Senate debates

Monday, 21 June 2010

Renewable Energy (Electricity) Amendment Bill 2010; Renewable Energy (Electricity) (Charge) Amendment Bill 2010; Renewable Energy (Electricity) (Small-Scale Technology Shortfall Charge) Bill 2010

Second Reading

Debate resumed from 15 June, on motion by Senator Stephens:

That these bills be now read a second time.

12:31 pm

Photo of Simon BirminghamSimon Birmingham (SA, Liberal Party, Shadow Parliamentary Secretary for the Murray Darling Basin) Share this | | Hansard source

It is my pleasure to rise to contribute to this debate on the Renewable Energy (Electricity) Amendment Bill 2010, the Renewable Energy (Electricity) (Charge) Amendment Bill 2010 and the Renewable Energy (Electricity) (Small-scale Technology Shortfall Charge) Bill 2010. At the outset, I restate the coalition’s strong commitment to the renewable energy sector and the types of reforms that are outlined in these bills. The coalition have a proud history of the type of direct action on climate change matters that this type of proposition develops. We have a strong history when it comes to the renewable energy target. It was the coalition that put in place the original renewable energy target for Australia that mandated a 9,500 gigawatt-hour mandatory renewable energy target. It was as a result of this that Australia’s renewable energies got the kick-start that they deserved, and we were very pleased last year to build on that and support the extension of that renewable energy target.

We went to the last election proposing an extension of the renewable energy target, as I know the government did, so we were pleased to be able to find the means last year to give effect to that increase in the renewable energy target and to see continued support and a continued mechanism to guarantee the growth of the renewable energy sector in Australia. But it is disappointing to be back here in this chamber less than 12 months later, having to fix up the mistakes of the changes that were made less than a year ago. That is what we are effectively on this week when it comes to these bills—it is a fix-up measure. It is to right wrongs that were identified and discussed at the time that the original expansion of the renewable energy target was passed, and that is extremely disappointing for us. It is disappointing because issues that we are fixing today are very similar to issues that were identified in the debate less than 12 months ago.

Particularly disappointing is the fact that what we are having to do in the legislation before us today is provide some certainty of opportunity for the major, large-scale renewable energy technologies. That is what the proposal before us today attempts to do: provide some certainty of investment opportunity for large-scale renewable energy technologies. The legislation does this by effectively splitting the renewable energy target. It creates, in a sense, two targets within one: a large-scale renewable energy target, which will now seek to produce 41,000 gigawatt hours by 2020; and a small-scale component which the government has proposed of, it says, around 4,000 gigawatt hours by 2020—but this figure is uncapped under its proposed small-scale renewable energy scheme. That is an issue to which I will return later.

Last year this parliament agreed to increase from 9,500 gigawatt hours to 45,000 gigawatt hours the target for renewable energy in Australia by 2020. We did so believing it would be a great fillip, a great boost, to the renewable energy sector. But there were particular warnings that the measures being proposed would not provide enough certainty for investment in the types of large-scale developments that are not only necessary to achieve that 45,000 gigawatt-hour target but critical if we are to transform Australia’s reliance on fossil fuels and non-renewable energy sources. What Australia needs if we are to transform that reliance on those traditional energy sources are major development and major advances in the technology of renewables like wind, solar, geothermal and biomass—the types of renewables that we hope can actually provide baseload power for Australia.

It is one thing to provide intermittent power but it is another thing to provide baseload power. That is why in the debates last year coalition members and senators highlighted again and again the importance of ensuring that, under this expanded renewable energy target, there was enough certainty to ensure there was investment in those potential baseload electricity sources—things like the geothermal opportunities that abound in my home state of South Australia and the major solar developments that have struggled under this government because of the ever-changing policy parameters that it has set.

I know that Senator Barnett will highlight wind and other opportunities like tidal and wave energy—the potential is endless. But what we have seen put in place from last year is a scheme that did not set aside any of the renewable energy target for large-scale developments and did not set aside any of the renewable energy target for developments that could provide baseload power. It just put in place one target which has seen a great surge in the amount of renewable energy certificates generated by those small-scale technologies because of the types of incentives that exist for small-scale technologies not just from the Commonwealth through things like the solar credits multiplier but also from state governments through their ever-changing and ever-developing policies, especially around gross feed-in tariffs and other such mechanisms. As a result of that surge, we have seen a drop in the price of renewable energy certificates. As a result of that drop in price and the surging abundance of certificates from small-scale technologies, we have seen reduced investment in the large-scale sector. This is precisely what this chamber and the other place debated. There was the fear that there would be not be sufficient incentive for large-scale projects, especially those that could provide baseload power, to get off the ground and be a key part of this renewable energy target.

The real disappointment in being back here today is that we had to come back and fix up a problem that was identified at the time. But I am pleased that we are attempting to fix it up this week, because it is important that we fix it. It is important that those large-scale projects have some certainty of investment and the knowledge that they can go forward and plan to develop their projects and be part of this renewable energy target—and I know that there will be a market for the certificates at a viable price when they are generated. Without those large-scale projects, we have no hope of the type of transformation in electricity generation that I know many people in Australia hope for in the years to come.

The coalition has concerns, however, about some of the detailed aspects of the legislation before us. between The coalition and the government have been negotiating over the last couple of weeks in an attempt to resolve our concerns and our points of difference before we get to a final vote and the committee stage of the legislation this week. They are eleventh-hour negotiations now, but I hope they can resolve some of the key issues we have concerns about. One of those issues relates to the unlimited liability that is placed on electricity users in Australia as a result of these changes. The Small-scale Renewable Energy Scheme is uncapped. It allows for the production of as many small-scale technology certificates, or STCs, as can be produced with a floor price of $40 through a clearing house. The clearing-house price of $40 applies no matter how many are produced. Year after year, the liable entities—the major electricity buyers and sellers of Australia—will be the ones that have to pick up the tab for that unlimited liability.

That has created great and legitimate concern throughout major industry and those who retail electricity to Australian households and businesses, because they are the ones who will have to pick up the tab. The concern for them is that, under this legislation, they may not know until March of each year what they will be liable for in that year. There will be an estimate of what they might be liable for the year after, and that is all the certainty they get. Potentially, they will not know until March of the following year whether that estimate was right, whether there is a carryover of STCs from the previous year and whether they are liable for much more than they ever thought they would be. It will not be until then that they get another estimate for the following year. For the liable entities who have to pick up the tab for the STCs, there is significant uncertainty about what it is going to cost them year after year after year. We hope the government can find a way to address that uncertainty. I know there are not easy ways to address it. The Senate committee inquiry into this canvassed whether you could place an annual cap on the number of STCs that could be generated. I recognise that the problem with placing an annual cap is that, when the cap is reached in September, October or November of each year, your market falls off the edge of a cliff for that last month or so.

