Lyn Allison (Victoria, Australian Democrats) Share this | Link to this | Hansard source

I move:

That this bill be now read a second time.

I seek leave to table the explanatory memorandum and have the second reading speech incorporated in Hansard.

Leave granted.

The speech read as follows—

The purpose of this bill is to amend the Environment and Biodiversity Protection Act 1999 to set a minimum greenhouse intensity threshold for new power stations.

This private senator’s bill sets an emissions standard of a greenhouse gas emission intensity threshold that any new power station must comply with by using a technology with less than 0.6 Tonnes of CO2 equivalent per Mega Watt Hour (on a full fuel cycle basis).

The introduction of a greenhouse intensity threshold for new power stations is in line with the Government’s election policy commitments of reducing Australia’s greenhouse emissions and the introduction of an emissions trading scheme (ETS).

I have addressed the Senate on many occasions on the urgency of needing to act on climate change and the need to reduce our emissions sooner rather than later. My most recent comments were quoting NASA chief climate scientist James Hansen who has written to Prime Minister Rudd urging him to end the mining and export of coal in Australia. Professor Hansen’s proposal is backed by the latest in climate change science.

If we believe the climate science we must move beyond business as usual in the shortest time humanly possible, then policy must be clearly defined in order to guide investment decisions and to reduce the risk of stranded assets in the form of coal fired power stations.

We must move away from the thinking that we can continue to use fossil fuels in our power stations and our vehicles and magically move to a lower carbon foot print. We must clearly address both our relationship with energy through energy efficiency and the sources of that energy by increasing our use of renewable energy while using fossil fuels sparingly and strategically.

Action on climate change will be driven by enormous ecological, economic and human rights imperatives. And the pressure for change to low emission technology is becoming more and more compelling and urgent.

So, what technology will be used for Australia’s next large scale power station? We certainly know it will be required to participate in an emissions trading scheme.

An ETS will not drive renewable energy but will result in the technology selection of a more efficient and therefore lower greenhouse intensity power station using either coal or gas. The corporation to build the next power station would certainly be calculating its exposure and the additional cost of its electricity product due to the cost of an ETS carbon permit.

As we know when an ETS is introduced, the cost of compliance will be passed on to the consumer. Sadly, the current environment has the demand for electricity increasing by almost 3 per cent per annum and energy efficiency a low priority for government, despite the enormous opportunities in industry, commercial and domestic buildings.

So the builder of Australia’s next coal power station would be hedging bets like an actuary, knowing that in such a wasteful energy environment that as long as it is not the worst emitter – that honour will go to brown coal generators – any carbon costs can be passed on to the consumer and as a consequence, the individual consumers will pay through the nose - not a good outcome for society or the economy.

I would anticipate, just as the Minister for Climate Change no doubt would, that an ETS will deliver the best practice technology. So if the ETS objective is to reduce emissions from Australia’s electricity sector and to deliver best practice low greenhouse intensity power stations, then the threshold in this bill will complement the ETS.

This bill sets a greenhouse gas emissions threshold of less than 0.6 tonnes of CO2 equivalent per megawatt hour (on a full fuel cycle basis) for all new power stations. This will have the effect of focusing the efforts of industry on technology that uses coal or gas in a more efficient and clean manner (and water too for that matter). A full fuel cycle basis refers to the emission-intensity at the smoke stack, not offset through planting trees or buying carbon credits or other form of offset. Setting this greenhouse emission intensity threshold will drive innovation and improvement on the 100 year old technology currently used by Australian coal fired power stations.

To put this in perspective, the average greenhouse intensity of NSW’s electricity between 1998 and 2003 was 1.05 TCO2 / MWh, ultra-supercritical black coal technology used at Millmerrin Power Station in Queensland is 0.78 TCO2 / MWh, integrated Gasification Combined Cycle (IGCC) is 0.72 TCO2 / MWh, combined cycle gas turbine (CCGT) is 0.43 TCO2 / MWh – the same technology used at Swanbank - and gas fired cogeneration is 0.3 TCO2 / MWh.

This policy approach is not new and has already been discussed by the Ministerial Council on Energy and the Victorian and New South Wales Governments. There is an international trend to improving the technology and to set minimum standards that exclude the worst greenhouse performers.

In 2007, a U.S. Department of Energy report listed 151 coal-fired power plants in the planning stages in the United States. But during 2007, 59 proposed plants were either refused licenses by state governments or quietly abandoned. Close to 50 other coal plants are being contested in the courts, and the remaining plants will likely be challenged when they reach the permit stage.

A greenhouse intensity threshold that is higher or weaker than 0.6 Co2 Tonnes per MWh will result in sub-optimal technology and as the cap tightens under the ETS there is a high probability of stranding. Technologies below this threshold, particularly gas turbines, are commercial and available today.

It is worth noting that the Minister would have the discretion to override this threshold if national energy security was an issue and for some reason the threshold could not be met.

Setting a greenhouse intensity threshold is consistent with an emissions trading scheme and with the international trend to low emissions generation technology. Setting such a threshold in law provides clear direction to industry and is economically efficient in reducing the likelihood of stranded generation assets. However there is still the need for complementary measures to ensure that Australia becomes internationally competitive in terms of greenhouse intensity and energy intensity of the economy.

Such complementary measures would include an energy efficiency target and actions, transition to renewable energy by bringing forward the Mandatory Renewable Energy Target to increase from 2008. A national gross feed-in-tariff is needed too, to encourage distributed generation and therefore avoid the need for costly transmission infrastructure augmentation.

Most critical and overlooked is energy market and tax reform. Current regulation means the only way to make a profit is to sell more electricity, creating perverse incentives that act against low cost greenhouse abatement activities such as energy efficiency and distributed generation.

An ETS will create a carbon tax which will filter right through society and further disadvantage the most vulnerable in our society so taxation reform must be undertaken in parallel with the introduction of the ETS.

Energy efficiency is the largest, single-most profitable energy resource and more cost effective than mining and burning coal for electricity. As the old adage goes, the cheapest megawatt is the one you save. Aggressive energy efficiency measures must be combined with a shift to renewable energy and the efficient and strategic use of fossil fuels.

The coal fired power station emission standard in this bill would complement, not interfere with, an ETS.

Market schemes need to be supported and backed up by minimum standard, below which activity is outlawed. If an emissions trading scheme is the incentive, then standards are the stick and together they provide the push and the pull that is needed to reduce carbon intensity.

This bill and the setting of minimum greenhouse emissions intensity for new power stations is a commitment to and an unequivocal statement to investors that new power stations must meet a minimum standard. A regulatory minimum is the insurance policy on an emissions trading scheme. It closes the door on any temptation on going back to the polluting clunkers that belong to the 19th century technology. It would close the door on allowing mothballed power stations like Hazelwood in the Latrobe Valley - the worst of the worst of the greenhouse polluters - from coming back on line.

I seek leave to continue my remarks later.

Leave granted; debate adjourned.