Tuesday, 20 June 2006
Renewable Energy (Electricity) Amendment Bill 2006
The original question was that this bill be now read a second time. To that, the honourable member for Grayndler has moved that all words after ‘That’ be omitted with a view to substituting other words. The question now is that the words proposed to be omitted stand part of the question.
I welcome the opportunity to conclude my presentation on the Renewable Energy (Electricity) Amendment Bill 2006. As I said, amongst the benefits of the changes brought about by this amendment, more householders will be able to participate in the scheme through changes that allow more eligible solar hot-water heaters—and I think that move should be universally welcomed. Under the scheme, accredited renewable energy generators can create one tradeable renewable energy certificate for each megawatt hour of energy they produce. The measure creates an incentive for electricity retailers and large users to purchase these certificates and surrender them to demonstrate their compliance.
According to the second reading speech and the explanatory memorandum to the bill, the government’s projections are aimed at achieving 9,500 gigawatt-hour targets, which would bring the renewable share of electricity consumption in 2010 to around 11 per cent. This would result in carbon dioxide equivalent abatement of about 6.6 million tonnes per annum or about 10 per cent of the current projected abatement for the Kyoto commitment period 2008-12. As I said earlier, there have been several reviews in relation to renewable energy. The 2003 review of the act made recommendations to enhance market transparency and to improve business certainty. As a result of that review, the government also agreed to increase opportunities for bioenergy and solar technologies, encouraging greater innovation.
Concerns have been raised about driving renewable energy expertise away from Australia due to these changes. However, I believe that the government has a very delicate balancing act to perform—that is, establishing an effective mandated renewable energy target without creating distortions in the market and ensuring that incentives are targeted to the most appropriate forms of renewable energy development.
The bill, I think, reflects the majority of the recommendations of the Senate Environment, Communications, Information Technology and the Arts Legislation Committee, providing a package of amendments that will improve the operation of the mandatory renewable energy targets. The changes are a result of expensive consultations, which have gone on since 2002, and an independent review in 2003. I think the government is demonstrating that it is committed to making sure that it is approaching the energy environment issue in a multifaceted way, as any responsible government ought to. (Quorum formed)
I was interested in the previous speaker, the member for Batman, who talked about the importance of building design and energy efficiency. On those issues, I agree with him. I think, though, that what we must realise is that, certainly in building design and energy efficiency, state governments have a very important role to play, and I think that some responsibility must be sheeted home to state governments to make sure that the architecture and the design concepts of buildings within their jurisdictions and within the local government jurisdictions are rightly overseen by them.
In summary, this government has taken a number of very important measures. As I said before, the first is the establishment of the Australian Greenhouse Office; the second, which is the subject of this bill, is the introduction of mandated renewable energy targets; and the third is the initiation of the Asia-Pacific Partnership on Clean Development and Climate. In conclusion, the AP6 partners cover most of the world’s manufacturing capacity for electrical appliances, from light bulbs to air conditioners and televisions. Energy efficiency improvements of these appliances made by the AP6 partner countries can drive rapid global improvements in energy efficiency. They are improvements that will reduce energy demands and costs and associated greenhouse gas emissions worldwide. I remind the House that, as a key negotiator at the Montreal meeting, Australia played a very important role in forging this new international collaboration.
The AP6 is a model of cooperation and practical action involving both developed and developing countries as equal partners that will play a major role in helping the world find a solution to human induced climate change. I think the bill before us today makes some sensible amendments, gives some flexibility and reflects the concerns of a very good Senate majority report and recommendations. I commend the bill to the House.
I rise to speak on the Renewable Energy (Electricity) Amendment Bill 2006. This bill is in place of the Renewable Energy (Electricity) Amendment Bill 2002, which was amended some 3½ years ago beyond the government’s tolerance and subsequently allowed to lapse. This bill consists of amendments to the act of 2000, but regrettably and most substantially it is an indication of how the government can take five years of evidence of their 10-year program for supposedly promoting the production of electricity through use of renewable energy and then mock it. This program, purportedly encouraging the production of electricity through use of renewable energy, runs from 2001 to 2010. After five years of operation, halfway through the time frame, the content of this amendment provides plenty of evidence of the government’s negative attitude towards environmentalism generally and renewable energy specifically.
The Prime Minister’s 1997 statement, Safeguarding the Future: Australia’s Response to Climate Change, said in part:
Electricity retailers and other large electricity buyers will be legally required to source an additional 2% of their electricity from renewable or specified waste-product energy sources by the year 2010.
This target of a two per cent increase in the proportion of electricity generated from renewable energy would have meant a total of 12.7 per cent of 2010 production. Let us see how this original promotion is going.
At the time of the Prime Minister’s 1997 announcement, the proportion of renewable energy production was approximately 9.6 per cent through hydro schemes and an estimated 1.1 per cent through other methods, including solar hot-water systems. By the year 2001, at the start of the operation of the Renewable Energy (Electricity) Act, the proportion of electricity produced by renewable means appears to have fallen. Hydro schemes’ proportion of electricity generated had decreased from 9.6 per cent in 1997 to 8.1 per cent in 2001. In 2001, 12.7 per cent of production would have been 25,245 gigawatt hours and, in 2004, would have given us a target of 27,045 gigawatt hours. It is anticipated that 12.7 per cent of production in the year 2010 will be approximately 31,115 gigawatt hours and 37,465 gigawatt hours in 2015.
The government’s promotion of renewable energy for electricity generation was regrettably changed from the original growth target of 12.7 per cent to a static target, an increase of 9,500 gigawatt hours over what was produced at that time. This would mean an annual renewable output of around 25,500 gigawatt hours. The government is happy for industry to produce at the end of the 10-year promotion a total of 25,500 gigawatt hours. This is likely to be only 10.4 per cent of electricity production in 2010, an actual decrease in the proportion of electricity generated by renewable means from the original baseline proportion of 10.7 per cent in 1997.
The government is happy for its promotion of renewable energy to call for a decrease in the proportion of electricity generated by renewable means. That is some promotion. The government is also happy for the required amount to remain static throughout the next decade, with no required increase of renewable energy production over the current 9,500 gigawatt hour increase. This will result in a renewable energy target—if one can call it that—of 25,500 gigawatt hours in 2020. In the year 2015, it is expected that the target will deliver 8.6 per cent of total electricity generated, a decrease of 20 per cent of the 1997 baseline. Industry will meet the target—it is not hard to catch a dead rabbit—but that is hardly the point.
In 2002 it was predicted by the Business Council for Sustainable Energy that by 2010 we would only just be maintaining the proportion of renewable energy generated in 1996-97. The government appears to have lowered expectations, and probably future outcomes, thereby evidently realising its objective. What is worse than having a static target for 10 years of this promotion’s operation is having absolutely no expectation of growth in the subsequent 10 years of promotion from 2010 to 2020.
The government is confirming in this amendment bill that it has absolutely no expectation of industry to increase the proportion of power generated by use of renewable energy over its 1997 level. The government’s own white paper from 2004, Securing Australia’s energy future, identifies that demand for electricity will increase from 2004 levels by 50 per cent by 2020. The government knows its static target is effectively meaningless. The white paper also anticipates at least $37 billion in energy investments by 2020 to meet demand—investments that will be productive for 50-odd years, investments that this government is apparently quite happy to see ploughed into brown coal power generation, or similar, instead of any number of renewable technologies.
