Senate debates

Wednesday, 23 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

In Committee

Consideration resumed from 22 June.

Photo of Scott LudlamScott Ludlam (WA, Australian Greens) Share this | | Hansard source

We are dealing with Greens amendments (4), (9) and (1) on sheet 6114.

10:04 am

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

I rise to respond to Senator Colbeck’s analysis of these amendments to the Renewable Energy (Electricity) Amendment Bill 2010 and related bills. These amendments are to remove any view that native forest biomass can be used to generate renewable energy certificates. Yesterday Senator Colbeck mentioned that WWF Australia supported biomass energy. The report on Forestry Tasmania’s website is a WWF report, but it refers to biomass in Europe not biomass in Australia and so WWF have put out a clarifying statement which says: ‘No support for biomass burning of native forests’. Let us make it very clear that the European situation is quite different from the situation here in Australia and WWF do not support burning of native forests for biomass in Australia.

Senator Colbeck really let the cat out of the bag yesterday when he talked about the extent to which the Tasmanian logging industry is depending on getting renewable energy certificates as a lifeline for logging native forests. He said here that he would expect they would get something like 3,000 gigawatt hours, but in Forestry Tasmania’s own so-called fact sheet it says that it wants to build a 25-megawatt biomass plant at Southwood and that would generate 160,000 renewable energy certificates a year. So there is a full expectation that they would be getting RECs from their 25-megawatt biomass plant at Southwood.

We have this ludicrous situation where we are logging native forests without the emissions from those native forests being counted because the Kyoto accounting does not require it. So they log the carbon stores, the most important carbon stores. If the government really wanted to move on climate change then it would protect the carbon stores and it would support this amendment to get rid of any possibility that you can log a native forest and use the woodchips to go into a biomass furnace.

What this is going to come down to is the definition of ‘waste’, and that is why it is important to rule it out right now. Thirty years ago, the logging industry argued that the waste from sawmilling would be used as woodchips—that it would merely be the waste; it would not be the predominant industry, just the waste—and that the woodchips would be sent overseas. The upshot was that the native sawmilling industry was overtaken by the plantation sawmilling industry in 1993-94 and completely displaced in the market, and the woodchip industry has been the major driver of native forest logging ever since. The woodchip industry has now collapsed and is looking for a make-work program to continue logging native forests when it needs to get out of native forests and downstream the plantation estate.

At the same time as the government is considering giving a further subsidy to native forest logging via this process, you have a 100 per cent tax deduction on the other side for establishing carbon sink forests. So we now have this ridiculous logic of subsidising logging established carbon stores, subsidising the establishment of carbon sinks over on the other side, subsidising managed investment schemes on the other side, and having photographs taken of putting in a few seedlings as some kind of carbon offset under the Carbon Pollution Reduction Scheme, whilst facilitating the logging of the great carbon stores. This is a ridiculous scenario in a climate sense. We should have full carbon accounting. We should have a recognition of the carbon stores. And now is the time to do it, because there is not a single native forest logging industry player around the country who can argue at the moment that there is any profitability, that there is any market, for logging native forests.

The point at which you have no market is the point at which you have opportunities. With this not being removed from the renewable energy target, the logging industry are going to make a pre-emptive strike to maintain this industry way beyond its use-by date via a government subsidy, effectively. It is not just the Southwood mill in Tasmania, the one proposed for Smithton, the Gunns one or those at Orbost and Eden; there is also a proposition for another one in Western Australia. Some 20 mills are on the agenda around the country. On television last week the proponent of the native forest burning furnace at Eden said that they were depending on renewable energy certificates for 50 per cent of their revenue—50 per cent. This is the government funded destruction of native forests, of biodiversity and of wildlife at a time when we have more and more species on the lists of not only threatened species but, in some cases, critically endangered species.

How is this justifiable? When Australia argues that we have the capacity to do full carbon accounting, why are we in the RET negotiations sticking with the old Kyoto accounting? I simply do not understand that and I hope that the minister can explain to me: since we say that we can do full carbon accounting in Australia, why aren’t we arguing for that in international negotiations? Why are we sticking with the Kyoto definition which does not require us to account for the emissions from the logging of native forests? This is a huge loophole and a big problem. So I urge the Senate to recognise that now is the opportunity. If you do not remove this from the renewable energy target bill, you are creating a pre-emptive strike for ongoing logging of native forests where, just as the woodchip industry argued 30 years ago that it was simply dealing with the waste and then rapidly became the industry, now that woodchipping has collapsed the generation of biomass energy from logging native forests will be the industry.

And let us not pretend that this is about sawlog. Let us not even amuse ourselves with that notion or view. It is not. ABARE pointed out and agreed in Senate estimates that 1993-94 was when plantation timber overtook native forests in terms of the generation of sawlog. This is an industry in crisis, with nowhere to go, and the lifeline is here with this renewable energy target, with this burning of biomass—and it absolutely has to be stamped out now. We will end up in the courts here, because there will be a requirement to define what is ‘waste’ for a higher value purpose. Since when is woodchipping a higher value purpose? And there will be no standing up in court trying to argue that going in for a single stem of sawlog is going to result in the generation of hundreds of hectares of clear-felling of native forest as waste. What nonsense. No court will accept that, but of course we could end up with the Commonwealth joining the other state governments in retrospective legislation to suddenly make right what is clearly wrong and unacceptable. Unless we remove this now, we are going to end up in the courts, because there is no way that people around Australia are going to accept logging and burning of native forests—logging the carbon stores, not accounting for the carbon from those stores when they are logged and then trying to pretend that burning those forests is generating green energy. This is creating a major conflict, Minister, and you have the opportunity now to remove it as a loophole and remove any potential for a subsidy going to the burning of native forests for the generation of energy. This is the opportunity and I hope that the Senate will take it.

10:14 am

Photo of Penny WongPenny Wong (SA, Australian Labor Party, Minister for Climate Change and Water) Share this | | Hansard source

A number of the things that Senator Milne has put on the record do not relate whatsoever to the debate we are currently having, which is on the renewable energy target. I am not from Tasmania, but I do understand that this issue has been around in Tasmanian politics for a very long time. Last night we had Senator Milne, Senator Colbeck and, I think, some others having a long discussion—if I may say, with respect to both sides—often about issues which had nothing to do with things that were before the chamber. You are entitled to do that. I would ask that the Senate consider, at an appropriate time, whether there be some end point to a debate which is in fact in large part about many other issues.

I have a procedural request for us to consider. I jumped before Senator Birmingham—which might have been an error because he might have been about to address this—but I would invite the opposition to be clear on this. I understand that the opposition is proposing another amendment on this issue to expand the eligibility. The government will not be accepting that amendment and the government will not be accepting the Greens amendment. The government’s position is that this is a definition that has been in place in the legislation for some time. We have been lobbied by both sides of the debate to expand the eligibility to enable more forest product to be used under the renewable energy target, as well as the perspective put by Senator Milne. I have indicated to both sides that the government’s position is to retain the existing eligibility and press ahead with improvements to the bill.

