Tuesday, 20 June 2006
Renewable Energy (Electricity) Amendment Bill 2006
Debate resumed from 2 March, on motion by Mr Hunt:
That this bill be now read a second time.
The Renewable Energy (Electricity) Amendment Bill 2006 makes some administrative amendments to the Renewable Energy (Electricity) Act 2000. What it does not do is advance the cause of renewable energy in this nation. The government recently established an inquiry into nuclear energy for Australia and is determined to impose nuclear power plants and nuclear waste dumps on Australia. Guillotining this debate on renewable energy highlights the hypocrisy and the bankruptcy of this government when it comes to addressing climate change. When Australians need a responsible, forward-thinking and balanced approach to climate change and renewable energy, all we get is this weak piece of legislation.
Labor supports the bill. There is not much in it that you can oppose, because it does not do much, but we are very disappointed that the bill is merely tinkering with administrative arrangements for renewable energy when greater investment and action is required. This bill shows that, instead of being a responsible steward for our environment and our economy, the Howard government has put climate change in the too-hard basket.
The 2006 budget did not mention climate change, for the 11th year in a row. The budget had no initiatives for clean renewable energy. This bill is consistent with the government’s irresponsible approach of doing very little to avoid dangerous climate change—the greatest environmental challenge facing the world. There is overwhelming scientific evidence that climate change caused by carbon pollution is making Australia hotter, the ocean warmer and our cities and towns drier. The CSIRO says climate change is directly affecting the water supply of every city and town and is threatening the Great Barrier Reef and Kakadu. The science is pretty clear that climate change increases the intensity of cyclones and hurricanes. Climate change means we will have more category 4 and category 5 cyclones. If climate change remains unchecked, it will severely damage Australia’s agricultural and tourism industries while also impacting on many Australians through health effects, weather events and further water restrictions. There is no doubt that recent steep rises in temperature can be put down to human activity.
But the government’s hypocrisy in having the Parliamentary Secretary to the Prime Minister, who is responsible for water, gagging a debate on renewable energy, which has a direct impact on climate change and therefore on water, shows the bankruptcy of the government’s approach. Surely, the recent destruction caused by Cyclone Larry should have been a reminder of the severe weather we must prepare for at home as our planet warms. If for no other reason, Australia’s self-interest dictates we must support clean renewable energy. To do so is prudent and not to do so is irresponsible.
As well as understanding the immediate and long-term threat of climate change, the most important thing to understand about dangerous climate change is that it can be avoided. I repeat: dangerous climate change can be avoided. If governments, communities and businesses work together to get us out of the heat trap which is developing around the world, we can avoid dangerous climate change. Humans have become a force of nature. We are changing the climate, and what happens next really is up to us. Climate change has been caused by humans; but, thankfully, solutions already exist to address it. We can and should act now to address the problem.
That is why the bill before the House represents such a failure of policy by the Howard government. By bringing forward a bill that does nothing to increase the use of renewable energy, the government has failed. Renewable energy is universally acknowledged to be an important part of any climate change strategy. However, instead of supporting clean energy projects and smart, efficient technologies, the Howard government is taking Australia the other way. Instead of a balanced and prudent approach, the Howard government is trapped by old thinking and irresponsible policies.
It is hard to believe but in Australia there is still no national climate change strategy. The report released last month by the Australian Greenhouse Office showed, once again, the Howard government’s failure when it comes to reducing our greenhouse gas emissions. It showed that, if you exclude land use changes made in New South Wales and Queensland by the state Labor governments, greenhouse gas emissions in Australia increased by 25.1 per cent between 1990 and 2004. We hear my opposite number, Senator Ian Campbell, the parliamentary secretary and many members of the government often speaking of the need for a 60 per cent decrease in greenhouse gas emissions by 2050. It is the scientific consensus that that sort of reduction is needed to avoid dangerous climate change; yet the reality of Australia’s performance is absolutely disastrous—a 25.1 per cent increase in emissions between 1990 and 2004. A government that is complacent about climate change places our environment, our economy and our vital infrastructure at risk.
By doing nothing in this bill to increase the use of renewable energy, we just reinforce that. But what is the government doing in order to distract attention from its failure? It is setting up an inquiry to look at imposing a nuclear power industry on Australia. It will not say where the nuclear reactors will go or where the waste from those reactors will go. Of course, you cannot look at the cost of any major piece of infrastructure, such as a nuclear reactor, without looking at where it will go. That is a major part of the cost of imposing on Australia what government advisers say will need to be at least five or six nuclear power plants.
In question time in the House last week, the Minister for Education, Science and Training, who has responsibility for the Lucas Heights nuclear reactor, failed because she did not have any idea about the four incidents that occurred in one week at the Lucas Heights nuclear reactor. The first of those incidents was on Thursday, 8 June—the same day that the chair of the government’s nuclear inquiry, Mr Ziggy Switkowski, stepped aside from the ANSTO board. He intends to return to the board. The inquiry has nuclear proponents as members, with the advocacy of nuclear energy being a prerequisite for appointment to this inquiry. It is quite an extraordinary situation. In the best Yes, Minister fashion an inquiry into nuclear energy is instigated, with all the people on the inquiry being advocates of nuclear energy and some of them having a commercial interest in Australia’s promoting nuclear energy. It is quite an extraordinary situation.
Mr Greg Bourne, the head of WWF, was called while he was overseas—two hours before the composition of the inquiry was announced—and asked to be on the inquiry. That shows two things: firstly, the government were unprepared, given the haphazard way they put together this list; secondly, Greg Bourne refused the invitation to be on this inquiry and described it as a ‘rubbish’ inquiry because it would not be dealing with renewable energy. The key to Australia’s future needs is not about going back to the past, to a discredited form of nuclear energy that creates waste that cannot be dealt with and is uneconomic for Australia; it is about renewables. This bill means we have totally lost the opportunity to move forward with renewable energy and to take advantage of the opportunities to improve not just our environmental performance but our economic position.