Limiting the target to the static 9,500 gigawatt hours this decade, and maintaining exactly the same quantity of electricity generation throughout the next decade, purposefully neutering the incentive to invest in renewable energy will, one can presume, lead to the opportunity created by mandatory renewable energy targets being squandered. The change from a growth target of 12.7 per cent of production to a static increase of 9,500 gigawatt hours after 20 years is an example of the billboard policy. A mandatory renewable energy target: it sounds great, it looks great up there in lights, and the government can say it is the first of its kind in the world. But it will also inevitably be the worst. Put a name like ‘mandatory renewable energy target’ on a billboard, authorise and print it, and forget about actually achieving anything. It is misrepresentation, nothing more, and it is such a waste of the opportunity given to this government by the Australian people.
This renewable energy promotional strategy is farcical. The government knows this. The government can only have designed the promotion strategy with this outcome in mind. How can anyone say that it is changing a growth target to a static target in terms of gigawatt hours, and pretend it is doing anything but pulling its head out of the harness it created for itself in 1997? Nevertheless, there may be some incredibly bright people pursuing substantial change regardless of the government’s target. I have heard of some examples. I have heard of some CSIRO scientists and the Queensland Centre for Advanced Technology producing solar turbine technology, which they think can store and produce power on a continual basis, overcoming the unreliability of solar and wind energy.
They believe it could replace coal-fired power stations in 20 years, which sounds miraculous, but apparently they cannot get sufficient financial backing within this country. I wonder why? According to a recent article, Queensland sustainable energy management consultant Mr Guy Lane has said that it has failed to generate interest among Australian investors, because they are more comfortable with traditional energy sources. Australian Business Council for Sustainable Energy Executive Director, Ric Brazzale, said one of the biggest barriers was the lack of political support. I would be keen to receive any background the Minister for the Environment and Heritage or fellow members may have on this project, and whether or not it is worthy of Australian investment. The article may sound far-fetched. It was by Ian Gerard of the highly reputable daily the Australian on 2 February this year.
I would like to acknowledge the leadership demonstrated by the Australian business roundtable on climate change. This group has members including BP Australia, Insurance Australia Group, Origin Energy, Swiss Re insurance, Visy Industries and Westpac. The roundtable commissioned CSIRO to quantify expected impacts of climate change on Australia, and commissioned Allen Consulting Group to assess the costs of substantially reducing our nation’s greenhouse gas emissions, both in acting toward this end sooner, and the costs anticipated if we act later.
The outcome of this research was that substantial reductions could be realised at an affordable cost by acting sooner. The longer changes take to be implemented and realised, the greater the increases in costs to business and the Australian economy at large. The government’s response toward such groups’ contributions will no doubt be one of indifference at best. The response of some government agencies and members of the public is more encouraging. For example, a constituent of the Hindmarsh electorate came in to see me recently. He is a firefighter and a really terrific bloke who has spent $20,000-odd of his own money, and thousands of dollars in rebates, installing a photovoltaic system in his home, courtesy of the Australian Greenhouse Office.
Photovoltaic means electricity from light. Such a system uses daylight to power ordinary electrical equipment such as refrigerators and lights. It is quite different, I understand, to the commonplace solar thermal technology used to heat water. The Photovoltaic Rebate Program commenced in January 2000 and offers a cash rebate of $4 per peak watt, capped at $4,000 per residential system and per school or community building system. This program was extended a year ago although, unfortunately, it is to be phased out in June 2007. It is unfortunate that such initiatives will not remain in place and available to greater numbers of Australian households who may become aware and convinced of such a scheme’s merits over time.
It is also unfortunate that the federal government’s interest is probably even lower in terms of carbon trading. It seems the government is saying: ‘It’s better to sit back and wait to see if everyone else will do it, making it inevitable globally. Europe may have started, but it is early days and results are mixed. There’s no rush; let’s wait and see.’ In contrast to this approach, New South Wales have developed their own scheme. In February 2005 New South Wales Forests was fully accredited as an abatement certificate provider under rule 5—that is, carbon sequestration of the New South Wales Greenhouse Gas Abatement Scheme. As a result, New South Wales Forests now has authorisation to create, register and trade New South Wales greenhouse abatement certificates.
New South Wales continues to be a pioneer in introducing carbon dioxide emissions trading and exploring methods to use forests for greenhouse-friendly products. The first carbon trades in Australia involved state forests of New South Wales working with Pacific Power and Delta Electricity. A subsequent carbon sink investment project has been announced with the Tokyo Electric Power Company. New South Wales Forests is developing a complete account of the carbon uptake and storage in relevant parts of its plantation estate, and is working to develop carbon accounting tools that could be applied throughout New South Wales, including in privately planted forests. So it is an exciting new era for those who grow forests. Now when we create a healthy forest, we not only receive a return for the wood products being grown, but may also benefit from trading in carbon credits.
The apparent view of New South Wales is quite distinct from that of the federal government. New South Wales holds the view that, although international trading systems for carbon dioxide emissions are still being developed and there is apparently no prospect of a national trading scheme while we have this federal government, there is growing recognition that Australia needs to act now to expand its planted forests and build a base that will make a real impact on the greenhouse issue. Everyone in this country bar the federal government is, I understand, in favour of a national carbon-trading system. I look forward to people such as the Premier of South Australia, Mr Mike Rann, leading the way, with NSW obviously at the cutting edge. I also look forward to the reforestation of—in some cases—increasingly degraded parts of South Australia, the creation of carbon sinks and the improvement that that will promote in the quality of the land.
We have recently heard that, within South Australia, a new $236 million, 45 wind turbine investment by AGL will not only make the Flinders Ranges wind farm the biggest in the nation but increase renewable electricity to 15 per cent of total state production. So what have the Rann Labor government done? They have increased their target for renewable energy from 15 per cent of total electricity production to 20 per cent within 10 years. It is quite remarkable to see the difference between Labor and coalition governments, to feel the enthusiasm for the growth of the renewable energy sector, on the one hand, and then, on the other hand, to reflect on the federal government amendment bill currently before the House.
The member for Hindmarsh made some quite interesting comments in his speech. He talked of an acquaintance who has put in a photovoltaic array to supply electricity to his home, and he said that that was ‘electricity for life’. He should know that included in that package, which is extremely expensive for the amount of electricity that is provided, would be a significant bank of batteries which must be recharged during daylight hours, hopefully on bright, sunny days, and that they have quite a limited life. So the photovoltaics on the roof are a good idea—and I might mention later how they could be better utilised—but unfortunately they are not ‘electricity for life’.
It is interesting that the member for Hindmarsh talked about products of New South Wales Forests. Why they have not been charged with fraud, with their carbon credits scheme, I do not know. But I just happen to recollect one of their wildfires burning into Canberra and burning out 400 houses. Who are they paying back for all those carbon emissions that their benign neglect of their forests created? I note that they are selling carbon credits and, as the member for Hindmarsh said, also getting a return for their wood products. When they cut the tree down, do they pay back the carbon credit? Obviously, part of that tree is going to be destroyed. Certainly, with a little bit of luck, some of it will be retained, and the sequestered carbon might be utilised in a home and stay there. The offcuts will be burnt, and they will emit carbon dioxide. So it is pretty interesting.
It is a pity that the member for Hindmarsh has left, because I thought this was the ripper. He has given Labor Premier Mike Rann a big lift. I read in the paper that Labor Premier Mike Rann the other day participated with his minister in releasing all these balloons filled with some lighter-than-air gas, probably helium or hydrogen, to demonstrate to all the householders how much CO2 they were emitting each day. I guess that is a pretty good media stunt, and I hope that the rubber did not pollute somewhere when the balloons eventually burst. But the reality is that the entire residential sector of Australia uses 13 per cent of our energy. To be quite honest, I think there are better ways of addressing greenhouse emissions than by starting with the 13 per cent—when, for instance, transport uses 50 per cent of all the energy consumed in Australia. I will take the opportunity to speak a little more about that in due course.