Leaving that to one side, as a matter of process, I invite the chamber to consider that it would be sensible for us, if possible, to debate by leave the two amendments together because, once Senator Colbeck moves his amendment on native forest eligibility, we will be traversing the same debate as we have had today and did last night. So I would invite consideration of that for the efficacy of the debate. There are a range of other debates, including from Senator Xenophon. I know that Senator Xenophon’s time constraints are substantial. Obviously, an independent senator does not have colleagues who can move his amendments, and Senator Xenophon has a number of other pressing issues that I know he wishes to attend to in relation to Productivity Commission reports. So I would invite the chamber to consider whether we could procedurally deal with the opposition’s yet to be moved amendment on native forests and this amendment together. If the opposition’s amendment is not ready, could we possibly defer this debate until then, Senator Milne? If you could consider that and Senator Birmingham could respond, I would appreciate it.

10:16 am

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

Firstly, in relation to the matter raised by Senator Wong, Senator Colbeck does have some further amendments relating to issues around the treatment of biomass. I understand those amendments are being circulated as quickly as possible to senators present and the coalition is willing to have those debated, with the leave of the Senate, at the same time as the proposed Greens amendments. I note that the chamber has very limited time today to try to get through what are a lot of amendments on this issue. I hope that we can deal with this particular issue and all the other amendments, and the opposition certainly wants to do that with the government.

I would like to quickly address the Greens amendment whilst Senator Colbeck’s amendments are being circulated. Senator Colbeck and Senator Boswell yesterday highlighted a range of issues in relation to this amendment. Senator Wong has rightly pointed out that much of the debate, particularly some of the comments from Senator Milne, has focused on the relevance of native logging and issues around logging and forestry that are not particularly relevant to renewable energy. The opposition will not be supporting this amendment. We think it is transparent from what Senator Milne has had to say so far that this is really all about the Greens opposition to the logging of native forests. That is what it is all about, that is what they are continuing to pursue and that is why we will not be supporting this amendment.

Senators Boswell and Colbeck highlighted some specific examples as to why we will not be supporting it, and I want to support one other example. In addition to the lobbying I have had on this issue from my Tasmanian colleagues and others with a vested interest in this, I have had very strong representations made to me by the Liberal candidate for Eden-Monaro, David Gazard—and Senator Milne in her comments cited the Eden mill as one example. Mr Gazard has highlighted to me that the Eden mill is very important in terms of economic activity in that community and also in terms of what it contributes to the generation of renewable energy. It is a $20 million investment in the community. It employs some 76 people directly plus contractors in a range of sectors, especially in the trucking and transport sector. Importantly, it generates some five megawatt hours of reliable baseload electricity that powers the local community and the local town. This is an important activity. All up, forestry is critical to that area. It employs around 830 people and locally supports around 3,000 jobs. Mr Gazard has presented to me in the strongest possible terms the importance of maintaining arrangements for the Eden mill, the importance of ensuring that the investment in that community is sustained going forward and the importance of supporting it within the context of the renewable energy that is generated.

The coalition, and the Liberal Party in particular, will be standing firm in support of Mr Gazard and what he has had to say on this issue. We will make sure we support that local community as of course we do those communities highlighted by Senator Colbeck, Senator Boswell and many others who have not spoken in this debate. Our opposition to this amendment remains steadfast. Senator Colbeck will in due course speak on his amendment as well.

10:20 am

Photo of Bob BrownBob Brown (Tasmania, Australian Greens) Share this | | Hansard source

What a shambles the opposition is. This legislation has been on the slate for a very long time indeed. The opposition have just argued that that they cannot and should not be dealing with a welcome to country proposal that has effectively been there for three years. This legislation has not been there that long, but everybody knew it was coming for a long, long time. The opposition want us to wait while they circulate last-minute amendments, presumably generated by some logging industry factotums who, of course, always determine what the opposition’s policy on such matters is going to be. Well, let the debate continue. If the opposition cannot get themselves into order that is their problem, not the chamber’s problem.

The minister said she is in the middle: between the destruction of forests and the protection of forests. I do not actually know what that means. What we have in front of us is a proposal from Minister Wong to burn native forests in forest furnaces and beguile the community by selling that into the electricity grid as green power. Let us be direct about this. It means putting into furnaces, largely placed at current big industrial native forest logging sites, the habitat of many native species, including rare and endangered species, in potentially every state and territory of Australia, maybe the ACT excluded. She says that this is not going to affect Tasmania, and she is not aware of the situation down there, but that is largely because she has not engaged with the communities who are terribly alarmed about this proposal in Tasmania. Let me point to the biomass fact sheet, for which I am grateful to Senator Milne, from Forestry Tasmania itself. It wants a 25-megawatt biomass plant at Southwood, south of Hobart in the Judbury region near the Huon River and the Weld River. It has got a whole range of things on why this would be a marvellous environmental breakthrough, but when we get to the heart of the matter the minister was saying would not occur, here it is in black and white. Forestry Tasmania says that this plant, burning native forest, would generate about 160,000 renewable energy certificates per year. That is under the legislation Senator Wong has before the parliament.

Senator Wong is a prodigious supporter of the destruction of Australia’s native forests and woodlands, as is every member of the Labor Party here. Prime Minister Rudd in the run to the 2007 election said, ‘I am 100 per cent behind John Howard’s policy of logging forests in Tasmania.’ A day later he followed that up with support for the then proposed Gunns woodchip mill, since repudiated by every thinking person around the country who cares about the environment. Nevertheless, the government’s support for that woodchip mill as proposed continues, and that mill—Gunns’s proposal—is to produce 180 megawatts of electricity per annum, which is as much as the Franklin Dam would have produced had it been built. That is as originally conceived, although Gunns meritoriously is changing direction from the destruction of native forest now that the old leadership of John Gay and Robin Gray is not there. We look forward with interest to see where that it goes. Nevertheless, the concept for that pulp mill which Senator Wong and Prime Minister Rudd and the opposition support still—no change there—is to generate power through the burning of native forest largely in the north-east highlands of Tasmania. Yes, these are real proposals and this is actually subsidising that destruction.

I ask Senator Wong a couple of direct questions because it is germane to this argument. She says it is not but I say it is. Can she guarantee that under this proposal the putative World Heritage area forests of Tasmania as outlined by the International Union for the Conservation of Nature—and I refer there to the Great Western Tiers, to areas of the Tarkine, the Styx Valley, the Weld Valley, the Upper Florentine, which Prime Minister Howard promised to protect but is now being logged, and the Picton and Huon valleys—will not be fed into any of the proposed furnaces, including this one by Forestry Tasmania, under its biomass fact sheet awaiting this very legislation? Can the minister give us a clear statement that none of those putative World Heritage areas and high conservation value forests will be in any way a resource for this proposed 25-megawatt biomass plant at Southwood by Forestry Tasmania? If so, she has misled the Senate, and I do not want that to occur. This is a serious matter. We are talking about real on-the-ground proposals. We are talking about real national heritage forests in the wake of an opinion poll showing that 78 per cent or so of people in this country want these native forests protected. By the way, we are talking about a resource—native forests and woodlands across this country from Tasmania to Tiwi—which if it had been protected by the government would reduce greenhouse gas emissions in this country of ours by 20 per cent. The government CPRS is five per cent and that measure is 20 per cent.