Let us look at some practical examples. Last month the Minister for the Environment and Heritage, Senator Ian Campbell, said that it was not a problem that Australian renewable energy companies had to move offshore to China to commercialise their products rather than to produce them here. Two weeks ago I met with the Roaring Forties renewable energy company in Tasmania, which is an offshoot of Hydro Tasmania. After the budget, Roaring Forties announced that it would not proceed with half a billion dollars worth of projects in Tasmania and South Australia because of the government’s failure to increase the mandatory renewable energy target. The Howard government’s policies are destroying Australia’s clean energy industry and jobs in regional Australia. Roaring Forties is the same company that announced a $300 million deal, when Premier Wen Jiabao was here, to provide three wind farms to China. So the situation is such that Australian innovation and renewable energy is welcome in China but it is not welcome in the Prime Minister’s Australia. That is an absolute disgrace.
If you thought the Howard government was not to blame for that, recently the Minister for the Environment and Heritage, Senator Ian Campbell, blocked a wind farm in Victoria because it would threaten one orange-bellied parrot every 667 years. The orange-bellied parrot has not been seen by anybody at the Bald Hills wind farm project, but the minister used his power under the EPBC Act—which is questionable, and I understand will be challenged in the courts because of this—to intervene. Senator Campbell then tried to stymie a Western Australian wind farm, which his own department, after examination, had agreed was a project worthy of support. Instead of blocking clean energy projects, the Howard government should seize the opportunities which are there. Sadly, the Howard government’s approach to renewable energy is all about politics and not about Australian jobs or the environment. The Howard government’s approach to renewable energy is both irresponsible and very inefficient. We have the potential for a stronger renewable energy industry, yet the government’s policies send jobs overseas and cripple our renewable energy market.
The personification of the government’s failure came with the latest Business Review Weekly rich list, which comes out every year. In it you can see where the richest Australians have moved to and from in the previous year. Sometimes they move from No. 10 to No. 8, or from No. 16 to No. 19, but this year there was a spectacular debut. Dr Zhengrong Shi, a dual Chinese-Australian citizen who had never before appeared on that list, debuted at No. 4 on the list of the richest Australians, with a wealth of $3 billion. Dr Zhengrong Shi did his PhD in solar energy at the University of New South Wales. His wealth comes from developing solar energy technology in China. The solar energy technology being used by Dr Shi has made his company, Suntech, very hot property, if you can excuse the pun. It is shameful that Howard government policies have sent great innovative solar energy technology to China—invented in Australia but made in China. What a disgrace. When will the government take action to ensure that Australian ideas in the booming renewable energy market are commercialised in Australia, creating Australian jobs? You have to wonder: why back the toxic, expensive, risky nuclear power industry when Australia has such an abundance of good ideas and other energy sources?
I see Dr Zengrong Shi as the personification of the government’s failure on renewable energy. Let us put it in perspective. This individual dual Chinese-Australian citizen is worth $3 billion in personal wealth. Yet the government would have us believe that the nuclear inquiry is the big issue facing Australia. Uranium exports, which were worth $500 million last year, need to be put into perspective. This one individual is worth $3 billion.
It is for that reason that I will be moving a second reading amendment to the bill. If we are going to meet the challenges posed by climate change and adapt to a carbon constrained economy, planning is the key. We need to act now for the future of Australian society, Australian jobs and business. We need to move towards a modern, clean-energy economy.
The chairman of Rio Tinto, Mr Paul Skinner, has recently called for the introduction of market mechanisms as part of the global solutions to combat climate change. Mr Skinner confirmed that:
... ultimately, the challenge for the global political leadership was how the two components—technology and market mechanism—could be brought together for a long term solution.
Just as science and technology have given us tools to measure and understand the dangers of climate change, so too can they help us deal with them. The potential for innovation and business investment is immense. It is about providing the market based stimulus for the deployment and transfer of clean-energy technologies, the transfer of which the International Energy Agency has estimated at $27.5 billion worth of carbon credits. By not ratifying Kyoto Australia is giving the world a jump-start in this new, dynamic global marketplace.
Australian companies are already being disadvantaged by our exclusion from carbon markets and from the developing renewable energy technology markets. The investment is simply going elsewhere. Our technology and our know-how are heading to China instead of creating jobs at home. More and more we are seeing this occur. More and more our isolation on this issue has become an international embarrassment which makes it harder for us to achieve other environmental objectives. We have seen that recently at the International Whaling Commission.
The Kyoto agreement was hailed by the Prime Minister back in 1997 as ‘a win for the environment and a win for Australian jobs’. The Prime Minister got it right then but he is wrong now. Labor takes a more sensible, practical approach on this issue. We acknowledge that the nature of such agreements is that they are a product of compromise and, like almost every international agreement we are part of, we do not say that it is perfect. We need to think beyond 2012, but by not ratifying Kyoto we are excluding ourselves from the negotiating table of future agreements and undermining our credibility.
It is very hard for Australia to argue that countries such as China and India should take on board targets. Clearly there is a need for the developing world to also look at reductions, just as annex 1 countries to the Kyoto protocol have targets for their greenhouse gas emissions. But there is a reason why annex 1 countries—the most industrialised countries that have created the problem of greenhouse gas emissions and climate change—took the lead. Commonsense tells you that it was important that they move forward in the first instance.