It is similar to the speech of the member for Grayndler, which I have had the opportunity to read. He went on to say that, by not extending the MRET in the Renewable Energy (Electricity) Amendment Bill 2006, the government is endangering regional jobs. When we refer to the second reading speech relevant to this legislation, we learn for a start what MRET is. The MRET, which is Australia’s mandatory renewable energy target, came into operation in 2001. It is set at a percentage, which is two per cent. Obviously the member for Grayndler thought that possibly we should increase that. The reality is that energy consumption in Australia and energy generation is increasing as our population increases and, might I add, as our workforce increases. (Quorum formed)
The reality of all of these matters is that, as described in the second reading speech:
MRET uses a market based approach to drive higher renewable energy uptake. Renewable energy generators accredited under the measure may create one tradeable renewable energy certificate for each megawatt hour of energy they produce.
In other words, we have a system which grows not by increasing the percentage amount that is identified but by the fact that it has to reach 16,000 gigawatt-hours by 2020.
It is interesting that the member for Hindmarsh also said that the South Australian government—he lives in South Australia—is going to create another great big wind farm. Of course, these certificates are available for wind generation, and that is clearly a renewable resource. I refer to the parliamentary secretary’s second reading speech, in which he said:
To help address this issue the bill provides a process for granting provisional accreditation from the renewable energy regulator at the pre-commissioning stage.
That is, of the installation of a renewable energy facility. But I am very interested to know: what exactly is the number of renewable certificates based on? Is it based on the actual amount of energy generated or the energy capacity of each generator? They are two entirely different things.
Just how much of that energy is generated when nobody wants it? There are a few factors known about the wind. There has been many a song written about the variations of the wind, connecting it to the variability of love and all these sorts of things. This variability is a known factor. Another one which always strikes me is that the wind often blows strongest just as the sun goes down. So what are we doing with that energy at that time? The Labor Party would say that it is all being used by the slave labourers employed in all our factories who work all night and on Saturday and Sunday. When I drive through industrial areas, there seems to be a tremendous amount of darkness about those particular facilities.
So we have a lot of power being generated by the wind when we do not need it. That is not necessarily to say that we should not have wind generation, but the House has heard me say, particularly as it applies to remote areas, that that surplus energy might be converted by the simple process of electrolysis into hydrogen. In a remote area, if you have 1,000 kilowatts of wind generation capacity on the top of the tower, you have to have 1,000 kilowatts of diesel generation sitting at the bottom and ticking over. It has to be ready to handle any of the fluctuations.
There was an article in the Australian recently on one of the big set-ups in New Zealand producing 150 megawatts—that is about half as big as a typical coal fired power station—and it was experiencing 100 megawatts of variation in energy generation over five-minute intervals. The New Zealanders were actually more worried about when the generation went up than when it went down, because it was frying everybody’s computers. You cannot have a grid system with those sorts of variations. What happens when you have a coal fired base load? You have to keep burning the same amount of coal as you did before the wind farm was there simply to fill the gaps. They always keep turning because they have to turn at a constant speed, but they do not always generate the same amount of electricity. Their fans adjust.
The BMW company have motorcars now with reciprocating motors that run on hydrogen. They have just done a deal with Total to start installing hydrogen service stations.
We have those too, and they run on fuel cells, which is a little more complex at this stage of development. These are motors just like those you would see in any other car but their fuel is hydrogen and their fuel tanks can be refilled in three minutes. You have to go there. But why aren’t we—and why isn’t Premier Rann, Premier Iemma or anybody else—looking to these people—
well, we will come to that—and saying, ‘For goodness sake, put these things to some practical use, but don’t try and kid us that those renewable energy certificates are genuinely reducing greenhouse gases if, back at the coal fired power station, we’re still burning as much coal because they are not a responsive operation’? You just cannot. If you have a back-up of hydropower or something like that, you can feed it in with very short response times. But, if you are burning coal and you have big steam generators and things of that nature, you cannot do it.
I have a situation in my own electorate with 650 kilowatts up the tower and 700 kilowatts of diesel gensets on the bottom. Our government, quite properly, according to its principles, is providing another $1 million to put up a second tower. I have asked the minister to put the $1 million into hydrogen generation and then run those supporting diesels on hydrogen. Then we would have a renewable power package. But in the last two days Woodside, a great Australian company, has been here telling us about its prospects and, consequently, Australia’s prospects in the export of liquefied natural gas. Natural gas is a lower level polluter per unit of energy than coal, but it is still a hydrocarbon and it still emits carbon gases. Woodside tells us of its Browse resource, which it says is as big as the North West Shelf. It wants to develop entirely offshore a virtual floating liquefaction platform—which I hope it can put on land—north-west of Broome. Broome is the commencement of the great tidal resource of the Kimberleys, a resource with the generating capacity of all the energy consumed in Australia today of whatever variety.
The interesting thing is that these people want 900 megawatts of electricity to run this facility when they put it together. To the best of my knowledge, that is 1½ times the biggest coal fired power station in Australia. How do they intend to run it? Suck the gas straight out of the ground, burn it through gas turbines and generate all this electricity with a high level of emission—and I would think a pretty serious level of consumption—of natural gas that we could otherwise be liquefying and selling to someone in some part of the world, which is the best financial return for the product.
Isn’t it better—and maybe the opposition wants to take the lead on this—that the government start looking at some of its expenditure for the purpose of building that power station on the tides? All the problems of wind do not apply to tidal energy, simply because it is predictable. Yes, it is cyclical but it is predictable, and when something is predictable it is manageable. You can use pump storage, something that is used in the Snowy, and you can do all sorts of other things to even out the load so that you can keep it, basically. But, all of a sudden, we have the foundation for a tidal energy system. I call it greenhouse with grunt, because there is a huge capacity, it is a manageable, renewable source and, as long as the moon keeps going around the earth, it will be there. That cannot be said of gas and, I guess, to a degree it cannot even be said of hot rocks—although I think hot rocks are a renewable resource that responds to many of these things.
Kyoto has been mentioned by the member for Grayndler. A piece of paper has never fixed anything and I think we should never have signed that protocol. That is not the solution. I welcome the government’s initiative to rope India, China and the United States into a single confrontation of this problem. We could be a supplier of liquid hydrogen to the world. The member for Throsby mentioned those three buses driving around Perth. They are 300 kilowatts, the size of a tractor. Taking the reference of the member for Hindmarsh to photovoltaics, put them on a farm in sufficient size and they might take up half an acre in space—but not a thousand acres to grow the fuel necessary to create biodiesel or something. If you have that there, you could be electrolysing your pesky groundwater and pump-storing hydrogen in a movable electricity generator—the same as sits on the roof of these buses—that could sit in the tractor when you were using it or in the head of the harvester when you were using that or maybe just towed behind.
These are the options when we turn to hydrogen. But outside the environmental issues—and there are people who look you straight in the eye and say ‘The emission problem is not even true’—if we want to fix the price of petrol or the price of private transport, why would we not go to the manufacture of hydrogen as the fuel of mobility? As a response to that, we have a wonderful situation because we would be producing it within Australia using the tides of the Kimberleys and we would be in a position to make sure that petrol prices as we know them—if you like, the price of running a motor car—would not be volatile and would not be dependent on the resources of other countries, particularly those that are a bit more volatile.