I have got a second question. I do not want to delay the house but I ask the government and the minister, in relation to the proposed forest furnace at Eden that we have heard the opposition springing to the defence of: can the minister give a guarantee that that will not involve the removal of part or whole of old trees, primary habitat for rare and endangered swift parrots in Mumbulla or other components of the south-east forest, or of any real or potential koala habitat in those same south-east forests? Or is this legislation opening the way for those forests to be fed into a biomass plant that proposes to use 50 per cent native forests and then sell it to an unsuspecting public as green energy when in fact it is black and disgusting destruction of the natural realm in a world which is losing its biodiversity at the greatest rate in history in this International Year of Biodiversity under the United Nations?

10:29 am

Photo of Penny WongPenny Wong (SA, Australian Labor Party, Minister for Climate Change and Water) Share this | | Hansard source

Senator Brown is a very good politician and that was a good politician’s speech. It was a speech that was designed to try and inflame this debate. It was a speech designed, as the Greens always do, to try and convince people that they should not vote for the Labor Party, they should vote for the Greens. It is always interesting to me that this supposed left-wing party is quite happy not to seek coalition voters, you only want to convince people who vote for the Labor Party. Your real enemy, Senator Brown, has always been the Labor Party, and you would rather see Tony Abbott in the Lodge than a Labor government which has done so much for the environment and so much on climate change since we came to government. But that is a matter for you, Senator Brown.

The only thing I am going to respond to is the personal attack. I always find it interesting that you feel the need to do that, Senator Brown. ‘Penny Wong is a prodigious supporter of the destruction of native forests’—what an extraordinary inflammation of the debate without any factual basis. Senator Brown, it does you no credit in a debate like this where parties have negotiated with each other despite their divergent interests. We have moved amendments on the basis of those negotiations. We are accepting some from the opposition, we are accepting some from your spokesperson, Senator Milne, in the interests of cooperation and getting this legislation through because we believe it is in the national interest to get more investment in wind farms, in solar and, over the years, in tidal, geothermal and in all the rich renewable sources this country has. This is what this debate is about; you want to make it about Tassie forests. That is the reality.

I refute your personalisation of this debate. I refute what you have said. What we are saying is that we are retaining the existing regime, which includes specific eligibility criteria for the use of native forest biomass to ensure that only genuine waste from sustainable forestry operations is eligible to create renewable energy certificates. These regulations include a high-value test which is applied to avoid creating further incentives for clearing native vegetation.

I am advised that high-value processes include sawlogs, veneer, poles, piles, girders and wood for carpentry or craft uses or oil products. I am also advised that wood chipping, including for pulp waste, is ineligible. I am further advised that to date there has been virtually no eligible generation derived from native wood waste, although a number of power stations are accredited to use wood waste as a fuel source. According to the Office of the Renewable Energy Regulator’s 2008 annual report, approximately 2.4 per cent of renewable energy certificates created to December 2008 were from general wood waste.

I cannot recall how many hours we have spent so far on this amendment with the same—but now perhaps a bit more inflammatory—speeches from Senator Milne and now Senator Brown. We can keep debating native forest issues all day and ensure that this was another day where we did not pass this legislation. I understand that Senator Colbeck’s amendment has now been circulated. I invite the committee to consider whether we could have Senator Colbeck move that amendment now and have a cognate debate on this issue because otherwise I think we will have this debate again when Senator Colbeck moves the amendment. The issues raised by Senator Colbeck’s amendment are fairly and squarely relevant to the issues raised by Senator Milne’s amendment, albeit that they are clearly from very different perspectives.

Photo of Sue BoyceSue Boyce (Queensland, Liberal Party) Share this | | Hansard source

We are currently dealing with the Greens amendments. And then, if the chamber agrees, we could move straight onto those opposition amendments from Senator Colbeck. They could be debated cognately if the committee agrees.

10:33 am

Photo of Richard ColbeckRichard Colbeck (Tasmania, Liberal Party, Shadow Parliamentary Secretary for Agriculture, Fisheries and Forestry) Share this | | Hansard source

To facilitate the committee making a decision as to whether they do have a cognate debate on this, I seek leave to move my amendments so that they are on the table and we can continue the debate on that basis.

Leave granted.

I move opposition amendments (1) and (2) on sheet 6158:

(1)    Clause 3, page 2 (lines 7 to 11), omit the clause, substitute:

        (1)    Each Act, and each set of regulations, that is specified in a Schedule to this Act is amended or repealed as set out in the applicable items in the Schedule concerned, and any other item in a Schedule to this Act has effect according to its terms.

        (2)    The amendment of any regulation under subsection (1) does not prevent the regulation, as so amended, from being amended or repealed by the Governor-General.

(2)    Schedule 1, Part 2, page 80 (after line 4), at the end of the Part, add:

Renewable Energy (Electricity) Regulations 2001

137  Paragraph 8(2)(b)

Repeal the paragraph, substitute:

             (b)    a by-product (including thinnings and coppicing) of a harvesting operation that is carried out in accordance with ecologically sustainable forest management principles; and

138  Subregulation 8(3)

Repeal the subregulation.

139  Subregulation 8(4) (definition of high value process)

Repeal the definition.

140  At the end of subparagraph 9(1)(b)(ii)

Omit “;”, substitute “.”.

141  Paragraph 9(1)(c)

Repeal the paragraph.

I will not take too much of the chamber’s time but I do want to speak to these amendments. It is pertinent that Senator Wong has said that there have been very few renewable energy certificates generated from the use of biomass under the current regulations. It is quite clear that the current regulations inhibit the generation of renewable energy through the use of biomass.

I think it is fairly obvious that I disagree with Senator Brown and Senator Milne that biomass is not a renewable energy source—it obviously is. That is even demonstrated by some of their pronouncements. I mentioned yesterday that I was in a forest six or eight weeks ago that Senator Brown and Senator Milne would have declared destroyed under the current logging regimes but they now claim that forest as a high conservation value forest.

Interestingly, I note that they also claim, under the maps issued by the Wilderness Society, some pine and eucalypt plantations, so perhaps there is some confusion in their minds as to what a high conservation value forest really is. But that is part of the forestry debate that we do not necessarily need to go through now because are debating renewable energy.

I am disappointed that Senator Brown again used the politics of personal denigration. I suspect I will cop the same but that is the stock in trade that he, disappointingly, tends to operate under. We have seen that happen in Tasmania to senior figures in the forestry sector. The first task is to tear them down and tear down their credibility so that they cannot effectively make an argument. That is the way the Greens tend to operate.

I want to put on the record what is possible and what is happening in other parts of the world in the generation of energy from woody biomass. In 2008 about 27 per cent of Sweden’s energy came from mainly woody biomass. At present the target is to increase this figure to 39 per cent by 2020. Sweden aims to use that to eliminate imports of fossil fuels by 2025.

So there are countries that are actually utilising woody biomass for energy generation. I saw it myself in Finland when I was there last year. The trimmings from their forestry operations are stacked on the sides of the coops, dried there for a couple of years and then used to generate energy in local communities—they do not have the distribution networks that we have here in Australia. In Finland approximately 20 per cent of electricity is produced from biomass derived almost entirely from forestry waste or from timber processing. About 23 per cent of the country’s overall energy supply is now derived from this. Finland aims to meet 39 per cent of its national energy needs from renewable energy sources, including biomass, by 2020.