Our credibility is very limited. Australia got the second-most generous target in the world—108 per cent. Only Iceland, at 110 per cent, has a more generous target. Even after the concessions we got on land use being accounted for in reaching our target, Australia said no. I had the privilege of attending the Montreal climate change conference last year. Australia’s credibility, along with that of the United States, was very limited because of that. The alternative that some would put—that of the climate pact—was rejected for funding by the United States Congress. This week it managed to get a total funding contribution from the US government of $4 million, which might pay for a few airfares for people to go to meetings. It is just farcical compared with the main game—the international agreement that is the Kyoto protocol.
The Mandatory Renewable Energy Target was announced in 1997 in the wake of Kyoto. It was implemented in 2001. It has helped the deployment of renewable energy projects and technologies. This has meant that the 2010 MRET target of 9,500 gigawatts of generation has basically been achieved now. MRET stimulated the renewable energy industry, subsidiary manufacturing industries and substantial intellectual property rights that are now being used around the world. The government should have taken advantage of this bill to increase and extend the MRET target. The government’s own review panel, headed by former government senator Grant Tambling, recommended that MRET targets should increase beyond 2010 at a rate equal to the rate before 2010 and stabilise at 20,000 gigawatts in 2020.
To understand why this never happened, and why renewable energy is being strangled in Australia, you have to look at the politics of renewable energy and the genesis of the MRET. When MRET was first announced it was the government’s stated intention that it would increase the market share of renewable energy generation as a percentage by two per cent. This is what the government 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 sources by 2010.
That was Senator Ian Campbell in Hansard on 14 August 2000. However, in its design MRET became a gigawatt hour target rather than a percentage of market share. That is, by making the target a gigawatt hour target rather than as a percentage of electricity generated, the target became a dead target. The result is that market share of renewable energy in 2010 will be approximately 10.5 per cent—exactly the same as it was in 1997. In other words, MRET has not increased the market share of renewable energy; it has simply enabled it to keep pace with our growing demand for energy.
There are many implications of the government’s current dead MRET target. The renewable energy industry is currently facing a significant downturn in project activity and investment. Without an increase, Australia stands at risk of stranding industry capability, technology, skills and intellectual property. We are missing out on great opportunities because of our failure to be involved in the international world. Because of our failure on Kyoto, we are unable to participate in the clean development mechanism, which would allow Australian companies to invest in our region and to gain an advantage that otherwise is not available to them. Because of its failure, Australia cannot receive investment under the joint implementation measures of the Kyoto protocol, which could see great opportunities for investment here in renewable energy and other greenhouse friendly economic activity from those countries that are struggling to meet the targets that have been established. By not ratifying Kyoto, Australia is not able to attract this investment. The fact is that the international emissions trading market is booming as countries like Britain, Germany, Spain and Japan all look for cost-effective ways of meeting their obligations.
The Howard government sees no contradiction in proclaiming that Australia will meet the Kyoto target whilst also claiming that ratification would destroy economic growth. The Howard government signs the vision statement of the Asia-Pacific climate pact, which concludes it ‘will complement, but not replace, the Kyoto Protocol’, but then senior ministers proceed to trash Kyoto. The fact is that the government is two-faced on climate change. There needs to be action. Determining when to act is often as important as determining how to act. There is an opportunity cost of time. As the business roundtable on climate change pointed out, the longer the delay in action, the more expensive it will be—which is why this bill fails so dismally. The government says that its technology will somehow be applied by itself without any economic incentives. That is simply a triumph of hope over experience.
This bill could and should have done far more for renewable energy. All around the world governments are putting in place polices to facilitate its growth. The future for UK wind power was brightened with the July 2003 approval of up to 600 megawatts of offshore wind power by 2010. In Spain, Denmark and Germany alone the expansion of the renewable energy sector has created about a quarter of a million new jobs in the last few years. John Howard’s refusal to ratify Kyoto has meant that Australian companies such as Macquarie Bank are investing in massive renewable energy projects in Europe and Britain. According to Business Review Weekly, Australia is missing out on $3 billion worth of investment due to the inertia of the Howard government. We need effective incentives to drive investment. Growing targets for clean, renewable energy are part of this solution.
The government has also failed with the drafting of the bill. Throughout the investigation of the Senate Environment, Communications, Information Technology and the Arts Legislation Committee Labor senators raised concerns over the antigaming provisions in clause 30D of this bill. We are concerned that those provisions would have some unintended consequences for the sugar industry. This is an issue that Labor and some sections of industry have been pressuring the government over for some months. It is disappointing that government senators on the committee did not accept the clear and cogent arguments made by Labor and industry on this matter.
Today, given that the government has gagged this bill, I suspect that the amendments that have been flagged as being needed by the government are not coming. Perhaps they have been knocked over by the Prime Minister’s office. But I suspect that the government will be back here when we get to consideration in detail moving amendments to its own bill because it has it wrong. So you get it wrong in the detail of the bill. You then leave it on the shelf for a couple of months. Then last night you decide, ‘Oh, we’ve got to bring on this bill.’ When it is brought before the House the first thing that happens is the parliamentary secretary for water, who feigns concern about climate change, moves a gag to stop debate on renewable energy before this House, yet the government still has not even got the legislation right in its detail. That is why I move:
That all words after “That” be omitted with a view to substituting the following words: “whilst not denying the bill a second reading, the House condemns the Howard Government’s complacency over climate change and calls upon the Government to:
- join the established global framework for action against climate change and ratify the Kyoto Protocol;
- establish a national emissions trading scheme so Australians can minimise the cost of adjusting to a carbon constrained economy and enjoy the economic opportunities arising from the global carbon trading market under the Kyoto Protocol;
- ratify the Kyoto Protocol and therefore allow Australian companies to benefit from the Kyoto Protocol’s Clean Development Mechanism and Joint Implementation provisions which encourage and reward renewable energy projects;
- work towards a long-term target of 60% cuts to Australia’s year 2000 levels of greenhouse gas emissions by 2050;
- increase Australia’s investment in proven renewable energy technologies by substantially increasing the Mandatory Renewable Energy Target;
- support greater incentives for the research and development of renewable energy; and
- support measures to improve energy efficiency, such as making an effective 5 star building code the national standard for new homes, and developing partnerships with energy utilities so that they don’t just sell electricity and gas but also help people use less energy and cut their bills”.