If we were to focus on hydrogen as the fuel of the future, we have every renewable energy source available for its manufacture but, more particularly, the tides of the Kimberleys where we have the energy to do the lot. We have the opportunity, if government were a partner, to get a 900- or, let us say, a 1,000 megawatt—that is as big, by the way, as a nuclear power station—built in the Kimberleys on truly renewable power. That is a challenge—that is not easy—but that is the sort of thing I would like to see happen. I would like to think, when the member for Throsby gets up, that she would say, ‘What a great idea, and why aren’t we doing it?’ If the Labor Party want to take the lead on an issue like this, instead of telling us we should have ratified Kyoto, I think we might get a deal—and something that might be of great assistance to the Australian people. (Time expired)
It is always interesting following the member for O’Connor. I must compliment him on this occasion for a range of very constructive suggestions that he has added to the debate on the Renewable Energy (Electricity) Amendment Bill 2006, particularly in terms of a hydrogen future which many nations will face a little way down the track. I just say to the member for O’Connor how disappointed I am that his constructive ideas do not seem to register in the corridors of power in his government. I think it would be far more beneficial for the nation and for his government to be examining the kinds of constructive suggestions that he has made in this debate rather than, as we have seen, a very diversionary strategy focusing on the potential development of a nuclear industry in Australia.
Unlike the member for O’Connor, I believe that the government is not really serious about the enormous environmental challenges that face us with climate change and global warming. I say this because the government continues to refuse to ratify the Kyoto protocol. Despite the fact that it does have flaws, it is the only international arena in which these decisions can be discussed in a meaningful way. It is true that we do need to involve the developing nations, but I think that they are looking to see what countries like our own are prepared to do in playing our part in reducing the ever-increasing global carbon emissions.
This government is also refusing to take any meaningful action in helping our economy, our community and our business sector to adapt to a more carbon constrained future. Even the business community is now saying to the government that there is a sense of urgency, that we need to act; we cannot just wait. Setting up this diversionary nuclear industry inquiry is wasting time because, on all the best economics, it does not stack up—even your own Treasurer has said that. If we are going to wait around for the next stage of nuclear reactors, which we are told are going to be much safer, it will be a long wait. I think that most people with expertise in this area say it will be at least 10 years before safe nuclear reactors will see the light of day.
I am also very concerned that this government displays a conspicuous lack of support for the renewable energy industry. The Parliamentary Secretary to the Treasurer, or one of his colleagues, would recall sitting on the House of Representatives Standing Committee on Environment and Heritage when we examined the issue of MRET. Many submissions made to the committee said that it was really urgent for the government to take action to increase the mandatory renewable energy target so that business has the sense that the government has a framework, a target and a strategy to move to increase the uptake of renewable energy sources.
I see the Chair of the House of Representatives Standing Committee on Environment and Heritage has entered the chamber for this very important debate. I was just saying that it is much to the government’s shame that it has not raised the MRET and that this is having a decidedly negative impact on the renewable energy industry. Let me cite one example. Just recently a company called the Roaring 40s announced that they were halting work on wind farm projects in Tasmania and South Australia. They cited as their reason the government’s refusal to increase the MRET. Ironically, just last month this same company announced a $300 million deal with China to provide three wind farms there. So it is not surprising that the clean energy industry is packing up its bags and looking for opportunities in other countries. What a shame. In the words of the managing director of that company from his press release:
The MRET measure introduced in 2001 successfully kick-started the renewable energy industry in Australia. However, without an increase in the initial target level, electricity retailers are reluctant to commit to long-term REC deals which are crucial in financing renewable energy projects. Consequently, further substantial investment in the renewable energy industry is unlikely without an increase in the target.
They are not alone in expressing that point of view. We have not just failed domestically by not increasing that target but also taken Australia out of the main game of the huge growth in renewable energy in the international arena. We are missing out on significant benefits that would have come to our nation’s economy from the ratification of Kyoto—in particular, through opportunities under the Kyoto protocol’s clean development mechanism and the joint implementation program. Only by being part of Kyoto can Australia seize the economic benefits of the worldwide push for cleaner and more renewable energy. Had we ratified Kyoto, this government would have provided Australia with access to the trillion dollar industry of carbon friendly technologies that is emerging globally, and ratification would have sent a clear message to our business sector that, as a nation, we are taking a planned approach to shifting our economy onto a low carbon growth trajectory, one that will ensure the quest for low carbon growth becomes a significant driver of innovation.
Interestingly enough—and appallingly, I think—the business community is now ahead of the government on this issue. We saw recently the data produced by the Australian Business Roundtable on Climate Change and the economic modelling undertaken which showed clearly the economic cost of inaction on climate change. Their modelling and arguments quite rightly point to the fact that rising greenhouse gas emissions threaten our entire economy and, in particular, that temperature increases will put two of Australia’s largest exporter earners—our tourism and agricultural sectors—at great risk, threatening up to a quarter of a million jobs with a no-change attitude. They argue, and any sensible person would realise, that the longer the delay the higher the final bill will be. Their modelling showed that, with early action, setting us on the path to reduce emissions by up to 60 per cent by 2050—which is what we really need to be looking at—was achievable without halting economic growth or job creation in this nation. In other words, it could be a win-win situation, but every day, every week, every month and every year we delay that final bill will be all the higher—and future generations will be left to pay for it as well.
In Labor’s view, we need to set a price signal on carbon. We have proposed all along that the sensible way of achieving these goals of reducing our emissions would be through the creation of a national emissions trading scheme. It is a proposal that has not been taken up as yet by the Howard government, although I do read now and again different opinions on this issue reflected at the cabinet table, so I am hoping that good sense will ultimately prevail. We are going to keep on your hammer because without a national emissions trading scheme we are not going to see the end results that we all know are desperately needed.
I cannot believe our lack of action when compared with China. Just recently, as we know, the Chinese parliament committed their country to a 15 per cent renewable energy target by 2020. China has now become a world leader in solar cell production. The 2008 Olympic Games in Beijing is being used to stimulate China’s solar energy industry with plans for solar power and geothermal energy to be used at various sites. Contrast this with the sorry plight of solar energy and innovation in Australia.
As our shadow minister often says, we could have been the Silicon Valley of solar but we needed national leadership and we did not get it. If you take, as one example, the solar hot-water system developed at Sydney University, the technology could absorb sunlight very efficiently and work below freezing temperatures. The Chinese saw its commercial potential and grabbed it. It is now a huge part of China’s booming solar market, a market which accounts for 80 per cent of the world’s new solar water heater installation and an even larger proportion of the world’s production. Amazingly, invented in Australia and now made in China, it is nothing short of a national disgrace. More and more of our innovative projects are falling over through the lack of commercialisation and the lack of incentive provided by the government and these companies are packing their bags and moving offshore.
I am not going to speak to all the details of Labor’s policy. We do believe we have a positive and economically sustainable way of meeting the challenge of reducing greenhouse emissions without hurting the economy and without hurting jobs. We do believe that Kyoto should be ratified. We believe that you have to set targets for greenhouse gas reduction and we believe you cannot achieve those end points unless you have a national emissions trading scheme. We have committed to generate more of our energy from renewable sources by increasing the pathetically low rate of MRET that we now face.