There is clearly an opportunity here for this. I understand that the Greens have a fundamental disposition against any form of native forest logging, and they put up distorted facts to push the argument that it can all come from plantations. I put on the record yesterday the fact that it cannot and I want to put another example on the table. Two weeks ago I was at a plant in New South Wales that could replace 75 per cent of their current fossil fuel energy source by using waste generated on-site. They are currently using coal in their boilers, unfortunately. They would like to change that. Seventy-five per cent of it can be replaced with bioenergy from wood waste generated on-site in their plant. They do not have to touch another tree; they do not have to touch another twig. That is what can occur in the here and now.

As I said yesterday, in terms of life cycle it is up to 56 times cleaner than emissions based on coal, so there really is an opportunity here for us to provide the opportunity to genuinely utilise biomass in Australia. The current regulations obviously are an inhibitor to that, which is demonstrated by the comments that Senator Wong put on the table. I do not need to go into a long dissertation about the misinformation that the Greens put on the table in relation to the forest industry. That is well understood by many. But I will talk about the opinion poll that Senator Brown talked about, which would have to be one of the most blatant examples of push polling that I have ever seen. Once you actually read what the Greens, through their pollsters, asked, you see that they start with a statement that talks about a certain perspective and then ask a question based on the statement. They do not necessarily just ask a question to get a result. It is very clearly push polling and it needs to be seen for that. It really is worthless in respect of the story that it tells except that it gives Senator Brown something that he can go out and publicly spout as supporting his argument. Quite frankly, it is completely and utterly worthless as an argument because it is quite clearly push polling.

I understand that most likely the chamber is not going to support this amendment, but it is an important amendment and it has been put up genuinely, not because I have been told to put it up by the forest industries, as Senator Brown might want to imply—again, the politics of denigration. It is because I have been out and actually had a look around. I have been to other countries to see what is being done and what can be done. There is an opportunity here and it is going to take a change to the regulations for that to occur. I understand that the Greens do not like that and that they have this philosophical view—that is fine—but I think that there is an opportunity for us to do something positive here. That is why I have moved the amendment, not because somebody else wants me to do it. I have taken the opportunity to study it; I have actually worked in the timber and construction industry and I know that there are waste streams that can be very effectively put to use for the generation of renewable energy, just like they will be in the pulp mill in the Tamar Valley, proposed by Gunns. A significant amount of energy will be generated by that mill from waste product. Senator Brown still does not support the mill, even though it is being transformed from a mix of plantation and native product to purely plantation product. Any suggestion that the Greens will ever support a pulp mill in Tasmania I think is dancing with the fairies at the bottom of the garden. I do not believe that will ever occur, that they will ever support that, because they are philosophically opposed to it. I understand that; that is fine with me. But here is an opportunity for us to put on the table the opportunity to genuinely generate energy in a way that is being done in other places around the world and to make some amendments to allow that to happen in Australia.

10:42 am

Photo of Bob BrownBob Brown (Tasmania, Australian Greens) Share this | | Hansard source

The issue of the needless destruction of forests and their wildlife, against the rights of future generations and against the rights of our fellow species on this planet, is an emotional one, and I make no apology for the emotional component. We are human beings. Let me go a little further, because it needs to be said every now and then. The forests are the cradle of our own species. We are made from our ancestry in forests. We put pictures on our walls because we respond to the beauty of forests as we see it. We do not put up pictures of chainsaws and bulldozers; we put up pictures of wildlife and beautiful vistas of forests—not clear-fell areas but forests.

What I see when I go to south-east New South Wales, to Gippsland and to the Central Highlands of Victoria—and of course in Tasmania—are areas that were beautiful forests last year but devastated this year, and with them the wildlife. Senators want to discuss the economic advantages of burning forests in forest furnaces, which we know cannot compete unless this legislation gets through, for one simple reason: those promoting these forest furnaces want to depend on the outrageous and blatant lie, given legislative cover under the government’s proposals now before the Senate, that it will be green energy. That is what it is about.

We have argued in this Senate for many, many years against the existing legislation and now through this legislation the continuance of that lie that energy coming out of forest furnaces is no different to wind energy, solar power, wave energy or whatever the renewable source will be. It is not renewable energy. This is not renewing of native forests. It is destructive energy. It is destruction of native forests.

Senator Milne has brought in a ‘clear the air’ proposal that says that you cannot burn native forests and call that green energy, and every single member of the old parties yet again—not for the first time—will vote for this proposal to continue the destruction of Australia’s wild forests, this time through forest furnaces under the lie that it will be green energy coming out of it. Senator Wong protests about that. Well, it is her legislation; it is her doing. It is eyes wide open. Senator Milne has brought in the clarifying amendments, and I suspect—well, I know—that every Labor member of this place and every Liberal member of this place and every National Party member of this place will vote for that lie, will vote for that deception and will vote for that destruction.

If I am emotional about that it is because I am a human being—like every other person in this place. What I do not understand is why this is happening in this wealthy country, where we have two million hectares of plantations—which is more than enough to meet all our wood needs. Senator Colbeck may have been fed stuff from NAFI. It does not make any difference; that is the reality. We do not need to continue this destruction of an heirloom that belongs to this country.

If you want to further look at the economics of this, there is a forthcoming United Nations report, due in October. It is International Year of Biodiversity, and the topic here is biodiversity—burning biodiversity and calling it green energy. The fact is that the loss of biodiversity around the planet is going to hit the global economy by the end of this century to the detriment of that economy of US$3 to US$4 trillion per annum through loss of plant and animal diversity. I will repeat that: US$3 to US$4 trillion per annum. Who is factoring that into this forest furnace proposal? What they want here is public subsidy to give us a massive economic detriment to pass on to our grandchildren.

If you insist we be unemotional and non-human in here and not care about biodiversity and not care about our wild forests in this country, I do not care what Finland or Sweden—which have lost most of their native forests—or Russia, Cameroon, Indonesia, Brazil or anywhere else is doing in this regard. This is this nation’s heirloom. And I do not care about Senator Colbeck saying that there is a statement at the start of a question put to Australians—which there normally is in opinion polls. He should ring his pollster and find out how they put opinion polls. That opinion poll question is available freely—it has been released to the media. It is a genuine poll. If there is some other poll that shows an alternative result, let Senator Colbeck produce it. He cannot, because there is not one—because the Australian people feel very strongly about this matter. Will it be an election issue? Of course it will be. It has to be. We are talking about the nation’s future here. We can do better with our heritage than be shovelling it into furnaces and under legislation like this, coming from the logging industry—through the big parties—giving a legal imprimatur to the lie that it will be green energy when it is not.

Senator Milne has brought forward amendments which we as the guardians of this nation’s future should be flocking to support. I find it extraordinarily remiss that these amendments will not get the support that they should get in this Senate. But that is why we here. That is why we Greens are in this place.

10:49 am

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

I indicate that I support the Greens’ amendments. I do not support Senator Colbeck’s amendments. I note that he has articulated the position very clearly in relation to his amendments, but I think it is important to take a more prudent approach in relation to this. Therefore, from my point of view, I think it is important to support the Greens’ amendments in relation to native forests. Although I do acknowledge what Senator Colbeck has said, I think it is important that the Greens’ amendments be considered and be supported in the context of this ongoing debate. But I do note that the government does have regulations that would restrict the use of native forests in the context of the REC scheme. I think the minister is acknowledging that. If the Greens’ amendments do not pass, as appears to be the case, the issue is: how effective will those regulations be to maintain those conservation values?

