Tuesday, 2 June 2015
Renewable Energy (Electricity) Amendment Bill 2015; Second Reading
I wish to talk about the Renewable Energy (Electricity) Amendment Bill 2015, and reflect on the journey that has brought us to this point, and on the way forward. The journey so far was all about how we, as a nation, create a mechanism to encourage renewable energy in our midst. Renewable energy does inspire the hearts of people. As Australians, we aspire to have an energy mix made up of fossil fuels, but also, increasingly, of renewable energy in an affordable and sustainable fashion.
Not long ago, one of the prime ministers of Australia talked about climate change being the greatest moral challenge of our time. There were those who saw that as disingenuous. But in a big fever to move towards renewable energy, we realised what happens if you develop policy in isolation of industry or policy in isolation of the cost that it puts on people. In the great moral crisis of our time, we saw a carbon tax introduced into Australia. Effectively, what that did was take away what is our competitive advantage.
Our competitive advantage as a country has always been cheap electricity. We do not have the benefit of having cheap wages, or we might say we are the recipient of higher wages. That, of course, has created a standard of living that we, as Australians, enjoy. When people go to work they expect to be well paid, and they should be well paid. But what has helped us when we have produced goods is that our energy costs have been reasonably cheap. We compete with countries that have more expensive energy but have cheaper wages. But at least having cheap electricity has been our competitive advantage.
The challenge is that the carbon tax and then the Renewable Energy Target have actually put power prices up. The outworking of that is that we have seen industry shift offshore. Our government made a commitment that we would repeal the carbon tax. That is what we have done, and we are now moving forward on discussing how we ensure that we keep our competitive advantage as well as continue to encourage diversity in our energy generation mix.
One of the great testimonies of the Australian people has been the changed behaviour that we have seen within energy use. The projections of what amount of renewable energy we thought we would need have been put out and skewed simply because we have changed behaviour. I do not need to tell the schoolkids who are no doubt looking on up in the gallery that they now turn the light off instead of having lights just blazing away all day and that we now think about how we minimise our impact on the environment. I think that is something that we should be proud of as the Australian people, and some of the leadership of that has come from our younger Australians.
But in changing behaviour we have found that we have not needed as much generation capacity within our mix as we anticipated. The challenge we have at the moment is that we originally had a renewable energy target of 41,000 gigawatt hours, which was scoped to be quite a large percentage. But we did not need that much because we simply have changed behaviour. We have also moved some industry offshore. That changed behaviour has meant that we now need to make some changes and some adoptions to our renewable energy target. It is not to diminish the role of the target, but it does give an example of where we do not need as much in the mix as we originally thought. So this amendment bill is to move the target from 41,000 gigawatt hours to 33,000 gigawatt hours, still a very ambitious target to hit within the time frame and still very conscious of the government's role in creating a diversified energy mix.
The other thing that has happened is panels have got cheaper in solar and the technology has got better. I fear that as we have developed the renewable energy target over successive governments we have perhaps missed the opportunity to better enhance utilisation of our fossil fuels instead of demonising them. If we can burn coal hotter and create less emissions per unit of output of power, that is also a way of reducing our impact on the planet.
We can, and I think this does need to be explored because, whilst we have been the beneficiaries of fossil fuel, whilst we have been the beneficiaries of lifting our standards of living out of fossil fuel, the great challenge for Africa is how they lift their standard of living in a continent where they have large amounts of fossil fuel. If we had used part of our renewable energy target to develop cleaner coal, we would have a technology that could be replicated in a part of the world that is going to have to focus on fossil fuels for many years to come if they are going to lift their standard of living. It is disingenuous for us, as a rich country, to tell a poor country what they can and cannot do on their emissions.
But, be that as it may, reducing power has come at a cost, and yet we have also seen that the price of power has not diminished as much, because of the investment in the distribution networks right across Australia—the poles and wires. Some of this is an outworking of the royal commission after the Black Saturday fires, certainly in Victoria. My concern with the renewable energy target is: are we favouring one part of our economy over another? I have this double edged sword within my electorate where I have a lot of dairy farmers, a lot of irrigators and a lot of horticultural producers who are using electricity driven pumps.
A renewable energy target is, in fact, in a small way, driving up the price of their business, driving up their costs of doing business, and so, in some regards, we are working against those particular parts of our economy. If you are a dairy farmer in Victoria, most of your milk is usually exported as dehydrated milk. They are an energy intensive and somewhat trade exposed industry, but they are not currently exempt from the impacts of the renewable energy target. My argument is that we should be excluding our food producers and our food processors in the export industry from the impacts of a renewable energy target.
Finding the balanced solution is also an issue when it comes to the communities that I represent. I think, overwhelmingly, they do favour solar. They do like solar, and my fear is that this bill still leans towards wind generation. Wind generation has had a pretty fair run, in my opinion. But solar probably has not, and what has happened is that the price of solar panels has got cheaper. The ability of a community to work together so that they can collectively have a solar farm needs to be enhanced in legislation. It is currently not there.
The other thing that is a conflict in my area is the impact both on health and on aspect—of looking at wind turbines. I know that, when I talk to people in the southern parts of my electorate, they are very concerned about the new changes in planning from the Victorian state government which limit their opportunity to have a say when a wind farm is going to be put in their area. The flip side, of course, in all of these conflicting areas, is that our local councils, who obviously do not have large amounts of rate bases, are attracted to the earning capacity of wind farms. So we have an interesting paradox where some parts of my electorate are very much the recipients of a renewable energy target, some parts of my electorate are very much the losers of a renewable energy target and some parts of my electorate are exposed to the risks of power prices increasing.
I think we do need to review, with a balanced solution—and this is what this attempts to do. I think we also need to understand, and we need to move towards some renewal. I think it is just not fair if those who have an objection to a wind farm do not have an opportunity to have their objection heard. It is not fair if those who are impacted in their daily lives and in their activities are not able to be heard as to how we move forward.
My great dream is around solar, and I will share where I want to go with this. Currently, a person can put solar panels on their roofs and they will pay $8,000. If you have a look at solar panels on roofs, whilst they are reasonably effective at reducing the power for the person who has them on their roof, they are very hard to manage into a grid. If you were to get around 100 people who also wanted to commit $8,000 and wanted to collectively put together a bid to build an $800,000 solar farm on the outskirts of some of my regional towns, which are very sunny, I think that is something we should be more open to when thinking through this legislation.
Currently, the renewable energy target system favours solar panels on roofs but does not favour the same solar panels on a paddock right next door to a town. Something about my community that I have been very proud of is that people do have a sense of working together. We do have land that is reasonably cheap. If you look at any studies about how to manage a grid and how to maintain a mix of solar panels, it is much easier to do it from a maintenance perspective when they are on a paddock because you do not have to climb on the roof. But also you have a bulk of power that can be managed into the whole grid. Ultimately, that needs to be looked at when we talk about renewable energy.
It really should come down to practicality, not ideology. This legislation is trying to recognise that we ran the risk in the current legislation, as it stood, of putting prices up through the roof by hitting penalty rates. There were time frame restraints on how to build the amount of renewable energy at a time when behaviour has changed. One thing that we must do is to commend the Australian people for changing their behaviour. They have learnt to use less electricity. They have learnt to insulate their houses better and to turn lights off. But it is also important that we work with industry so that we do not put ourselves at a significant disadvantage when it comes to producing the goods that we produce and to grasping our competitive advantage—that being cheap electricity—as we move towards being good global citizens.
The contrast in my electorate, as I say, is a discussion between the wind farm generators and the irrigators and the dairy farmers who also have their milk processed. It is a discussion around those who have to live with a view to wind farms and the concerns they might have around their health, and it is a discussion around how we can look at solar panels collectively, as communities, rather than just have them on our roofs. The legislation does not embrace everything I would like, but it is certainly a step in the right direction. The challenge for us is how we, as a country, continue to grow the standard of living we want and ensure that the environment is also looked after. The other thing we must also think of is how we develop technology that can be taken up in developing countries so that they can also lift their standard of living without having adverse effects on the planet.
Recently, I had a meeting with representatives of ACCIONA Australia. ACCIONA is one of the largest investors in renewable energy projects in Australia and abroad. During the meeting with the representatives of ACCIONA, one of the company directors asked me a very direct question. He said to me: 'Why is it that the Australian government is seeking to reduce the amount of renewable energy that it will produce over the next five years?' I was quite shocked. My reply was: 'There is only one answer to that question, and that is: because Tony Abbott is our Prime Minister, and Tony Abbott does not believe in climate change and does not believe in taking concerted action to promote renewable energy in our economy.'
Since his election as Prime Minister, Australia has become probably the only developed nation in the world to go backwards on tackling climate change and on policies that promote progress and greater uptake of renewable energy in our economy and our society. As a result of that, our kids will pay the price. Our kids will pay the price in the form of more pollution in our economy into the future, of lower economic growth in the longer term and of fewer new jobs being created in the industries of the future. In the long term, we will pay with higher electricity prices. There are many reports that detail this fact.
The Prime Minister has deceived the Australian public. Before the last election, the Prime Minister gave one of his many ironclad guarantees—no change to the renewable energy target. The 41,000 gigawatt hours by 2020 was supposed to be a bipartisan commitment. It was supposed to be beyond politics—something that all Australians could feel comfortable with; that, no matter who was in power in Canberra, our national government would be taking action to combat climate change and to promote renewable energy. Once again, this is another broken promise from a Prime Minister who makes a habit of deceiving the Australian public.
As soon as he was elected, the Prime Minister sought to appoint a known climate change sceptic to review the operation of the renewable energy target. When that announcement was made, the new investment in the industry completely stopped. It ceased. All of the progress that had been made under the Howard government and under the Gillard and Rudd governments was halted. Projects were stopped and, over the months that ensued, jobs were lost. The renewable energy target, up to that point, had facilitated $20 billion of new investment in large-scale renewable energy and billions of dollars of new investment in small-scale solar panels and solar hot water. That investment was growing. In 2012, the renewable energy industry employed 24,000 Australians. These are highly skilled, high-wage jobs of the future—jobs that we need to be promoting into the Australian economy.
Other nations are investing heavily in renewable energy—in particular, some of our closest trading partners. It is remarkable to see the transition that has occurred in the last five years in the Chinese economy. The Chinese get it when it comes to investment in renewable energy. They understand that the jobs of the future and the transition from an industrial based economy to a clean energy economy will be based on the promotion of renewable energy. So they are investing more than any other nation, in dollar terms, in renewable energy projects—in research and development, in commercialisation, in funding, in manufacturing, in installation and in production of power through renewable energy. Unfortunately, because of this Prime Minister's deception of the Australian public, Australia has gone backwards in this area because all new investment was halted when the Warburton review was announced.
We have seen the loss of bipartisanship, which has affected investment in the industry. The change sent shockwaves through the renewable energy industry because, as I said, prior to the election those investors—and many of them are big banks, superannuation funds and big corporations—were given a guarantee by the Prime Minister that there would be no change in the renewable energy target. You could invest safely and you could invest with the comfort that the government was not going to change the policy. In an area like this, government policy, stability and certainty is crucial to investment and jobs. Then the Prime Minister backflipped. Then the Prime Minister deceived the Australian public. The destruction did not stop there. The Prime Minister will continue his campaign to decimate the renewable energy sector by cutting $600 million to the commitment for solar roofs, towns and schools to just $2 million in the 2014 budget and slashing funding to the Australian Renewable Energy Agency in the 2013 MYEFO, before adding the agency to the abolition list in the 2014 budget. The biggest shock and the biggest broken promise came after the review of the renewable energy target. The Prime Minister's RET review created uncertainty in the market that would ultimately see investment in Australia practically stop.
Despite the Prime Minister's insistence that the renewable energy target drives up power prices, the RET review found—and this is important evidence—that the current RET of 41,000 gigawatt hours would put downward pressure on household power prices in the medium to long term. That is a finding that has been backed by the Clean Energy Council when they commissioned a report from ROAM Consulting which found that, over the medium to long term, the uptake and increase of renewable energy will actually put downward pressure on electricity prices. The reason is that, once the initial investment is made, the source of the power is free. Wind is free and solar energy is free. So, once the initial investment is made, over time prices come down. So there is actually an advantage to our economy—for businesses and for households—by promoting more renewable energy, but the Prime Minister wants to put the brakes on that. The Prime Minister does not want to see us move from coal to more renewable energy. The ROAM report found that the effect was that households will pay $50 more for their electricity in 2020 if the renewable energy target were eliminated. The current RET of 41,000 gigawatt hours is driving investment in new projects. It is also reducing Australia's carbon pollution and it is driving new jobs.
Labor believes in climate change. Labor believes in renewable energy. In government, Labor expanded the renewable energy target to ensure that at least 20 per cent of Australia's electricity would come from renewable sources by 2020. In government, we established the Australian Renewable Energy Agency, or ARENA, to manage $3 billion in renewable energy investment and the $10 billion Clean Energy Finance Corporation to provide a new source of finance to renewable energy, low emissions and energy-efficiency technology. This was a process of ensuring that there was support to get many of those important renewable energy projects off the ground—start-ups, if you like. It is support from government for start-ups in renewable energy, ensuring that they have the commercial backing to make those projects viable. As I said, once they are established, once the capital investment is made, the long-term running costs are very low because the energy source is free. The result was spectacular growth in jobs. From 2007 to 2013 direct employment in the industry doubled, to over 24,000 jobs. Wind capacity trebled to 3,000 megawatts and over one million solar PV systems were installed. We went from 7,400 systems at the end of the Howard government to over a million households and businesses with solar panels on their roofs, generating renewable electricity for their households and businesses through that process. That was Labor's commitment to a renewable energy target. It was Labor's belief in investment, a greater uptake of renewable energy and using government policy to promote that in our economy.
The Abbott government are seeking to cut the RET. The renewable energy industry has been gobsmacked by the approach of the Abbott government. As I said, they failed to see, because they were given a commitment before the election that there would be stability and certainty in the industry and that the government would not change the goalposts midway. But that is exactly what they did. As a result of that, as I said, new investment halted.
The industry has been absolutely begging the political parties to reach an agreement on this issue, to ensure that there is ongoing certainty into the future so that there will be investment and that jobs will not be lost. Labor has heeded those calls and we made offers that were reasonable to the government to ensure that the renewable energy target continued and that there continued to be investment in jobs growth into the future. It is pleasing to see that the government finally did adopt Labor's approach, come to the table and agree to the compromise offer.
The Clean Energy Council recommended 33½ thousand gigawatt hours. We have agreed on 33,000. It estimates that that will drive about $40.4 billion in investment and will create more than 15,000 jobs. The agreement will see projects start to be built again and businesses begin to enjoy certainty again to allow them to assure their staff's job security.
I want to congratulate Mark Butler, the shadow minister, for the wonderful job that he has done in representing the views of the renewable energy industry. I think without Mark's advocacy and deft negotiation in this matter, we may have seen the renewable energy target in this area fall over.
Labor also negotiated principles that we are pleased to see have achieved outcomes, including no change to the small-scale solar scheme, which includes rooftop solar and solar panels for small businesses; full exemptions for emissions-intensive trade-exposed industries, which relieves some pressure on those industries that are enduring downturns and job cuts; and removal of the two-year reviews, which provides the long-term certainty that the industry so desperately needs to survive and to thrive.
The final point to make is that I am deeply disappointed that the government continues to pursue its plans to include the burning of native forests in the renewable energy target. It is something that I and my Labor colleagues are opposed to. Burning native forests for energy is neither clean nor renewable. And the best advice is that that is so.
The definition of 'waste' is not what those opposite would have you believe. We are not just talking about the bits that are left over after logging. 'Waste' can be large parts of trees and, in some cases, entire trees that are not up to scratch for other uses. We simply do not see a case for the inclusion in the RET of burning wood waste and, on that basis, we will oppose that aspect of this bill.
If that is the sort of speech you get from the member for Kingsford Smith when there is bipartisan agreement on a renewable energy target, imagine the performance if he disagreed.
I have great pleasure in telling you, Deputy Speaker, that this bill, the Renewable Energy (Electricity) Amendment Bill 2015 reflects an important bipartisan agreement between the government and the opposition on renewable energy.
Ms MacTiernan interjecting—
I might just remind the member at the table that 'bipartisan' is an adjective. It means 'involving agreement or cooperation of two political parties that usually oppose each other's policies'. By any measure, this is not only a bipartisan but an ambitious agreement, which seeks to achieve 23.5 per cent of Australia's energy from renewable sources by 2020. And, as the Clean Energy Council has pointed out, that will require about $10 billion of investment.
I have been a persistent champion for this deal, with my colleague the member for Lyons and our other amigo the member for Braddon, along with a number of my colleagues, in writing to the Prime Minister a year ago to make the point that aluminium smelters should be exempt from the renewable energy target. This advocacy is linked to a desire to secure over 1,500 direct or indirect jobs at Bell Bay Aluminium in my electorate of Bass.