There are real problems with how you reconcile the unlimited liability for those who have to buy the STCs and the risk of a highly volatile market for those creating the STCs. It should not be that hard. I hope that, whether or not it be through an appropriate pricing mechanism that allows the $40 price to fluctuate a little more, we can find a means to provide some certainty—maybe not total certainty but at least some—for the liable entities without risking what exists for the STCs. I highlight this issue in particular because even the government acknowledged in the second reading speech that the SRES, the Small-scale Renewable Energy Scheme, in creating its fixed price will have the potential to produce more certificates than needed for the 45,000 gigawatt-hour change to the target that was originally set. So industry concerns about this are real. Industry thought last year, when the scheme was put in place, that the renewable energy target was a 45,000 gigawatt-hour target. They now learn that it is uncapped, that the government expects that that original target will be breached and that industry will have to pay more as a result. That is why those concerns are extremely real.

I would also like to highlight the concerns that we have about changes surrounding the treatment of waste coalmine gas. Last year, in negotiating the passage of this legislation, the opposition in good faith agreed with the government to provide for the incorporation of waste coalmine gas in the renewable energy scheme. This year the government appear to be backing away from that deal and putting the inclusion of waste coalmine gas somewhere out on the never-never. That sector continues to have concerns about its coverage under GGAS in New South Wales, and the uncertainty which surrounds that scheme is a factor of the uncertainty surrounding the government’s plans for their emissions trading scheme. All those uncertainties mean that the existing incentives for waste coalmine gas are uncertain and unreliable. That sector argues quite strongly that it needs a long-term scheme with a fixed date at the end and some fixed targets so that it can have business certainty for its electricity generation from waste coalmine gas. The government appear to be pulling the rug out from under that sector and removing the certainty that it has longed for. We urge the government to look at how they can somehow provide a degree of certainty for that sector so as to ensure that it is not disadvantaged.

We equally have concerns about the way emissions-intensive trade-exposed industries are treated. There are some complexities in the formulae for how industries that are highly electricity dependent but highly trade exposed are given some offset treatment under this plan. In particular, the aluminium and alumina sectors have highlighted—and, again, their comments are recorded in some of the Senate inquiry material—their concerns that the current formula, whereby they receive a partial exemption for the amount above 9½ thousand gigawatt hours but then only a partial exemption for the amount below 9½ thousand gigawatt hours if the RET price exceeds $40, is a complicated approach and a complex system that does not provide them with certainty and ease of business operation or guarantee their ongoing competitiveness in a trade exposed environment. So again I look forward to hearing the government’s response to those concerns and to ensuring that they are also addressed.

In relation to other aspects of the small-scale technologies, we heard during the Senate inquiry some very valid evidence from those in the solar photovoltaic sector that the current solar multipliers have a risk of creating another unsustainable boom in the solar industry. We have seen what happens when you have booms in some of these industries. We saw it writ large with the Home Insulation Program. An unsustainable boom, where things are effectively given away, brings all types of charlatans, fraudsters and shonks into the business, and as a result the whole industry ends up suffering. The insulation industry today suffers as a result of the Home Insulation Program. It is an industry crippled and on its knees, and it is an industry whose public reputation is in tatters as a result of a giveaway program.

The concern of some of those in the solar sector is that the current five times multiplier for a 1½ kilowatt system is too generous now that costs in their industry have come down and that there is too much scope for systems to be given away or nearly given away, creating the risk of having too many people entering the industry selling products not up to the standards that they should be up to. The committee heard some evidence from that sector that we should look at shaving the multiplier—and it compelling evidence when industry operators who stand to actually lose something themselves in the short term come in and advocate to get less today for their long-term security. I urge the government during the committee stage to look at whether in fact they have got the balance on the issue of the solar multiplier wrong and whether that needs to be redressed during the debate on this legislation.

We are, of course, entering this debate in absolute good faith. We are committed to a renewable energy target. We want to see it work and we want to see this legislation pass. We want to see it pass in a form that means we will not be back here once again in less than 12 months. We want to see it pass in a form that will guarantee some stability and certainty for this important sector into the future. I implore the government to conclude the negotiations with the opposition in good faith to address some of the issues that I have highlighted today and to ensure that we can give some certainty and a strong and prosperous future to the renewable energy sector in Australia.

12:51 pm

Photo of Guy BarnettGuy Barnett (Tasmania, Liberal Party, Chairman of the Scrutiny of Government Waste Committee) Share this | | Hansard source

I stand on this side of the Senate chamber, along with my colleague Senator Birmingham, speaking to the Renewable Energy (Electricity) Amendment Bill 2010 and related bills. I wish to highlight the importance of renewable energy and its role in the energy make-up of Australia and, specifically from Tasmania’s perspective, the important role of renewable energy in Tasmania. I will have more to say about that shortly.

I want to go back in history and note on the record the proud achievement of the Howard government in 2000. In fact, this year is the 10th anniversary of the legislation for the Renewable Energy (Electricity) Act being introduced to the parliament and passed under the Howard government. Historically, that was a very special occasion in support of renewable energy, and the mandatory renewable energy target has a very important role to play in promoting, supporting and encouraging renewable energy. I also want to put on the record my thanks for the leadership of David Kemp, former Minister for the Environment and Heritage. Former senator Robert Hill also had an important role to play in and around that time and since the year 2000.

The bills before us are fix-up measures because the government bungled it last year. As a result of the ‘muffing up’ of the process, as I call it, they have had to come up with remedial measures in the form of the legislation before us in the Senate today. Of course, they have bungled a number of things, and in this area and on environmental initiatives the pink batts fiasco comes to mind. That has been one of the most highly publicised and worst-bungled government programs administered by the Rudd Labor government in recent years. It is a shameful display of waste and mismanagement. It is a $2.45 billion program where $1 billion has clearly been wasted, and there is no commitment on behalf of the government to ensure that every home in Australia that has had insulation put into it as result of the program will be properly and fully inspected. So people still live in fear not knowing exactly whether their home has dodgy or unsafe insulation, whether they have electrified roofs and whether they might be next on the list for a house fire. The government has a track record. They mucked it up last year in terms of this legislation.

In doing my research on the bills before us, I am reminded of two Senate motions that were passed through this chamber. One was passed on the voices on 24 February but opposed by Labor. The other was passed on 15 March 2010. That one was moved by me, together with Senator Mary Jo Fisher from South Australia. The import of those motions, which are on the public record, is that they highlighted the fact that there were major flaws in the design of the federal government’s renewable energy target legislation that have led to a dramatic drop in the price of renewable energy certificates and have stalled investment in the renewable energy sector. The motion also indicated that the federal government was warned of these flaws by industry and opposition parties but chose to ignore the warnings. Those warnings were given last year. It was not just the coalition; the Greens and other opposition senators highlighted concerns. I am happy to note that on the record. The industry was very concerned last year but the government did not respond. They did not fix it until late in the day, late in the hour, and as a result have caused a drop in investment and job creation in this sector.