Photo of Sue BoyceSue Boyce (Queensland, Liberal Party) Share this | | Hansard source

Thank you, Senator Xenophon. In view of what you have just said, I will put the question on the amendments in two parts. The first question is that the Australian Greens amendments (1), (4) and (9) on sheet 6114 be agreed to.

Question put.

Photo of Alan FergusonAlan Ferguson (SA, Deputy-President) Share this | | Hansard source

I now put opposition amendments (1) and (2) on sheet 6158. The question is that those amendments be agreed to.

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

On a point of order, Mr Chair, I just seek clarification: is this Senator Colbeck’s amendment?

Photo of Alan FergusonAlan Ferguson (SA, Deputy-President) Share this | | Hansard source

I am told yes.

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

I have a concern because we had an arrangement with Senator Xenophon that—sorry?

Photo of Alan FergusonAlan Ferguson (SA, Deputy-President) Share this | | Hansard source

Senator Milne, I intend to make it another four-minute division if that may help you.

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


Question put.

11:06 am

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

For the benefit of the Senate, because we are trying to facilitate a lot of changes in a short time, yesterday I deferred consideration of my amendment which provides for a biennial review of operation of renewable energy legislation, because I was negotiating with the government and coalition for a word change. That word change is now reflected in No. R3, sheet 6114 revised. We are now bringing back something that was deferred yesterday, and it provides for a biennial review of the operation of the renewable energy legislation.

I think it is absolutely essential that we have a biennial review, because this industry sector is moving faster than the parliament can possibly keep up with. As I indicated yesterday, the price of solar panels has gone down 40 per cent since the legislation was introduced last year. There are new technologies coming on all the time and there ought to be consideration of whether they should be included. Yesterday I did ask about why evacuated tube systems are not able to generate renewable energy certificates. Also, what about geothermal heat for individual residents? That is not currently included. We need to be constantly looking at new technologies and whether they would qualify or otherwise under the scheme.

Also, the adequacy of the target needs to be looked at. In my view, 20 per cent is nowhere near enough. But I accept that the Greens do not have the numbers at this point to increase the target. What is very clear is that the tenor of the debate is about dampening demand not actually driving massive expansion. A lot of the problems we are now trying to fix up would have been sorted if we had actually increased the target to 30 per cent or more. Clearly, we need to be constantly reviewing the target—as the technologies come on-stream and as the economic viability of those technologies and so on improves—and reviewing how the scheme is operating.

The minister and the coalition obviously reached an accommodation around the renewable energy certificates that can be created from the small-scale part of the scheme. The Greens do not support that. The amendment was delivered to this Senate very shortly before it was actually debated as the first amendment yesterday. I am worried about this because the whole point of us being here is to take out the uncertainty and to give long-term investment signals. We are now doing that in the large-scale part and we are making it very clear what will be there for them. Now, by introducing a soft cap of six million, the government and the coalition have effectively introduced uncertainty for the small-scale renewable energy providers. For example, last year in 2009, 19 million renewable energy certificates were created. Ten million of those were for solar renewable energy certificates—10 million out of 19 million.

Whilst the government have said this six million will not kick in until 2015, effectively what it has said is that you will get the $40 price for small-scale renewables out to 2015. But, clearly, if the rate of growth is as anticipated based on what occurred last year and is replicated in coming years, the six million is going to act as a cap, and it is an indication that by 2015 the price that you would get for solar is likely to be reduced probably to $20. If this happens, it is going to actually massively restrict the contribution that solar can make to a renewable energy future in Australia.

I have real concerns about this. This was not something that was canvassed with the industry. I understand the coalition wanted a hard cap. It would have been an absolute disaster, I have to say, Senator Birmingham, if that had been introduced. A hard cap would have meant everybody would run hard up to the cap and then there would be a complete collapse. By introducing this soft cap by 2015, the government have actually introduced uncertainty when the whole point was to give the industry, both large and small, certainty into the future.

How can you make a decision about investing in solar, when you know that in 2015 the price is likely to be halved? Given the current rate at which solar, and the number of certificates it is accessing, is expanding, what is going to be the situation then? I would like the minister to respond to that. The industry is now rather concerned because they thought the legislation was coming back to the Senate to be split, to give certainty to the large-scale sector and to make it unlimited for the small-scale sector. Now, having taken the uncertainty out of one end, the government have potentially introduced it at the other end.

I appreciate the government’s support for this amendment. I think everybody in this chamber and in the industry generally recognise that things are moving so fast there has to be a regular review of everything about the operation of the renewable energy legislation. Hopefully, we will now be legislating for the review. But I take this opportunity to ask the minister to explain in more detail why the six million soft cap will not introduce uncertainty for the small-scale sector. Can the minister give some clarity around the government’s thinking and provide some reassurance to that sector that the intent is not to cap the contribution that solar can make and that the effect will not be to do that?

I move Greens amendment R3 on sheet 6114 revised:

(R3) Schedule 1, item 99, page 59 (lines 16 to 21), omit the item, substitute:

99  Section 162

Repeal the section, substitute:

        (1)    The Minister must cause an independent review of the following to be undertaken as soon as practicable after 30 June 2012 and every 2 years after that date:

             (a)    the operation this Act and the scheme constituted by this Act;

             (b)    the operation of the regulations;

             (c)    the operation of the Renewable Energy (Electricity) (Large-scale Generation Shortfall Charge) Act 2000;

             (d)    the operation of the Renewable Energy (Electricity) (Small-scale Technology Shortfall Charge) Act 2010;

             (e)    the diversity of renewable energy access to the scheme constituted by this Act, to be considered with reference to a cost benefit analysis of the environmental and economic impact of that access.

        (2)    A review must be undertaken by a person who, in the Minister’s opinion, possesses appropriate qualifications to undertake the review.

        (3)    The person undertaking a review must give the Minister a written report of the review before 31 December in that year.

        (4)    The Minister must cause a copy of the report to be tabled in each House of the Parliament within 15 sitting days of that House after the day on which the report is given to the Minister.

        (5)    The report is not a legislative instrument.

11:14 am

Photo of Penny WongPenny Wong (SA, Australian Labor Party, Minister for Climate Change and Water) Share this | | Hansard source

I thank the Australian Greens for agreeing to various changes. We will not oppose Greens amendment R3. We are happy to support that amendment. In relation to the questions asked, which really relate to the discussion yesterday, first, let us discuss the policy parameters here. We have split the small-scale and large-scale sectors to better reflect the dual policy objectives under this legislation, which are to transform Australia’s large-scale generating capacity and also to provide support for Australian households who want to do their bit to tackle climate change. Hence, we essentially have two schemes within one—the large-scale renewable energy target and the Small-scale Renewable Energy Scheme.

However, as Senator Milne has identified both in the contribution that she just made and elsewhere and as is reflected in one of her subsequent amendments, which I will come to, obviously the market in this area does shift over time. Sometimes we can predict that; sometimes we cannot. Sometimes different people predict different things. For example, as the senator would be aware, there has been a reduction in the unit cost in some small-scale technologies. There has certainly been higher uptake in some areas than might have been anticipated. As she herself has said, what we need to look at is sustainable growth for the industry.

