a challenge for the future. But I think, with the technology that we have currently available and that is commercially available, we can do a large part of our emissions reduction goal and get a long way to net zero without disrupting our economy, without destroying jobs or industries, without impacting on our way of life, without changing our diet, without doing any number of other things. We can do that with technology as it is.

What we also lay out in our Long Term Emissions Reduction Plan is the technology targets we need to hit in order to move down that pathway. Some of those are important to recognise. Clean hydrogen at less than $2 a kilo—at that price point, hydrogen becomes commercially competitive as a source of energy for transport and other uses. Low-cost solar at less than $15 per megawatt hour—this is significantly lower than the wholesale cost now but it will allow large penetration into the network. Energy storage at less than $100 per megawatt hour storage—this is an important component of stabilising the intermittency of renewable energy sources. Green steel at under $700 a tonne—this would make it commercially competitive. That's direct reduced steel, using things like hydrogen rather than coking coal to reduce the iron ore to steel. We need green aluminium at less than $2,200 a tonne, and we need carbon capture and storage at less than $20 a tonne, because there will need to be carbon capture and storage in a net zero economy. Finally, we need to be able to measure soil carbon at less than $3 per hectare. All of those technologies, if we get to that price point, will get us at least another 40 per cent of our way towards net zero. Bear in mind we're already at 20 per cent. This will get us another 40 per cent. New technologies will take us a further 15 percent. Then abatements and offsets will need to take as the remainder of the way.

I think it's important to recognise here that this economic transition is not something to be feared, it's not something that's unprecedented and it's not something that Australia has not gone through before. It's true we are a highly emissions-intensive economy at the moment, and that partly reflects our export mix and partly reflects our industry mix. But, if you think back through Australia's economic history, for most of our history since Federation our largest export was wool. Even as recently as 1970, at least half of Australian exports were wool and wheat. Resources have only really come on as major exports since the 1970s. They will remain as important exports into the future, but what our commitment to net zero and our Long Term Emissions Reduction Plan allow us to do is to generate new sources of exports and new sources of prosperity, which will remain essential in ensuring jobs and industries in our regions well into the future.

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