The motion that I put up in February said:

(iii) the Federal Government’s failure to act is now threatening the financial viability of major renewable energy projects such as the Muselroe Bay Wind Farm project in north-east Tasmania; and

(b) condemns the Government accordingly.

The motion in March indicated similar things. It referred to the Hallett Wind Farm in South Australia and called on the government to:

work cooperatively with industry, the community and the opposition parties to ensure the bill is properly designed and introduced without delay,
without delay, release any modelling or other analysis on which this proposal is based, and
provide assurances that the legislation will not result in unreasonable additional costs in power prices to end users.

These are very well-worded, sensible motions. They achieved the support of this Senate chamber, and for that I am most thankful. I like to think that these motions and the will of the Senate on behalf of the people that we represent in this chamber—the Australian people—were a stimulus to get this government to act to fix the problems that they caused last year.

The legislation before us confirms that we will have, as we have had for some time, 20 per cent of Australia’s electricity generated from renewable sources by 2020. The existing RET will be achieved through a series of increasing annual targets, culminating with a target of 45,000 gigawatt hours of eligible renewable energy generation in 2020. The bills before us provide for the creation of renewable energy certificates by generators of renewable energy. One REC generally represents one megawatt hour of electricity from an eligible renewable energy source.

Before I go on, I want to commend and thank the Senate Environment, Communications and the Arts Legislation Committee for their report, which was tabled in recent days in the Senate, and thank the committee secretariat for their work in pulling that report together. That report contains the chair’s draft and the coalition senators’ report as well. It is a very useful document and informs members of the Senate accordingly.

As a result of the legislation before us, we now have an opportunity for large-scale renewable energy operators and technology. The renewable energy target is clearly broken up between large- and small-scale operators. In terms of the timing, as I have indicated, the motions put forward in February and March this year hopefully had a part to play in stimulating the government into action. In terms of the impact of this in Tasmania, I am hopeful that this legislation will be passed, and the sooner the better. We have been calling for this for a long time now—and why the Tasmanian Labor senators refused to support those motions earlier this year is beyond me, because this is definitely of benefit to Tasmania. The Musselroe Bay Wind Farm in north-east Tasmania has a lot going for it. It is strongly supported by the Dorset Council and by the local community. Tasmanians up there need investment and jobs, like many other parts of Australia, and I know they will be very pleased if this legislation is passed. This is a must-do initiative to support projects like that. Further things still need to be done by Roaring 40s, the proponent, but this is a must-do action; it is a condition precedent to getting action.

We know that that wind farm is around about a $400 million development for Tasmania, in particular in the north-east. I understand there are 56 turbines and it will deliver 168 megawatts of power. The company has already invested over $20 million in facilities and jobs, which is good. As I said, Roaring 40s has the full support of the local people and the local community. I am advised that the project will deliver around 180 jobs during the construction phase, so that is clearly good news.

This project will support businesses like Haywards Engineering just outside of Launceston near the airport at Breadalbane. Tony Abbott inspected the Haywards factory last year with the federal Liberal candidate for Bass, Steve Titmus, and Tasmanian Liberal Senate team members. This highlighted the importance of businesses like Haywards that build the towers that support the turbines and the wind energy industry generally. They had a very important role to play in the development of the Woolnorth Wind Farm in north-west Tasmania, as did many other small and large businesses throughout Tasmania. We are very proud of their efforts and developments, and I hope that they get success in the weeks and months ahead if things proceed positively.

I have been advised this morning that the REC price is under $40. Having talked to Steve Symons, of Roaring 40s, I know that they would prefer it to be somewhat higher than that. I just want to put on the public record my thanks to Hydro Tasmania for their positive contribution. We are proud of the Hydro in Tasmania. Tasmania, more than any other state or territory of Australia, is a renewable energy state, and we are proud of that. In fact, Tasmania is the largest generator of renewable energy in Australia. I know that most Tasmanians are proud of that. I am advised that Hydro Tasmania actually owns and operates in Tasmania some 29 hydropower stations. Based on the last estimates that I have been briefed on, these stations are worth $4.8 billion. Hydro Tasmania have a joint venture partner, China Light and Power, and they own Roaring 40s, a very important proponent for the Musselroe Bay wind farm. I look forward to continuing to work with them in the months and years ahead on behalf of the local community.

I want to commend the shadow minister for sustainable transport and alternative energy in Tasmania, Matthew Groom, who used to be an employee of Roaring 40s. He is now, of course, a Liberal member of the Tasmanian parliament for the electorate of Denison. He has been a strong proponent of renewable energy for a long time and he now has a shadow ministry role in that area. He is very keen to see if we can get fast action on renewable energy, as I know are Will Hodgman and the state Liberals. But I think we are heading in the right direction. I am fully aware that negotiations are continuing, and more action will occur in the committee stage on this bill.

I also want to put on the record the importance of protecting jobs at places like Rio, Temco and other major business enterprises that rely on power and energy for their operations. An aluminium smelter and other industrial developments in northern Tasmania are very important. We want to protect jobs, we want to make sure that the price increase for power is at an absolute minimum and we want to ensure that we get 20 per cent of our electricity from renewable energy in the long term. I am of the view that Tasmania can play a leadership role in this regard. Just a few years ago I had the opportunity of visiting Denmark and the Vestas factory, where they produce turbines and wind energy equipment and materials to support the wind energy sector. Of course, Denmark already leads the way in providing renewable energy in Europe.

There are also future opportunities for geothermal energy in Tasmania. KUTh Energy is a player in Tasmania, as is Tidal Energy, and there are other renewable energy opportunities. I, like other members and senators, have been lobbied by a range of players in the renewable energy sector. I thank them for their information. I am no expert in this area but I like to be informed and I certainly use opportunities to advance the cause. In conclusion, I remain hopeful that this fix-up job that the government have been forced into to remedy the problems that they caused last year will be successful and will provide further confidence and hope for the key players and stakeholders in the renewable energy sector, whether they be the Clean Energy Council or other players who are very supportive of giving confidence in this industry. We need it, we want it and I am hopeful of it. I thank the Senate.

1:06 pm

Photo of Mary FisherMary Fisher (SA, Liberal Party) Share this | | Hansard source

I rise to speak in support of the intention of the Renewable Energy (Electricity) Amendment Bill 2010 and cognate bills, although I am very concerned to see that some amendments that may be being contemplated are seriously considered by the government. After all the government has a track record of programs that sound good but, where not well implemented, do no good. Exhibit A is the Home Insulation Program. and exhibit B is the so-called Building the Education Revelation.