In fact, the policy issues that we are attempting to grapple with are also those which lie behind the senator’s own amendment in relation to the solar credits multiplier, which in effect enables the minister to alter the multiplier. That is in fact altering the cost of the subsidy. It is precisely the same policy issue, I would suggest, driving the senator’s consideration of that as is driving the government in this clearing house price review process that was passed yesterday.

These are amendments agreed between the government and the opposition. It is true that some members of the opposition have publicly sought a hard cap in the small-scale sector. What 30LA, which we passed yesterday, does is set the clearing house price. It says, ‘It is $40 but the minister can specify a lesser amount in certain circumstances.’ Then it goes through in very clear detail the sorts of things a minister must take into consideration—for example, any changes to the costs of small generation units such as solar hot water heaters, co-contribution, the impact of the clearing house price and electricity prices, which are obviously an important issue. We do need to balance the cost to consumers against the benefit of having a subsidy for these technologies under the scheme.

In relation to the six million to which the senator has referred, one of the things the minister has to do is look at whether or not the total value by 2015 of this part of the scheme is likely or expected to exceed six million. It is not a hard cap, but it is seeking to ensure that the scheme works efficiently and effectively and that there is the capacity, if required, to deal with a situation such as, for example, if the expected take-up of six million is likely to be exceeded. It really deals with the same issues, Senator, you have raised and which your solar credits multiplier amendment which you will be subsequently seeking to move, depending on discussions, seeks to deal with.

11:18 am

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

I will touch on both the amendment under consideration and the earlier amendment that Senator Milne raised. Yesterday, as Senator Milne highlighted, we had the first parcel of amendments dealt with in the chamber. I am not sure that all of the comments I made at that time were necessarily totally germane to those amendments. The opposition support for them was very real and, as Senator Wong has alluded to, they were a point of negotiation between the government and the opposition.

We strongly endorse the soft-cap approach. In my speech in the second reading debate I spoke about a hope that somehow the government could find a way to limit the liability that liable entities face under the RET using a price mechanism. The RET has always worked on the basis of a variable product. That has been the way it has responded to market demand. The challenge with the SRES as proposed is that it fixes a clearing house price and therefore takes out that capacity, if there is a surge in generation certificates, for the price to drop back. The amendments proposed and accepted by the chamber yesterday in this regard allow the government to respond to those market factors. If there is excessive growth that is going to go well above six million then the government can adjust the price.

That will not necessarily cap at six million the number of certificates generated. It will simply reduce the cost to the liable entities. Yes, it will potentially reduce demand as well, but if that demand is growing because technologies have become more efficient and because of their lower costs in and of themselves then the government will be able to step back the effective subsidy that electricity consumers are paying but allow the certificate generation to continue well above six million, if that is what happens, as long as the price is adjusted in accordance with the terms set out in the amendments made yesterday.

I welcome that. I think it is as close to an elegant solution as you can come to for the problem of the unlimited liabilities that are faced under the SRES by local entities. The coalition had genuine concerns about those unlimited liabilities and wanted to see some means by which they could be if not capped then at least given an element of certainty for the future that they were not going to be ever-increasing. This price mechanism provides for that and we think that is a useful step forward. We do not believe that it should create uncertainty for the generators of small-scale technology certificates. We think that a minister of the day should be able to handle the issue in a way that is consultative enough with industry, takes into account industry concerns enough and provides some certainty for the future so as not to see the type of on-again, off-again incentive, subsidy and rebate type of arrangements that have plagued the sector that Senator Milne and I and many others have spent so much time talking about in this chamber and elsewhere.

We think that the process that is set out forces the minister of the day to consider enough factors and take into account enough factors, and those need to be the ongoing stability of the small-scale technology sectors. I would expect the minister—and take her word—and future ministers to make sure that they did not dramatically alter the certainty around those sectors, but that any price changes to the clearing house price were done in a measured, moderate, considered and consultative fashion. We note that the minister is required to provide not just for changes but reasons outlining the changes to that price under those amendments to the House as well.

We support the Greens’ amendment under debate because we think it adds to and complements the amendments that I was just talking about—the amendments that allow for a change in the clearing house price. We think it will add transparency to any decisions that a future minister makes. We think it will hopefully inform the debate on any future decision a minister makes, and so in that sense having the biennial review, going through that process, will guarantee consultation and engagement. It will guarantee that there is a public statement of the government’s thinking of the day at the end of that. It will guarantee that the future intentions of the clearing house price should be clear to all, and so it is a value add and we welcome the fact that the Greens have proposed this.

I understand there has been some negotiation around the terms of the amendment between the government and the Greens, but we think that overall the principle and the concept is an important one. It will add, I think, to the certainty for the industry but together these amendments will also allow the scheme to be as responsive as it needs to be. As Senator Milne alluded to, we see a dynamic and fast-changing industry sector around all of the renewable technologies. We all hope of course that this entire scheme drives change and advances, lowers costs and makes a dynamic sector even more dynamic, and therefore providing the government with capacity to respond to that in an open, transparent and thoughtful way is important. Together, we think these amendments make eminent sense.

11:24 am

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

Senator Birmingham has just clarified why the minister is actually wrong in assuming that the intent of what was moved yesterday is what the Greens have in mind. They are two diametrically opposed positions. The Greens are coming from a perspective of wanting to make sure there is long-term sustainable growth in the renewable energy sector. The coalition’s amendment which was agreed to by the government was not negotiated with the Greens because it is coming from the perspective of the aluminium sector and the big liable entities. They are required to take up the renewable energy certificates. They are worried that if the small-scale renewables explode and expand as we would like them to that will increase the liability for those large-scale industries, the aluminium sector et al, to have to take up those certificates. The perspective of the coalition is that they are trying to limit the liability of the aluminium sector to the detriment of the small-scale solar sector in particular.

This amendment is the aluminium industry amendment that came through here yesterday and it is vastly different from a perspective which says, ‘We want to make sure that we don’t overheat and have a debacle like the insulation debacle where shonks got into the market, where things were not regulated properly and it didn’t lead to a sustainable industry’ Our perspective is to grow the renewable energy sector as sustainably in a managed way so that there is certainty into the future and a pathway for expansion. What the coalition put to the government and was agreed to yesterday is an aluminium industry amendment to restrict the growth of renewables because the aluminium sector does not want to have to take up the increased liability that they are required to take up as liable entities. Let us get completely on the record what is going on here.

I will be interested to see what does happen when we get closer to 2015. The only thing I will say is that with these review processes and the rapid changes in the industry there will be changes between now and 2015 obviously, and so to a certain extent it is academic. At this point, I want to make it very clear: our perspective is to grow the industry, not to provide surety to the aluminium sector.

11:27 am

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

I do not want to redebate an amendment that was passed yesterday at great length; I want to respond very briefly to Senator Milne. There is a dilemma inherent within the way in which the SRES was proposed and created—that is, that it creates an unlimited liability for liable entities whomever they are whether they be aluminium or industries that you want to rail against, Senator Milne, or mum and dad electricity buyers at the end of the day. There is an unlimited liability that is created under the SRES. A hard cap, as Senator Wong, you and others have rightly pointed out—and that I certainly accept and have heard the message loud and clear from the industry—on the number of certificates that can be generated would create an edge-of-the-cliff scenario for small-scale technology certificate generators that could come about every year or at the end of the scheme.