I have lobbied everyone from the Prime Minister, to the industry minister, to the environment minister on this issue and I am pleased at their willingness to listen and act so decisively in support of jobs in Northern Tasmania.
I am particularly grateful to the member for Flinders, Greg Hunt, the environment minister, frequent visitor to and great supporter of Northern Tasmania. Greg has done an outstanding job. Not only does this include making good on one of the coalition's key promises to repeal Labor's ill-considered carbon tax but he has now played a central role in delivering this deal on the RET.
His work in protecting our iconic Great Barrier Reef is also noteworthy and most deserving of this parliament's acknowledgement. In recent days both UNESCO and the World Heritage Centre have praised the significant and unprecedented work that Australia has done to protect the Great Barrier Reef and made it clear that the reef will not be listed as 'in danger'. In fact, there is no mention of 'in danger' at all.
While the reef may have gone onto a watch list under the Labor-Greens government, it has come off that watch list under us. Minister Hunt deserves great credit for securing this great news for all Australians and we welcome that decision. It demonstrates that this government and the member for Flinders are committed to protecting the reef at home and its reputation abroad.
Returning now to the agreement on a renewable energy target, it undoubtedly alleviates millions of dollars in renewable energy target costs annually on Bell Bay Aluminium's operating costs. Importantly, the RET agreement includes a 100 per cent exemption for all emissions-intensive trade-exposed industries, including aluminium, which will remove a regulatory cost burden to my smelter in Bell Bay of between $8 million and $10 million per year. The net impact of the RET on what we refer to as Tasmania's 'big picture industries' is around $20 million a year. RET payments by these industries over the next 10 years would see a wealth transfer of around $200 million out of the Tasmanian economy.
Looking just at Bell Bay Aluminium in my electorate of Bass, since the RET scheme commenced in 2001 it has cost the company more than $48 million. Forecast RET costs for the next five years were $42 million if no change was made. This business is, sadly, one of the few of its size left in Northern Tasmania and its importance cannot be overstated. It uses 25 per cent of Tasmania's total electricity, contributes almost $700 million to Tasmania's gross state product each year and provides 1,500 direct or indirect jobs. It is worth noting that the power this smelter has used since 1955 has been predominantly renewable. Consider this: the power that Tasmanian families and businesses use is well over 80 per cent from renewable sources, primarily hydro. So, frankly, it fails the common sense test to impose RET costs on businesses like Bell Bay Aluminium in a state that is the exemplar within the Federation on using renewable energy.
The General Manager of Bell Bay Aluminium, Ray Mostogl, is a good man—the member for Lyons and I know him well. He has won CEO Magazine's Manufacturing Executive of the Year. His operation at Bell Bay has cut costs in a very difficult market, with a high Australian dollar and historically low aluminium prices, which has caused well over 130 jobs to be shed from this business in recent years. As Mr Mostogl has said publicly, they have continued to absorb RET costs at a time when their industry can least afford it and when many other Australian manufacturers have closed or are signalling their closure. And as aluminium is a globally traded commodity, Bell Bay Aluminium has no ability to pass these additional costs through to its customers. So it should be no surprise that Bell Bay Aluminium has warmly welcomed the Abbott government's deal on the Renewable Energy Target. I am grateful that, in their public comments, Bell Bay Aluminium states that they 'would like to particularly thank the local MP for Bass, Mr Andrew Nikolic, for his support through these negotiations.' I appreciate that support from one of Tasmania's biggest employers and taxpayers.
Removing regulatory costs from businesses like Bell Bay Aluminium through this RET agreement helps to secure the long-term future of aluminium smelting in Australia. But while most people in our community celebrate this agreement, those perennial ideological whingers in acrylic koala suits, the Greens, have ungraciously rejected it. In doing so, they have again put their flawed and superficial voodoo ideology ahead of helping secure jobs in Northern Tasmania—an area that has been doing it too tough for too long. As a Southern Tasmanian, it was predictable that former Greens leader Christine Milne would refer to major Tasmanian industrial companies like Bell Bay Aluminium as 'exaggerators wanting a handout'. Ms Milne is able to hurl such abuse from trendy cafes in Hobart, a luckier part of the state that can always rely on a steady flow of taxpayer funded public service jobs. But the North of Tasmania does not have that luxury. You would think Greens senators north of Oatlands would show more common sense and respect for the jobs at Bell Bay. I have had many people contacting my office to express their disgust at the comments of Greens Senator Peter Whish-Wilson, who lives and works in Launceston—not too far away from Bell Bay Aluminium. Senator Whish-Wilson has publicly referred to aluminium producers as 'a dirty industry always overstating the risks of the RET'. It appears there is no limit to the local jobs the Greens are willing to sacrifice on the altar of their superficial ideology. Once again, by failing to acknowledge that companies like Bell Bay Aluminium are amongst our biggest employers and biggest taxpayers, the Greens Party rules itself out of the rational debate.
This bill represents a balanced approach. The reduction in the large-scale target from 41,000 gigawatt hours to 33,000 gigawatt hours will result in 830 to 1,000 fewer wind turbines. Solar will be a big winner with significant new investment in small- and large-scale solar expected. As I said earlier, the bill protects jobs in the emissions-intensive and trade-exposed sectors by reducing their costs. The bill wisely reinstates native forest wood waste as an eligible fuel source, representing a welcome return to common sense. The bill acknowledges and reflects changes that have occurred in the electricity market and will allow for sustainable growth in small- and large-scale renewable energy.
I have already talked about some of the bill's key features but let me focus on one other matter in the time I have available. A vital feature of this bill from a Tasmanian perspective is reinstating biomass from native forest wood waste as an eligible source of renewable energy. I congratulate my friend the member for Lyons who last Thursday gave an eloquent, passionate speech exposing the soft underbelly of hypocrisy in Labor on this issue. He encouraged the member for Franklin to listen to her constituents and, indeed, the state Labor Party on this issue.
This government is committed to the inclusion of wood waste as an eligible form of renewable energy generation and it will be included in legislation. Native forest wood waste was in place as an eligible source of renewable energy under Labor's own legislation until November 2011. Consistent with our election commitment, this bill reinstates native forest wood waste as an eligible source of renewable energy under the RET, basing eligibility on exactly the same conditions that were previously in place under Labor. One of the objectives of the RET is to support additional renewable generation that is ecologically sustainable. We are reinstating native forest wood waste as an eligible renewable energy source because there is no evidence that its eligibility leads to unsustainable logging or has a negative impact on Australia's biodiversity. In all cases, the supply of native forest wood waste is subject to Commonwealth and state or territory planning and environmental approval processes either within or separate from the Regional Forest Agreement frameworks. Burning wood waste for electricity generation is more beneficial to the environment than burning the waste alone or simply allowing it to decompose on the forest floor and give off CO2. In rejecting this aspect of the bill, the Labor-Green opposition demonstrate that they are still tied at the hip on this measure—that they are, in fact, climate science deniers. As my colleague Senator Colbeck has said, by blocking biomass from being included in the renewable energy target they are clinging to last century ideology. The science is clear, I say to those opposite, when it comes to the environmental benefits of biomass as a source of energy. It is even recognised by international environmental groups such as the World Wildlife Fund. Instead of voodoo ideology and superstition, Labor and the Greens need to get up to date with the latest science. The environmental benefits of biomass are widely recognised. Let me quote to you a couple of things. A report by the World Wildlife Fund and the European biomass industry found that replacing coal-generated energy with biomass would significantly reduce carbon emissions. The IPCC—the Intergovernmental Panel on Climate Change—which is often quoted by those opposite, states that:
In the long term, a sustainable forest-management strategy aimed at maintaining or increasing forest carbon stocks, while producing an annual yield of timber, fibre or energy from the forest, will generate the largest sustained mitigation benefit.
This government supports wood biomass as a source of renewable energy and recognises the benefits it could bring to the environment, the forest industry and the economy. It is the policy we took to the last federal election: to reintroduce renewable energy initiatives using wood biomass. It was a key element of our forestry policy, and it is a complete sham for Labor to describe this is a last-minute push. In fact, I repeat that this used to be the Labor Party's own policy before their dirty deal with the Greens. Using wood biomass is making use of an otherwise wasted product such as timber offcuts, bark and branches that would otherwise be discarded. You would not slaughter a cow for the prime eye fillet and leave the rest of it to fester and rot, and the same principle applies to the forest industry. Federal Labor has shown their true colours yet again by siding with the Greens and indicating that they will attempt to block biomass from inclusion in the RET. It is disappointing that they are not interested in supporting an environmentally and economically beneficial industry.
In conclusion, let me say this: this bill is a very good deal that should be supported. It reflects the government's commitment to a renewable energy target that will encourage sustainable growth in both small- and large-scale renewable energy in Australia, and I commend the bill to the House.
The glaciers are retreating, and so is the Abbott government when it comes to supporting renewable energy. Just as the dinosaurs were wiped out by the ice age, by rejecting renewables this government risks wiping itself out politically. Until the election of this government Australia was emerging once again as a world leader in renewable energy, but this Prime Minister is frozen in time while the world warms around him. It is having real consequences already. Jobs are being lost and investment is plummeting, with a decline in investment in renewables of 88 per cent since this government came to office.
What is the context of this? Renewable energy in Australia is a no-brainer: we have abundant solar, wind and wave resources and the world-class skills and expertise to turn those resources into reliable energy. Renewable energy creates jobs, including jobs in manufacturing; it attracts investment; it drives down household energy prices and it reduces Australia's carbon pollution. But uncertainty has been killing jobs and investment.
In spite of the fact that the Abbott opposition campaigned saying that the renewable energy target was a bipartisan target, they sought to undermine it when they came into office. There are more than 20,000 renewable energy jobs—with some already lost—around Australia, including more than 4,000 in my home state of New South Wales; there are jobs in wind, solar, hydro and bio energy. It is not just the technical jobs; it is the manufacturing and the retail, maintenance and administration staff. There is a multiplier effect. But, since the election of this government, investors have been abandoning us. In 2013 Australia was ranked alongside Germany, China and the United States in the top four most attractive places to invest in renewable energy. Under this government we have plummeted to 10th place and we have seen that extraordinary drop-off of 88 per cent in investment in the renewable energy sector since the change of government.
The fight against climate change, of course, is not just economic. UN Secretary-General Ban Ki-moon said it best. He said this:
Saving our planet, lifting people out of poverty, advancing economic growth ... these are one and the same fight.
We must connect the dots between climate change, water scarcity, energy shortages, global health, food security and women's empowerment. Solutions to one problem must be solutions for all.
On this side of the House we do see the big picture. We aim to connect the dots. We are not in this just for ourselves, but for the future. We believe in appropriately charging polluters for their emissions—not paying them more using taxpayer funds. We take a whole-of-government approach; this government refuses to.
We know the Australian community gets it as well—more than one million Australian homes now have solar panels; when we came into office in 2007, only 7,000 did. That is a remarkable transformation. Latest research shows that Australians back renewables. Some new research, conducted by IPSOS on behalf of the Australian Renewable Energy Agency, has come out in the last week or so. The report shows strong community support for solar across Australia: 87 per cent of Australians are in favour of home solar panels; more than three-quarters of people are in favour of large-scale solar facilities, and there is also strong support for hydro energy and wind farms—72 per cent—even if we have a Treasurer now who finds wind farms somehow offensive.
Labor has been doing the hard policy yards on climate change for a long time. As shadow environment minister in 2006 I attended the Walk Against Warming with then Labor leader Kim Beazley. I said that day:
We can't afford to wait any longer.
The only way we will tackle climate change in Australia is with a change of government.
… … …
Australia needs a whole of Government approach to avoid dangerous climate change.
Labor's systematic climate change plan offers Australia a way to avoid dangerous climate change.
We must take action not just to protect the environment, but to protect jobs and the economy.
On that day, Labor committed to a comprehensive policy: pursuing a target of a 60 per cent cut in emissions by 2050, joining the global community and ratifying the Kyoto protocol, which we went on to do. It was the first action of the Rudd Labor government on the day that we were sworn in. We committed to giving a price signal by having a national emissions trading scheme. Of course, that would have come into place in 2009 if more than the two Liberals who crossed the floor had voted for it in the Senate. Most significantly, I think, if the Greens political party had voted for a price on carbon in 2009, it would still be in place today. We committed at that time to support renewables, including the '20 by 2020' target, and to introduce a climate change trigger in Commonwealth environmental legislation. We supported effective action on climate change once we came into government. In government, we have a record that I am certainly proud of, in spite of opposition from those opposite and, of course, from time to time, from the Greens political party in the Senate, who lost the opportunity that they had back in 2009.
The fact is that Labor's renewable energy target has been a success. I have mentioned before solar panels—with numbers going from 7,000 up to 1.2 million—but wind power in Australia tripled. The number of jobs in the renewable energy sector tripled. There was more than $18 billion invested in wind and solar farms, hydro plants and renewable energy technology development. On top of these major economic benefits, the explosion in renewable energy in Australia saw carbon pollution from the electricity sector come down. Between June 2012 and June 2013, emissions from the electricity sector fell by more than seven per cent. Renewables are an essential component of cities policy—for making them more productive, sustainable and liveable. Labor's cities agenda has a strong energy and environmental focus. New housing developments are using tri-generation technology to power water, heating and cooling. An example is in my electorate, where I went along to the opening at Canterbury Hurlstone Park RSL of a system, funded by the former Labor government, that will save the club $800,000 a year. That is a good investment supporting a community based organisation, making an enormous difference. The whole-of-government approach comes through when it comes to our policy of being prepared to support public transport as well as roads, which is one of the distinctions between the two sides of politics.
Of course, when the Abbott government came to office, in spite of the promise that it made—that it would not make the renewable energy target an issue of partisan politics—we saw the opposite occur. We had the review conducted by Dick Warburton into the renewable energy target. What was remarkable about that was that the review found that the RET that then existed would put downward pressure on household power prices. It found that it was creating jobs in Australia. It found that it was reducing Australia's carbon pollution. It found that it was driving investment in Australia's renewable energy industry. So what did the government do with that report? It said, 'The renewable energy target is too successful, so we need to undermine it.' From that point on, it attempted to drive down the target as low as possible, or possibly to make it disappear altogether.
That is why Labor was in a position of having to compromise its preferred position in order to save the renewable energy target, at the urging of the Clean Energy Council. The Clean Energy Council predicts that the revised target of 33,000 gigawatts will drive around $40.4 billion in investment and create more than 15,000 jobs. The agreement will see projects start to be built again and businesses enjoy certainty that will allow them to assure their staff's job security. Despite the government's best efforts, we are proud to have achieved the following outcomes: no change to the small-scale solar scheme, full exemption for emissions intensive trade industries and removal of the two-yearly reviews that they attempted to put back on the table at the end of this process. Again, that measure would have created absolute uncertainty and ensured that that investment would not occur.
They also proposed another last-minute change, which was to insert into the proposal the idea that native wood waste should be included in the scheme. We do not support this last-minute thought bubble based upon ideology rather than common sense. This proposal was never raised during negotiations of more than 12 months; it was only put on the table at the last minute. Native wood waste is neither clean nor renewable. The way the government have worded it makes it sound like it would just be the little offcuts which would be burnt, but the fact is that nothing is further from the truth. The definition of native wood waste under their proposal is the whole of any tree that is harvested and not ultimately saw-lopped. So, if you cut down a whole lot of trees but decide not to saw-lop them or to saw-lop only some of them, you can still burn the whole tree. That is the proposition before us today, and we are simply not willing to see the renewable energy scheme used to provide an alternative to the hard work being done by all those who have negotiated the Tasmanian forestry agreement, which focuses on employment, value adding and making sure that that resource contributes the maximum benefit to the economy, rather than this opportunistic, last-minute inclusion that the government have attempted. We will be supporting this legislation, with the exception of the element that we will seek to amend in both the House of Representatives and the Senate. We do so from a position of principle, but one that recognises that if we were the government of the day we would have a different approach. We believe the renewable energy target is too important, in terms of its practical survival, to not listen to the Clean Energy Council and others in the environmental movement who have urged us to have a pragmatic approach to ensure that the industry can continue, whilst committing to further change to improve the scheme, should we come into government. So I commend the amendment to the House, and I suggest that the last two amendments have been put on the table by the government as an attempt to distract from the real position, which seems to be that they simply do not support renewables. They have dropped off one of them; they should drop off the second as well.
I welcome the introduction of this bill to the House and the hard work of the ministers for environment and industry and many others to get the bill to this point. I welcome the fact that this bill brings an unavoidable period of uncertainty to an end, and protects past investments that were made in good faith.