With the renewable energy target and the regime of aiming at 20 per cent of renewable energy generation within a certain time period, that is of course a goal that the coalition supports. But the lessons of the Home Insulation Program, where the goal was to stimulate the economy, create and protect jobs and help the environment, are that none of those goals has been achieved. Indeed, to the contrary, it is arguable that the Home Insulation Program has backed money out of the economy, cost jobs and sent the environment backwards in terms of, in particular, removing insulation that has been installed and the carbon miles that go into that.

Unfortunately, in terms of the renewable energy scheme, the opposition was raising concerns with the government as early as the end of last year. The evidence before the Senate committee inquiring into this bill included concerns from witnesses about the renewable energy scheme becoming another Home Insulation Program. Essentially what the government was doing with the Home Insulation Program was picking winners, mucking around with the market. The renewable energy scheme arguably sees the same thing. The government is picking winners and mucking around with the market. When you are doing that, you want to be very confident that you have the right checks and balances. In the case of the Home Insulation Program, where it is clear that you do not have the right checks and balances, you need to show that you know what you are doing when you move in to mop up the mess and that you have learnt the lessons of the past.

We heard from witnesses at the inquiry into this bill that they were concerned that he mucking around with the market skews demand and leads to increased demand. My colleagues have already spoken about the pressure placed on the large-scale renewable sector from an unpredicted upswing in the small-scale renewable sector, which of course is why the bill finally proposes a splitting of the regime into two. But we have unsatisfied concerns in terms of evidence provided by witnesses to the committee that there can still be demand pressures on the small end of the system, that there can still be incentives for householders to install photovoltaic cells for a subsidy and, once installed, they then have an income incentive, which is not something that was assisting to skew the market in a demand sense with the Home Insulation Program. Witness Fiona O’Hehir from Greenbank Environmental said to the committee:

When things are for nothing and when margins are completely squeezed for the installers, people start taking shortcuts. Photovoltaics is actually electricity. It is electricity generation. You actually have generation on your roof, and if people start putting in cheap panels that are made with just plain glass, not tempered glass, it is dangerous. … A flood of cheap imports into Australia could mean that we have significant risk.

I am sure that the government will be doing everything it can to learn from the lessons of the Home Insulation Program to ensure that that does not happen with renewable energy and with photovoltaic cells. Fiona O’Hehir went on to say:

Currently, in New South Wales … there are companies giving away 1.5 kilowatt systems for free. If it continues at this rate, we will soon end up with a situation along the lines of the insulation program, which would be a disaster for the renewable energy industry, as it has been for the insulation industry.

I want to say two things about that evidence. Firstly, admittedly the committee was not necessarily able to find comprehensive evidence of photovoltaic cells being installed for free, although there was some limited anecdotal evidence about that. Secondly, on the reputation of this industry, the stakeholders in the industry are reinforcing the concerns that the coalition raised last year. The industry deserves reassurance from this government that it does not face the same fate as the insulation industry, which now has an unjustifiably tarnished reputation. You may think that it is beyond the pale in some respects to suggest that the government owes this industry that reassurance, but some of us would have thought that it was beyond the pale for the government to so mismanage the Home Insulation Program that the reputation of that industry would end up being as unjustifiably tarnished as it has been. We have an understandable ‘let’s get this legislation through this week’, but why are we left with that? Why didn’t the government bring on this legislation for debate earlier, particularly when the concerns had been spoken loudly about by the industry and reinforced by the opposition last year? Why weren’t we debating it in February and March?

The committee heard some evidence about analogies with the environment department implementing the Home Insulation Program. The government was warned that the environment department was underresourced and ill-equipped to do a job of that scale in the time frame within which it was tasked to do it. This department now is contemplating a new regime under the bill with a clearing house. The department has no experience running a clearing house, yet it is reassuring us that it is going to be able to establish the clearing house from scratch. There have been concerns expressed to the Senate committee about the length of time it will take for value to be redeemed through the clearing house. Mike Sexton, from Rheem, told the committee:

The situation is that when we have sold a water heater we have given the value of the certificate to the householder. We then have taken that certificate and … need to redeem those certificates as soon as possible. If I would go into a clearing house which is clearing them on a first-in, first-out basis—and under the proposal I understand that they would not pay out any certificates if their target had already been satisfied—

and he is talking there about the overall target—

I might have to wait until the following year and hold that whole amount of money until the following year. That is the issue, so how would a company like ours, or any other company, or a distributor, be able to fund that within their business?

Surely we are not going to get to a situation—and we have heard claims again today—where installers in the home insulation industry are owed several hundreds of thousands of dollars. These are small businesses; these are mums and dads. They cannot afford to be the bank in lieu of the government, yet that is what is happening with the Home Insulation Program. With the renewable energy scheme the proposition is essentially that the clearing house be ‘kind of like a bank’. Well, let us make sure that it is but also that it pays out on time and in a way that ensures the stakeholders in the industry can do what they are in business to do, consistent with the goals of the legislation.

I placed on notice a question about whether the government was doing a risk assessment of this program as it did for the Home Insulation Program yet failed to make public—and, I would argue, failed to take adequate heed of. Happily, in answer to the question the department has indicated that a risk assessment will be done. I look forward to the government releasing that risk assessment and making public the risk register as soon as it is done. I look forward to the government, through the department, indicating each and every measure that is being taken in the implementation of this amended program to address each and every one of those risks and to appropriately mitigate them. We in the opposition want to make sure that the renewable energy scheme achieves its goals and, in attempting to do so, does not harm the reputation of an industry and lead to interference with market forces which has consequences that a government has not contemplated and then finds itself ill-equipped to deal with. I look forward to further debate of this bill and its consideration in the committee stages.

1:17 pm

Photo of Ron BoswellRon Boswell (Queensland, National Party) Share this | | Hansard source

The Renewable Energy (Electricity) Amendment Bill 2010 is a bad bill to fix a bad law based on a bad policy. This second remake of the RET inside a year will go the same way as the first. If, God forbid, the government wins the next election we will be back here quickly for a third try. The centrepiece of this government’s first go at legislating its 20 per cent RET was the bid to increase the opportunities for large-scale wind projects. That effort was limited to an increase from $40 to $65 in the penalty to be paid by liable entities in default of meeting their annual REC target. The penalty is actually in excess of $90 because the $65 is not tax deductible. It was assumed the penalty would ensure that wind farms, which needed a REC price of around $50 or more, would be able to get finance and make a return. It did not work and it was never going to work.