I think this is an elegant compromise because it allows the industry to grow. It allows the industry to have certainty. It allows the industry to know that there will be ongoing support and for the government to flag any variations to that support with some notice, one would expect. It also provides a capacity where you can at least respond to the fact that if that unlimited liability keeps growing and growing you can manage to peg it back somehow. That is all it does. It does not mean the government will peg it back. It does not really provide any certainty to those liable entities in some sense but it provides a hope that the government will, within some parameters of six million certificates, respond to that. This was the No. 1 issue raised during the Senate inquiry. Submission after submission highlighted concern about that unlimited liability.

That is what the initial amendment sought to do. It has passed, so I do not want to go on about it, but it was not the case that we wanted to put uncertainty into the renewables sector. That is why I said I thought it was an elegant solution. It provides a capacity to vary the price without capping certificate numbers and allows them to get on with advancing their technology in a slightly more responsive scheme than the one that was proposed with a fixed price.

11:30 am

Photo of Penny WongPenny Wong (SA, Australian Labor Party, Minister for Climate Change and Water) Share this | | Hansard source

I am going to write that down. Senator Birmingham just said that something we put forward is an elegant solution! I am very pleased and I thank him for the contribution. Senator Milne, we have sought in this debate to manage a range of policy objectives. What we are saying is that there is the capacity in this scheme to alter the price if required within certain circumstances. That is no different, Senator, to your amendment (8), which is to appoint a small-scale technology certificate advisory board and to give the power to the minister to alter the multiplier. If you think about the effective subsidy for Australian households, it is a product of the number of RECs times the price of the RECs times the multiplier. We are saying that we need some capacity to look at the price in the event that what is predicted is substantially wrong, if the number of certificates is over the six million that is predicted. You are saying the same thing, except you are choosing to look at the multiplier. They are the same policy issues. If you are critical of this position then you would withdraw that amendment, because it effectively does the same thing. I think this is a sensible arrangement. It seeks to give certainty to both sides and, for that reason, it is being supported.

Question agreed to.

11:32 am

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

by leave—I move opposition amendment (1) on sheet 6148:

(1)    Schedule 1, items 111 and 112, page 61 (lines 23 to 30), omit the items, substitute:

111  Subparagraph 17A(1)(a)(i)

Repeal the subparagraph, substitute:

                   (i)    starting on 1 July 2011; and

The opposition also opposes items 111 and 112 in schedule 1 in the following terms:

(2)    Schedule 1, items 111 and 112, page 61 (lines 23 to 30), items TO BE OPPOSED.

This amendment and the motion to oppose items in schedule 1 relate in particular to issues around the treatment of waste coalmine gas. When the changes to the renewable energy act were debated in this place last year, the coalition negotiated with the government. We negotiated outcomes to provide for the protection of waste coalmine gas to give that sector some certainty that they would be included under the renewable energy certificate scheme into the future. I do not want to go back over the merits or otherwise of the sector—that could be a lengthy debate.

The nature of the amendments we negotiated last year was that either the minister would have to, by 1 July 2011, prescribe a starting date for the inclusion of waste coalmine gas or else it would be included within the renewable energy trading scheme on 1 July 2011. In this legislation the government is seeking to remove that inclusion. We do not think that that is reasonable. We think that that removes certainty for that sector. In the end, that sector faces an uncertain future at present because of the uncertainty that surrounds the current GGAS. The current scheme in New South Wales was scheduled to end at the introduction of the CPRS. There is no particular clarity now around when the CPRS will be introduced. Even in the modelling for this legislation the government has modelled alternative scenarios and, as a result of that uncertainty, there is a level of dysfunctionality in the GGAS market. So the coalition believes that the certainty for waste coalmine gas is best provided by allowing the sector to operate within the RET scheme, giving them that certainty for the future through till 2020.

As a result, there are two alternatives moved. Amendment (1) is simply to provide that waste coalmine gas be a prescribed inclusion in the RET on 1 July 2011, to bring it in then and give certainty about the starting date. That is our preference, given the fact that the government has now taken the CPRS off the table. We think it is reasonable to provide that certainty over the starting date. But, if that is not accepted by the chamber, then we will simply seek to remove the government’s amendments from this bill and leave the deal that was negotiated last year intact.

We are very disappointed that the government has decided to go back on that deal, that it decided not to stand by amendments that were negotiated and put in this act only last year. We know circumstances in some ways have changed since then, but in other ways the reality is that this industry still generates as many jobs, still generates as much energy, still is just as important to the operation of the energy sector in Australia, still provides as much opportunity as it did last year and still faces uncertainty from the scheme that it used to operate under, the GGAS. So we would urge the government, urge the chamber and urge all senators to support amendment (1) in particular to give the sector the 1 July certainty. But, if that is unsuccessful, then at the very least I would urge the chamber to stand by what it decided last year and leave last year’s deal intact.

11:36 am

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

I rise to indicate that the Greens will not be supporting the opposition’s amendment or motion to oppose items in schedule 1 in relation to waste coalmine gas. I would remind the chamber that the only reason this was even considered for the renewable energy target was that GGAS, the scheme in New South Wales, was to end when the CPRS was introduced, but the CPRS was not introduced and GGAS is not ending.

There is no place for waste coalmine gas in a renewable energy target. It is not a renewable source of energy and I object to having it there in the first place. To now argue that, even though the New South Wales scheme is continuing, they should get eligibility here is pure, utter, absolute rent-seeking, because the proposed price of the REC is higher than they will get in New South Wales under GGAS. They have looked at it and said, ‘Oh! We can get more money under the RET than we can get in New South Wales with GGAS.’ Their argument was, ‘Oh dear, we will be left out in the cold; GGAS is ending, there is nothing to take its place and therefore we need to be considered,’ so the government moved to put them in the RET, even though it is not renewable energy, above the target at that time. We now have a scenario where they can see a windfall gain at the taxpayer’s expense. It is simply not on.

We should have a better mechanism for dealing with the established industries in the New South Wales scheme into the future than putting them in the renewable energy target, regardless of whether there is an emissions trading scheme or whatever arrangements are made in the future. What other industry can sit back and say, ‘Oh well, we’ve got a choice of subsidies here; we will go for the Commonwealth subsidy because it’s higher’? That is all that is going on here. It is disgraceful. If this industry wants to have people listening to it in the future, it had better do better than just saying, ‘We actually want more from the community than is a reasonable thing.’ This started out as a gap in the proceedings because of the confusion around when GGAS would end and when the CPRS would start. The fact that a mechanism was put in place to try and plug the gap is not a reason to be back here opting for a higher paying scheme. I completely reject on behalf of the Greens these opposition amendments. The industry will be no worse off than it is now, because it will still be under the auspices of GGAS in New South Wales.

11:39 am

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

I will respond briefly to Senator Milne. The industry is already worse off. It is worse off because of the uncertainty in the way the GGAS market operates. If there is a challenge here, it is probably the challenge that Senator Milne highlighted, which is to find the means to reconcile the operation of this New South Wales scheme with the operation of the renewable energy target. That reconciliation should not mean that this chamber should at present say to industries like waste coalmine gas, ‘No, we will leave you over there in an uncertain scheme with an uncertain future and an uncertain price, and you can deal with that because we are not going to make room to accommodate you.’ A far better outcome would be to say we will accommodate them here and that we—in particular, the government—will negotiate with the New South Wales government about how they might adjust, fix, wind up or provide certainty, whatever is necessary, to GGAS  to ensure that there is a complementary role for the schemes or that they work together or, indeed, if they do not work together, that either there should be a clear line between them or only one of them should operate. But, at present, the uncertainty of having a scheme that is forecast to close at an unknown end date in New South Wales does not assist an industry like this.