The main point that I want to get across in the debate on this bill is that to avoid the effects of dangerous climate change we really need to get our act together and we need to act now. We need to commit to sensible alternatives that produce cost-effective reductions in greenhouse pollution. I know that alternative renewable energy is never going to displace base load capacity that will for decades to come be driven on coal, but we are an innovative nation. I think some of the pilot projects in clean coal technology and geosequestration really need an added impetus and boost from this government, but it is not beyond our wit as a nation to provide the necessary industry support for wind power, solar power and wave power. I have a wave power demonstration project in my electorate that not only uses wave power to make energy but also has a desal plant attached to it. There is the whole area of biofuels, and we have talked a lot about the importance of ethanol to our future. As the member for O’Connor said in his contribution, the prospects for hydrogen are also important as is the coal- and gas-to-liquid technologies that the shadow minister for resources has talked about.
But instead of being serious about this what do we find? We find just in recent weeks a politically motivated decision by this government to block a wind farm at Bald Hills because it might threaten, over many years, an orange bellied parrot. It is preposterous that we would stop a wind farm development on the grounds of a tiny risk that a small number of orange bellied parrots could be killed when we all know that climate change could wipe out this species and many others within 50 years. I think we have to get the balance right. I cannot understand why previous wind farm projects that were in the vicinity of orange bellied parrot colonies were approved with sensible management plans attached to them. You have to say that this was a decision driven by political expediency and nothing more than that.
The government needs to be doing more about energy efficiency, which is also part of the equation. You only have to look at a recent UK Climate Group report called Carbon down profits up. It showed that 43 companies have significantly reduced greenhouse gas emissions and by doing so saved themselves a total of $15 billion. So it makes good business sense as well as good environmental sense. DuPont, as one example, has cut its emissions by over 70 per cent in recent years, at the same time as increasing production by nearly 30 per cent and saving more than $2 billion in the process.
I want to say something in winding up about the issue of nuclear power. There appears to be a growing chorus of opinion, championed by the PM, who has suddenly discovered that global warming is a serious issue, that believes nuclear power is now the answer to the huge challenge of climate change. I believe that proponents of nuclear energy have always exaggerated the potential of nuclear energy while playing down the risks and consequences. Nothing has changed in this debate in recent times. I am very pleased and so is my community that the leader of my party has said that nuclear power is not appropriate for Australia.
The economics of nuclear power simply do not stack up. Australia is fortunate in having abundant and relatively cheap gas, high-quality coal and renewable resources to meet our domestic power needs. In that regard, clean coal technology and geosequestration will have an increasingly important role into the future. But, for me, the economic arguments against nuclear power are overwhelmed by the fact that no-one to date has come up with a solution as to how radioactive waste can be stored safely for thousands of years. From a sustainability perspective, while the nuclear waste issue remains unresolved, the nuclear power industry will be transferring the risks, costs and responsibility to future generations. There is no community in Australia that has to date signified its willingness to be the repository for relatively small amounts of low-level research and medical waste, let alone the high-level waste generated by nuclear power stations. And which member of parliament has volunteered to have a nuclear reactor situated in their electorate?
Nuclear power is dangerous. There continues to be the risk of accidents. Look at the recent leaks at Lucas Heights and remember Chernobyl. It is a grim reality that 20 years later 350,000 people remain displaced and three-quarters of a million hectares of productive land remain off limits, with experts arguing that the final death toll could be as high as 24,000 people. On top of that in this very troubled world, you have to add the new possibilities of nuclear terrorism. Remember that uranium, like oil, gas and coal, is a finite resource. Renewables are our only ‘in-finite’ energy options. In a recent paper, the President of the Australian Conservation Foundation, Professor Ian Lowe, concluded with the following quote, which for me sums it up:
We are 50 years into the best funded development of any energy technology, and yet nuclear energy is still beset with problems. Reactors go over budget by billions, decommissioning plants is so difficult and expensive that power stations are kept operating past their useful life—
as Tony Blair well knows—
and there is still no solution for radioactive waste. So there is no economic case for nuclear power. As energy markets have liberalised ... investors have turned their backs on nuclear energy. The number of reactors in western Europe and the USA peaked about 15 years ago and has been declining since. By contrast, the amount of wind power and solar energy is increasing rapidly. The actual figures for the rate of increase in the level of different forms of electricity supply for the decade up to 2003 are striking: wind nearly 30 per cent, solar more than 20 per cent, gas 2 per cent, oil and coal 1 per cent, nuclear 0.6 per cent. Most of the world is rejecting nuclear in favour of alternatives that are cheaper, cleaner and more flexible. This is true even of countries that already have nuclear power. With billions already invested in this expensive technology, they have more reason to look favourably on it than we do.
It is time our Prime Minister got the message. We must act now to reduce our greenhouse gas emissions. The citizens of Australia must demand this of the Howard government. We must take part in the trillion dollar industry emerging globally in renewable energy technologies. Instead of the Prime Minister’s focus on nuclear power, which is really nothing more than a diversion, we should be out there supporting our clean energy industries in the manner suggested by the opposition in the second reading amendment to the bill moved by our shadow minister.
May I first acknowledge the terrific job which the member for Throsby does on the Standing Committee on Environment and Heritage. The Renewable Energy (Electricity) Amendment Bill 2006 will implement the government’s agreed response to the review of the operation of the Renewable Energy (Electricity) Act 2000. The Renewable Energy (Electricity) Act 2000 established the mandatory renewable energy target measure which came into operation in 2001 and is scheduled to end in 2020. The mandatory renewable energy target is the first of its kind in the world. The UK’s Renewables Obligation scheme, which began in 2002, is similar. However, it is not mandated through legislation and there are no penalties for noncompliance.
The mandatory renewable energy target places a legal liability on Australian electricity retailers and other large buyers of electricity to contribute proportionately towards annual targets for additional renewable energy. This annual target will increase to 9,500 gigawatt hours in 2010 and remain at that level until 2020. This is expected to push the amount of renewable energy used in electricity generation from 10.7 per cent in 2000 to 12.7 per cent in 2010.
How does the scheme work? The key features of the Mandatory Renewable Energy Target scheme are renewable energy certificates. These certificates are created by accredited power stations that generate power from renewable energy sources in excess of a baseline amount. This baseline amount was calculated on power stations which were operating before the act came into effect in 2001 to encourage generation of power above their existing level of production. One renewable energy certificate is created for every one megawatt hour of renewable energy power generated above this baseline.
Some installations of solar hot-water heaters and small renewable energy generation units may also be eligible for renewable energy certificates. Deemed renewable energy certificates for both solar water heaters and small generation units may be either created and traded by the owner of the system or assigned to a registered agent. That means that, when you purchase an eligible hot-water system, the associated certificates may be registered and sold at a later date by you or passed on to the seller of the hot-water system who will give you a rebate or price reduction of some kind. In this case, the seller will then own the certificates. These renewable energy certificates are the ‘currency’ of the Mandatory Renewable Energy Target. Once created they are registered with the Office of the Renewable Energy Regulator and placed on the green electricity market or sold via bilateral deals. The certificates are in an electronic format and each has its own unique code. Any organisation or individual can purchase renewable energy certificates on the market. Once registered, these renewable energy credits can be ‘banked’ indefinitely in anticipation of an increase in market value. The final act in the life of the certificates is when they are surrendered to the renewable energy regulator.
Out of interest, the trading price of a renewable energy certificate in March this year was $20.50 and as of January 2006 approximately 14.6 million renewable energy certificates had been created since the start of the scheme—5.3 million of these from hydro power, three million from solar hot-water heaters and 2.6 million from wind power. Australian electricity retailers and other large buyers of electricity are required to meet targets of renewable energy acquisition by purchasing certificates through the market. For example, if an electricity retailer purchases 10 per cent of all electricity available nationally, they must meet 10 per cent of the graduated target for that year. They discharge this liability by surrendering the required number of certificates to the renewable energy regulator.