The built-in mutual exclusive was pre-existing generous subsidies for small-scale renewable energy programs. By early last year it was obvious that the creation of RECs from small-scale projects was a runaway bus. Even a cursory look at the subsidy explains why. For the installation of rooftop solar power systems you would get an upfront Commonwealth cash subsidy of $8,000, or around 80 per cent of the cost. From the middle of last year that morphed into an upfront payment of RECs worth about $6,200, which you could sell or exchange to the power generators or the installers. You could then sell the power you generated to state power retailers—and that really increased it again—at two to three times the price of grid power. In the ACT you can put power into the grid at 60c a kilowatt hour and buy it back at 19c. Someone is paying that subsidy—the people who do not have power generators on top of their roofs.

For a rooftop solar hot water system you can get $1,600 upfront plus RECs. RECs from these sources flooded the market and collapsed the price. The price did not get near the $70 that the government said it would; in fact, it went to about $27. The government should have seen that coming. Hundreds of millions of dollars were deliberately thrown into rooftops even though it was inevitable that this was going to undermine wind power and the price of wind power.

The $8,000 cash rebate that the former coalition government instituted in its last budget in 2007 was a program worth $150 million over five years. This government deliberately allowed that to blow out to $700 million before it was stopped. But it was replaced by Commonwealth and state subsidies that were even more generous. The big-end-of-town wind generators were effectively double crossed so that Labor could keep throwing money around where it thought it would have most effect politically. It became part of the stimulus package.

Here we are debating a fix for a problem that we did not have, did not have to have and should not have had—and the fix is flawed as the government’s first attempt. The government’s second attempt to carve room for the big end of renewables splits the target. The so-called liable entities, the big wholesale buyers of electricity charged with the primary responsibility of meeting the target, will have to source 41,000 gigawatt hours of power from large-scale renewable projects by 2020. There is a nominal target of 4,000 gigawatt hours of renewables to come from rooftop systems or small RETs. But it is not a 4,000-gigawatt target; it is an open-ended target. I have not seen any amendments coming through but I hope the coalition does put a cap on this.

The liable entities will not only have to buy 41,000 gigawatt hours from big projects; as a public service they will have to buy every REC created by small-scale systems, however many there are going to be. The government says it has modelling suggesting its policy of an uncapped SRES system will result in the 20 per cent target actually reaching 22 per cent by 2020. I made an agreement that we would go to 20 per cent and already we are talking about 22 per cent. It is impossible to believe it. The numbers might as well have been plucked out of the air. The last time this government modelled its RET it predicted the REC price starting at around $70, but it topped $50 only briefly before collapsing. The government cannot model for six months, let alone for a decade. The entire RET program did not last six months. Part of it lasted weeks. The law this legislation will replace was proclaimed last September. In February, barely six months later, with parts of it in effect only from January, it had to be remade because the outcome was a disaster, an own goal—and I think Senator Milne would agree with me.

There are several seeds for further disasters in this remake. First, liable entities are now trapped in a seller’s market. If they do not buy their designated share of RECs they will pay a penalty in excess of $90 for a megawatt hour they are short. The price they are charged will therefore inevitably get as close to the penalty level as sellers dare. The aluminium industry, in its submission to the government’s discussion paper on the revamped policy, predicted that prices will rise as much under the new version of the RET as they would have under the CPRS if the CPRS also existed. Such is the power of a seller’s market.

That increase might not happen for some time because there will be, according to the government, in excess of 16 million RECs from small-scale generations in the pool. Some industry commentators estimate there will be up to 20 million. At least one industry estimate suggests it will take two or three years before they wash out of the system and the price is able to rise much above the current dollar level of around the high 30s. That is still way too low to attract investment in wind, so anyone who goes into it before the REC price starts to rise will be gambling that the ‘straw in the wind’ policy settings of the government have somehow finally solidified. I wish those investors good luck.

If the government is successful then the price of power will ramp up far more than it should, because of the seller’s market. That points to the other great unknown in the second remake of the RET in a year: the price impact. The government is at pains to suggest it is minimal, about two per cent from these bills and about four per cent from the RET overall. Others suggest the impact will be far greater. There are suggestions from a variety of sources that power prices in Australia will double or even triple over a decade. Large aspects of this prospect relate to the serial neglect by state governments of their transmission systems. There will also need to be a massive investment in new baseload and peaking power to meet growing consumption. Doubts about the future of a carbon price are so deep that nobody is prepared to punt billions on the construction of coal-fired generators that could turn into white elephants. That leaves gas. Either we will see a big increase in gas-fired baseload and peaking plant in Australia over the next few years or we will see the lights go out.

These factors make it difficult to determine what element of the massive increases in power prices we confront are RET related. Even if only 20 per cent attributed to it—and that is an estimate given to me by one industry player who believes we may see a doubling of prices over the next decade—then that amounts to many hundreds of dollars a year, not Minister Wong’s estimate of a few dollars a year, on household power bills.

There are several factors behind suggestions that the price impact of the RET will be far more substantial than the minister suggests. One is the need to deal with the intermittency of wind. It is accepted that wind has the capacity to work around 30 per cent of the time. That means for 70 per cent of the time it is useless and it means you have to have massive conventional backup to maintain supply. That can come from coal-fired power stations running at full steam and sending the heat up the cooling tower until the wind drops or increases, as the case may be. It can come from open cycle or combined cycle gas generation. Experience from around the world suggests that more than two-thirds of the nameplate capacity of wind farms has to be backed up. It is possible that the amount of gas-fired generation coming on line will be able to handle backing up wind for several years, until its volume really starts to ramp up. But the closer we get to 2020 and many wind farms, the tighter it will get.

The international literature suggests that as you get near to 20 per cent renewables the job of balancing the grid becomes huge. You not only have a need for major backup capacity; you have a much more complex grid. At some of the many far-flung wind farms at any given time there will not be any wind. At some there will be too much and at some too little. If you are lucky, at some it will be just right. If you are very skilful in juggling that massively complex grid you will be able to keep the lights on, but do not fall for any suggestion that you will be saving a lot of greenhouse gases in the process. You will not. The need for the reserve to deal with the fluctuations in wind can negate any saving. This legislation also consolidates other problems with the original RET, and Senator Fisher has enunciated some of them.

The Senate Economics Legislation Committee that examined these bills was told of major concerns in the photovoltaic area. Concerns were expressed about safety and rorting. Other concerns were built around the same sorts of problems that generated not only the home insulation fiasco but also the BER debacle. If you make vast amounts of money available to many thousands of small projects, all going ahead simultaneously, you are begging for accountability problems. Sections of the industry fear a flood of cheap imported products that will not meet performance or safety standards. The Senate was told that hundreds of new installation firms cropped up in the space of just a few weeks last year. Problems relating to poor product and poor installation might already be out there and might have been out there for some time.