I want to begin with a word of caution. Much work is necessary to deliver good policy outcomes from this bill. Many different stakeholders will determine the success, or otherwise, of this bill, including project developers, retailers, the Clean Energy Regulator, the Clean Energy Finance Corporation, local and state planning authorities, or any federal government in power during the life of the legislation. The choices and actions of these stakeholders will heavily impact on the quality of the outcomes we get from this legislation. These stakeholders can get it right, or, alternatively, they can get the implementation desperately wrong. Some of the stakeholders I have mentioned could trample over local communities, be biased towards the wrong technologies, ignore the inherent risks in this scheme, and ignore the real justification for the legislation. If they choose this path we will all pay the price. Or, they can choose to pay respect to committees, make sensible technology choices and set Australia up for a lower emissions future. That is what we all want.
Since 1983, I have closely followed developments in the science and policy of climate change. Over that time I have seen the science strengthen in demonstrating the causal relationship between rising atmospheric concentrations of carbon dioxide equivalents and global warming. I do accept that there is much uncertainty in the modelling, the forecasting and some of the causalities, but I also believe, as a policy maker, that the risk and uncertainty is, in itself, a strong reason for precautionary action. I remain firmly convinced that the world does need to act, and Australia does need to do its piece.
But I have learnt over the years that emotional policy responses to a problem, whilst understandable, rarely make for good policy. So we need to remember some very basic principles in developing our policies across the globe, not just in Australia. The number one point here is that this is a global problem and it requires a global solution. The atmosphere is totally neutral to the cause of rising concentrations. It does not matter whether it comes from China, India or Australia, from the electricity grid, from transport, or from other sources of carbon emissions. We also know that outsourcing carbon emissions from one country to another helps no-one and has no impact. You only have to look at the result of what has happened in Europe to see that. The Europeans have outsourced their industry and their carbon emissions and have claimed that as emissions reductions. Of course, the atmosphere does not see it that way.
Secondly, we cannot bring this down to a choice between prosperity and the planet, or we will not save either. Instead, we need to focus on the lowest cost of reducing emissions and containing atmospheric concentrations of carbon dioxide equivalent across the world. As a world, we are still moving 50 million people per year into the middle class. When your income is $5,000 or $10,000 per year, then food, housing, basic education and health come first. We will only solve this problem if a solution does not slow the pathway to prosperity for the poorest amongst us and for those moving into the middle class. We need to develop prosperity and the future of our planet.
We should avoid expensive symbolic gestures when there are other better, lower-cost alternatives. But we also know that if we are going to avoid this choice between prosperity and the planet new technologies will be central to any solution. This is not just in the electricity grid, but off grid as well. We do not yet have a technology that can replace transport fuels and nor do we yet have a low-cost technology that can provide a sure supply of baseload electricity at low cost in our electricity grids. This will continue to be a challenge for the world and for Australia.
More locally, we need to remember some key principles. The first of these is that the electricity grid in Australia is an expensive place to reduce emissions. There is a very simple reason that: we have low-cost coal and high-cost gas. Worldwide, developing countries have found the easiest way to reduce emissions, aside from outsourcing them to other countries—which is completely ineffective, as I have already said—is to switch quickly from coal to gas. That is not an easy solution for us because we export our gas at high prices and our local coal is very cheap. But we do have very good options for off-grid reductions: changes of land use, capturing waste methane, and energy efficiencies. That is why the direct action program has worked at a phenomenally low cost—much lower, and with far greater volumes, than anyone expected.
So, it should not worry us that Australia is an expensive place to reduce emissions in our grid, because the electricity grid is only about a third, or a little more, of our carbon emissions. We still have a huge part of our carbon economy outside the grid, where there are low-cost options, and that is why Direct Action has been the right policy and has been such a successful policy. But we are also unusual amongst developed countries in being a major exporter of carbon-intensive goods. That means that solutions and targets which are acceptable to the US and Europe, which are increasingly importers of carbon-intensive goods, should not apply to us, and I will come back to that in a moment. Ultimately, though, if the science continues in its current direction we will need to achieve significant reductions in emissions in our electricity grid, and that requires exploration and commercialisation of new prospective technologies.
Turning now to the LRET and why it needs to change, we need to reduce the target while at the same time making sure that we maintain our commitment to a five per cent reduction in overall emissions by 2020. The reason for this is very simple. The original target of 41 terawatt-hours for the large-scale renewable energy target became unachievable. The highest rate of new generation coming in to our system has been about 1.6 terawatt-hours a year, but in order to achieve the target of 41 terawatt-hours we need to go from 1.6 up to 7. It was never going to happen. It was an impossible target, set by a trajectory set many years ago, which was totally unrealistic, and it meant that we simply were not going to achieve it. And, as I will explain in a moment, that would have meant the system going to penalty, and we would have been paying out large amounts in our electricity bills for no emissions reduction. This was not going to work.
We also know that demand grew far less than was expected. In fact, the 41 terawatt-hour target was looking like it was going to take us to something closer to 30 per cent renewables rather than the original target of 20 per cent, which was anticipated when the legislation was put into place. So, the target was quite simply wrong, and it needed to be changed. On top of this, we have a situation in which we are punishing our exporters for absolutely no reason. If an exporter shuts and that industry moves to another country, there is no improvement in carbon emissions. In fact, in all likelihood, because the outsourcing would more likely shift to a high-emission country using high-emission technology, we would see a deterioration in atmospheric concentrations as a result of punishing our exporters. So that too needed to change. What is being proposed in this legislation is a target that is much more realistic—33 terawatt-hours—and exemption of our major exporters. These are good changes and the right changes.
We still face some serious challenges in making all of this work, and they come down to three. The first is that the large-scale renewable energy target risks becoming a technology monoculture—that is, all wind and nothing else—and this is a serious policy problem. You cannot justify the large-scale renewable energy target on the basis of its being the lowest-cost means of driving emissions down. Even at the moment, the cost of a certificate is about $45. That is supposed to be the equivalent of $45 per tonne of emissions reduction. In fact, in all likelihood it is more than that, because we do not get a tonne of emissions for every certificate. But let's go with $45. We know from Direct Action we can reduce emissions for under $14. This is expensive. So, how can we justify doing it? The only real justification is in providing a platform to test, commercialise and refine new technologies that offer us good prospects in the medium to longer term.
If the technology used in the LRET is exclusively or largely wind, the problem is that we know wind will not see the learning curve improvements that we are seeing with solar. Most who look closely at this over a long period of time have come to the conclusion that the technology that has the best prospects is not in fact wind but, in time, will be solar. And we are seeing massive improvements in the cost of solar cells and the cost of batteries, which are central to storage. Wind is also highly intermittent, and supply often comes at the wrong times, at night. It is focused in the south of Australia, and we know that the demand growth we are seeing in the electricity grid is in the north of Australia, not in the south.
It will also be a huge challenge to meet the target. We will need to build more in the next five years than we have ever built before. We know that if we do not reach the target the impact will be that the certificate prices will go to penalty, flowing through to electricity prices. Claims are being made that that is not the case, and these claims are deeply flawed. If the certificate price goes to penalty, we will pay for it in our electricity prices. The argument made is that because there are many long-term contracts at lower prices then the short-term prices of going to penalty will not be passed through. Of course, this flies in the face of the most basic principle of microeconomics: that prices equate to marginal costs. But, more simply, as one farmer in my electorate put it, this is the equivalent of a farmer buying sheep for $30, the market price moving to $100 and the farmer selling the sheep for $30. What business is not going to pass on the price increase? Of course they are going to. So, clearly, if the certificate price moves to penalty because we missed the target then there is no question that electricity prices will increase very significantly, and that is likely to be a cost of about $3 billion per year by about 2020 if we go to target.
The third risk is that, in the rush to meet the target, local community concerns will be ignored. Some wind projects are planned in regions with highly subdivided country, like the outskirts of the Canberra region, and the community divisions can be deep and damaging. Land prices are elevated in many of these regions, which means that there are significant downside risks to those land values, and we need to be conscious of that.
To solve these problems, we need to do three things. One is to closely monitor our performance versus the target, and we need to take strong and immediate action if it is clear that we are not going to reach the 33 terawatt-hour target. We need to avoid a wind monoculture in the large-scale renewable energy target scheme by encouraging solar and other technologies beyond onshore wind. The focus needs to be on technologies which offer the best prospects for the longer term. I take great comfort that retailers are starting to understand the real advantages of well-located large-scale solar projects. They are quick to commission, better able to match supply with demand and better suited to the north of Australia, where demand growth and prices will be higher. Regulators, particularly the Clean Energy Finance Corporation and the Australian Energy Regulator, have an important role to play here in making sure that we get technology diversity in the large-scale renewable energy target scheme and do not end up with a monoculture. The retailers and developers also need to be aware of this.
Finally, we need the retailers and developers to be alive to community concerns. I will be quick to challenge developers and retailers who promote developments where there are strong unaddressed community concerns. I ask that these developers provide appropriate compensation for all parties that are impacted on. I congratulate the ACT, which has actually taken these things into account.
The implementation of this legislation is critical for my local communities and many communities across Australia. It will also ensure that we have a portfolio of low-cost new technologies. I, for one, will be watching closely and will be quick to point out when we are getting it wrong. Subject to these caveats, I commend this bill to the House.
I rise today to join my colleagues in supporting this legislation, the Renewable Energy (Electricity) Amendment Bill 2015. Labor has been working tirelessly over the last 18 months to secure the renewable energy target to give Australia's $20 billion renewables industry the certainty that it needs. This bill amends the Renewable Energy (Electricity) Act 2000 and the Renewable Energy (Electricity) Regulations 2001 and makes consequential amendments to the Climate Change Authority Act 2011.
The bill adjusts the large-scale renewable energy target to 33,000 gigawatt hours by 2020. This will reflect a commitment to achieve approximately 23.5 per cent of electricity from all renewable sources by 2020. The bill also repeals the requirement for periodic reviews of the RET, including consequential amendments to the Climate Change Authority Act 2011, something which Labor did not support.
Throughout the entirety of the negotiation, Labor has been guided by advice from the industry on what is best for them. The Clean Energy Council predicts the revised target of 33,000 gigawatt hours will drive around $40.4 billion in investment and create more than 15,000 jobs. That is welcome news. This agreement will see projects start to be built again and businesses enjoy the certainty that they have not enjoyed recently. It will allow them to ensure job security.
Labor's negotiation principles throughout did not change, which is why it is so pleasing to achieve the following outcomes: no change to the small-scale solar scheme, which includes rooftop solar and solar panels for small businesses, such as nursing homes; full exemption for emissions-intensive trade industries, which relieves some pressure on those industries that are enduring downturns and job cuts; and the removal of two-yearly reviews, which provides the long-term certainty the industry so desperately needs to survive and to thrive. These amendments in this bill will provide much-needed certainty to the renewable energy industry and enable sustainable growth in renewable electricity generation.
However, this bill also amends the Renewable Energy (Electricity) Regulations to reinstate native wood waste as an eligible renewable energy resource. Labor have said on numerous occasions that we will move an amendment to the government's legislation to exclude this provision. There is no case for introducing native wood waste burning into the renewable energy industry, and Labor will not be accepting this proposal from the government. Labor do not support burning native forests as a renewable energy source. We opposed it in government and we oppose it now.
Labor have been a longstanding supporter of renewable energy in Australia. We have had a longstanding commitment to it. As a country with abundant solar, wind and wave resources, and the world-class skills and expertise to turn those resources into reliable energy, Australia was a world leader in renewable energy until the election of the Abbott government. Labor's renewable energy target has been a resounding policy success story. Under Labor, homes with rooftop solar grew from just 7,000 to more than 1.2 million. Wind power in Australia tripled. Jobs in the renewable energy sector tripled. There was more than $18 billion invested in wind and solar farms, hydro plants and renewable energy technology development. On top of these major economic benefits, the explosion in renewable energy in Australia saw carbon pollution from the electricity sector come down. Between June 2012 and June 2013, emissions from the electricity sector fell by more than seven per cent.
This is a critically important industry in Australia. It employs more than 21,000 people, it attracts billions of dollars in investment, which creates jobs, and, importantly, it contributes to Australia's carbon pollution reduction. Labor firmly believes renewable energy is the way of the future. The rest of the world is marching towards a clean energy future. Around the world, investment in renewable energy grew by 16 per cent in 2014. In China, which is one of our biggest trading partners, investment in renewables soared by 33 per cent. That is why renewable energy featured so heavily in Labor's clean energy package and why Labor has fought so hard against the government's attacks on renewable energy over the past 18 months.
Renewable energy in Australia is a no-brainer. It's a no-brainer around the capital region too. It is a burgeoning industry that creates jobs, attracts investment, drives down household energy prices, offers alternative job opportunities to replace those being lost in the traditional manufacturing sectors and reduces our carbon pollution.
We have seen broken promise after broken promise from this government—and the RET is just another example. As we all know, the RET was introduced by the Howard government in 2001 as part of its climate change strategy and sought to increase renewable electricity generation by an additional two per cent by 2010 on top of existing generation. Until just after the election, it enjoyed bipartisan support. It is quite extraordinary that it enjoyed bipartisan support for such a very long time.
The target was subsequently expanded in 2009, by the Rudd government, to 20 per cent of all electricity generation by 2020. Before the election the Prime Minister promised not to change the RET, saying, 'We have no plans to change the renewable energy target,' but shortly afterwards he backflipped on that promise. There are no surprises there. It is just another broken promise from the Abbott government.
There were many more renewable energy related broken promises from this Prime Minister. There was the $600 million commitment for solar roofs. The towns and schools commitment was cut to just $2 million in the 2014 budget. The Australian Renewable Energy Agency had its funding severely cut in the 2013 MYEFO, and then the agency was added to the abolition list in the 2014 budget. The biggest of all renewable energy broken promises came after the Prime Minister appointed a known climate sceptic to review the renewable energy target, a move that completely undermined the whole industry.
Over the past 18 months this government has taken the renewable energy industry right to the edge of the cliff. Australia has plummeted from the fourth most attractive country in the world to invest in renewable energy to the tenth. Over the past year investment in renewables has dropped by a—staggeringly—massive 88 per cent. That decline has been felt very strongly, here, in the Capital Region. There are at least 14 announced large-scale projects surrounding Canberra. Only a few of those are in construction, with the rest having been placed on hold since this government set its sights on the renewable sector. Our renewable industry has completely stalled over the last 18 months in the Capital Region, and there is no way around it. That means a loss in local jobs, job skills and innovation. Most importantly, the stalling of the Capital Region's renewable sector has ultimately stalled our ability to reduce emissions of greenhouse gases from the electricity sector.
Labor has a proud track record when it comes to renewables, and we mean business. We said that if elected in 2016 we would use 33,000 gigawatt hours as a floor to build on. It will be a minimum. And we will top up the 2020 RET. We are currently consulting with the industry and finance sector to develop an ambitious renewable energy policy, past that point, beyond 2020. We have plans for the future to 2020 and are consulting on what is next, after 2020. Labor knows renewable energy is the way of the future. We know Australia needs to transition to a clean-energy economy and Labor is the only party with the will and ambition to see that happen.
In closing, I support the majority of this legislation because it will provide much needed certainty to the renewable energy industry and enable sustainable growth in renewable electricity generation. However, Labor opposes the inclusion of native wood-waste biomass, and we will fight it.
I also rise to speak on the Renewable Energy (Electricity) Amendment Bill 2015, which is all about the legislative underpinnings of the renewable energy target. It has three features. The first is the rescaling of the RET from 41,000 to 33,000 gigawatt hours, the second is assistance to emissions-intensive trade exposed industries and the third is the inclusion of wood waste in the RET. As other speakers have indicated, we support the first two elements but not the third.
Like the member for Canberra, like the member for Isaacs and all of my colleagues, we are big believers, on this side of the House, in renewable energy. For my 20 years in the Labor Party, we have been the party of renewable energy. We believe in the transformative economic benefits of wind, hydro, geothermal and especially solar energy.
Think about this stunning fact: more energy from the sun hits the earth in one hour than all the energy consumed on our planet in a year. You do not need to be Einstein—even the member for Mayo would grasp this—to see the opportunities in all of this for Australia, given our abundance of sun and wind in this country. We have all the ingredients to be a world leader in renewable energy—except a government that treats it as a priority.
My support for renewable energy extends to the programs that help make it a reality in this country: the Clean Energy Finance Corporation, the carbon price and the renewable energy target. We want an economy powered by clean energy, we want cheaper energy for middle-Australia in the medium term, and we need some business and investor certainty in this country. That is why I support almost all of the RET bill that is before the House of House of Representatives tonight.