The graduated target is issued by March each year and a renewable power percentage is calculated for that target to be reached. The renewable power percentage effectively determines what an electricity retailer’s liability is for that year. For example, in 2006 the target is 4,500 additional gigawatt hours of power from renewable energy sources. In order for this target to be reached, the renewable power percentage has been calculated at 2.17 per cent. So if an electricity retailer, the liable party, purchases 100,000 megawatt hours of electricity in 2006, they must surrender 2,170 renewable energy certificates to fully discharge their liability.
As the renewable power percentage is calculated in advance, it is based on estimates of the total amount of liable electricity in upcoming years. In some years the percentage may result in more certificates being surrendered than the specified target; in other years the percentage may be set too low, resulting in fewer certificates being surrendered. This underachievement or overachievement against the interim target is corrected by adjusting later years’ renewable power percentage.
If liable entities do not surrender sufficient renewable energy certificates, the shortfall charge is $40 per megawatt hour. So if the retailer were to be short 1,000 renewable certificates, they would be liable for a charge of $40,000. However, if the shortfall is less than 10 per cent of the total liability they may make up the shortfall in the next year.
In March 2003 the mandatory renewable energy target scheme was put under detailed scrutiny by the Tambling committee, with the findings being presented in September 2003. Many of the recommendations dealt with refinements to the mandatory renewable energy target scheme to allow it to work more effectively and transparently, as well as supporting many of the recommendations that were included in the Renewable Energy (Electricity) Amendment Bill 2002. The 2002 bill sought to improve the administrative integrity, effectiveness and efficiency of the scheme, but it was stalled in the Senate in late 2002.
The government has agreed to many of the recommendations to improve the scheme and is implementing these improvements in this bill. However, the government did not agree to the recommendation of extending the scheme from 2010 to 2020 and of increasing the target to 20,000 gigawatt hours for 2020. Why? A target of 20,000 gigawatt hours in 2020, whilst providing a subsidised growth path for renewable energy, would impose significant economic costs through higher electricity prices. The recommendation would double the current projected cumulative economic cost of the scheme to over $5 billion by 2020 in net present value terms. The Australian government does not believe these costs can be justified. As stated in the June 2004 energy white paper, Securing Australia’s energy future:
MRET will continue to play a significant role in supporting the renewable sector, and will underpin $2 billion in renewable energy investment in the period to 2010. The scheme has played a important role in demonstrating the potential for renewable technologies, in reducing renewable energy project costs and facilitating the development of ‘soft’ infrastructure such as regulatory and market structures. In increasing renewable capacity, the scheme has largely supported currently available technologies, and provides little direct support for the development of new low-emission technologies.
The Australian Government considers a better path is to build on the successful outcomes of MRET to more directly promote the development and demonstration of a broader range of low-emission technologies, and more aggressively address the impediments to the uptake of renewable energy. The $500 million Low-Emission Technology Development Fund and the $100 million in funding to promote the strategic development of renewable energy technologies are key parts of the strategy, as are the Solar Cities Trials.
What are the recommendations of the review being implemented in this bill? The bill contains measures that will improve market transparency and business certainty by: introducing a time limit following renewable energy generation during which the certificate for that generation must be created; allowing the publication of additional data relating to renewable energy generation, the baselines allocated, and certificate shortfalls of liable parties; and providing a process for granting of provisional accreditation for power stations before they are built. This will enable participants to make better informed investment and trading decisions. The review also reported that the uptake of bioenergy under the measure was lower than expectations. To assist with this the bill simplifies the eligibility requirements for energy crops and plantations, and removes any anomalies that have occurred in the treatment of municipal solid waste.
The bill encourages the greater participation of solar technologies by broadening the eligibility of solar water heaters and by simplifying deeming arrangements for solar small generation units. The bill also provides for the surrender of renewable energy certificates by persons who do not have a liability. Individuals or organisations may purchase certificates and voluntarily retire them from circulation. This could be done for a wide range of reasons, including for philanthropic purposes, and will encourage additional renewable energy generation. The bill allows the minister to determine the eligibility of new renewable energy sources to encourage emerging new technologies.
This bill clarifies the list of eligible energy sources by removing some items which were not sources as such but rather processes and technologies for transforming energy sources into electricity—for example, fuel cells are removed. The eligible sources list will now include: hydro; wave; tide; ocean; wind; solar; geothermal-aquifer; hot dry rock; energy crops; wood waste; agricultural waste; waste from processing of agricultural products; food waste; food-processing waste; bagasse; black liquor; biomass based components of municipal waste; landfill gas; sewage gas and biomass based components of sewage; and any other energy source prescribed by the regulations.
My electorate of Moore, like that of the member for Throsby, is involved with a renewable energy power station which is accredited with the scheme. The waste disposal facility at Tamala Park uses biomass from the electorate of Moore as well as from other electorates as its energy source and it taps the landfill methane to generate electricity via a reciprocating engine.
There are many fascinating technologies being developed to harness renewable energies, and I am sure that our energy mix in the future will involve many of them. We are also seeing some of these technologies combining with current energy sources. Rather than the current debate of fossil versus renewable we will see in the future a combination of best technologies and resources to produce cost-effective energy with next to zero greenhouse and pollution emissions.
An example of this is solar thermal energy. Solar thermal power plants generate heat by using lenses and reflectors to concentrate the sun’s energy. Solar thermal energy is emerging as a cost-competitive source of electrical power, especially as it can combine beneficially with current energy sources such as coal, gas, biomass, photovoltaics and wind power. As you are all aware, Australia has abundant reserves of both brown and black coal, and we derive 85.5 per cent of our electricity from this energy source. In view of this, any other energy source that can combine with coal power in a beneficial way is exciting news.
Solar thermal power is suitable for base and peak load power and for distributed or stand-alone generation. In contrast to other types of renewable energy generation, the energy from solar thermal energy can be stored far more cheaply in the form of heat, as well as providing more continuous power. It can provide supplementary steam energy to bolster the efficiency of coal fired power plants and cut greenhouse emissions. It can also give the low grade energy needed to filter CO out of the exhaust gases of existing coal and gas fired power stations for long-term storage.
A major solar-coal trial is taking place at Liddell power station in New South Wales for extra steam production, and CSIRO’s National Solar Research Facility in Newcastle is exploring the use of concentrated solar thermal technology to reform methane from natural or coal bed gas to make synthesis gas. Synthesis gas is a mixture of hydrogen, carbon monoxide and carbon dioxide. This process is being used for power generation, for production of industrial chemicals or transport fuels and for generating hydrogen for power production. It also has the added bonus of taking off the CO in a pure stream for long-term sequestration.
The innovative mandatory renewable energy target scheme has been successful to date, and there has been significant investment in the renewable energy sector as a result. This bill helps streamline the operation of the scheme, ensuring that it will continue to be successful in encouraging further generation of electricity from renewable energy sources.
I welcome the Renewable Energy (Electricity) Amendment Bill 2006. Renewable energy is an increasingly important source of energy for securing Australia’s energy needs. Energy in all its forms is the lifeblood of a modern economy. It is an essential ingredient in the production of just about every good and service that you can imagine. Electricity itself has fast become a consumption good.
I also welcome the second reading amendment moved by the member for Grayndler. It is important that, in any debate about the security of Australia’s energy future, consideration is given to the impact of energy consumption on the environment. It is important that both sides of the energy equation—production of and demand for energy as well as its environmental impact—are always considered. I will return to some of these comments a little later.