The Department of the Environment, Water, Heritage and the Arts said there had been no fires associated with faulty installations. Within days there was confirmation that there had been at least two fires in Melbourne. The department said that there was no evidence that installers were giving away product. A number of witnesses promptly provided evidence to me to the contrary. It appears that the scale and pace of a program has, again, overpowered the ability of the Public Service to manage and monitor it. Even the solar hot water system program hints at chaos. When the government shut down the Home Insulation Program overnight in February, it also shut down the Solar Hot Water Rebate Program. There was no explanation, but the explanation is apparent.

The installation of solar hot water heaters was the primary cause of the collapse in the REC price last year. That was the principal catalyst for these bills. The government had to slow down the flow of RECs from that source, so it shut down the program, cut the rebate and did not allow applications for the new rebate to be presented for months. And the delaying tactic worked. In July last year solar hot water systems created one million RECs. In April they created just 300,000. The plan was to reduce the number of RECs from hot-water systems before the boom dropped on their validity at the end of this year. The fewer there are, the faster they will wash through the pool and the quicker the seller’s market will be able to dominate the LRET. The deeper you dig, the more this program looks like the Home Insulation Program and the BER.

In desperation to spray cash around, the government has thrown accountability and good governance, not to mention the wind industry, to the wolves again. The RET is just another Rudd government policy, financial and administrative, disaster. Initially, it was marked by fundamental policy errors, followed by serial, ad hoc, sneaky changes to try to maintain the charade. Nothing in this legislation addresses the core problem and, as I said at the beginning, if Labor wins the looming election we will be back here for another go at it.

1:32 pm

Photo of Christine MilneChristine Milne (Tasmania, Australian Greens) Share this | | Hansard source

I rise today to welcome the changes that are coming before the Senate to address the problems with the renewable energy target. I remind the Senate and Senator Boswell, who has just resumed his seat, that when I spoke on this legislation, the Renewable Energy (Electricity) (Charge) Amendment Bill 2010 and related bills, last year I pointed out this problem would occur. I cited evidence from Dr Mark Diesendorf, at the ANU, pointing out that if solar hot water systems and heat pumps were left in the program we would see a flooding of the market, a collapse in the price and that it would be a disaster for large-scale renewables. The then minister for Climate Change and Water at the time said to me that that was not correct. In fact, she quoted from her department—and of course it is the minister’s responsibility to take note of the modelling—to the effect that the MMA modelling:

… indicates that less than five per cent of the renewable energy target would be taken up by solar hot water and by heat pumps.

The government department got it incredibly wrong and did not listen to the industry at the time and, as a result, we have had a stalling of investment in large-scale renewables that was foreseen and that should have been dealt with. At that time I moved an amendment and, sadly, I did not get the support of anyone in the Senate—even Senator Boswell and The Nationals did not support it, even though now they recognise that that was the situation. The really wonderful thing is that this is a chance to participate in the energy revolution. This is a revolution every bit as big as the telecommunications revolution that is going on around the planet. The wonderful thing is that we are seeing an explosion in new forms of energy that are taking over from past forms. I think it is shocking that there are people in the Senate who want to stop the revolution—they want to stop this massive change that is taking place around the world.

When this legislation came in—and this is part of what we are now trying to fix—the government proposed a regime whereby you had 1.5 kilowatt system with a five multiplier. In less than 12 months solar panels came down in price by 40 per cent—and that is an extraordinary figure. That is how fast this revolution is progressing around the world. Because of the critical mass volume that is occurring around the world, systems are getting cheaper and so they are more within the reach of ordinary people. But the point I made last year was that we should go for a much greater ambition than 20 per cent renewable energy by 2020.

Photo of Ron BoswellRon Boswell (Queensland, National Party) Share this | | Hansard source

Come on!

Photo of Christine MilneChristine Milne (Tasmania, Australian Greens) Share this | | Hansard source

We should go much higher, Senator Boswell. I want to see this nation powered by renewable energy. I know Senator Boswell is from the mining party, which used to be known as the National Party but is now the coalmining party, which want to take over Australia’s farmlands and—

Photo of Carol BrownCarol Brown (Tasmania, Australian Labor Party) Share this | | Hansard source

Senator Boswell, do you have a point of order?

Photo of Ron BoswellRon Boswell (Queensland, National Party) Share this | | Hansard source

Madam Acting Deputy President, that is untrue and Senator Milne knows it.

The Acting Deputy President:

Senator Boswell, do you have a point of order?

Photo of Ron BoswellRon Boswell (Queensland, National Party) Share this | | Hansard source

Madam Acting Deputy President, my point of order is that Senator Milne named the National Party mischievously, and I would ask her to apologise to the chair and to the Senate and withdraw.

The Acting Deputy President:

I believe that Senator Milne is using debating points and that there is no point of order.

Photo of Christine MilneChristine Milne (Tasmania, Australian Greens) Share this | | Hansard source

Thank you, Madam Acting Deputy President; that is certainly correct. From my observation of what is going on on the Darling Downs and in several places in the Hunter Valley, we are seeing farmland being taken over by the coalminers, and I do not hear too much dissent on that from the National Party.

However, I do not want to be distracted by that, because this is a very good news story we are telling about the growth of renewable energy all around the world and no more so than in Australia, where we have fantastic new technologies in the labs, being commercialised and getting rolled out. We should, as I was saying, go much higher than 20 per cent renewables. We should be aiming to have 100 per cent renewable energy as fast as we can, because it is in that conversion to 100 per cent renewable energy that we will not only see a massive reduction in greenhouse gas emissions but see technologies rolled out in Australia, rebuild the manufacturing industry in this country in these new technologies and be able to sell the IP overseas as well. So it is a win-win-win for this nation to move on.

In rural and regional Australia, this is a huge opportunity to build resilience in rural and regional communities. Large-scale renewables out there can provide new sources of income and jobs in rural and regional towns and cities. I have been arguing for some time that we need a national gross feed-in tariff across the country. We will then see people who are on properties now and are struggling to adapt to climate change being able to make money—add another crop to their rotation, if you like—by building large-scale renewables on their properties as a result of joint ventures, lease arrangements or whatever they decide to do. There is a property in Northern Tasmania whose owner already would like to put up six turbines on the property because, as the owner recognises, it is a long-term strategy for income, it would strengthen the grid and it is a much more certain form of income for someone in rural and regional Tasmania than a lot of the other propositions that are being put up there.