Just like other speakers, I am proud of Labor's record when it comes to renewable energy. It is a fact that we were a world leader, during the Rudd and Gillard years, on renewable energy. We were in the top four for renewable energy investment alongside the powerhouses of Germany, the United States and China. That is an incredible feat for a nation like ours. I can rattle off lots of facts to demonstrate just how important investment in renewable energy was during that period. Solar rooftops grew from 7,000 homes at the beginning of the Rudd-Gillard years to 1.2 million homes. Wind power tripled. There was $18 billion of investment in wind and solar farms, hydro plants and renewable energy development.
One of the things I was most proud of is that there was a tripling of jobs in the renewable energy sector, despite a global financial crisis. Carbon pollution from the electricity sector dropped. In the last full year of Labor it dropped seven per cent from June 2012 to June 2013. You can see how this was achieved when you contemplate this, taking my own electorate of Rankin, to the south of Brisbane, as an example: 30,000 families in Rankin invested in solar energy for their homes. That is 42 per cent of the families in my community. That is much higher than the national average of 22 per cent, higher even than the Queensland average of 32 per cent. It is much higher than the Prime Minister's electorate of Warringah, which had 5.9 per cent take-up, or the Treasurer's electorate of North Sydney, which had 4.2 per cent.
You can see that communities like mine took up the opportunities of renewable energy with gusto. It shows this is not a preoccupation of the inner cities. It is something done by people of modest means, in suburbs like mine. They can spot an opportunity to do the right thing for the future of the economy, the country and the environment at the same time as they make a real investment in cheap, alternative energy for their families.
The contrast is really clear when you consider the achievements of the Labor government that I just ran through and compare them with what has happened since the election. It is a fact that the change of government had a devastating impact on investment in renewable energy in Australia. We went from being fourth in the world in terms of investment—remember, it was Australia, Germany, the US and China in the top four—and we are now 10th. The government should be acutely embarrassed of that fact. They shattered the bipartisan consensus over the renewable energy target, despite promising not to. They did not just try to trash our legislation in 2010, but they trashed the Howard legacy of the Howard legislation from 2001. They had a hand-picked panel that they tasked with undermining the renewable energy target. They headed it up with a guy who, remarkably, is the Prime Minister's business adviser, who thinks that the climate change debate is a cunning plan for world government. This was all part of their grand strategy to smash the RET, to smash the Clean Energy Finance Corporation, to smash ARENA and all the other institutions, policies and initiatives that helped make Australia one of the top four countries for renewable energy investment in the world, as it was under Labor.
They are supposed to be the party of business and investment, and in the process they smashed investor confidence. They brought investment to a standstill. If you consider this one fact: in 2014, worldwide investment in renewable energy went up 16 per cent; in Australia, in the same period in the large-scale sector, it was down 90 per cent—not 19 per cent, 90 per cent. It was up, around the world, by 16 per cent; it was down by 90 per cent in Australia in one year—and they have the gall to pretend that they are pro certainty, or pro investment, or pro business.
We entered into this negotiation because we value certainty for the sector. We wanted to restore confidence, even if we could not have absolutely everything that we wanted when it came to the renegotiation of the renewable energy target. I want to pay tribute to the member for Port Adelaide for his role in these negotiations, working with the government to get the best deal that we could for the renewable energy sector. We worked with the industry, and we worked with the stakeholders, to make sure that we could get for them, and the broader Australian community, the best possible deal. We reached agreement for about 25 per cent of energy from renewable sources by 2020. Even at 33,000 gigawatt hours, this will drive, with the certainty it brings, something like $40.4 billion in investment, and create more than 15,000 jobs. When you consider that the unemployment rate is higher now than at any point during the global financial crisis, those 15,000 jobs are very valuable indeed.
We worked with the government, but we did stand firm on some issues, including no change to the small-scale solar scheme for rooftop solar, including small businesses and other institutions—for example, nursing homes. We fought for a full exemption for emissions-intensive trade-exposed sectors and companies to protect jobs, and we fought against the two-year review so that businesses have the certainty they need. The two-year review that was thrown on the table late in the piece would have gone against everything we were trying to achieve when it came to certainty in the sector.
As other speakers have said, we do not support the inclusion of native wood waste biomass, for the reasons that the member for Port Adelaide ran through in detail. It was not in there when we were in government, as the member for Isaacs would know, having been a key contributor to our policy in this space, and it should not be in the agreement now. Our position will have absolutely no detrimental impact on investor confidence in this country.
We want an economy powered by clean energy. We want investor certainty. We want more people in communities like mine to access cheap renewable energy, and we want to help create the jobs of the future. That is why we need to be ambitious when it comes to renewable energy, and especially the renewable energy target. We have done a deal here in the interests of investor certainty, and we look forward to building on it and building on the substantial achievements of the Labor Party in renewable energy in the years ahead.
I note that the previous speaker, the member for Rankin, boasted of the Labor Party being the party of renewable energy. Given that renewable energy only exists in this country in the way it does through subsidies and government welfare, and that the Labor Party is the party of welfare, it is a neat match. We have heard from the member for Canberra that they plan to do more. They plan to ratchet up the amount of subsidies going into renewable energy, with the cost of power being driven up as Labor seeks to expand this sector, which is all subsidies.
Before I speak on the Renewable Energy (Electricity Amendment) Bill 2015, I want to address the changes that this bill will implement, and I want to preface those remarks by noting that a great deal of compromise has gone into achieving this negotiated agreement. This bill will make a number of key changes to the Renewable Energy (Electricity) Act 2000. It will adjust the large scale renewable energy target to 33,000 gigawatt-hours, in 2020. It will change partial exemptions to full exemptions for emissions-intensive trade-exposed activities. I note that the member for Rankin tried to claim this as a Labor Party feat, but part of the reason we went into this review was to give a reprieve to these industries. These trade-exposed emissions-intensive industries were copping it in the neck from high electricity prices caused by the carbon tax and the renewable energy target. It is certainly not a Labor feat, but one that the Liberal-National coalition has achieved because of this review. It will change partial exemptions for those industries to full exemptions. It will reinstate biomass from native forest wood waste as an eligible source of renewable energy.
This bill removes the biennial review—sadly, I have to say. I know the Labor Party and their Greens mates were very keen to see the back end of those reviews, and it begs the question: what exactly were they afraid of with the review? They tell us, ad nauseam, how great renewable energy is. They tell us it is a growing industry and creating all these mythical green jobs. But if renewable energy is such a wonderful thing, and if it is so efficient, then why would they not want it be reviewed every two years?
Are they afraid the review will show renewable energy to be not the raging success they think it is? I think they are afraid the review will highlight what a disastrously expensive indulgence it is, because the renewable energy target has already been reviewed. The Warburton review reported, and a key finding of the review was that:
In the presence of lower cost alternatives, the costs imposed by the RET are not justifiable.
Let me repeat that for the Labor Party: in the presence of lower cost alternatives, the costs imposed by the current renewable energy target are not justifiable. The Warburton review reported that the RET was an expensive means of reducing emissions because it failed to directly focus on emissions reduction and related only to electricity generation. Between 2014 and 2030, the cost of carbon abatement is estimated by the Warburton review to be between $32 and $62 per tonne for large-scale renewables. In small-scale renewables, the cost is even more outrageous, at between $95 and $175 per tonne of abatement.
One of the problems that this bill will address is the distortion caused by a changing market. As highlighted in the energy white paper, we have an oversupply of electricity generation capacity, when demand has fallen by an average of about 1.7 per cent per year from 2009-2010 to 2013-14. To allow for a changing market, this bill will reduce the large-scale renewable energy target from 41,000 gigawatt hours in 2020 to 33,000 gigawatt hours. The bill also changes the annual targets so that the 33,000 gigawatt hours in 2020 remains the target until 2030. These new targets address the fact that declining activity in the industrial sector and increasing energy efficiency have driven down demand. The changing target balances, on one hand, the desire to encourage investment and to reduce emissions and, on the other hand, the need or the absolute necessity to keep electricity prices down for consumers.
I note there is another section of this bill that the Labor Party says they no longer agree with, and that is reinstating biomass from native forest wood waste as an eligible source of renewable energy. I say 'no longer' because at one time they did agree with it. I was on the Labor dominated committee chaired by Dick Adams where a recommendation was made to the previous parliament that native forest wood waste be eligible as a source of renewable energy. The inclusion of native forest wood waste was in Labor's own legislation until November 2011.
The Liberal National government made a commitment at the last election that we would reinstate wood waste as an eligible source of renewable energy under the RET. In doing so, we were basing eligibility on exactly the same conditions that were in place under the Labor government. The whole idea of the RET is about support for additional renewable energy generation that is sustainable. Wood waste is a renewable energy source, and there is no evidence that it would lead to unsustainable practices, nor would it have a negative impact on biodiversity. In fact, the supply of wood waste as a fuel would have to work within the processes of Commonwealth, state and territory approvals. If burning wood waste to generate electricity is more beneficial for the environment than burning the waste alone or simply letting it decompose, how can Labor justify ruling it out?
The position Labor, the Greens and others in the same field have taken on this issue has been to block anything that would make energy cheaper and to search for ways that are going to make it more expensive because Labor and the Greens do not care if it costs more money. In fact, they want it to cost more money. Labor wants it to cost more because they are happy to keep borrowing money until they send this country broke. And what of the Greens? Well, the Greens do not believe in money. What the government has done is inherit a Labor Greens scam. It has made the most of the hand it was dealt, and credit is due to the government for limiting the damage and salvaging industry wherever it could.
But the reality is that the renewable energy target is a government mandated system designed to cost more. It is one viable sector of the industry being forced to prop up an unviable sector. There are many ways to generate electricity out there. The cheapest, the easiest and the most efficient is coal—coal fired power. In fact, the only way to generate reliable baseload power in this country is through coal fired power stations. There are other ways of doing it: nuclear, but we do not want to talk about that; or hydro, but, no, the Greens will not allow that either. There are the expensive ways of producing electricity, like wind or solar.
There are two problems, though, with wind and solar. They are intermittent and they are expensive because the wind does not always blow and the sun does not always shine. So it is necessary to have an alternative baseload generator. The baseload generator must be operational 100 per cent of the time because you cannot rely on wind and solar. So right from the get-go you are paying for two power sources when the cheapest one on its own could do the job.
When they introduced the job-destroying carbon tax—which they promise to bring back after the election if they are in, if they are given the chance—they droned on and on about green energy and green jobs. But their sermons never touched on how expensive that energy or those jobs would be. More important than what they said is what they did not say. They do not mention reports like the November 2014 report by Euan Mearns of Energy Matters, which concluded that renewable energy subsidies amount to 94 per cent of the value of the energy produced. Because the RET has forced Australia to use more expensive power generation, we all must pay more for power.
The Labor Party, during debate on the cataclysmic disaster that was the carbon tax, insisted that only the big polluters pay. The argument did nothing but confirm their own ignorance of anything to do with business or the real world. Any business that was forced to pay the carbon tax was forced to pass it on if they wanted to stay in business, and the same outcome applies to the RET. If we insist on using more expensive electricity, then someone has to pay that extra expense, and that someone is the end user: mums and dads and families around Australia. Every time they turn on the light, they are paying for the electricity, plus they are forced to pay more for more expensive electricity. Every time they cook dinner, have a shower, go to the fridge or watch television, they are using electricity that is much more expensive than it should be because of the RET. In some business operations, it is impossible to pass on that extra cost because there are other businesses in other countries that are not forced to use a more expensive means of electricity generation. So the RET places those businesses in an uncompetitive position. When the largest item of expense for a business is electricity, they are placed in an untenable position. They suffer massive cost blow-outs and will never be able to compete with a business that does not have that cost. That is why the government should be applauded for including in this negotiated agreement the raising of partial exemptions to full exemptions for businesses in that situation.
I am very pleased to say that that full exemption for emissions-intensive trade-exposed industry is very good news for a business like Sun Metals, a zinc refinery in my electorate up near Townsville. The refinery was built in 1996 by Korea Zinc, which produces 10 per cent of the world's zinc. Sun Metals is one of the most advanced plants in the world and one of the largest zinc refineries. It employs about 400 people. When massive cost increases were imposed upon the industry through schemes like the RET, and through Labor's other famous act of economic self-harm, the carbon tax, it was jobs like those that were put directly at risk. North Queensland is doing it fairly tough at the moment. Jobs are harder to come by since the downturn in the resource sector. The last thing we want is to see another carbon witch-hunt put 400 families out of work.
In conclusion, I want to address some of the fantasies that surround this mythical 'clean energy'. If you took the headlines at their face value, you might fall into the trap of thinking that families and business would be better off with renewable energy. For instance, consider a Worldwatch Institute article headlined, 'Renewables becoming cost-competitive with fossil fuels in the U.S.' These are the sorts of headlines that the Labor Party and the Greens love to promote and trumpet. If renewables are cost-competitive with coal, I ask: 'Why do they need subsidies? Why do we need any renewable energy target? Why do we need a government-imposed mandate at all?' But do not look at what they say; look at what they do not say—or at least read beyond the headline.
For example, there was a New York Times article from November last year headlined 'Solar and wind energy start to win on price vs. conventional fuels'. That sounds fairly promising. It even goes on to talk about:
… several companies signing contracts, known as power purchase agreements, for solar or wind at prices below that of natural gas, especially in the Great Plains and Southwest, where wind and sunlight are abundant.
But here is the kicker:
Those prices were made possible by generous subsidies …
And it goes on:
Both industries have managed to bring down costs through a combination of new technologies and approaches to financing and operations. Still, the industries are not ready to give up on their government supports just yet.
Already, solar executives are looking to extend a 30 percent federal tax credit that is set to fall to 10 percent at the end of 2016. Wind professionals are seeking renewal of a production tax credit that Congress has allowed to lapse and then reinstated several times over the last few decades.
In another article—one by Joel Hruska on the ExtremeTech site in December last year—it is a little bit more upfront. The headline declares, 'Solar and wind power are now fully cost competitive with fossil fuels—is it time to switch over?' But in the very first line the story says:
Renewable energy production has boomed across the globe in recent years, driven by improvements to solar and wind turbines, increased economies of scale, and in some cases, significant government subsidies.
They are right when they say that the Labor Party is the party of renewable energy, because renewable energy relies heavily on welfare and subsidies. And Labor is the party of welfare and subsidies.
I congratulate the government on what it has been able to achieve here in making a silk purse out of a sow's ear. I do commend this negotiated RET agreement to the House. I look forward to its passage in the Senate. And let us hope that some sense is retained here with the biomass wood waste being included in the final bill.
This bill, the Renewable Energy (Electricity) Amendment Bill 2015, amends the Renewable Energy (Electricity) Act generated in 2000. The major things that these amendments will achieve are as follows. Firstly, the target of 41,000 gigawatt hours will reduce to 33,000 gigawatt hours by 2020. It also increases the partial exemptions for all of the emissions-intensive trade-exposed industries to full exemptions. Currently, they are sitting at 60 per cent or 90 per cent to, roughly, overall, across the emissions-intensive trade-exposed industries, 70 per cent. Finally, it will also reinstate biomass from native forest wood waste to be an eligible source of renewable energy. Two other features are that it removes the requirement for biennial reviews of the RET—which is great because this current review seems to have taken forever, and we would have to be starting again in another six to 12 months time if we were left with that—and also that 850 gigawatt hours of energy from waste coalmine gas generation will remain as a separate requirement annually until 2020.
Next, I would like to bring to the attention of the House some popular misconceptions about the RET and these changes, and to document the serial changes in the RET since its inception in 2001. When you look at the history you can see why some of the illogical issues that we have to deal with now have come to be. Also, I would like to confirm that the large-scale renewable energy target of 31,000 gigawatt hours represents 23½ per cent, which generously exceeds the stated target of 20 per cent of all energy generation. The small-scale energy rollout currently has exceeded projections which were originally for 4,000 gigawatt hours by 2020. But already there are about 7,000 gigawatt hours—and it is projected to reach 13,000 to 14,000 gigawatt hours by 2020.
Also, the RET, or the renewable energy target, which is not to be confused with the renewable energy certificate, is quite different from feed-in tariffs, which many of my constituents get confused with. Feed-in tariffs are run by state governments and are a payment by the energy producers for the energy that is produced. One renewable energy certificate represents one megawatt hour of power. The renewable energy target originally was initiated by John Howard's coalition government in 2001. It was designed to produce another two per cent or at least 9½ thousand gigawatt hours of extra renewable energy on top of the existing baseload renewable energy, so that by 2010 we would have 12.7 per cent of our energy coming from renewable sources, with the original baseload of renewable energy coming from Snowy and Tasmanian hydro systems.
Liable entities—namely, energy retailers and some high-energy producing entities, which cover about 50 industries, including things like smelters and big LNG producers—were compelled to source renewable energy certificates to prove that the set percentage of their energy was generated by renewable sources. Originally, wind farms and sugar waste generated most of the early renewable certificates, but in 2007 the Labor Party and Prime Minister Rudd came along and overnight doubled the renewable energy target to 20 per cent of generation by 2020. At that time, with the current energy use, they estimated that, quite generously, at 41,000 gigawatt hours.