Mr Deputy Speaker, I thought you were extraordinarily generous to the previous speaker in allowing him to finish reading his second reading amendment. Were it possible to recycle the hot air uttered by the member for Grayndler, obviously Australia would go some considerable distance towards meeting our renewable energy target. I am pleased, however, to join the debate on the Renewable Energy (Electricity) Amendment Bill 2006. It is widely recognised in the Australian community that renewable energy is a source of energy which we as a nation ought to avail ourselves of. There seems to be a bipartisan approach to the fact that we need to use this renewable energy in a way that we often in the past have not. The requirement for greater energy efficiency and improved access to renewable energy is, quite frankly, one of the most significant issues confronting the world and Australia today. Put simply, mankind must do its best to reduce its reliance on energy, the creation of which has pollution as a by-product, in order to reduce the stress on our planet in dealing with pollutants.
The Australian government is committed to renewable energy, although you would not really think so if you listened carefully to the honourable member for Grayndler. The Australian government understands that, by dedicating ourselves as a nation to the use of so-called green energy sources—such as solar panels, wind farms and the like—we can enjoy the dual benefits of having power and reducing the impact its generation has on the environment. The renewable sources of power are varied and quite remarkable. There are the common, well-known sources—such as hydro-electric schemes, wind farms and solar power—but there are the lesser-known alternatives such as bagasse cogeneration. This is the process by which the waste left over after juice has been extracted from a crop is used as fuel to help power the extraction process. Mr Deputy Speaker Causley, you would be aware that it is quite common in the sugar industry. It is notable that through bagasse cogeneration power left over can be directed to other users. Renewable energy sources also include black liquor, a combustible by-product of the paper production process; landfill gas; wood waste; energy crops; crop waste; food and agricultural wet waste; the combustion of municipal solid waste; gas collected from sewage; geothermal aquifer; tidal energy; waves; and hot dry rocks, to name others.
The value of these renewable energy sources is well recognised in the community. Nine years ago, in 1997—which was only one year after the people of Australia entrusted the keys of office to this government—the government introduced the Mandatory Renewable Energy Target, the MRET. It is administered by provisions set out in the Renewable Energy (Electricity) Act 2000. The MRET scheme outlines the requirement that by the year 2010, and until 2020, the Australian energy producers sector will be producing an extra 9,500 gigawatt hours each year of renewable energy. This is well above the 16,000 gigawatt hours of power that were produced in 1997 when the scheme began, and it has been set as a benchmark from which greater targets can be set. The aim of the MRET is simply to encourage a slowdown in the generation of emissions in energy production and then to maintain it at a targeted level.
Obviously, it will be virtually impossible for a fossil fuel dependent power station to be able to contribute to this target in a physical capacity, but they can contribute thanks to renewable energy certificates. These certificates are created by those power companies which source their power through green means such as those mentioned earlier. The production of one megawatt hour of green energy makes the producer eligible for one renewable energy certificate. The MRET is valuable in that it places a legal responsibility on power producers to actively take part in the overall production of renewable energy. Those power companies that are unable to qualify for RECs through their own power generation methods—(Quorum formed) Thank you to my friend the member for Melbourne Ports for organising a much better audience for this speech. The House rather sadly was starkly empty and, indeed, it is good that so many people came to make sure that this important debate on the Renewable Energy (Electricity) Amendment Bill 2006 was able to continue.
As I was saying before I was interrupted, the production of one megawatt hour of green energy makes the producer eligible for one renewable energy certificate. The MRET is valuable insofar as it places a legal responsibility on power producers to actively take part in the overall production of renewable energy. Those companies that are unable to qualify for RECs through their own power generation methods—the use of coal for example—are given the opportunity to buy the certificates, thereby purchasing a share in the creation of green energy.
These certificates are traded at prices anywhere between $20 and $50 each—but mostly around $25 to $40—depending on quantity and continuity of certificate supply. The sale of the certificates provides an income stream for the producers of renewable energy. Power producers have a responsibility to comply with the renewable energy targets, and must surrender certificates annually to demonstrate that they are actually meeting their particular liability. This is one of the unique markets that have arisen in the contemporary world, such as the international trade in ‘carbon credits’—the buying and selling by countries of the right to burn fossil fuels.
As I mentioned earlier, the drive in Australia towards reduced emissions and greater production of renewable power is governed by the Renewable Energy (Electricity) Act 2000. At the introduction of the act, it was decided that it would be independently reviewed after its first two years of operation. The government’s responses to the recommendations that came out of that review are implemented by the Renewable Energy (Electricity) Amendment Bill 2006, which we are now debating. The bill is designed to improve the effectiveness of the act and the following are among the targets of the bill.