The reason we do not have a national gross feed-in tariff is that this parliament did not support the legislation that I brought in here to do that and instead sent it to COAG, which is a black hole from which hardly anything ever emerges that is useful. The national gross feed-in tariff is buried in COAG. While it has been buried there, every state in Australia has adopted a different system. That is why we have a major policy conundrum that we are trying to address now in terms of the renewable energy target. We have a situation where New South Wales has a very generous feed-in tariff. In New South Wales, with a 1.5-kilowatt system with a five multiplier, that means that the system is virtually free of cost to the consumer. However, the same system in Tasmania, where there is not a feed-in tariff, will cost you about $5,000 from most suppliers and $2½ thousand at the very cheapest. So we have a situation where the industry itself has identified that in some places in Australia systems will be virtually free, and that opens us up to all the vulnerabilities that occurred with the insulation scheme, because once you get something for free you get shonky operators in the market, you get an overheated market, you do not have enough qualified people who are installers, you do not have the audit processes in place and you get disaster.

What are we to do to fix this policy conundrum? Some of the people in the solar industry have said: ‘Well, let’s change it. Let’s increase the size of the system to three kilowatts and let’s reduce the multiplier to three.’ Whilst that would slow down demand in New South Wales and so would stop the situation that I just described occurring, what would that mean in Tasmania? It would mean that a 1.5-kilowatt system would end up being $9,000 and a three-kilowatt system would be as high as $15,000. It would be $10,000 at the very cheapest but more likely around $15,000. That means you have a terrible inequity occurring around the country. Surely it would not be seen as reasonable for the government to bring in a system that makes these systems so out of reach for the average householder in Tasmania to go ahead and install a solar system.

One of the amendments that I have is, first of all, a second reading amendment that we move to a national gross feed-in tariff across the country so that we stop this differential occurring around the various states depending on the level of support that they have. Victoria is pretty similar to Tasmania in terms of the price differentials. In the absence of the government supporting a national gross feed-in tariff, the Greens have been saying that at the very least we need to take the size of the system and the multiplier out of the legislation and put them in the regulations so that the minister can move quickly in the event that the market is flooded or some of these problems occur, as we expect them to occur, and there needs to be something in the interim to slow this down. Isn’t it amazing that we are standing here in this parliament talking about slowing down or trying to even out the demand because there is so much excitement in the community and so much willingness to take up renewable energy? It is very, very promising in terms of where we need to be going in this country in the future.

The first point is that it is fabulous that we are back here to fix it, but it is very sad that we needed to do it, because this problem was on the table when this legislation was introduced, but for some reason or other the department got it completely wrong. The Greens have been campaigning ever since to have this fixed, so I take a particular pleasure in its coming back here to be fixed. I do want to see a national gross feed-in tariff and I will continue to campaign for that until ultimately we achieve it, because that is what has driven the renewable energy revolution in Europe, in Spain and in Germany, and it should be driving the very same renewable energy revolution, basically, here in Australia.

In terms of energy efficiency, one way that this should be fixed is to have a national energy efficiency target and an energy efficiency program so that we take out the solar hot water and the heat pumps from this system. They are energy efficiency measures and they should be in an energy efficiency program, but in the absence of an energy efficiency program we have to give them support. Last year, I said, ‘Let’s put them on top of the target until we have a national energy efficiency program,’ and that is effectively what is going on here.

I note the minister is in the chamber now. I do want to ask her a question and perhaps she can give me a response at some point: what is the government’s view on geothermal heat? There have been a lot of suggestions and submissions to me from people working in the area of geothermal heat that they should be earning renewable energy certificates as well. It has also been suggested that evacuated tube solar systems should also earn renewable energy certificates. Ideally, they should be in an energy efficiency program but, since they are not, if solar hot water is to get RETs why would evacuated tubes not get RETS?

Would the minister also let me know what is happening with heat pumps. I understood that COAG was going to review the number of RETs that heat pumps get, and I do not think there has ever been any response publicly to the COAG response on that. I am not surprised. As I said, if you want to get something off the public agenda, if you want to kill it and throw it into a black hole, the best way of doing that is to send it off to COAG because it never comes out the other end, or if it does it is so many years later that people have forgotten what the issue was at the time that it was actually referred to COAG.

Waste coalmine gas is not a renewable energy source. It never was and it never has been. It is a fossil fuel and it should not be in the renewable energy target scheme. The only reason it was put in there in the first place was that there was an assumption that the Carbon Pollution Reduction Scheme would go through and that that would substitute for the GGAS program in New South Wales. When the CPRS did not proceed and the assumption was that the GGAS program would end, it was added to the top of the target. Now that the GGAS program in New South Wales is not ending, I do not see why there is any longer any justification at all for the inclusion of waste coalmine gas, and I urge the government to take that out.

I want also to speak about native forest furnaces. There is a complete and total collapse around the country in the forest industry. The world does not want to buy any more native forest woodchips because there is a growing recognition that our forests not only are marvellous for the stores of biodiversity they have but also, equally, are carbon stores to which virtually nothing can compare. They are fantastic carbon stores and we should not have the government subsidising the logging of native forests. The rest of the world has recognised that and the market has totally collapsed. At the same time, there is a wall of wood coming on stream from plantations around the world and so the Australian forest industry is in collapse. The obvious solution is to stop the logging of native forests, protect those forests for their biodiversity, water and carbon stores and shift the industry into downstreaming the plantation resource.

However, the forest industry does not see it that way. They want to continue logging native forests. They cannot at the moment because they cannot sell it, so what they have come up with is: ‘Let’s have a fabulous idea. Let’s cut down our native forests and put them in forest-burning furnaces and generate energy for that. Let’s get renewable energy certificates for it.’ Wouldn’t that be a fabulous idea? Keep truck wheels rolling and keep people working, destroying the best carbon stores in the world—our native forests!

So this legislation has in the renewable energy target the capacity to generate renewable energy certificates from waste wood biomass, provided that that waste wood biomass comes from a higher value source. Whilst currently the government would argue, ‘It’s not generating many renewable energy certificates at the moment; therefore it’s not a problem,’ it is a problem because the native forest industry around the country is depending on getting renewable energy certificates. We have Eden, in New South Wales, Orbost, in Victoria and the southern forests in Tasmania and in the north-west, not to mention the proposed furnace at the Gunns pulp mill. All over the country the forest industry has said—and in its pulp and paper strategy—that a key component for the future of that industry is being able to burn native forests for renewable energy certificates.

I urge the Senate to support this amendment when I bring it forward in the committee stage and take out any reference to being able to use native forests. In fact, I urge the Senate to rule it out completely as a source of renewable energy certificates. It would be an utter and absolute disgrace if, instead of protecting our native forests, the government took the line, ‘We need to keep the jobs of people cutting down native forests so we’ll give them to them in feeding the furnaces.’ That would be appalling. Already that is occurring with the export of some of our woodchips to Japan. They are not going, as people thought, for the making of pulp and paper; they are going straight into the furnaces in Japan as we speak. I think people would be horrified to learn that our magnificent forests, with all the wildlife in them, the water sources that they are and the carbon stores that they are, are being knocked down to burn. So I would urge the Senate to support the Greens amendment on ending this practice of native forest logging, but also this amendment to stop the knocking down of our native forests for putting into furnaces.