Around the same time they also started a fund, originally of $150 million, to give $8,000 grants to install photovoltaic solar panels. That was meant to run over five years, but within one year it reached $700 million. Along came the GFC and it appeared to keep going. When the need was obvious to remove the grants, they made another major change, which really created chaos in the renewable energy target and certificate market. Overnight, instead of one megawatt hour generating one certificate, or one REC, it created five RECs. Not too surprisingly, there were over 23 million of these phantom credits created without the proportion of energy that was originally intended. These phantom credits flooded the market and many of them still remain. So the renewable energy certificate price plummeted, effectively hobbling the large-scale renewable energy system, because the large-scale renewable energy producers, like wind farms, need $80 to $90 to break even. That is why they need a renewable energy certificate which gives them an extra income stream. I am sure they are quite happy now that the certificate price has gone up towards $60. It changes all the time. Back then, when they created the phantom credits, in typical Labor Party fashion they were trying to help a system that they destroyed. Only they could do something like that.
Also, since then, circumstances have changed dramatically, and that is why we have needed to readdress the 41,000-gigawatt-hour target. That estimate was wildly wrong as energy consumption has dropped dramatically. There are many reasons for this: the loss of many high-energy users, such as manufacturers of steel, aluminium and cement; high network costs; the explosion of photovoltaic solar panels with generous feed-in tariffs, as well as other state grants for things like solar hot water systems; along with building efficiency, lighting efficiency and heating efficiency. That all leads to lower energy consumption. So we have a market flooded with energy, a lot of it being subsidised. With the system being disrupted, so that even with the subsidy in place people were not expanding, there was a large likelihood that penalty payments would fall into place. If the targets are not met, the liable entities have to pay a penalty price, which is anything. Because it is not tax-deductible, it is up to $60 or more. There is a potential price that people would be paying for energy—wholesale prices of $90 to $95—and you can imagine what that would do to energy prices.
Baseload systems, which are cheaper to build and also much cheaper to run, have closed. Many industries depending on cheap energy have also closed. Small energy-dependent industries have struggled. It has become too expensive for many individuals and businesses. That is why we put in the adjustment to emissions-intensive trade exposed industries, as they are competing with producers in low-energy-cost markets. Whether you are an aluminium worker or a cement worker, or one of the many other high-end energy users that actually make and manufacture things, this is a matter of necessity. It is not a question of whether you like it or not; it means the industries will vanish if we do not correct the potential problems as well as the current problems.
Reinstating native wood waste is another issue which is entirely sensible. Some of the opponents of this initiative make out that there will be harvesting of primary wood sources just for generating biomass for bioenergy, but there are current state and federal agreements and legislation that prevent that. It is only the wood waste that will be eligible to be used as biomass. Also, the economics of the timber industry would mean that it would be a crazy waste of resources if they were using prime timber, which goes into our buildings, fencing, furniture and all those high-value things. What you get out of a renewable energy certificate would pale into insignificance compared with the value of the wood. So that legislation and pure common sense mean that it is only the wood waste—the sawdust, the offcuts, and all the other bits and pieces which will generate CO2 if they are left to rot or which, in many cases, are actually burnt because they are waste and every timber mill would fill up with waste if they did not dispose of it.
The legislation is also in keeping with the Kyoto protocol. It is quite sensible and, as I have mentioned previously, this is a sensible addition to the renewable energy certificate generating system.
I just want to say a few words about what we have achieved in Australia in terms of renewable energy. Our uptake of photovoltaic systems is exceptional and our target of 23½ per cent will put most countries in the world to shame. Yet we are criticised for not doing enough and not being generous in our support of renewable energy. They also say that renewable energy is cheap, but the economics of this RET scheme are incredibly generous. In fact, economically, it does not make sense it is so generous. But because we have a commitment to a renewable energy target we are running this system.
The cost of the subsidy in the RET, to 2030, is estimated at $17 billion. That is a huge subsidy and it is the electricity users of the nation, namely, the citizens who are paying for it. If penalty payments came in because the targets were not reached, that figure would rise to $35 billion. As I mentioned earlier, wholesale energy averages out at $30 to $40 per megawatt hour. It can go widely below to widely above. A two-megawatt turbine operates at 35 per cent capacity. So that would generate 6,100 megawatt hours of electricity per year. And if that turbine has a power purchase agreement with a certificate price of $60, that turbine would receive about $370,000 subsidy per year. If it dropped to $40 per megawatt hour, that would be $240,000 per turbine, per year. If you had a wind farm of 100 turbines—and there are some nearby that almost reach that number—the subsidy via the RET scheme would be half a billion dollars by 2030. That is a very generous subsidy.
When you look at the renewable energy target system to see whether it is a cost-effective way of carbon abatement, it probably is not. Before we got rid of the carbon tax, it was heading to $25.50 per tonne. And it was going to go up and up and up. With the recent Emissions Reduction Fund reverse auction we have achieved $13 a tonne—half the price. It is delivering six to seven years of reductions lock, stock and barrel. The cost of small-scale renewable energy via the RET—if you do the sums, the carbon accounting and the economics of prices and subsidies—is $95, up to $175, per tonne. Large-scale systems are slightly more efficient, at $32 to $62 per tonne.
So Australia is doing an exceptional job, compared to other places in the world like Europe that are held up by our political opponents, the Greens and the Labor Party. It is gold standard. We are streets ahead. Even the US has some large-scale systems but it, too, relies on extensive tax or physical subsidies. And the same in Britain. It is good to have a broad mix of energy production, but we do not want to blow up the whole system and have our baseload energy producers remove themselves from the market. We will then be like other countries that have brownouts or blackouts. This is a sensible bit of legislation that puts a bit of common sense into a very complex system and that meets our requirements to do our part for the environment.
I rise to discuss the Renewable Energy (Electricity) Amendment Bill 2015. Before I go to the substance of my address, I want to address some of the wild contradictions that the last speaker presented, because they are contradictions that are inherent in the entire approach of the coalition to this policy area, an approach that represents a reckless disregard for a very important industry and a very important arm in combating climate change and developing a new industry.
On one hand, those opposite argue that the Small-scale Renewable Energy Scheme is wildly inefficient. But, on the other hand, they took to the election a policy of one million solar roofs, a policy they have slashed to save money. But they have contradicted themselves on that. On the one hand, they attack the cost of abatement under the RET as being too high, yet their expensive and completely reckless Direct Action policy has a much higher cost of abatement. I just want to correct the myth propagated by the member for Lyne, which will probably be continued by the member for Hinkler when he has his go a bit later. The cost of the carbon price was $23 a tonne. On 1 July 2015, if that scheme still exists, we would have linked with the European carbon price and the cost of abating emissions under an emissions trading scheme would have been around $8 per tonne.
Under their dog of a scheme, where they cannot find a single economist to support the carbon price, the equivalent carbon price is $66 a tonne because two-thirds of their first auction results were for projects that would have existed anyway, that were funded under the carbon price, under the Carbon Farming Initiative, and that would have failed the additionality test. So once they were excluded, they purchased 10 million tonnes of abatement, at a cost of $660 million. That is a carbon price of $66 a tonne versus $8 a tonne under Labor's emissions trading scheme. So they cannot have it both ways. They cannot attack the cost of abatement under the RET and then defend their dog of a scheme with its $66 carbon price.
Let me return to the substance of the debate here. Why are we debating this bill? We are debating this bill because of the broken promise of those opposite, who, before the election said they would maintain the RET unchanged. They broke that promise because of their ideological hatred of clean energy, because their party room and their support base is made up of conspiracy therapists—not all of them, but Maurice Newman, their chief business adviser, sees climate change as some UN global conspiracy with world banks to dominate and take sovereignty away from sovereign nations. Their chief business adviser thinks climate change is a UN conspiracy to destroy the sovereignty of nations! The Treasurer is a man who thinks wind turbines are offensive, a blight on the landscape. We heard a sterling contribution from the member for Dawson. His understanding of clean energy is probably on par with his understanding of multiculturalism—and his contribution to both public debates is negligible; in fact, it is counterproductive. We also had a weird contribution from the member for Lyne saying we need to cut the RET because we are in danger of hitting the penalty price, we need to cut the RET because the penalty price will be hit and that will destroy industry.
The only reason anyone in industry started talking about the penalty price was the investment strike caused by the government's meddling, their ideological attacks on the RET and their constant reviewing. Because of the intervention, because of their broken promise, because of their ideological agenda, because of their appointment of Maurice Newman to conduct a review, what we saw was a complete investment strike by the global clean energy industry. They could not make investments in 2014 because of the mass uncertainty caused by the coalition government. The result of this was that we saw investment in the industry fall from $2.7 billion in $2013 to $240 million in 2014, an 88 per cent fall in investment in the clean energy industry because of the uncertainty caused by the vandals on the other side. We saw our global reputation damaged, we saw Australia's attractiveness for clean energy investment fall from fourth in the world to 10th in the world, and we saw 21,000 jobs in peril by their reckless approach.
We should contrast that with Labor's achievements in this area when in government. Under Labor, the number of solar PV systems on Australian roofs went from 7,000 to 1.2 million. There was a tripling of jobs in the clean industry, to 24,000, at the time we left office and we saw $18 billion invested in clean energy industry over. This move was matched around the world. Last year, we saw a 14 per cent increase in global investment in clean energy and a 33 per cent growth in China. Contrast that with the 88 per cent fall in clean energy investment caused by this government's ideological attack on renewable energy.
So we had the Newman report commissioned by the Prime Minister, a self-confessed weathervane on climate change, a self-confessed climate change sceptic who questions the science with rather pejorative terms. He commissioned Maurice Newman, 'Mr UN Conspiracy', to conduct the review. They then commissioned modelling with some of the most problematic assumptions ever seen in modelling. We often see modelling with dodgy assumptions and there will be argy-bargy on both sides about modelling—I understand that—but their modelling was so flawed that it was universally condemned for the assumptions underpinning it. Those assumptions included that the cost of base load coal fired power in 2030 would be exactly the same as it is now, that there would be no global carbon price and that there would be no price on carbon emitted from coal that would impact on the cost of production. It was incredibly flawed. But even this jury rigged, book cooked modelling—and let me emphasise this—still found that the 41,000 gigawatt hour Renewable Energy Target actually suppressed retail prices. Let me repeat that. The government's own modelling that was based on incredibly heroic assumptions to attack renewable energy found that the RET as legislated was suppressing retail prices, driving investment and increasing jobs in the industry. It found that, if you reduce the RET, jobs would go, emissions would rise and retail electricity prices would actually increase.
That is what those on the other side are actually arguing for when they argue for a huge cut in the RET, which is really what they want to do. This compromise is not where they want to land. They want to have either a RET with a two in front of it—in terms of 20,000 gigawatt hours—or no RET at all. What they are arguing for is an increase in electricity prices, not a reduction. That is based on the government's own modelling.
The government was pursuing this agenda and Labor had a choice. We could engage in empty political grandstanding and say that the RET as legislated was our policy, that we were going to help them keep their promise at the election—a broken promise like so many other broken promises. We could grandstand—and what would happen? The renewable energy industry would die. We would see the investment strike continue and 21,000 jobs in danger. We refused to do that because that is the response of a party that puts political interest above the national interest. Frankly, that is the response of the Greens.
The Greens were very happy to carp on the sidelines, to play no constructive role in this debate, to pursue an ideological agenda as narrow, fixed and opportunistic as the coalition and not contribute to the national interest. Instead, they chose to attack the Labor Party, who worked with NGOs and the clean energy industry to achieve the best possible compromise and rescue the government from a problem of their own making. Yet again, the Greens indicated that they would put their cheapjack political interests above the national interest. Labor will not do that. Labor, negotiated with the government and came down with a compromise that results in a Renewable Energy Target that, while unsatisfactory, is still unacceptable. That is why we are supporting this bill.
There are two important breakthroughs in this bill. Firstly, it ends the endless cycle of reviews that are constantly undermining certainty in the industry. That is a very important achievement that those on the other side tried to oppose and up-end at the last minute through the Minister for Industry. Secondly, it grants the full exemption to emissions-intensive and trade-exposed industries. This is an important initiative. This is a move that correct a massive flaw in the original mandatory renewable energy target as legislated by John Howard. Those on the other side can talk about protecting the industries that rely on cheap energy, but this flaw began under Prime Minister Howard. The 2009 amendments by Labor to produce a 20 per cent renewable energy target provided a substantial shielding for industries—we provided 90 or 60 per cent exemptions, unlike the original Howard MRET, which had zero exemptions for EITE industries. So I support that change to the renewable energy target to provide shielding to exporting industries that are emissions-intensive.
The result of all this is that, according to the industry's projections, we will see $10 billion of additional investment in the clean energy industry, 6½ thousand additional jobs and an additional 6,000 megawatts of capacity. This is very important. As important will be Labor's policies that will build on this. We have committed that the future Labor government will top up the renewable energy target's 2020 target to provide more space for large-scale solar and, secondly, that we will have a more ambitious 2030 RET target that we will bring into place. That is really important—to continue the development of this industry—because all this debate, all this heat and light, all this sound and fury, is about a choice. And the choice in this country is: do we want to develop a clean energy industry that will allow us to compete in the 21st century, or do we want to be a rust-belt, rust-bucket economy? Do we want an economy driven by fossil fuels that inevitably must have a carbon price somewhere in their production, and an economy where we are competing against the rest of the world that is investing in clean energy industries while we stick our heads in the sand? This is the choice in this debate. The renewable energy target is about carbon abatement. It is not the cheapest form of reducing emissions—that is an emissions trading scheme, and the RET works best when combined with an ETS.
But the main purpose of a renewable energy target is to develop an industry so that it has a mature stance and can compete against the rest of the world. That is really what we are talking about here. The nation that developed the technologies of steam and textiles production dominated the 18th century—that was the United Kingdom through the first Industrial Revolution. The economies that developed steel and chemicals dominated economically in the 19th century—that was the United States, the United Kingdom and, later on, Germany. The economies that had technological dominance in electronics through the transistor revolution dominated the 20th century—that is Japan and the United States. Just as these did, it will be the economies that invest and dominate in clean energy technologies in the 21st century that will be the most dominant economies in the world.
That is a dominance that Australia needs to be part of. We used to lead the world in solar technologies. Unfortunately the cutting edge solar technologies were sold off to Germany because of the lack of support here and the more production-ready technologies went to China. We have an opportunity to still participate in this industrial revolution, and we must. If we want to give our kids the best possible future and the best possible jobs, we must have good technologies in this area. We must be commercialising and productionising these technologies so that our jobs have these great, great opportunities. Our kids really need to have this opportunity, and this is what this debate is about.
Those on the other side with their real agenda of cutting the RET—and destroying it, eventually, if they get their way against the massive tide of public opinion—would have us as a rust-belt economy in the Pacific. We would be the laughing stock of the Asia Pacific. We would be an economy still built on very emissions-intensive energy production when the rest of the world had moved to clean energy. That is a future that is bleak. It is a future that is very short-sighted. And it is a future we must avoid. That is why I am proud to be part of a party that achieved a compromise on the renewable energy target in order to maintain it. It is a compromise that on some levels is unsatisfactory, but we must accept it so we can get that investment flowing through to the renewable energy industry. It is an investment that is vital not just for the future of that industry but for the future of the nation. I need to be able to look my children, and other people's children, in the eye and say: 'I supported Australia transitioning to a clean energy future—a future where we could compete with the rest of the world on the basis of clean energy production and low emissions-intensity production of manufacturing and other industries.' I commend the bill to the House.
I will not be supporting the Renewable Energy (Electricity) Amendment Bill 2015 that is currently before the Australian parliament. In my view, the renewable energy target—the RET, the deal the coalition has been forced into with Labor—will achieve only three things. It will increase the cost of electricity for those who can least afford it, Australian taxpayers will have spent billions of dollars subsidising private enterprise, and, come 2020, environmentalists will have little more to show for it than a warm and fuzzy feeling.
Let me explain. When I entered parliament in 2013 I was still a registered professional electrical engineer in the state of Queensland, and I promised to be a common-sense voice for the people of Hinkler and regional Australia. Over the past 18 months the issue raised most often with my office has been the spiralling cost of electricity—and for good reason. The median personal income in Hinkler is just $411 a week—just $411. A substantial number of pensioners call Hinkler home, and we have one of the highest unemployment rates in the country. Unfortunately, many of Hinkler's major employers are making workforce decisions based on the cost of energy—local foundries, farmers and manufacturers all say their overheads are rising at an unsustainable rate. Any relief businesses and households might have felt with the repeal of Labor's carbon tax quickly turned to dismay when Queensland electricity retailers substantially increased their tariffs. The end result was a net price increase of about five per cent. It is no coincidence that in 2013-14 the number of households in regional Queensland disconnected for debt or non-payment rose 87 per cent to 12,454. The Fraser Coast Chronicle last week reported that the local Meals on Wheels electricity bill jumped from $5,700 to $12,200 in just one year. The not-for-profit organisation says it has only two choices if it is to remain viable: to either increase the price of the meals or find $85,000 to buy solar panels.