The bill introduces time limits with regard to creating a renewable energy certificate. One of the issues that became apparent during the review of the act was that there was no set time frame between when renewable energy is produced and when the REC needs to be created. The bill suggests a time frame of 44 weeks after the generation of the unit of renewable energy is formalised. The bill will allow provisional renewable energy accreditation for proposed new power generation projects. This will help to resolve a ‘chicken and egg’ type situation. As it stands at present, the Office of the Renewable Energy Regulator is able to give accreditation to those power generators which have met certain criteria, including complying with various Australian and state government regulations. However, the producer may not be able to meet the criteria until its facility is actually ‘up and running’, and this is obviously causing a dilemma. The bill suggests giving provisional approval to projects so that they can begin moving ahead, while the application proper is assessed within a six-week time frame.
The bill also clarifies various definitions in the act in relation to eligible renewable energy sources. It clarifies provisions relating to the claiming of renewable energy certificates in the case of solar hot-water heaters and small renewable-energy power generators. Homeowners can currently indirectly participate in the MRET scheme, and the bill introduces simplified procedures to administer this process. The Office of the Renewable Energy Regulator has quantified the value of domestic renewable energy systems in relation to renewable energy certificates. In addition, the bill streamlines the system by which agents are able to trade in RECs that are created in the domestic sector.
The bill makes room for the entry of new operators in the renewable energy sector, while also making provision for changes to the national electricity market. The bill suggests the introduction of new powers for the Renewable Energy Regulator, enabling it to collect information that will assist in effective monitoring of power producers, ensuring they comply with the legislation.
It is important to encourage increased production and use of renewable energy in Australia. The renewable energy certificates scheme has been helpful in bringing about a change in mindset to this issue within the power industry. It is very important that this system is not allowed to be abused, so safeguards are important. The bill proposes that accreditation for a producer of electricity can be suspended in cases where its reported output of renewable energy is manipulated so as to create extra renewable energy certificates without an actual increase in its production of renewable energy.
The provisions of the Renewable Energy (Electricity) Amendment Bill 2006 will help to increase further the effectiveness of the act in encouraging and administering the continued growth and development of the renewable energy sector. This is an important, ongoing step and the government ought to be given credit for it. The outcomes which will flow from the implementation of this bill will be very positive for the energy future of Australia. I commend the bill to the House.
I rise this afternoon to speak on the Renewable Energy (Electricity) Amendment Bill 2006. In doing so, I indicate that the bill to a large extent implements some of the recommendations of the 2003 review of the Renewable Energy (Electricity) Act 2000. As I have said on many occasions recently, here unfortunately is yet another example of the Howard government’s tardiness and sloppiness in its attention to the legislative program and to issues of detail. Firstly, I suppose we should think about why it has taken three years to bring this legislation to the parliament—because the energy debate is not only important internationally but also of primary concern to Australia at the moment.
It is interesting to note that, in terms of access to energy, our cold war might have finished, but there is a new cold war; it is about who controls the source of energy throughout the length and breadth of the global community. It is a cause of major tension. We need only think about what occurred in Russia earlier this year, when the Russian government turned off access to gas to a number of countries that historically it had been supplying gas to, with the issue being the cost of gas. It is causing tension, for example, between the United States and China, with exploration going on throughout the world where energy options are available. So I think there should be some urgency in Australia about the energy debate, yet it has taken the Howard government since 2003 to bring forward propositions and suggested recommendations for implementation going to the review of renewable energy in Australia. This is merely another example of arrogance by the Howard government 10 years on. The member for Fisher has talked about the keys to the cabinet room. Perhaps it is time that those opposite lost the keys to the cabinet room, because they are not taking seriously some of these important economic debates that Australia should be involved in.
I also note unfortunately that, as the result of a procedural motion moved by the Howard government at the commencement of this important debate, many speakers on both sides of the House will be denied the opportunity to contribute to it. The guillotine has been used yet again, as it has been used consistently over the last couple of parliamentary days, to deny the representatives of the Australian people their opportunity to contribute to debates about their future. The debate about renewable energy is part of the debate about our future. It is not only a debate about cleaner energy in Australia; it is also a debate about additional energy at a time when energy demand in Australia is growing—in the same way that energy demand internationally is growing. If you have any doubts about that, just think about the growth in energy demand in our backyard, in our own region, in countries such as China and India. I believe it is time that the Australian community gave the Howard government a message—that they think, as a matter of courtesy, their representatives ought to be allowed to participate in these important debates in their House, the House of Representatives, the chamber in which governments are formed.
That aside, the long list of speakers who desire to contribute to this debate indicates the importance with which members on both sides of the House regard this debate about renewable energy. They care about Australia’s future energy security and supply diversity and they also indicate, by their willingness to speak in the debate, their concerns about climate change and the environment. Having said that, can I also say that the problem is at the very top of government in Australia; the Prime Minister does not care about this debate. That is not to say he has never taken the debate seriously. The truth is that, until 1979, the Prime Minister understood the issue of energy security, but it was then that he removed the excise on LPG, which is part of the debate about energy. In my contribution to the debate today, I suppose it is fair to say not only that the Prime Minister should have removed that excise but also that he has shown he is 30 years out of date. He is largely uninterested in the views of his own members, as demonstrated by his being part of the decision to guillotine debate today. Obviously, he treats the views of the Australian community with disrespect and arrogance.
On behalf of the opposition, I simply say that this is a very important debate. I expect it is unlikely that all members will get the opportunity to put their case on renewable energy and all the matters that go with it, because it has become usual for the government to exercise its arrogance by guillotining debate in the House. But the bill itself is important. There are many aspects of the bill that the opposition, the Labor Party, wholeheartedly supports. We see the issue of renewable energy as important to the overall energy debate.
