Tuesday, 2 September 2014
Renewable Energy Target
I speak tonight on the Renewable Energy Target. I commence my contribution with a quote:
We will be keeping the renewable energy target. We have made that commitment. We have no plans or proposals to change it … We have no plans or intentions for change and we have offered bipartisan support to that.
Those are not my words. They are the words of the current environment minister before the last election, in what regrettably went on to become another broken promise from this government.
I wish to speak today on a matter of the utmost importance to Australia's future economic growth—the increasingly partisan policy being proposed and enacted by this coalition government. This government is making decisions now which will negatively affect levels of investment in a whole swathe of industries for many years to come. Actions designed to keep a minority of their backers and supporters happy will damage key Australian industries well into the future, long after their period in government has ended.
Last Thursday, the government released the report of the Expert Panel on the Renewable Energy Target Scheme. The panel found that the RET has met its objectives. It has encouraged significant additional renewable electricity generation and delivered a significant level of carbon dioxide-equivalent savings. Yet, in the face of the objective evidence found by the panel of the RET's success, the recommendations to government basically distil down to two options: scrap it fast or scrap it now.
I intend to make two points: to touch on how devastating the report's recommendations will be for the renewable sector and to highlight how the mixed messages and inconsistency of this government's policies are damaging industries and increasing investment risk.
The most recent example of this—the knee-jerk review of the Renewable Energy Target—is a dangerous example of policy made in parallel to reality. It is a review written in reverse, with the desired outcome made crystal clear by the government well before the hand-picked panel set about their work. Since John Howard brought in the RET in 2001, it has gone through for elections with support from both sides of politics. The historical bipartisan support for the Renewable Energy Target has led to billions of dollars in investment. Since its introduction, around $18 billion has been invested in Australian renewable energy and it is estimated that a further $18 billion would have been invested before 2020 under the current RET. The additional wind and solar power energy networks are beginning to drive down wholesale electricity prices. If you scrap the RET, power prices for Queensland families will increase.
A report released yesterday by Solar Business Services showed just how wrong the government is on this issue. The research showed that, should the government scrap the rate, demand for solar and jobs in solar would both fall by up to 50 per cent. To make matters worse, Queensland leads all other states in solar jobs and it is estimated that 96 per cent of solar businesses are small- to medium-sized enterprises. Queensland truly is the solar state of Australia. Queensland has more solar-generating capacity than South Africa, Mexico, Malaysia, the Netherlands, Taiwan and many other countries. If the government accepts the recommendations in this report they are anti small business and anti Queensland.
The current government is changing its mind so fast on issues that soon any investment with a lifespan of longer than a month may have to be considered at risk. Damaging reforms to health care, education, child care, and financial advice—none of these were canvassed with the public before the 2013 election. A growing renewable energy sector delivers jobs in manufacturing, mining and many other industries, creating export market opportunities, increasing our skills base and contributing towards a clean energy future.
The report of the expert panel itself points out that 144 countries have renewable energy targets and, of those, 138 have policy measures in place to support those targets being met. As the government is fast finding out, though, it is not only the solar and wind energy sectors that will be affected by the enacting of this report. The sugar industry has directly invested over $600 million in expanded co-generation projects in regional Queensland since the RET was introduced. As the Australian Sugar Milling Council indicates:
The bipartisan support policy has driven advances in technology and efficiency, refurbishment of milling infrastructure and the creation of new jobs. These significant investments (with a 15-20 year payback) increase industry confidence and broader investment across the sugar mills community.
The Sugar Milling Council goes on to say that any reforms that seek to lessen the effectiveness of the RET are directly inhibiting a potential further investment of $1.3 billion at existing mill sites and a further $2 billion to $4 billion in greenfield investments in Northern Australia, particularly Queensland. In my home state, co-generation at Racecourse sugar mill currently contributes the equivalent of a third of Mackay's energy demand for over 50 weeks of the year. Right now this is happening—not in the future, but right now.
Importantly, the RET allows Australia to keep pace with international renewable energy policy and not fall behind the rest of the world. As the Sugar Milling Council goes on to say:
… As the international focus on enhancing energy security through renewable electricity and biofuels increases, international competitors are leveraging expansion of their industry through generous renewable energy and biofuel subsidies, generating a step change in the economic profit possible from sugar production. The Australian sugar industry does not have the support of similar subsidies—and the Australian RET is modest in comparison.
Put simply, the RET in its current form is creating jobs, driving investment and increasing energy security in regional Queensland. I wonder if the National Party senators in the chamber will stand up for investment in the sugar industry in Queensland. My guess is that they will not, but we can hope.
The lack of any credible replacement for the RET in the report takes this from farce to high farce. The government got rid of an effective and operational carbon pricing scheme, and they now want to scrap the RET. The apparent replacement, Direct Action, has to be one of the least credible environmental policies in Australia's living memory. Last year, a Fairfax Media survey of 35 prominent university and business economists found that only two out of 35 believed that Direct Action was a better way to limit Australia's greenhouse gas emissions than Labor's carbon pricing scheme. The report's reliance on the widely panned and detail-light direct action plan to pick up the slack of a scrapped RET is almost laughable.
I will now move to the broader economic risks that this report presents—the investment risks that this government seems all too ready to dismiss. But the government has an answer for that too: a change in terminology. I quote from the report:
The panel considers that the risk of significant policy change is better characterised as regulatory risk and is always present.
Yet calling a spade a bucket does not completely resolve the issue. The report goes on to say:
… the Panel recognises that repeal may result in adverse financial implications for existing investors.
The current RET policy is working, creating jobs, increasing competition and broadening our electricity supply base. Yet this government would put it all at risk to prop up a small sector of interest. While the government is going over the report, I would ask them to consider the approximately 24,000 jobs in the renewable energy sector currently on notice, the success of the scheme to date, and the risk to investment in Australia they would be creating by going down the murky road this report suggests.
In summing up, Australians overwhelming support renewable energy. The RET will drive down household electricity prices in the medium and long term. Changes to the RET will force small solar businesses to close and lead to a 40 to 50 per cent decline in jobs in the solar sector. More than half of Australia's rooftop solar panels are installed in non-metropolitan suburbs and rural and regional areas, with 61 per cent of solar businesses located outside capital cities. The evidence in favour of keeping the RET is overwhelming.