What is the solution? I have heard politicians on both sides tell people to shop around for the best rate. That might be possible in the capital cities, but there is generally only one retailer in most regional communities. The lack of market competition will only worsen if the Queensland Labor government proceeds with its plan to merge state-owned corporations Ergon, Energex and Powerlink. The merger, combined with already high electricity prices, falling energy consumption and the renewable energy target, will result in substantial job losses in the energy sector. We heard a lot from the Electrical Trades Union during the January 2015 state election, but why aren't they out there actively fighting for their members' jobs right now?
In his second reading speech to this bill, the Minister for the Environment, Greg Hunt, said the renewable energy target introduced by the Rudd government resulted in:
… new subsidised capacity … being forced into an oversupplied electricity market …
I appreciate the government is trying to put the RET on a sustainable footing, but, in my view, this current legislation will still result in an increase in power prices, paid for by the people who can least afford it. Australians are using less electricity now than they were 10 years ago. The AEMO Electricity statement of opportunities report in August 2014 stated:
More than 7,500 MW would need to be removed from the market to affect supply-adequacy in 2014-15.
There is potentially between 7,650 MW and 8,950 MW of surplus capacity across the NEM in 2014-15.
Under any risk scenario, no additional capacity is required for at least 10 years. It also states that approximately 90 per cent of this excess is in New South Wales, Queensland and Victoria. Furthermore:
As operational consumption grows, the level of surplus capacity decreases. However, even with 10 years of consumption growth, by 2023-24 between 1,100 MW and 3,100 MW of capacity could still be withdrawn from each of New South Wales, Queensland, and Victoria without breaching the reliability standard.
The problem is that forecast consumption is expected to fall by 1.1 per cent per year at a minimum.
Current renewable technologies like wind and solar do not reliably generate power on a constant basis, and so the baseload coal or gas fired power stations still have to maintain capacity for peak use times when the sun is not shining and the wind is not blowing. Most of that peak occurs in the evening, after dark and, in many locations, when it is calm. Without some type of affordable storage system, there is no option but to maintain baseload power, and that will continue to force up the price of electricity. Put simply, if your running costs remain the same and you are selling less product, the next logical step is to increase the price of the product to be able to maintain your operations.
However, the Australian Energy Regulator, the AER, has advised of its plans to restrict Ergon Energy's proposed revenue by 27 per cent over the next five years, well below the $8.24 billion that Ergon requested. The measure is expected to save Ergon customers between $16 and $44 in network charges on their bills each year. The savings would have been substantially higher if not for the exorbitant feed-in tariff offered to solar users by the former Queensland Labor government. In very simple terms, the AER makes its decisions based on how much the businesses need to spend delivering electricity prudently through the distribution network, putting an end to the so-called 'gold-plating' that occurred in the Beattie years. The AER says any costs above efficient levels are to be funded by the network owners and not the customers. On the one hand, federally we are trying to keep power prices down for consumers by reducing the operating expenses and revenue of electricity companies; but, on the other hand, our current environmental policies are inflating the price of electricity because, without baseload power, you have to start turning the lights off.
The public expects coal fired energy companies to maintain the same availability and readiness, but the renewable energy target encourages people to use more renewables in an already oversupplied market. To give you a simple example, I spoke with a pensioner in my electorate last week. He gets up in the middle of the night, each and every night, to turn off his refrigerator so he does not use as much electricity. He relies on his rooftop solar to power the fridge during the day, and he would rather risk food poisoning than run up an electricity bill that he cannot afford to pay.
I would support the move towards renewable energy if wind, solar and battery technology actually worked—meaning if it were capable of reliably supplying electricity during peak periods to replace traditional baseload power generators. Plus, the cost at this point in time is astronomical.
Under this bill, $15 billion will be spent over the next five years on infrastructure that will run concurrently with coal fired generators, supplying into a market that is excessively supplied. Broad estimates by the department indicate that renewable energy certificates from 2015 to 2030, at an average of $47 per certificate, will cost $24 billion. If the RECs are allowed to reach penalty at $93, the cost to users will be $43 billion. Can you imagine the response if we went to the Australian people and said they needed to contribute an additional $43 billion through their electricity pricing as a surcharge? To meet the target, Australia will need to build as many renewable generators in five years as we have built over the past 15—all of which will need to be replaced in the short to medium term, when the technology outdates and the equipment deteriorates. Putting aside the cost of building the infrastructure, renewable energy is extremely expensive to generate. Coal fired power costs about $36 per megawatt hour to produce, compared to $190 per megawatt hour for solar and up to $120 for wind. If renewable energy were a sound investment, governments would not need to subsidise private businesses with renewable energy certificates.
I find it absurd that we on the conservative side of politics have abandoned the stated belief in the free market to reach a deal with Labor. Labor's recalcitrance will only hurt the very people they always purport to represent, and that is the poor. The Coalition's Direct Action Plan costs around $14.50 per tonne of carbon abated at its first auction. That is compared to $25 under Labor's carbon tax and a whopping $95 to $175 per tonne of carbon abated through the renewable energy target for the small systems scheme. Rather than subsidising jobs in private renewable energy businesses to the tune of almost $200,000 each over the period 2015 to 2030, we should be spending taxpayers' funds on research to advance renewable technologies that have real promise—growing our fuel, finding cheap and effective storage sources and ensuring ongoing jobs in Australian manufacturing through competitive energy pricing. The enormous buckets of money thrown at renewable research by Labor was haphazard and predominantly unsuccessful in large-scale trials.
I have personally worked in hydro power stations that have been operational for more than 50 years and they will continue to work into the future. These plants provide a multiplying effect into the local economy, providing water storage, generating capacity and long-term infrastructure with real benefits. They are a true renewable, with their energy source replenished every time it rains. The greatest of these installations is, of course, the Snowy hydro scheme. Hydros can be used as peakers. They are flexible and can be run up quickly, and at night, when there is no wind or sun, they still work.
If you really want to do something about emissions, we need to be having a proper debate about zero-emission next-generation nuclear technology. If you want renewables, we should consider growing the fuel source. Spend money on research for natural fuel sources such as biomass, where every year 100 per cent of the fuel supply can be regrown, providing long-term jobs. There is a proposal floating around for loans for irrigators to install solar pumps. Unfortunately, they will only be able to irrigate when the sun is shining—and it is back to the bad old days of watering in the middle of the day, when evaporation is at its highest. All of those years of water-use efficiency and capital installation down the drain. Typically, irrigation only occurs during times of low rainfall and drought, when water is scarce, but it is either be killed by electricity bills or invest in capital.
The public perception is that we have not done enough with respect to renewable energy. In fact, there was a large amount of capacity before the target was even set. The price of installing rooftop PV solar has fallen substantially. In terms of installed capacity, that is, gigawatts, rather than generation, that is, gigawatt hours, coal is currently only providing around 50 per cent of the energy mix. To even come close to meeting the target set in this bill, around 1,500 to 2,000 wind turbines would need to be built. Wind turbines are intrusive, ineffectual and always best placed in your neighbour's property, and out of view of your own. The remaining sites capable of having any chance of even 30 per cent utilisation for wind turbines are very limited, because you need a location where the wind blows consistently, of which there are not that many. And it should be close to where the energy is used.
Do I honestly think they can install the capacity needed to meet the reduced target? My answer is no. We will be back having this debate again in two or three years' time, when it becomes apparent that even huge subsidies will not be enough to get sufficient facilities built. If you want to subsidise businesses, subsidise exporters that create long-term jobs. Do not subsidise businesses that devalue and destroy assets already predominantly owned by the taxpayer.
Every business owner in my electorate would like to have the upper hand against their competitors. They would love to receive a guaranteed price for the products they produce, regardless of need, subsidised by someone else. If—and I say if—Australia meets its 2020 renewable energy target, it will not be because we have created an economically self-sustaining, reliable source of renewable energy. People will be using less coal-fired electricity for one reason only: they simply cannot afford it.
Labor has been a longstanding supporter of renewable energy in Australia and we will continue to be so in the future. As a country with abundant solar, wind and wave resources, and the world-class skills and expertise to turn those resources into reliable energy, Australia has been a world leader in the renewable energy sector.
All of this, however, has been put in jeopardy by the Abbott Liberal government. Billions of dollars have gone to other nations because of the uncertainty created by this government's broken promise on the renewable energy target. By 2013, under Labor, Australia was rated one of the four most attractive places in the world to invest in renewable energy, alongside China, the US and Germany. Under this government, we have now dropped to tenth. Investments in large-scale wind, solar and other clean energy sources plummeted 88 per cent in 2014 to $240 million, the lowest level since 2002. The reckless behaviour of the Abbott Liberal government has effectively driven investors in the renewable energy sector offshore. This is Australia's great loss: a loss of jobs—important jobs of the future—and a massive setback for our efforts to reduce carbon pollution.
Conversely, under Labor's guidance and commitment to the future, the renewable energy sector flourished. Homes with rooftop solar grew from around 7,000 to more than 1.2 million, including around 9,000 homes in my electorate of Newcastle. That's right: under Labor's leadership, Newcastle installed more rooftop solar panels than the nation as a whole had prior to the election of the Labor government. Wind power in Australia tripled. Jobs in the renewable energy sector tripled, with more than 21,000 Australians employed in the sector, 4,000 of where were in New South Wales. More than $18 billion was invested in wind and solar farms, hydro plants and renewable energy technology development. The Australian Renewable Energy Agency, ARENA, which was established by Labor in 2012, invested more than $60 million in my electorate of Newcastle, with private funds taking the overall investment in just two years to more than $100 million—and that is just in my electorate. What is the government's reaction to this investment and economic boost? They attempt to abolish ARENA.
Not only were there economic benefits to Labor's commitment to renewable energy but there were very big environmental benefits as well. The explosion in renewable energy in Australia saw carbon pollution from the electricity sector come down. Between June 2012 and June 2013, emissions from the electricity sector fell by more than seven per cent. Under this government, however, emissions are headed the other way. Research by energy consultant pitt&sherry released last month showed brown coal's share of the main national electricity grid surging to its highest level since September 2012, increasing the sector's greenhouse gas emissions.
Unlike the Abbott Liberal government, Labor firmly believes renewable energy is the way of the future. The rest of the world is marching towards a clean energy future. Rather than lagging behind other nations we should be out there leading the way. We have the brightest minds, so we need the best government policy and funding commitment to support them. My electorate of Newcastle hosts some of the leading researchers in clean energy, based at the Newcastle Institute for Energy and Resources and the CSIRO's flagship energy centre. World-leading projects and scientific breakthroughs should be harnessed and developed locally, here in Australia. We must be able to realise the potential that is on our own door-step.
With all of this considered, we have to ask why we are here debating a bill to reduce the renewable energy target, the very policy that underpins the success of Australia's renewable energy industry and sets us on a pathway to a clean energy future. We are here because of a broken promise from the Prime Minister. Shortly after the election, the Prime Minister backflipped on one of his pre-election commitments—to retain the renewable energy target at 41,000 gigawatt hours, by 2020. Even though the Prime Minister has made a habit of breaking promises after the election, this broken promise did take us by surprise, simply because it just made no sense. The RET had enjoyed nearly a decade of bipartisanship—the Prime Minister voted for John Howard's initial RET legislation, in 2001, and then again in 2009 and 2010, when the Labor government expanded the legislation. The first sign we had that the government was walking away from its pre-election commitment on renewable energy was when Tony Abbott went on commercial radio in 2013 to peddle his myth that renewable energy drives up household power prices. This is simply not true and was indeed proved wrong by the Prime Minister's own hand-picked review panel, but I will go to that with some detail shortly. Then the Treasurer went on the same commercial radio program and added his own helpful contribution to the debate, declaring that wind turbines were 'offensive' and a 'blight on the landscape'. What a fine contribution to the debate from the man meant to be driving our economy into the future!
There were many more renewable energy related broken promises from this Prime Minister. The $600 million commitment for solar roofs, towns and schools was cut to just $2 million in the 2014 budget. The Australian Renewable Energy Agency had its funding severely cut in the 2013 MYEFO. And then, as I mentioned earlier, the agency was added to the abolition list in the 2014 budget. But the biggest of all the renewable energy broken promises came after the Prime Minister appointed a well-known climate change sceptic to review the renewable energy target. Much to the Prime Minister's shock, he did not get what he was after from that review. Despite the Prime Minister's insistence that renewable energy drives up power prices, the RET review found that the current RET of 41,000 gigawatts per hour will put downward pressure on household power prices in the medium to long term, that it helped drive investment in Australia's renewable energy industry, that it was reducing Australia's carbon pollution, and that it was creating jobs in Australia. Yet the Prime Minister's own hand-picked panel recommended either abolishing the RET altogether or cutting it significantly. The Prime Minister chose to cut the RET by more than 40 per cent.
This enormous change in policy sent shock waves through the renewable energy sector. The bipartisanship that had underpinned the industry for more than a decade had been shattered. That bipartisanship drove billions in investment, secured jobs and saw the industry flourish. It was the solid foundation that investors needed to make commitments that span decades. When the government shattered that bipartisanship, Labor knew it needed to be returned in order to give the industry the certainty they needed to attract investors to major projects. But Labor was not willing to do a deal with a government that would see the industry ruined. We did not accept the initial proposal to slash the RET by 40 per cent.
Throughout the entirety of the negotiation, Labor has been guided by the advice of the industry on what is best for them. We have reached an agreement now with the government that will see around 25 per cent of Australia's energy generation coming from renewable sources by 2020. The Clean Energy Council predicts that the revised target of 33,000 gigawatts per hour will drive around $40.4 billion in investment and create more than 15,000 jobs. The agreement will see projects start to be built again and businesses enjoy certainty that will allow them to assure their staff's job security.
Labor's negotiation principles throughout did not change, and I am pleased that the following outcomes were achieved. There has been no change to the small-scale solar scheme, which includes rooftop solar and solar panels for small businesses such as nursing homes. We have achieved a full exemption for emissions-intensive trade industries, which relieves some pressure on those industries that are enduring downturns and job cuts. And thankfully we have removed the two-year review that the government wanted to put in place. This provides the long-term security and certainty that the industry so desperately needs to survive and thrive. The exemption for emissions intensive trade industries is of particular significance to my electorate of Newcastle, with more than 1,000 people employed at Tomago Aluminium. Over the course of the RET negotiations I met with both the management of Tomago Aluminium and the unions to listen to their concerns about the RET and their ideas for the future. While supportive of the renewable energy target as a policy direction for the nation, Tomago Aluminium emphasised their massive reliance on electricity, with no viable alternative in sight. I am glad Labor has been able to secure a full exemption for emissions-intensive trade exposed industries like Tomago Aluminium and that the government has seen fit to correct what was an anomaly from the prior Liberal government. That is good news for the 1,000 men and women working at Tomago, for their families and for our region.
Finally, I would like to touch on the one remaining aspect of this bill that Labor does not support. We are disappointed that the government continues to pursue its plans to include burning native forests in the RET. Labor opposed this in government and we oppose it in opposition. Burning native forests for energy is neither clean nor renewable. We simply do not see a case for its inclusion in the RET, and we will oppose it. Renewable energy has a bright future under Labor. We have said that if elected in 2016 we will use the 33,000 gigawatts per hour as a floor to build on, not a limit. We will top up the 2020 RET, and we are consulting with industry and the finance sector to develop an ambitious renewable energy policy beyond 2020.
Labor knows that renewable energy is the way of the future. It is the way of the future for the environment. It is the way of the future for our economy. It is the way for jobs of the future. We know that Australia needs to transition to a clean energy economy, and Labor is the only party with the will and ambition to see that happen. Labor does support the majority of this bill, although we do not, as I said, support the last-minute, petty inclusion of the native wood waste biomass in the RET. I urge the government to take this out of the legislation. It has no place in the RET. It is time for our nation to move forward with an eye on the future, and there is no time to waste.
I rise to speak on the Renewable Energy (Electricity) Amendment Bill 2015. Firstly, by way of background, the previous legislation had our renewable energy target set at 20 per cent of our electricity production by 2020. I am not sure what the wisdom of 20 per cent by 2020 was, other than that perhaps it had a nice sound or a nice ring to it. The RET as modelled in the original legislation would have required 41,000 gigawatts of electricity to be produced to achieve that 20 per cent target by 2020. But this was just another example of the reasons we need to always be aware of economic modellers when they believe they can foresee the future. As economic modelling often is, this was, again, hopelessly wrong. They did not factor in the effect that schemes such as the RET, the solar subsidies and the carbon tax—all these wonderful so-called green schemes!—would have on the price of electricity.