For that very reason, the Leader of the Opposition made a major speech, a blueprint speech, in Sydney on 7 March this year, entitled ‘Protecting Australia from the threat of climate change —Blueprint No. 6’. That speech was about the issue of climate change. Obviously, as previous speakers on our side have said, it included support for the ratification of Kyoto, which is not a challenge to Australia—not a challenge at all because, with the little sweetheart deal we did over land clearing in Queensland, Australia would easily meet its requirements under the Kyoto convention. But I think it is important that that speech, as with the contribution of others in the community, tried to focus the Howard government on the need to get serious about these issues.
In that speech the Leader of the Opposition, Kim Beazley, not only talked about renewables but also acknowledged there is a broader debate on energy in Australia. He indicated correctly that coal, for example, will remain a dominant source of power generation for the foreseeable future in Australia—and that is a statement of fact. No-one can deny that, as important as renewable energy is, as Kim Beazley’s speech says at page 8—and it is an important speech on climate change that he made on 7 March 2006—coal will remain a dominant source of power generation for the foreseeable future in Australia.
That is why the Australian community has to accept the requirement by government, in association with the private sector, to make significant investments in cleaning up our coal-fired power stations and in clean coal technology, where there are issues of sequestration and gasification. It also means that, in a broader debate about transport fuels—which also goes to the question of energy—we as a nation have to become involved once more in nation building. We pride ourselves, for example, on our success in building the Snowy. That was about nation building. If we could do it 50 to 60 years ago, why can’t we do it now? That is about being serious about debates on transport fuel, investing in trying to encourage overseas investors who are already operating in Australia in the gas industry, for example, and being prepared to invest in Australia with respect to the gas to liquids process and issues of coal to liquids. It is all about transport fuel security and it is all part of the debate about energy supply in Australia and our security internationally. In that context, Kim also spoke about the importance of the renewable energy industry. That is part of the debate about climate change and it is also part of the debate about how we expand our access to energy supply to meet the overall demand by Australian consumers.
This bill also has to be about improved market transparency and business certainty, more opportunities for biomass, wood waste and solar technologies and better administration of the measures. All of these measures are welcomed by the opposition, but we are still concerned that the Mandatory Renewable Energy Target, the MRET, does not go far enough to maintain investment in renewable technologies in Australia over the longer term. The 2003 review of MRET recommended that the lifetime for the MRET scheme be extended from 2010 to 2020 and a target for electricity generation from renewable sources be set for 2020 at 20,000 gigawatt hours.
The government did not accept this recommendation, arguing that a better path is to more directly promote the development and demonstration of a broader range of low emission technologies and more aggressively address the impediments to the take-up of renewable energy. Labor supports these initiatives, but you also have to accept that at the same time you cannot continually tinker with a policy framework for renewables. Industry needs some certainty, and that is a matter of investment. It is about a tough global market. It is about trying to encourage an investment climate which guarantees investment certainty. The MRET measure had the support of the renewable energy industries and it formed the basis for its long-term planning. That is why this debate is so important.
Failure to continue and expand the measure has undermined the confidence of the renewables sector in investing in Australia. While MRET got the renewable industry off to a flying start in Australia, its ability to respond in the future will be diminished. The MRET generated growth in renewable energy generation, primarily from the hydro and solar water sectors, where strong growth in the wind sector coming from a small base is important. The government’s own review of MRET in 2003 identified that, without an increase in MRET, further investment in wind was likely to fall away within the next few years, and of course that is what we are seeing today.
More importantly, few inroads have been made into biomass and solar technologies, particularly solar thermal, both of which have enormous potential in the Australian context. Geothermal technology is the other sleeping giant of the renewables sector, and I believe that much more has to be done to promote its development and deployment in Australia. I also note that, despite the eligibility of wood and other biomass wastes for renewable energy certificates under the MRET, there has been very limited investment to date—and perhaps some of that is due to the ideological approach adopted by some in the green movement. Maybe it is about time they stepped back and had a hard think about their ideological approach and the short-sighted nature in the way they approach some of these complex issues. It is also interesting that forest growers and timber processors have the existing capacity to supply wood waste to produce almost 3,000 gigawatt hours of electricity each year without harvesting one more hectare of trees. Why shouldn’t we support this industry? As far as I am concerned, it is no different from the support we should give, for example, to wind power, solar or a variety of other renewables.
On that note, according to the National Association of Forest Industries, if the available resources were used to produce renewable energy, it would result in $800 million of investment in new plants throughout regional Australia and employment for over 2,300 people—not something to be sniffed at in the context of the difficulties of employment and training and economic activity in regional Australia today. Delivering these investments would supply enough electricity for 400,000 houses and would lead to a permanent reduction in Australia’s greenhouse gas emissions from fossil fuels of 2.2 million tonnes of carbon dioxide equivalent each year. It is both economically and environmentally smart. It would also add to the existing industry use of low-grade timber processing and harvesting residues to produce steam, heat and energy.
The MRET has also had only a marginal influence on generation from solar photovoltaics. The 2003 MRET review recommended a longer term deeming period of 15 years for solar photovoltaics. It would seem to be a good measure to encourage continued research and development, since, despite their potential, solar photovoltaics remain a long way from commerciality. The capital cost reduction curve for solar photovoltaics is at a critical point, where significant breakthroughs are essential if the technology is to have a long-term future. In some ways, therefore, our support for this technology has never been more important because, without that next breakthrough, the potential of the technology could be lost as other options overtake it.
I note that the member for Grayndler has moved a second reading amendment addressing some of the opposition’s concerns about the government’s ad hoc approach to energy policy in this country, and I ask those contributing to the debate to focus on this second reading amendment. As part of my contribution, I would also like to address the issue of energy efficiency, because I think it is important. As the member for Grayndler has said, the opposition calls upon the government to support measures to improve energy efficiency, such as making an effective five-star building code the national standard for new homes and developing partnerships with energy utilities so that they just do not sell electricity and gas but also help people use energy and cut their bills. It is smart for householders and it is smart for business.
