Senate debates

Thursday, 18 August 2011

Bills

Carbon Credits (Carbon Farming Initiative) Bill 2011, Carbon Credits (Consequential Amendments) Bill 2011, Australian National Registry of Emissions Units Bill 2011; In Committee

1:42 pm

Photo of Nick XenophonNick Xenophon (SA, Independent) Share this | Hansard source

by leave—I, and also on behalf of Senator Birmingham, move amendments (1) to (4) on sheet 7129 revised together:

(1)   Clause 5, page 12 (after line 9), after the definition of general law land, insert:

Greenhouse Friendly Initiative means the Greenhouse Friendly Initiative for the reduction of greenhouse gases established by the Commonwealth and administered by the Department administered by the Minister administering this Act.

(2)   Clause 5, page 17 (after line 9), after the definition of net total number, insert:

New South Wales Greenhouse Gas Scheme means the greenhouse gas reduction scheme established by Part 8A of the Electricity Supply Act 1995 (NSW).

(3)   Clause 5, page 18 (lines 23 and 24), omit the definition of prescribed non-CFI offsets scheme, substitute:

prescribed non-CFI offsets scheme means:   (a)   the New South Wales Greenhouse Gas Scheme; or   (b)   the Greenhouse Friendly Initiative; or   (c)   a scheme prescribed by the regulations for the purposes of this paragraph.

(4)   Clause 95, page 124 (lines 11 to 19), omit subclause (2), substitute:(2)    As soon as practicable after making the declaration, the Administrator must consider the request and may, by written notice given to the person who made the request, determine that this Act has effect, in relation to the project, as if:   (a)   if the project is a sequestration project:      (i)   paragraphs 89(1)(b), 90(1)(b) and 91(1)(b) had not been enacted; and      (ii)   the net total number of Australian carbon credit units mentioned in subsections 89(3), 90(3) and 91(3) were increased by the number specified in the determination; and   (b)   if the project is a landfill legacy emissions avoidance offsets project that was accredited under the New South Wales Greenhouse Gas Scheme—the baseline for the purpose of making a methodology determination under section 106 is 20%; and   (c)   if the project is a landfill legacy emissions avoidance offsets project that was accredited under the Greenhouse Friendly Initiative—the baseline for the purpose of making a methodology determination under section 106 is 0%.

This set of amendments ensures that early adopters of carbon sequestration projects will not be disadvantaged under the Carbon Farming Initiative. The collection and use of landfill gas for electricity generation is one of the most effective means of reducing greenhouse gas emissions. Australia's landfill gas power generation sector currently reduces carbon emissions by over four million tonnes of carbon dioxide equivalent each year. However, under the bill currently before the Senate, there is no certainty for these businesses—which currently operate under the New South Wales GGAS scheme or the Greenhouse Friendly scheme—that they will be considered under the prescribed non-CFI offsets scheme, nor what baseline would be applied. These amendments insert a provision that, for existing projects wanting to transition into the CFI scheme, a baseline of 20 per cent be applied to projects currently under the New South Wales GGAS scheme and a baseline of zero per cent be applied to projects currently under the Greenhouse Friendly scheme. These amend­ments also insert the New South Wales GGAS scheme and Greenhouse Friendly scheme into the definition of the prescribed non-CFI offsets scheme.

Currently it will be up to a determination to specify what baseline will be applied to existing projects, and this simply does not provide early movers with any certainty about the viability of existing projects. It should be noted that 20 per cent is a conservative figure that has been determined based on the national greenhouse gas inventory data. Inserting a 20 per cent baseline into the legislation for existing projects under the GGAS scheme and zero per cent for existing projects under the Greenhouse Friendly scheme will give this industry certainty for its projects.

LMS is a renewable electricity generator that was established in 1982. It is a South Australian based company employing some 100 people across the country. It was an early adopter—in fact, one of the first adopters of carbon abatement projects. The Prime Minister visited LMS's Rochedale plant, in Brisbane, on 13 July 2011. This is what the Prime Minister said at that time:

And I’m here today at LMS, and I thank them for having me here, looking at how they are generating electricity from landfill. Landfill, as it decomposes, creates the kind of carbon pollution we’re worried about, it particularly creates methane gas. Here at this facility today, instead of that gas simply going into the atmosphere as pollution, it is being captured and it’s being used to generate electricity …

And that electricity is powering more than 4500 homes. This kind of clean energy future is probably a bit unexpected, people have heard about solar and they’ve heard about wind, they may have heard about geothermal, but here is another innovative way that we will see a clean energy future using the gas from the landfill to generate electricity.

It’s this kind of clean energy future that will be turbo-charged by putting a price on carbon, as we create the circumstances where new clean energy ventures can prosper. I’ve been very pleased to learn about this clean energy venture today and it’s why I’m so determined, because I know these things are possible, that we as a nation seize a clean energy future by putting a price on carbon.

Interestingly, unless we significantly amend the legislation, then the legislation in its current form could well lead to a closure of the very plant that the Prime Minister visited, because there will be no investment certainty. But, more than that, this plant will not be viable. That is a very serious concern. If a standardised baseline of 20 per cent is not provided and does not give certainty to LMS, projects such as the Rochedale project that the Prime Minister visited will, most likely, close down. Indeed, LMS's 15 separate projects under the GGAS scheme could all be threatened if this amendment is not passed. In Queensland, projects include Rochedale, Swanbank, Whitwood Road and Birkdale. New South Wales projects include Tweed Shire; Summer Hill, Newcastle; Awaba, Newcastle; Eastern Creek; and Wyong. In Victoria, LMS has projects in Hallam Road, Wollert, Bendigo, Ballarat and Shepparton. In Tasmania, it has a project in Remount, in Launceston. These projects combined create an estimated 1.33 million tonnes of CO2 abatements annually. LMS also has four Greenhouse Friendly projects which could be put at risk. LMS is but one example.

Altogether, the landfill gas industry delivers around four million tonnes of CO2abatement each year. Failure to provide certainty that existing projects will be able to transition into the CFI, with a fixed 20 per cent baseline for GGAS existing projects and zero per cent baseline for existing Green­house Friendly projects, could see the closure of these projects.

These amendments will provide that certainty and will ensure that the Carbon Farming Initiative supports all carbon abate­ment schemes, including existing projects which have been initiated by early movers.

As I understand it, there have been many negotiations in the last 24 hours in relation to this matter. I hope Senator Milne does not mind my saying this, but I am particularly grateful for her longstanding interest—long­er standing I think, than that of most of us in this chamber—and her particular awareness of this issue. I know we can debate issues of additionality, but it would not make sense to me unless there is a proper transitional mechanism for these sorts of projects.

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