In the decade between 1990 and 2000, we had a four per cent total increase in the price of electricity. But, since 2007 to 2013, the price of electricity for Australian consumers and Australian households doubled. There was a 100 per cent increase from 2007. If electricity prices double—surprise, surprise!—you will get some reduction in demand. That is exactly what happened. It looks like our electricity demand will actually be 20 per cent less than where we expected it to be by 2020. again, That is 20 per cent less than what the experts foretold.
Currently, we are generating around 18,000 gigawatts of what is classified as renewable energy. This legislation in front of us that we are debating here today proposes to reduce the target down from 41,000 gigawatts to 33,000 gigawatts. Effectively, here today, we are locking in the need for this country to build another 15,000 gigawatts of electricity by 2020, the majority of which will come from wind turbines. This will effectively require around 2,000 additional wind turbines to be built throughout our nation. Many members, especially on the other side, have spoken up and said how wonderful this is. I would suggest that we could perhaps share the joy. We could each volunteer to have in our electorates a proportion of those 2,000 wind turbines. Then we will see how many members of parliament are still standing up and saying how wonderful this idea is to roll out another 2,000 wind turbines throughout our nation.
Here is the kicker: we as a nation do not need to spend one additional cent on any electricity generation capacity because we have a market that is oversupplied at the moment. So by resetting the target to 33,000 gigawatts all we are doing is creating a taxpayer subsidised, make-work program for the wind industry. Despite some of the nonsense peddled during this debate, wind turbines are simply not a cost-effective way to generate electricity. No-one in this country would build a wind turbine unless they received some type of subsidy. Wind turbines do not run on wind; they simply run on subsidies.
I have heard during this debate that somehow subsidising wind turbines will make the wholesale price of electricity cheaper. But 'wholesale price' is a completely meaningless term. It is simply a single cost point along the supply chain which is meaningless. What counts are the cost of production and the retail price to the consumer. It is an absolute and complete delusion to believe that we can somehow reduce the costs of electricity by mandating a higher cost and a more inefficient form of production. That is why this target simply will not work. In short, this legislation will lock in $20 billion worth of malinvestment in wind farms rather than $30 billion. Just think for a moment about all the things we need to do in our nation. Think of the opportunities lost and what could have been done with that $20 billion that will be unnecessarily spent building 2,000 wind turbines around this nation.
During this debate I heard the member for Rankin waxing lyrical about our nation's investment in solar. I believe that sometime in the future solar electricity will have great potential in this nation. Currently, I understand that in some cases in remote locations where the cost of connecting to the grid is prohibitive stand-alone investments in solar can actually be economically viable today. But I suggest the member for Rankin take time to read the recently published report by the Grattan Institute on the cost to this nation of the various solar subsidies. The report revealed that there is a $14 billion asset transfer. It is a subsidy being paid by consumers who do not have solar panels on their roofs to consumers who do have solar panels on their roofs. So I say good luck to those who have taken up these schemes; they are getting a subsidy. But that subsidy—$14 billion of it—is being paid by the majority of citizens of this country who do not have solar panels on their roofs. The Grattan Institute found that, even if we make an allowance for the so-called climate benefits of solar, the costs outweigh the benefits by $9 billion. So the investment in solar in this country by 2030 will see $9 billion of our nation's limited and precious resources—excuse my language, Deputy Speaker Goodenough—simply pissed up against the window.
What has greatly concerned me during this debate, listening to speaker after speaker from the Labor Party, is how clueless those opposite are about how we create wealth and prosperity in this country. The one way you do not create wealth and prosperity is by mandating the use of or having a compulsory requirement for a higher cost method of production. That is how you destroy wealth. That is how you destroy our prosperity. Our wealth and our prosperity is created by entrepreneurs, mainly our small business entrepreneurs, taking risks, experimenting with new ideas, trying out new methods of production, creating new goods and services, and investing in productive assets.
What we are doing by this bill—legislating 20 per cent of our electricity; a total of 33,000 gigawatts—is going backwards in our nation's productivity. This is at a time when we need to be looking at how we can do things more productively. By locking in the construction of another 2,000 wind turbines, we are doing things that are less productive. That destroys our wealth and hampers our ongoing prosperity.
The other fallacy in this debate is that having all these subsidies will create all these wonderful jobs. Under this bill, for every job created, the cost of the subsidies is something like $200,000. That is a great idea. We could create many more jobs if the subsidies cost $200,000. But by building things we do not need, building things that are inefficient, we are simply costing this nation jobs. For every job we create through artificial schemes, through subsidies to build wind turbines, we are destroying more real jobs in the economy.
In this bill I note there is 100 per cent exemption for what are called emissions trade exposed industries. But that exemption merely exposes the fraud or stupidity of those who have talked up this bill. If the RET is really going to lower costs, why do we have the exemption? The exemption is there because this bill drives up the cost of electricity. If you exempt some industries from the harmful effects of the RET, others have to pay more. There are many unintended consequences of this bill, and time does not permit me to expand on them.
Many Labor speakers say the reason we need to have all these—and they deny the additional costs of them—is they deal with climate change. They believe that if we build 2,000 wind turbines across our nation somehow they will change the weather. In truth, the belief that building 2,000 wind turbines will change the weather is little different from those in primitive societies who believed we could change the weather by throwing 2,000 virgins down a volcano.
The first question we should be asking ourselves is: how much CO2 will we reduce by building another 2,000 wind turbines? It is worth noting that a 1,000 megawatt wind farm produces seven million tonnes of carbon dioxide in component construction and concrete, and it requires almost 100,000 truckloads of concrete just for the footings. Then the wind farms need a 24/7 backup of carbon-dioxide-emitting coal fired or gas fired power stations. It is a question about how much if any carbon dioxide emissions will be reduced.
If we are serious about taking steps to reduce our carbon dioxide emissions and our footprint—
If we are really serious about reducing the carbon dioxide emissions in this country, building 2,000 wind turbines is a tokenistic act to make us feel good. If we are really serious about having to reduce CO2what we should be doing is looking at replacing our coal fired power stations with nuclear power stations. That is what we should be doing. If we are fair dinkum. If we do not say that, we are simply hypocrites.
In the future, all of us would love to see renewable energy replace fossil fuel, but to do that we have to get renewable energy at a cost below that of fossil fuel. The best way we can do that is not to waste $20 billion on the construction and rollout of another 2,000 wind farms. That money should go into research and development. If we are able to create some form of renewable energy that is at a lower cost than coal or gas we can roll that out not only across the nation but also across the world. By going down the track of spending and investing that money, we are simply making ourselves poorer and making it more difficult for us to achieve that target.
I could go on with this bill for many hours. In conclusion, I appreciate the difficult job the ministers had in negotiating this renewable energy target. This is the least damaging of what was already a damaging bill. Yes, it would have been better if we had got that number lower. That would have made our country more prosperous. It would have helped us create more wealth. It would have helped us invest more resources into the research and development of renewable energy that would actually do the job—rather than simply waste $20 billion on the construction of these 2,000 wind turbines. I thank the House.
I rise to speak on the Renewable Energy (Electricity) Amendment Bill. Energy is front and centre in national economic debates. Twenty-one years ago Labor created the National Electricity Market, the NEM, because Australia needs a robust energy framework and a responsive market. The RET has been part of our National Electricity Market and the national electricity policy framework for about 14 years. But as electricity markets began an unprecedented trajectory, five years ago, we knew that our old energy certainties were not going to continue. We needed to review where we were and where we were going, not just with the network itself but also with the RET. So, although Labor did not support the appointment of Dick Warburton and his committee to do that work—we believed it should have been done by differently constituted group—I thank Dick, Shirley In't Veld, Brian Fisher and Matt Zema for the work that they did. I thank them for the transparency which underpinned their review. It is an important review, and Dick and his team should be acknowledged for their work.
Over recent years, we have seen complexities which both enable and weigh on the capacity and efficiency of our electricity market, and we need to ensure a way forward that will strengthen markets and create a price for electricity that is understood, a price signal that can be both sent and received, and price reflectivity for producers and consumers of electricity. We need to support stronger and diverse growth opportunities for our energy industry and specifically for our renewable energy sector. Diversifying Australia's renewable energy supply through our vast solar, wind, wave and thermal resources make sense. Labor is committed to the renewable energy industry, because, deployed effectively, it is widely supported in our community and it makes economic sense.
Across the world, energy consumers are moving to renewable technologies. As customers they are voting for renewable technologies. In Europe we have seen the massive value of old power utilities and networks destroyed as customers have moved, wiping trillions of dollars off the value of publicly listed electricity generation and distribution firms.
Labor are committed to renewable energy because we know renewable energy is good for the environment, it helps lower carbon emissions and it responds to consumer demand. Energy generation contributes around 30 per cent of Australia's total CO2 emissions, so we do need to look at this sector and we do need to utilise technologies to get it to respond to that carbon footprint. We also need an electricity market that is efficient and that can respond quickly to the needs of consumers and whatever disruption comes next. We need an effective price signal that operates in our electricity market.
The renewable energy target, the RET, plays an important role in diversifying Australia's energy supply. It is also a bipartisan instrument. Labor and the government have sat down in good faith to discuss the future of the RET, and I give due credit to Ian Macfarlane and Greg Hunt for their terrific endeavours and the open and frank way in which we discussed a range of issues. I also give great thanks and pay tribute to Mark Butler and Chris Bowen for the work that they did in order to help negotiate the bipartisan position on this policy issue and resolve the impasse that has been in place for the better part of the year. The conversations and negotiations were genuinely highly useful.
There is a deep, 13-year history of bipartisanship on the current RET that spans the leadership of prime ministers Howard, Rudd, Gillard and now Abbott. Bipartisanship has been at the heart of Australia's nascent renewable energy industry. This industry, much like any industry, craves the certainty created by such strong political consensus. Certainty begets business confidence and allows renewable energy businesses to build, invest and set plans for the future. Bipartisanship paved a solid and reliable path towards investment and growth in renewable energy. Businesses were sure footed when travelling along this path. Consensus is important because we do not want to see the RET revisited based on the vagaries of an electoral cycle.
Australia's progress on renewables was such that, not so long ago, Ernst & Young placed Australia in the top four countries in their renewable energy country attractiveness index. Prior to the last election, Australia sat alongside the economic powerhouses of China, the United States and Germany. Unfortunately, recent events have highlighted the fragility of investor confidence and certainty, and have led to a situation where the two sides of politics had to get together again to safeguard business confidence and create the right environment for investors by settling on a new target. We know the devastating impact that uncertainty has had on the renewables industry. Uncertainty kills investment, and it did no less to the entire renewables economy.
This policy area should not be treated like a political football on an ideological playing field. I want to make it clear that the Labor Party are committed to the RET and that the parliament is also committed to the RET. There is genuine bipartisan commitment to the RET, now at 33,000 gigawatt hours. Labor is pleased that there is finally the basis for an agreement on a RET of 33,000 gigawatt hours. That is a significant shift from the target of 41,000 gigawatt hours; but, if is legislated, we hope it will provide certainty for the industry to restart the building of projects. It should also provide certainty to the energy-intensive trade-exposed sector.
Prior to the 2013 election, the RET of 41,000 gigawatt hours enjoyed bipartisan support for large-scale renewables, with an uncapped program for rooftop solar energy. After the election, the government embarked on an attack on the RET on the basis that it was providing too much capacity to the electricity market and causing price increases. Much of that rhetoric has been rejected by the government's own Warburton review in its report, which was released early last year. Since 2013, we have seen billions of dollars in investment stall and hundreds of jobs lost in this industry. In 2014, investment in large-scale renewables plummeted by 88 per cent.
Labor will not alter the aims of the RET if it regains government at the election due next year. Labor will seek to grow the renewable energy sector further if it wins government next year and will use the revised RET as a floor to build on. Labor believes a strong renewable energy target is a critical part of Australia's response to climate change, and transitioning our economy to a clean energy future is a mission that binds us all together. The RET has been the driving force behind billions of dollars of investment in clean energy that has delivered thousands of new jobs in hundreds of communities through the installation of clean energy systems in thousands of businesses and millions of homes.
Labor believe that renewable energy has an important role to play in Australia's energy mix and that we should rebuild the policy structure required to see the industry return to growth. Labor recognises that energy sector policy is complex and interrelated. It is important, therefore, to get the policy settings right. Labor would take steps to increase the size and diversity of the renewables market and would move to reunite the electricity production sector with the climate change portfolio—reversing the Abbott government's portfolio split. Labor strongly supports aligning electricity generation with climate policy. The reason for that is straightforward: 30 per cent of our CO2 emissions are generated by the electricity sector. It makes sense to reunite these two policy objectives under one policy umbrella. While Labor has convinced the government of the need to maintain the RET and has worked to achieve consensus in this policy area, there are some aspects of the bill that the government has got wrong. My party cannot support the inclusion of native wood waste in the target. Labor does not support burning native forests as a renewable energy source. We oppose it. We opposed it in government, and we oppose it now.
Aside from the inclusion of native wood waste, there is another anomaly in the RET scheme which needs to be fixed and which has been overlooked. The self-generation exemption for the RET allows for incidental amounts of electricity to be provided to external parties. What this means in practice is that in remote areas, especially in my home state of Western Australia, the power generated by, for example, a major minerals processing facility can be used to power telecommunications or television and emergency services communications over remote areas in a cost-effective way. Under the current law, there is a risk that such use may trigger a substantial RET liability—that is to say, the loss of a partial exemption, and that may occur to the minerals processor. This imposes a disproportionate penalty on the provider, which would then make the use of incidental electricity completely uneconomic. The Warburton review recognised this anomaly. In section 712 of the report: 'It is noted that the panel recommends self-generators be permitted to supply incidental amounts of electricity to third parties for community services on an otherwise dedicated line, while still being eligible for the exemption.' Unfortunately, I am informed that the government's current bill does not address this issue.
As the renewable energy target has shown, renewable energy reduces emissions and supports new manufacturing jobs and may also put downward pressure on wholesale power prices. Leaving the RET alone would please some in the industry as well as many members of the community who have embraced renewable energy. Some established investors would be happy. Some newer investors would be unsettled. With excess supply in the wholesale electricity market and with reduced investment in renewables, it would have been a challenge to reach the 41,000 gigawatt hours in the required time frame by 2020 for the RET to stay on track. Modelling conducted by the Warburton review and work commissioned by the Clean Energy Council found that to keep the RET on track we would need an additional newly-built 9,000 megawatt hours of renewable energy capacity by 2020. That equates to around 1,500 to 1,800 megawatt hours of new renewable energy each year to the end of 2020. The Warburton review did encouragingly find a significant project pipeline, including 6,000 megawatt hours of projects that already have planning approval. I accept that some projects in this pipeline have withered, but others will come along. But I do not want to understate how challenging it will be to significantly ramp up our renewable energy build. In 2013 we reached the highest annual wind installation of 655 megawatts, and some predictions have up to 900 megawatts scheduled for installation in 2015. But there is still a big gap between 900 megawatts and the 1,500 megawatts a year that will be required.
We hope that the government heeds Labor's concerns about certain aspects of this bill. I also hope that the considerable areas of bipartisanship that I have mapped out today do create some desperately needed certainty for industry, that this parliament is at least taking a step in the right direction. I congratulate the two ministers, Hunt and Macfarlane, for the work that they have done, and shadow ministers Bowen and the member for Port Adelaide for the work that they have done to ensure that we can reach this deep bipartisan agreement. We also need to accept that, as we continue to progress to reform our energy markets, the RET is only one part of that. We do need to have reforms that orient our electricity markets and our networks in a market-driven way to allow price signals to be sent and price signals to be received. In this context, our regulators and the role that our regulators play in ensuring that our industry works efficiently and effectively and that prices to consumers are kept at levels that consumers can afford to pay is critically important. The AER in that context is a critically important regulator.
I ask the government to ensure that the regulator decisions that are made that support customers, consumers and communities in their desire for affordable, reliable, safe and efficient energy supplies are maintained. I have noted in the past my concern that the New South Wales government's decision to fight the AER's assessments in recent weeks is in conflict with all of those objectives. We need to have governments that support regulators, that support good market outcomes, that support prices for consumers and that are in the interests of all of our community and in the interests of a sound industry. I commend this bill to the House.