I think it is fair that, whilst we would all support practical measures that increase energy efficiency, it seems to me that the current national energy efficiency standards for residential buildings in Australia and the various state and territory standards are underpinned by too many questionable assumptions and too little scientific evidence. The Productivity Commission has reported concerns about the analytical basis for the standards last October. The key issue is on the focus with respect to reducing household energy running costs and the thermal performance of the building shell. At least at the time the Productivity Commission was undertaking its investigations, the Australian Greenhouse Office’s home design manual noted that true low-energy building design should consider—and I think this is important because it is lost from the debate—embodied energy and take a broader life cycle approach to energy assessment. Merely looking at the energy used to operate the building, as far as I am concerned, is not really acceptable. It is a broader scientific debate. I say that because timber frame construction is lightweight in nature. It does not fit the thermal performance philosophy.
The analytical basis used also means that concrete slab on ground comes up trumps for efficiency over suspended timber flooring—an interesting concept. Consequently, $70 million worth of sales a year have been lost in the Victorian timber flooring market since the Victorian rating system was introduced. That is despite the fact that a 1999 study undertaken for the Australian Greenhouse Office found it would take 62 years to get a net greenhouse benefit from a concrete floor over a timber floor—never let the facts stand in the way of some policy decisions. And recent research indicates a concrete slab produces a net increase in CO2 emissions of 15 tonnes per house compared to a timber floor. The problem is the standards ignore the fact that cement is highly energy intensive to produce, while timber is a renewable resource, grown using direct sunlight and processed using relatively little energy in sawmills. And sometimes the energy in sawmills is produced using biomass from wood waste itself.
The Productivity Commission has recommended the Australian Building Codes Board commission an independent evaluation of energy efficiency standards to determine how effective they have been in reducing actual, not simulated, energy consumption, and whether the financial benefits to individual producers and consumers have outweighed the associated costs. And the sooner the government ensures this is done—and it is a complex issue for the Australian and the state and territory governments—the better, because in the meantime the timber industry is suffering, regional Australia is suffering, and it may well be doing so for no good reason.
I am therefore pleased to see that the industry has successfully lobbied the Victorian government for an amnesty on wooden floors in new homes until April 2007 to allow time to address the issue. Perhaps in this context, the Victorian government should also be reviewing why native hardwood timber—harvested, used and regrown using sustainable methods—is not available for use in Victorian government construction. Perhaps they should also reassess this issue at the same time.
But it is clear that, unfortunately, the Greens are now much more sophisticated in their attack on the forest industries, directly targeting industry markets to achieve their ends. The Wilderness Society responded to the Victorian amnesty by saying it was a ‘cynical attempt by the industry to maintain market share’ rather than improve energy ratings or environmental sustainability—an interesting response from a so-called Green organisation. This is an issue I am confident the industry will win on a sound scientific basis over the shallow political rhetoric of some in the environmental movement.
National building standards that increase energy efficiency are a must, but we have to make sure we get them right as a community. Demand management is exceptionally important, and making sure that our national building standards are energy efficient is also important. In conclusion, there is no point having national standards that do nothing for energy efficiency and nothing to reduce greenhouse gas emissions, but instead create artificial trade barriers against certain products and add unnecessary costs for new homebuilders. Ordinary people are doing it tough enough today, trying to raise the money to buy a new home, without having imposed on them artificial standards that do not do anything environmentally. Let us get it right and approach it from a scientific basis.
As I have said, the Labor Party supports this bill and welcomes the fact that by 2010 the renewable share of electricity consumption will be around 11 per cent. It is off a low base, and we have to do what we can to encourage its uptake. But our view remains that much more could and should be done to encourage further growth in the deployment of renewable electricity sources over the next decade. This contribution by the government takes us part of the way; there is still a lot further to go.
I welcome the opportunity to participate in the debate on the Renewable Energy (Electricity) Amendment Bill 2006. It is true to say the Australian government comes in for a fair amount of criticism for not signing up to the Kyoto protocol. However, a practical approach by this government is designed to manage a program for renewable energy and greenhouse gas mitigation. It is part of the essential policy mix to address a growing number of environmental concerns. There is so much this government has done. This government established the Australian Greenhouse Office, and I know from my work in the Public Works Committee that the office does a great job in that area alone—in looking at how we can reduce the greenhouse gas from public buildings.
Australia was the first country in the world to introduce a nationally mandated renewable energy target, which is backed by this legislation. In another first, the Australian government initiated the AP6 group. For those who do not understand that short title, it is the Asia-Pacific Partnership on Clean Development and Climate, which includes Australia, China, India, Japan, South Korea and the United States. This partnership covers about half the world’s population and about half the global contribution to greenhouse gas emissions. Kyoto covers about 32 per cent of the world’s emissions. This is a practical way of endeavouring to reduce greenhouse gas through regional cooperation and to explore new technological solutions to address climate change. Representing the parliament at the 114th Assembly of the Inter-Parliamentary Union in Nairobi in May this year, I was able to encourage the drafting committee, in a resolution on combating global degradation of the environment, to acknowledge in that resolution the establishment of the AP6 group and its contribution to reducing greenhouse gas emissions.
I also want to make the point that the Australian government is well-regarded internationally for its action on climate change, despite the fact that Australia is a relatively small producer of greenhouse gases, with just 1.46 per cent of the global emissions. We are investing considerable money, time, resources and energy into doing something about it. This is backed by a $1.8 billion investment. Australia is on track to meet its target set under Kyoto. In contrast, many countries that have signed up to Kyoto will not to meet their targets when the agreement expires in 2012. Investment in renewable energy is expected to be in excess of $3 billion, increasing renewable energy by more than 50 per cent compared to pre-legislated mandatory renewable energy targets.