The bill we have before us today seeks to introduce a time limit following the renewable energy generation, during which renewable energy certificates for that generation must be created. The bill also enhances the market transparency by allowing for the publication of additional data relating to renewable energy generation, the baseline allocated to power stations that were in operation prior to the announcement of measures and the additional information on the liable parties’ renewable energy certificate shortfalls. Quite frankly, they are very important. But this bill also provides the opportunity for the participation of bioenergy and solar energy technologies to access renewable energy certificates—again I would say a very important development.
The size of the contribution of renewable energy production to Australia’s total electricity supply is relatively low. That stands to reason, given the abundant supply of coal that we have available to us in Australia. In fact, in 2004 the bulk of Australia’s electricity was generated by burning coal. Black coal production at that stage was responsible for about two-thirds of Australia’s electricity demand, and brown coal was responsible for supplying about a quarter of the country’s electricity demand. Less than one per cent of Australia’s electricity, according to the Electricity Supply Association of Australia, was generated from oil or other sources.
It is disappointing that this bill seeks to change only the administrative arrangements associated with renewable energy. It is also disappointing that the government has acted to gag this debate, because the renewable energy sector investment that is needed, the benefits that can be achieved and the difficult issues that need to be considered with climate change and energy security are not being treated with the level of seriousness they deserve. I do not know whether it is a product of the government’s single-mindedness when debating Australia’s energy future or just some dislike for the renewable energy sector, but it seems to have some sort of objection to providing any sort of support for this industry.
One thing is looking reasonably certain when it comes to the government and debate about Australia’s energy future: the government is pretty willing to put all its options in one basket. When the government first announced the mandatory renewable energy target in 2002, it was set up as a percentage. In fact, in his second reading speech, Minister Campbell said:
Electricity retailers and other large electricity buyers will be legally required to source an additional 2% of their electricity from renewable or specified waste product energy generation.
From its earliest form, the MRET worked or at least it seemed to work. The renewable energy sector got off to a flying start. Investments were made. Not all those who had participated in that industry did so successfully, but funds were being committed and investments were being made. For the first time, the MRET at that stage was target based. It was very clear that the targets had to be met in terms of generating tradeable certificates, because they were underpinned and supported by a penalty regime. I have to admit that it was an innovative policy and, as I understand it, a policy that was adopted by many other countries. The MRET provided for the entry of a policy instrument that provided an environmental solution in a national energy market. That is not an insignificant step, and I am sure most people would agree. But obviously things change, particularly the design of the MRET scheme. As I said initially, the MRET scheme was originally conceived as a market share target, but it is now more like a gigawatt hour target. As some people have said, once this happened it became almost a dead target.
A fixed target such as a gigawatt hour target cannot of itself act to increase the market share of renewable energy sources accounted for, as all a fixed gigawatt hour target will allow us to achieve is renewable energy to at least keep pace with growing energy demands—not exceed them, not to make inroads into them but to just keep pace. The MRET has enabled further development in an innovative industry and one that makes a significant contribution to the Australian economy. I can attest to that on a personal basis, having worked with a company which was very dependent on generating energy tradeable certificates in order to commit funds from their investors to renewable power generation.
Despite the advances in renewable energy development, this government risks stagnation of the entire industry. Australia risks falling behind its global competitors when it comes to addressing the energy challenges of the future. Australia also risks stagnating industry, its capabilities, its technology, its skills and its intellectual property. Despite getting off to what I consider to be a good start, when it comes to the renewable industry sector the government’s failure in energy policy poses a serious risk not only to the future of the Australian renewable industry but also to Australia’s energy and electricity future.
It is important that Australia can stand on its own two feet when it comes to the production of electricity not only to support our lifestyle but to support our economy. It is disappointing to see that, with so many other technologies on offer and so many other options for the ongoing supply of electricity in Australia, the Prime Minister and his government are wedded to only one. It is disappointing that the Prime Minister is wedded to a position whereby he is not prepared to ratify the Kyoto protocol. He continues to cling to the argument that meeting those requirements will be damaging to our economy yet, when he addressed the Asia-Pacific climate pact, he indicated that Australia can achieve the same outcomes as Kyoto without damaging the economy. When you consider both approaches, it does not lend itself to making a great degree of sense. The government cannot work out whether it is Arthur or Martha when it comes to climate change, as long as we have nuclear power in Australia. A Labor government would provide the leadership to protect the environment and Australia’s future.
This government is ignoring other technologies available to us that should be part of a general suite of solutions to our energy future. Technologies such as geosequestration—the process of carbon dioxide capture from power generation processes and storing it underground—is not being taken seriously by this government. Australia has huge resources of coal and a huge power-generating capacity invested in the coal industry.
As I noted at the outset, power generated from coal accounts for nearly two-thirds of Australia’s power demands. Geosequestration is already occurring in other parts of the world and has been for quite some time. It is my understanding that it might not be economical right here and now in Australia, but it has to be considered economical or, at least, essential in the not too distant future. We need to constantly address and achieve energy security in this country. Importantly, we have to have a vibrant energy policy which looks at not only demands and supply but also, as I indicated earlier, its impact on the environment.
Australia has an abundance of coal resources—as I understand it from publications I have read, about 800-years supply—yet coal and clean coal technologies are not being considered by this government as part of a suite of technologies that are available to secure Australia’s energy future. Coal will remain the dominant source of power generation in this country for some time to come. That is why it is so important that cleaning up coal is not dismissed as simply pie in the sky. Geosequestration, gasification and other technologies present opportunities to expand the supply opportunities available to us, while taking positive steps to address climate change.
In the very short time that I have left, I would like to acknowledge the contribution today of the member for Batman, who sought to introduce into the debate Australia’s energy security, particularly as to how we should extend the argument to transport fuels. I could not agree with him more. All members in this place know the pain that our constituents are currently feeling at the petrol pump. Every week the price of petrol seems to go higher. In fact, only yesterday a poll was released that indicated that the price of petrol has had a dramatic impact on the spending habits of Australians.
I would like to acknowledge the contributions of all colleagues to this debate on the Renewable Energy (Electricity) Amendment Bill 2006. This bill before the House implements the government’s response to the 2003 review of the Renewable Energy (Electricity) Act 2000 and reconfirms the government’s commitment to the mandatory renewable energy target under what is otherwise known as the MRET scheme. The act is a world-leading piece of legislation that a number of countries have modelled for promoting renewable energy through a market based trading system. The MRET, which requires that minimum amounts of additional renewable energy be sourced by wholesale electricity purchasers, is a significant greenhouse abatement measure, driving in excess of $3 billion in renewable energy investment to 2010 and increasing renewable energy generation by more than 50 per cent, compared to pre-MRET levels. Since the measure commenced on 1 April 2001, over 230 power stations have been accredited, encompassing small and large producers using a wide range of fuel types.
To assist market transparency, the bill introduces a time limit following renewable energy generation during which renewable energy certificates for that generation must be created. The bill also allows for the publication of additional data relating to renewable energy generation such as existing baselines and additional information on a liable party’s renewable energy certificate shortfalls. The bill also provides a process for granting provisional accreditation from the renewable energy regulator prior to commissioning and introduces a time limit for the regulator’s consideration of applications for accreditation of generators.