I rise to speak on the Renewable Energy (Electricity) Amendment Bill 2015, and I do so with pleasure. My electorate of Petrie is home to almost 40,000 families and 3,000 small businesses. In relation to renewable energy, it will mainly affect my electorate of Petrie with solar, but it may also affect people if targets are not achieved and there is a price to pay and then bills are pushed up. That is the main gist of how it will affect Petrie. More than 20 per cent of homes in the Petrie electorate use solar power. I put my electorate in the top 25 out of the 150 federal seats in the country who use renewable energy. As I said in my maiden speech, I support solar and renewable energy as a way to sustain our beautiful Australian environment and also to harness the resources that we have, particularly the sun.
I want to stress to the households and businesses in my electorate using solar power that this bill makes no change to household solar—the small-scale renewable energy scheme. And in relation to small-scale renewable energy and solar power in particular: the government is a great friend to small businesses, and small solar companies within the electorate of Petrie should be glad about the recent instant tax write-off that we announced in the budget. It is a real opportunity for every solar provider within the Petrie electorate to get out there and to talk to businesses in the area, to say to them, 'Look, you need a new solar system on your building. Now is the time to install it.' A five-kilowatt solar system may cost $5,000 or $6,000 for a good system. Or they may want to get a 10-kilowatt system, because businesses are the ones that can take advantage of solar—particularly in Queensland up in my seat of Petrie.
Most businesses work in daylight hours—pretty well between eight and five—so if they have a solar system on top of their roof then as they are creating the energy they can use it. We know that businesses have lights, air conditioners, computers, power tools or whatever it may be running. This is a great opportunity for every solar installer in the Petrie electorate right now—with this certainty around the RET and also with the $20,000 instant tax write-off—to get out, approach local businesses and say, 'Have I got a deal for you! Let's go.' It is a great opportunity.
We, the coalition government, are committed to a renewable energy target that will encourage sustainable growth in both small-and large-scale renewable energy in Australia. This bill makes changes to the RET to better reflect market conditions. It amends the Renewable Energy (Electricity) Act 2000 to adjust the large-scale renewable energy target to 33,000 gigawatt hours by 2020; it increases the pastoral exemptions for all emissions-intensive trade-exposed activities to full exemptions; and it reinstates biomass from native forest wood waste as an eligible source of renewable energy—and I note that those opposite want to exclude that and add amendments. This will mainly come into place down in Tasmania, but if there is wood waste on the ground that is going to be burnt up in a fire or sit there and rot I cannot see why it should not be used. I am sure that the members on this side of the House and the three fellows from Tasmania here would be particularly supportive of this if it helps to create jobs in Tasmania as well. The bill also removes the requirement for Labor's legislated biennial reviews of the RET.
The bill represents a balanced approach and solar will be the winner, with significant new investment in small-and large-scale solar expected. We have made an agreement with the opposition to legislate a large-scale renewable energy target of 33,000 gigawatt hours by 2020. This will see more than 23½ per cent of Australia's electricity derived from renewable resources by 2020. That is a great achievement. I think we went to the last election promising 20 per cent. Due to the drop in electricity usage, the previous scale was going to come out a lot higher than that. But 23½ per cent is a fantastic place, isn't it? It is a great place to start. Well done to everyone involved.
As highlighted in our energy white paper, Australia has an oversupply of generation capacity, and some of that is aged. From 2009-10 to 2013-14, electricity demand has fallen by about 1.7 per cent per year on average. This is due to many factors: declining activity in the industrial sector, which is not always good news; increasing energy efficiency, which is good news; and strong growth in rooftop solar PV systems, which I have experienced in Petrie—a lot of people are taking that up there, which is fantastic. All of this has reduced demand for electricity sourced from the grid.
While the government welcomes a diverse energy mix in Australia, we also understand that circumstances have changed since that original target was set. The new target represents a much better balance, because it has to be achievable. It covers the need to continue diversifying Australia's electricity generation assets; the need to encourage investment in renewables, while also responding to market conditions; the need to reduce emissions in the electricity sector in a cost-effective way; and the need to keep electricity prices down for consumers. That is really important. I heard the member for Hinkler before, talking about the pensioners in his electorate who are screaming because of high electricity bills. He has a really good point—he has a great point—because if we do not achieve the targets that we have set then there will be penalties. What will those do to the pensioners in the Petrie electorate? Or to the people who cannot afford to put solar on their roof? This is an important question. We all have to work together to make sure the target is achieved, because we do not want those penalties kicking in.
The bill is about protecting jobs in the emissions-intensive trade-exposed sectors by reducing their costs. It will take the common sense action of reinstating native forest wood waste as an eligible fuel source as well.
I do want to take this opportunity to thank the Minister for Industry and Science, Ian Macfarlane. I heard him speak today. He was a key negotiator on this and he speaks a lot of common sense, so well done to him. Thanks go to him for his contribution and, of course, to the Minister for the Environment, the Hon. Greg Hunt, who has been doing a fantastic job as well with this and with everything he does in the environment. This week we saw what he achieved with the Great Barrier Reef. He also exposed Greenpeace for the lies that they were telling about the Great Barrier Reef—trying to pass off some Asian reef destroyed by a cyclone as our Great Barrier Reef. I do not know where theses Greenpeace people and the Greens get their ideas from—they are dangerous! People should not support them.
But thanks to him for what he is doing, and also for what he is doing with the Green Army. I have two projects that have been rolled out in my electorate. The Minister for the Environment has been doing a great job there as well. We thank him and the Minister for Science and Industry for what they have both been doing. It is so important that we protect the environment we live in, now and into the future. I am proud to be part of a government that is delivering in this space.
I want to particularly acknowledge both the ministers in writing into this bill that there will be no review of the Renewable Energy Target until 2020. I still remember all the commotion last year during the RET review that was legislated by the previous Labor government that led to uncertainty. At the time, I had the shadow minister, the member for Port Adelaide, running up around in Petrie and going to forums trying to get some political points. In his speech today he spoke about the uncertainty of the time and that we would have achieved the 41,000 if it were not for us. He was not playing a really good positive contribution, running around the country trying to scare the hell out of people. I think that this will bring certainty to the industry.
By legislating that there will be no RET review until 2020, we will be able to give the renewable energy industry the certainty it needs to grow. Instead of a review, the Clean Energy Regulator will provide an annual statement to parliament on how the scheme is tracking towards the 2020 target, and any impact the RET is having on electricity prices. This bill will give the renewable energy sector the assurance it needs to innovate and develop and it cements our commitment to the Renewable Energy Target that will encourage sustainable growth. This is a good deal for the sector and for Australia and it should be supported.
I rise to speak to the Renewable Energy (Electricity) Amendment Bill 2015. I make it clear that I support the position as outlined by the member for Port Adelaide and supported only a few moments ago by the member for Brand, who also spoke on this bill and who I know was also party to the discussions in the negotiations that ultimately led to the target that is now before us.
The Renewable Energy Target was introduced by the Howard government for a very simple purpose—that was, to reduce carbon emissions in Australia. It is one of many initiatives that have been committed to by both government and the private sector over the years in order to achieve that outcome. And the reason why we want to reduce carbon dioxide emissions in this country is because the planet is warming, our climate is changing and there is increasing global scientific consensus that the global changes that we are seeing are being contributed to mostly because of human activity in the form of creating and producing greenhouse gases, of which carbon dioxide is the major one.
There has been a number of other measures put in place over the years to try and ensure that we actually begin to reduce carbon dioxide emissions in this country and, indeed, across the world. Countries across the world are each in their own way making their contributions to changing the level of greenhouse gas emissions that have been occurring over the last hundred years or so. Each country does so in a way that best fits in with their own economy. But what we are seeing, more so in recent years than ever before, is that the major emitting countries like the USA, India, China and Europe are moving in the right direction in as much as they are making some serious efforts to reduce their carbon dioxide and other greenhouse gas emissions. Each are doing so by different mechanisms and different methods but they are all acting in a way which takes them in the same direction.
Whilst here in Australia, we see the Abbott government taking this country in the opposite direction. The major policy of direct action has been dismissed and discredited by most analysts. It is a policy that pays polluters with little net benefit to the environment or to the country for that matter. In fact, the $2 billion plus that has been allocated to that program, I believe, will be money that will give very little return to Australian taxpayers. As the member for Adelaide recently pointed out, it worked out that for each tonne of abatement that was achieved by this government in the first purchase of certificates, the cost was $600 plus per tonne. That is not good value for the Australian taxpayers.
We saw the Abbott government also try to get rid of the Australian Renewable Energy Agency and the Climate Commission, which is, I understand, now the Climate Council. But this change, the change to the Renewable Energy Target, is only the latest and perhaps the most significant of all the changes it wants to make. The Renewable Energy Target has been in place now for over a decade and it is actually working. It is actually making a difference to the release of carbon dioxide and other greenhouse gases in the Australian atmosphere.
On that point, there are many who talk about the fact that we are only a small player in the globe and therefore our contribution to whether or not there is an increase in greenhouse gas emissions makes little difference to the climate. Whether or not that is true, we have a responsibility as a country within the globe to do the best we can and the most we can to play our part in reducing those submissions, regardless of whether others are living up to expectations or not. I hear it often said by members opposite, when they talk about the current state of the Australian budget. And I heard it only earlier this evening by the Minister for the Environment, the very person who currently has responsibility for the environment in this chamber, when he referred to the intergenerational theft of the previous government by not having balanced its budget.
There is no greater intergenerational theft that I can think of than by a government that reneges on its obligation and its responsibility to manage the issue of climate change. In effect what is happening is that we are passing onto future generations a very heavy penalty for the inaction of this government. It is even worse than that, because, as a result of the inaction of today's government, we may even have effects that are totally irreversible; and future generations will never be able to share, enjoy or be part of our current way of life.
The renewable energy target is indeed working. It has created some 20,000 jobs here in Australia and I understand worldwide there are currently around 7.7 million jobs in the renewable energy sector. That is because countries are embracing the opportunities provided to them by the emerging and growing renewable energy industries. As other speakers have pointed out, the number of solar rooftop panels on houses across Australia increased from 7000 homes when we came to office to 1.2 million when we left office. I believe there has been about 200,000 in the last couple of years. We have almost one million solar hot water systems in homes around Australia as well. There are wind power solar farms, hydro plants and renewable energy technology developments right throughout this country. These have been critical in sustaining and supporting the manufacturing sector in Australia at a time when that sector has been hit hard by other policies of the Abbott government.
I have spoken to businesses in my home state of South Australia about how important the renewable energy sector is to the future of the many manufacturing businesses which faced dire consequences of the Abbott government having orchestrated the collapse of the automotive industry in this country. The member for Port Adelaide mentioned the company IXL, which I visited with him and where we saw exactly the opportunities presented by the Renewable Energy Target. IXL had made the transition from automotive component manufacturing to making the frames for large solar panels for use in the large solar projects we will see around Australia. That the firm had two projects—one it was working on and one it had put on hold because of the confusion and uncertainty surrounding the Renewable Energy Target. Dozens of jobs were in limbo as a result of the government wanting to change the Renewable Energy Target. Tindo Solar, which is another company in my electorate, made the point very clearly: it was the Renewable Energy Target that was sustaining its business of making domestic solar panels. I understand that Tindo is the only home solar panel maker in Australia and it is very supportive of the renewable energy target. Other companies interstate made it absolutely clear that, if the Renewable Energy Target was interfered with in any way, they would have to shed jobs.
I can think of only one reason that the government would want to change the current target, and that is to protect the fossil fuel companies and the electricity generators of this country that provide most of the electricity at the moment. There is no other logical reason. The argument used by members opposite—that we can achieve a 20 per cent reduction in emissions by 2020 and therefore the 43,000 gigawatt target needs to come down as well—does not stack up. If we surpass the 20 per cent target, what is the problem? What is wrong with going beyond the 20 per cent target that we have set ourselves? That, indeed, was a minimum target; there is nothing to stop us from going further and, if we do, it means that we have contributed even more than we had planned in reducing greenhouse gas emissions in this country and across the world. That is exactly what we should be doing—when we should set only minimum targets rather than targets that we cap when we reach them.
The last point I would make is this: the uncertainty that has been created by the Abbott government in wanting to change the target has clearly affected the renewable energy sector in this country. The Clean Energy Council has made statements to the effect that there is about $10 billion worth of investments in the pipeline which would be affected or, conversely, would proceed and create thousands of jobs if a worthwhile target remained in place. There have been similar claims by other stakeholders operating within the sector. My view is that the RET is important, firstly, for our contribution towards tackling the issue of climate change; secondly, it offers opportunities for new businesses and new technologies; and, thirdly, it sustains what is already a major industry sector in this country. For that reason the work done by the government and the opposition in trying to reach a target is important. I do not agree with bringing in the changes that the government proposes in respect of the burning of woodchips, and the like, as part of the Renewable Energy Target. I do agree that, at the very least, we need to have certainty in the industry, and hopefully this legislation achieves that.
I rise to speak on the Renewable Energy (Electricity) Amendment Bill 2015. The legislative amendments to the RET restore some of the balance in the RET scheme. I will make some comments on the member for Makin's contribution to this debate. We should get a few things clear here. The uncertainty in the renewable energy sector has been caused by the reluctance of the Labor Party from 2013 up until now to be involved in negotiations. As the member for Makin leaves the House, I will remind him of his 2008 contribution to the debate on the ill-fated emissions trading scheme, where he said in this place that, if we did not pass Kevin Rudd's emissions trading scheme, the heatwave in Adelaide would never come to an end.
This bill is a victory for common sense. It overcomes some of the ideological mumbo jumbo that we see come out of this place and puts some certainty into the RET. Without this bill, the RET would revert to its default position, which would mean that the whole RET would be in jeopardy and the cost of electricity would go through the roof. So I do support this legislation.
My colleague the member for Hinkler made a very measured and well-resourced contribution to this debate tonight. This bill is about altering the RET; it is not about whether we have one or not. I want to make it clear to people listening to me tonight that I am supporting this bill because it brings the RET back to a more achievable level. Not to support this legislation would see the RET go to the default position, which would be disastrous.
The Parkes electorate is quite a leader in renewable energy, with solar farms at Nyngan, Moree and Lake Cargelligo. All three different styles will play an important role in filling in some of the gaps in electricity transmission in New South Wales. Their location away from the generators in areas of high levels of sun make them ideally placed to play that role.
It is important in this renewable energy debate that we respond in a practical and measured way. The ideological drive by the Left needs to be called for what it is. Our electricity consumption is dropping not because we have become superefficient; it is because we are turning off and using less. Unfortunately, many of the people making that sacrifice are the ones who can least afford to do so—the elderly and small business. This bill brings some certainty into the RET, and it will have a twofold effect. It will have a target that is achievable and it will also put some certainty into investment so that those projects that are in the pipeline, those that have had a significant amount of investment, those that are waiting for approval, will now have the certainty to go ahead.
The solar farm at Moree is the most recent one in the Parkes electorate. It is an ideal location for a solar farm, in an area of flat ground, supported by a large community. If renewable energy is going to mature, we need projects like this one. Renewable energy, whether it be wind or solar, is probably in its early stages of development. If we are going to get to a more efficient level of generation from the sun and wind, we have to put up some large-scale plants so that engineers get experience in constructing them and, as time goes by, we will become more efficient.
I understand that the Holy Grail of the alternative energy industry will be a battery that can store electricity in an economical and efficient manner. In places like Silicon Valley in the United States, billions of dollars is going into such a development, so solar and wind will be complete alternatives rather than, as they are at the moment, additives to our energy generation. As the member for Hinkler rightly pointed out in his contribution, we are still reliant on fossil fuel power generation, which we need at peak times and at times when either the wind does not blow or when the sun is not up. The member for Makin, whose home state of South Australia has the largest reliance on wind, will know that in the recent past that state has had a large number of problems because of its complete reliance on wind without having an adequate mix of other forms of technology.
The Nyngan solar farm will certainly be the largest solar farm in Australia, and the construction of that is pretty well completed. It has been a wonderful project for the Nyngan community. There are projects like the Bodangora wind farm, near Wellington, which is in a relatively isolated area and, I believe, there is now the opportunity for that project to go ahead. It will more than likely happen. With the wind farms, it is important that the needs of close neighbours are taken into account, and that they are placed where they can get maximum draw-down on the wind, but do not cause problems for nearby neighbours.
While we have the minister and the shadow minister in the chamber now, I would like to commend them both for coming to an agreement on this. The statements made by previous speakers in here from the Labor Party, blaming the uncertainty in the industry on the coalition government, are certainly incorrect. That uncertainty will now be behind us and we can get on with the job at hand. I commend the bill to the House.
The question now is that this bill be read a second time.
A division having been called and the bells having been rung—
As there are fewer than five members on the side for the noes in this division, I declare the question resolved in the affirmative in accordance with standing order 127. The names of those members who are in the minority will be recorded in the Votes and Proceedings.
Question agreed to, Mr Katter and Mr Wilkie voting no.
Bill read a second time.