In 1997, the Prime Minister made a statement, Safeguarding the future: Australia’s response to climate change, in which he said:
Targets will be set for the inclusion of renewable energy in electricity generation by the year 2010. Electricity retailers and other large electricity buyers will be legally required to source an additional 2 per cent of their electricity from renewable or specified waste-product energy sources by 2010 (including through direct investment in alternative renewable energy sources such as solar water heaters). This will accelerate the uptake of renewable energy in grid-based power applications and provide an ongoing base for commercially competitive renewable energy. The program will also contribute to the development of internationally competitive industries which could participate effectively in the burgeoning Asian energy market.
This statement was followed by the Renewable Energy (Electricity) Act 2000, which provided the framework for Australia’s mandatory renewable energy targets. Under this act, Australian electricity retailers and other buyers of electricity, as the Prime Minister said, are required to collectively source an additional 9,500 gigawatts of electricity per annum from renewable sources by 2010. The amount contributed to the target by each liable entity is determined on a proportional basis. The target of 9,500 gigawatts is being phased in up to 2010 and will be sustained until 2020. In the interim, incremental progress will be achieved through annual targets.
The amendments in this bill implement the government’s agreed responses to the review of the act. The legislation allows further opportunities for the bioenergy and solar sectors to participate—that is a move I particularly welcome—and it improves administrative integrity and efficiency. Since the initial legislation was passed, there have been several inquiries and some earlier amendments to the original bill, with alternative renewable technologies developing so rapidly that it is not surprising that the operation of such landmark legislation will need careful monitoring and appropriate adjustments from time to time.
Contemporary environmental debate has been significantly focused on climate change. While this is indeed a very important part of the debate, it would be dangerous to allow climate change to be the exclusive focus of any debate relative to the environment. Energy use may be a major contributor to climate change, but one of the overwhelming issues for a contemporary world is how we use energy more efficiently, both at an industrial level and at a domestic level.
In both cases, much could be done to place emphasis on recycling. Not only do we use raw products, both organic and chemical, to create many consumer goods, but we frequently dispose of products before the end of their useful life, thus wasting both the natural and manufactured resources as well as the energy used in their production. Take plastic pot plant containers, for example. Five years ago it was estimated by Pot Recyclers Ltd that 100 million pots were used as plant containers. Of these, 8,000 tonnes of these plant pots went into Western Australian landfill alone. There is a wonderful family in my electorate, the Williamsons, who for many years have battled bureaucracy as they have strived to collect and recycle plastic pots.
A consumer will buy a single plant in a single plastic pot from their local nursery, take it home and plant it and then throw the pot into the rubbish. A research report in 2004 conducted by the Sustainable Energy Development Office found that to manufacture one tonne of polypropylene 27,222 kilowatts of energy are used. This would be enough energy to power the average home for 5.3 years. Australian manufacturing uses 240,000 tonnes of polypropylene per year. Of that, 108,000 tonnes will end up as landfill. Short-term packaging goes from manufacture to landfill, on average, within six months. Pot plants go from manufacture to landfill in six weeks.
The Williamson family reprocesses the pots using 98 kilowatts of electricity per tonne. This not only saves pots going to landfill; it also saves energy. For their trouble, the Williamsons pay 5c levy on each pot they recycle. The work of the Williamson family has attracted attention and awards from Australia and around the world, and recently Mr Williamson and his family were flown to Atlanta to receive an award for their environmentally friendly business.
One of the great threats to human life—if we continue to consume at the rate that we are and other developing countries also begin to consume to the extent of the developed world—is the disposal of goods we no longer want and in which all the component parts have not been fully expended. According to many scientists, climate change has occurred and does occur naturally from time to time. While we do not wish to hasten major climate change due to our profligate ways, we must also look at these matters in balance with other measures.
Public education is one of the ways that we can change industrial and domestic users’ behaviour. For example, there is the formation of the Climate Group, an international coalition with a secretariat in the United Kingdom, which has members ranging from corporations to governments, who are committed to developing new, clean technologies that maximise energy efficiency and minimise greenhouse gas emissions and to developing renewable energy sources. This group has demonstrated in a recent study that sustainability is not necessarily antithetical to profitability. For example, BP reports a saving of $650 million from emission reduction efforts; IBM reports a saving of $791 million; DuPont claims $2 billion in efficiencies; Alcoa is looking at saving $100 million by 2006; and ST Microelectronics expects $900 million in savings by 2010. Germany reports its efforts will lead to the creation of 450,000 new jobs, many of them within the renewable energy sector, according to M Northrop in Leading by example.
The government is taking a multifaceted approach, and I am pleased to see programs such as the Solar Cities program, which is aimed at reducing energy consumption at the domestic level. Again, this is an initiative of the federal government. There are many practical things we can do in our day-to-day living to reduce the amount of energy we consume, and the Solar Cities program is designed to achieve efficiency through trials and public education.
Climate change is not new. What is alarming is the speed at which it is changing and the lack of preparedness to design lifestyles and commercial and industrial developments to reflect these changes. In addition, we need to avoid adding significantly to the problem by polluting and by overclearing land of vegetation.
The mandatory renewable energy target legislated by this government in 2001 seeks to accelerate the uptake of renewable energy in grid based electricity supply. A number of renewable energy sources have been identified as suitable, including solar, wind, ocean, wave and tidal, hydro, geothermal, biomass, specified waste, solar water heating, renewable stand-alone power systems and renewable fuels—