One other matter that I will raise in the amendments is the banking of renewable energy certificates. Between now and 1 January many renewable energy certificates will be created. The problem is that all of those certificates will be in the large-scale renewable energy target. The concern here is that, if they are more than $16 million, they will drop the price of the renewable energy certificates in the big RET and the result will still be no incentive to bring on wind. So the Greens are going to move a motion to say that anything in excess of $16 million banked at the end of the year should be taken out and put on the target in future years so that we do not see a further disincentive for the bringing on of large-scale renewables. That is a critical issue, because—at one point, if you have had the flooding, and we are back here to fix up that issue—to not deal with the banking issue just means we are going to contribute further to problems for large-scale renewables, and it is absolutely essential that that takes place.

We have other amendments as well: in terms of a biennial review of the act, and also to make sure that we take into account off-grid systems, because we have seen, with the changes, the loss of support for the large-scale systems, particularly in Indigenous communities. I want to see some support for that restored, and I will be moving for that in the committee stage.

The Greens will be supporting this bill, and I look forward to the Senate’s support this time for amendments that genuinely deal with the policy issues. I plead with the Senate to get behind the Greens in addressing this. It is something we have argued for, and I am pleased to see we are back here dealing with it.

1:53 pm

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

I note that time is particularly precious this week, given that this is the last sitting week before the winter break, and I intend to keep my contribution short, on these and other bills. I indicate at the outset that I broadly support the intent of the Renewable Energy (Electricity) Amendment Bill 2010 and related bills. The government does seek to improve Australia’s support for renewable energy technologies.

However, I still have concerns—as I did last year when we first debated this legislation—with regard to the renewable energy certificate scheme. One of my key concerns relates to the inclusion of electric heat pumps or air source heat pumps, as they are sometimes called, in the REC scheme. To put it simply, a product that uses electricity cannot be properly categorised as renewable, and that is a real concern. If this scheme is about encouraging consumers to take up renewable technologies and about developing renewable technologies in this country, then including electric heat pumps under the REC scheme is a contradiction.

I understand that electric heat pumps are better for the environment than the standard electric water heaters that many households still have, but the fact remains that they still use electricity. They therefore are not renewable and should not be subsidised under the renewable energy target legislation. It is an anomaly, and that anomaly is compounded by the relative lack of efficiency compared to other technologies.

There are four types of heat pump technology available. There are electric storage heat pumps, which produce the highest emissions and are usually powered by off-peak electricity. These are the systems many households currently have in place which are being phased out. There is natural gas, which can be either continuous or storage, and either mains-supplied or supplied from bottled LPG. There are electric heat pumps, which I referred to, which essentially have similar greenhouse intensity to electric-boosted solar and storage and continuous gas systems. And, finally, there are solar with natural gas or LPG systems. The emissions intensity of gas-boosted solar is in the order of 25 per cent lower than electric solar and electric heat pump systems, and this is the renewable technology that I believe we should be encouraging households to install.

It does concern me that, in my home state of South Australia, you have a situation where Rinnai has had to lay off workers in their plant producing solar hot water heaters and to stand down workers as well. They did that recently for a one-week period because they cannot compete fairly with something that is not as green as a solar hot water system. Under the RECS system, electric heat pumps become so affordable for consumers that the best renewable option, solar, is often being bypassed, and hence we have seen that level of unfair competition.

Australians want to do the right thing by the environment with electric hot water systems, with heat pumps. But I wonder what the reaction will be when families who install an electric heat pump find that it is nowhere near as environmentally friendly as it is meant to be and their power bills continue to be quite significant. I have been advised by the Gas Industry Alliance that—as a result of electric heat pumps being listed under the REC scheme—of the hot water systems claiming RECS, 90 per cent are either electric heat pumps or electric boosted solar. I do not think that that is good for the environment or a good use of the taxpayer subsidies that we use in relation to this. I think that we need to encourage consumers to take up truly renewable energy technology.

Another issue that needs to be addressed is how to better support emerging renewable energy technologies. I believe that further support should be provided for emerging technologies such as wave, solar thermal and geothermal—hot rocks—amongst others, but these are long-term projects and require certainty to secure investment. I foreshadow that I will be moving an amendment to this purpose in the committee stage.

Further, I think that the work done by companies which collect and convert landfill gas to energy should be recognised and supported. It is with the RECS. But we also should be looking at energy efficiency technologies that would use this cogeneration gas from landfill.

I believe there is an opportunity here to improve this legislation. I believe that it is an anomaly that electric heat pumps get the support that they continue to get under this, and my concern is that there is a real risk that rorting can still take place. I will be asking questions during the committee stage about the level of checking, the level of auditing, of electric heat pumps. I note that the government did move forward with this last year, in terms of the commercial installation of electric heat pumps. They were welcome developments. But I would like to ask in the committee stage: to what extent are electric heat pumps being audited to ensure that rorting is not taking place? So I look forward to the committee stages of this bill.

1:57 pm

Photo of Steve FieldingSteve Fielding (Victoria, Family First Party) Share this | | Hansard source

I rise to speak on the Renewable Energy (Electricity) Amendment Bill 2010 and related bills. Family First supports renewable energy because we believe renewable energy will be an important component of the future energy mix. However, Family First makes a clear distinction between our support for renewable energy and our views on an emissions trading scheme. From Family First’s perspective, the driving reasons for renewable energy targets and an emissions trading scheme are totally different and it is a fact which the Rudd government continually overlooks.

The renewable energy targets, which were voted on last year and which Family First opposed, were based on the government’s emissions trading scheme—the same emissions trading scheme which the government has now shelved because it was a ridiculous and reckless policy. The Rudd government’s emissions trading scheme was based on a policy that assumed that increasing carbon dioxide emissions are the leading cause of global warming. But the Rudd government failed to provide credible evidence that Australia needed to reduce its carbon dioxide emissions. Therefore, the renewable energy targets should have been driven by a completely different rationale and not solely by the need to reduce carbon dioxide emissions.

The only credible reason to support investment in renewable energy was that renewable energy will be an important component of the future energy mix. But by mandating renewable energy targets we are artificially creating a viable renewable energy market. I stress: it is artificial, because the renewable energy sources for generating electricity are not financially viable on their own. That is, energy sources that generate electricity from renewable energy sources are not financially viable on their own. And the bill we are debating today would just help prop up the artificial market even more.

Debate interrupted.