The bill increases opportunities for bioenergy and solar technologies. Opportunities for bioenergy are increased by enabling renewable energy certificates to be created for a broader ranger of renewable material, broadening the scope of wood from plantations to be eligible as a renewable energy source under the measure. Amendments in this bill allow more solar water heating systems installed to be eligible to create renewable energy certificates and expedite the process by which certificates can be claimed for new solar water heater models as they become commercially available. In addition to these amendments, the bill provides for the surrender of renewable energy certificates by persons who do not have a liability under the act. This will allow interested individuals or organisations to purchase certificates and voluntarily retire them from circulation. The bill also contains a range of administrative amendments to provide greater clarity about what is an eligible renewable energy source, what is an accredited power station and what is a relevant acquisition of electricity. Similar amendments to vary or amend documentation or decisions allow the regulator to address mistakes made by participants or respond to changing circumstances, additional information or the results of monitoring and compliance actions.
Concerns have been raised by the opposition that the bill does not go far enough and that the government should increase the mandated renewable energy target. However, increasing the MRET would impose significant economic costs through higher electricity prices in Australia. Targets of five per cent and above could increase the cumulative economic costs of the MRET by $10 billion. The decision not to increase the target should also be seen in the context of the government’s strategic focus as articulated in the energy white paper which was released in June 2004. The white paper focuses on developing a broad range of the low-emission technologies needed for deployment at scale in the future to make the deep cuts in the greenhouse emissions that scientists tell us will be needed over the next several decades. The government considers a more effective path to a sustainable energy future is to encourage a broad range of low-emission technologies, including renewables, and to further address barriers and impediments to the uptake of renewable energy. The energy white paper contains a number of new initiatives and articulates an effective pathway to a sustainable energy future.
Concerns have been raised by sections of the renewable energy industry that the gaming provisions in the bill may unintentionally penalise or discourage, for example, sugar mills and refineries from optimising or expanding their core operations or improving their electricity generation efficiency and capacity. This is not the government’s intent, as is indicated in the explanatory memorandum to the bill. To clarify this situation, the government amendment circulated in my name will allow regulations to be made which will specify certain matters that the regulator must take into account when making his or her decision on gaming. I table the supplementary explanatory memorandum. This government amendment has the support of the sugar industry and will provide some certainty to the industry in relation to this issue. I acknowledge the input and advocacy of Senator Boswell on this matter and encourage the ongoing engagement of the sugar industry with the government to ensure that the concerns about unintended consequences—(Time expired)
The member did give me the courtesy of advising me in advance of his intention to do this. I make it clear I am not very comfortable with this procedure but I am aware of the precedent and I am aware of the advice that the member has received, so I will hear him.
Leave is granted. Can I make it clear that I think this is a matter that the Procedure Committee might need to look at because it does not reflect the intention of the House and the resolution which it carried. But there is a precedent. The member for Calare has acted in accordance with it and so has the minister.
The speech read as follows—
This bill represents another lost opportunity for this government to get serious about supporting renewable energy sources for the benefit of future generations of Australians.
In the debate on the Renewable Energy (Electricity) Bill 2000, which introduced the Mandatory Renewable Energy Target – the MRET – I expressed my concern about the adequacy of the government’s target of an additional 9,500 gigawatt hours of electricity from renewable sources per year, especially when the original target was to be an additional 2% rather than a set figure.
Apart from the fact 2% target was in itself inadequate I was concerned that as our electricity output increased, the 9,500 megawatt hours target decreases in percentage terms.
The debate about the MRET and greenhouse gas emissions has always been skewed by interpretations of figures, usually by the government trying to put us ahead of the game in comparison to greenhouse gas emission levels in the early nineties.
The parliamentary secretary’s introductory speech on this bill still attempts the same trick, celebrating the 9,500 gigawatt hours target as “an increase of over 50 per cent above the 16,000 gigawatt-hour level of renewable electricity generated in 1997”.
This debate should not be about fiddling the figures against the past, it should be about the future. The future is why we need renewable energy resources. If future generations are to enjoy the same access to electricity that we take for granted – we need a much stronger, ongoing commitment to renewable energy sources now. Indeed if we take the better option of combining renewable energy development with sensible conservation measures we’d be well on the way to sustainable energy use.
The parliamentary secretary went on to celebrate the fact the current MRET would “bring the renewable share of electricity consumption in 2010 to around 1 1 per cent.” This is not worth a shout when the original intention of the MRET scheme was to achieve a total renewable energy share of 12.7% by 2010.
The fact we are now almost 2% off the pace bears out my concerns that changing the target from a percentage to a set level of gigawatt hours would result in a lesser share of energy coming from renewable sources.
The bill before us now will continue to do this, as it retains the 9,500 gigawatt hours target and extends its lifespan by ten years to 2020. This is entirely unacceptable.
Even the government’s own review of the MRET recommended the life of the MRET scheme be extended from 2010 to 2020, with the targets increasing to 20,000 gigawatt hours by this time. Though this would still only represent a 2% target, the government did not accept this recommendation.
The 9,500 gigawatt hours MRET for new renewable energy output puts us well behind other countries. The UK has adopted targets for additional renewable energy of 10% by 2010 and 20% by 2020. Germany has a 12% target for 2010, and the US, India and Greece out-strip our current targets.
The MRET review also found the renewable energy sector currently employs 6000 people directly, and employment in the sector is growing. Undoubtedly such growth would be accelerated with a more robust MRET of 10%. This would also more appropriately reflect the Prime Minister’s aim for the MRET scheme, which he stated in 1997, was to: “accelerate the uptake of renewable energy ... and provide a larger base for the development of commercially competitive renewable energy.”
This is the energy debate we should be having – not the political distraction of the Prime Minister’s nuclear debate. Our lack of commitment to alternative and renewable energy sources is not only pathetic but inherently dangerous and ominous for future generations who will have to deal with our lazy negligence.
Nuclear power stations cost an absolute fortune and consume much energy depleting fuel in their construction. They take 10 to 15 years to get up and running and then use huge amounts of energy to extract the finite and very impure uranium ore required to run them. There is also the little problem of what to do with the indestructible radioactive waste.
Why not encourage a mix of wave, wind, hydrogen, and most importantly solar energy initiatives? Because these are not in the interest of the mining and oil sectors.
Let’s talk about solar energy, in which we once led the world until a lack of interest and support from successive governments saw our technological advances go offshore. Forward looking governments in Europe took up our advances while we continued to promote quarrying of climate-destroying minerals for short-term and short-sighted economic gain.
As a global energy crisis looms large, our government and most western governments go for a quick fix nuclear option, followed by emerging economies like India, China and now Indonesia – sitting as it does on an earthquake fault line. All alternative energy sources have their limitations, be they wind, ethanol or hydrogen, but a source of infinite energy shines on the planet every day and has the potential to fuel our homes and our transport.
We need to pick up our development of solar technology. It is not completely off the drawing board, but one can be forgiven for not knowing anything about it, given the government’s lack of commitment to the issue.
We have schools at both the University of NSW and the ANU making significant inroads in the development of photovoltaic technology, especially in reducing the cost of producing photovoltaic cells, which is attracting overseas attention. Our government should be doing what it can to encourage such developments here in Australia rather than lose the technology, and those who created it, offshore.
Until the government gets serious about its mandatory renewable energy targets and sanctions at least a 5% target for 2010, or even better 10%, I cannot support this bill.
The amendment is in order. The resolution of the Leader of the House makes it clear that, as is standard in this matter, government amendments circulated up to two hours before the conclusion of the debate are to be considered and will be considered in the subsequent resolution when I put it to the House.
Original question agreed to.
Bill read a second time.
Message from the Governor-General recommending appropriation announced.