There were government accepted coalition concerns regarding waste coalmine gas last year. I am sure they accepted it in part because there was recognition from their own side. Even Labor Senators Cameron, Feeney, Furner and Pratt had positive recommendations about the inclusion of waste coalmine gas last year when they were looking at this issue. They understand that this energy source, just like other waste energy sources, needs to be treated in an effective way. It may not be a renewable energy in the pure sense that we consider renewable energy, but it is nonetheless a by-product that can be used effectively—is being used effectively—to generate energy. There should be an incentive to make sure that by-product is captured and used rather than leaving it in some sort of limbo land, as would happen if it was left in GGAS.

11:42 am

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

The point is that waste coalmine gas is not renewable energy; it is fossil fuel generated. It is not renewable, so it should not be in this target. When we heard all that evidence in the Senate committee—I was there to hear it all as well as the other senators you named—it was agreed that something should be done about supporting it, but not in the renewable energy target. The point was that people could not work out what other scheme to use to support it. This was a stopgap measure, but it does not justify it being in the target.

11:43 am

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

I will make only one point in response to Senator Milne. That point is that there are other forms of emissions, such as from landfill, that are captured and used for energy. They are included in the scheme, validly so, because we should be utilising all of these things, even though they may not fit what any of us would accept to be a pure definition of renewable. This is the neatest way to ensure there is some incentive. If Senator Milne and others want to propose alternatives in the future—fabulous! But right now this is the only option on the table. It should be included and we should be making sure we provide some certainty for all of those sectors.

11:44 am

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

I am not able to support these amendments moved by the government. I have had a number of representations in recent days—

Photo of Penny WongPenny Wong (SA, Australian Labor Party, Minister for Climate Change and Water) Share this | | Hansard source

Moved by the opposition!

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

By the opposition, I am sorry. You are still the government; they are still the opposition. Let me get that straight.

Photo of Penny WongPenny Wong (SA, Australian Labor Party, Minister for Climate Change and Water) Share this | | Hansard source

You sound like Tony Abbott!

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

Senator Xenophon, please proceed.

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

You should withdraw that, Senator Wong; it was quite offensive.

This is an important issue, and there have been a number of representations made to my office in recent days from the waste coalmine gas industry. Whilst I appreciate those representations, the reason that I cannot support this is primarily because the waste coalmine gas industry still gets the benefit of the New South Wales government’s GGAS scheme. If we had a CPRS then obviously things would change because the GGAS scheme would fall off in relation to that, but whilst there is a GGAS scheme it is not appropriate to bring waste coalmine gas into this particular scheme. It is true that it is not renewable but this scheme does have a number of other elements of it that could be seen as not pure and I think there is a policy difference between the circumstances surrounding landfill gas and waste coalmine gas. There is a fundamental difference between the two.

The GGAS scheme is already in place. I understand that the minister has also had a number of representations in recent days from the waste coalmine gas industry and, if there are genuine concerns about the impact on the industry as a consequence of this legislation then obviously I would appreciate an undertaking from the minister that those concerns will be monitored closely. But, given that the GGAS scheme is still in place and that it is there to give credits for this industry, I do not think it appropriate that they be brought within this scheme. I therefore cannot support this amendment.

11:46 am

Photo of Penny WongPenny Wong (SA, Australian Labor Party, Minister for Climate Change and Water) Share this | | Hansard source

The government will not be supporting this amendment, and I make three points. Senator Birmingham urges us to honour the deal. Well, Senator, the deal is intact. The agreement that the government came to was that, where there was a price on carbon through the CPRS which resulted in the end of the GGAS, we would include existing waste coalmine gas projects above the target, recognising the position that these companies were in. That remains the position, but what you are seeking is a different proposition.

Second, there were some comments made about uncertainty. I would make the point, Senator Birmingham, that if there is uncertainty in the GGAS market as a result of the CPRS, well, you did have the opportunity to provide that in December. But I will leave that point. My third point is this: in this debate we are seeking to balance a range of policy objectives, and one of the things we have to balance is cost to electricity consumers. This is a subsidy. Through this scheme we deliver a subsidy to renewable energy and we do that because it is in the national interest to increase the amount of renewables that are feeding in to the grid. So we consciously set aside a market for those renewables and we say that we are going to make sure that at least 20 per cent of our electricity comes from these sources. But one of the things that we have to balance is ensuring that we do not impose unnecessary costs on electricity consumers.

The amendments to the RET are about unleashing the investment needed to supply renewable energy to Australians and to support the jobs of the future. The proposal to give more money to waste coalmine gas is about increasing the price of power to consumers for a non-renewable energy source and, whilst I understand what the opposition has said on this in relation to, I think, landfill, I agree with Senator Xenophon that there is a policy difference. We did come to an agreement and we will honour that agreement in the event that those circumstances arise.

Question put:

That the amendment (Senator Birmingham’s) be agreed to.

Question put:

That schedule 1 stand as printed.

12:03 pm

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

I move amendment (1) standing in my name on sheet 6116:

(1)    Schedule 1, item 96, page 58 (lines 28 to 30), omit subparagraph 141AA(c)(ii), substitute:

                  (ii)    a statement that the certificate was created in relation to a solar water heater other than an air source heat pump water heater, or that it was created in relation to an air source heat pump water heater, or that it was created in relation to a small generation unit (as appropriate)

The amendment relates the publication of information about certificates for air source heat pump water heaters. This amendment addresses the need for clear information to be published about the uptake of renewable energy certificates for small-scale technologies. Currently, the information provided includes both solar and electric heat pumps within the one group. I believe it would be useful for further assessment of the RECs scheme to see how many certificates are allocated to various technologies and in what amounts.

I am grateful to Minister Wong’s office for providing details of the proportion of the historical and projected REC creation for small-scale technologies such as heat pumps and solar hot water heaters, but that information is not readily available. From a public policy and public interest point of view, I believe that information ought to be published. We now have the information about the RECs created for small-scale technologies but it is not broken down into electric heat pumps and solar hot water heaters. That is what this amendment is about. It is a transparency measure and I urge my colleagues to support it.

12:05 pm

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

On behalf of the opposition, I indicate our support for Senator Xenophon’s amendment. As he said, it is simply an amendment about providing greater information and greater transparency. The opposition thinks that is a wise thing and welcomes it.

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

The Greens also support this amendment.

12:06 pm

Photo of Penny WongPenny Wong (SA, Australian Labor Party, Minister for Climate Change and Water) Share this | | Hansard source

Senator Xenophon, I understand this amendment is only seeking to require the publication of information and I think the government is in a position to agree to that aspect of your amendment. I understand the proposition you are putting about the utility of having the two separate aspects of solar water heater information disaggregated.

Question agreed to.

12:07 pm

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

I move amendment (2) on sheet 6116 standing in my name:

(2)    Schedule 1, page 60 (after line 2), before item 100, insert:

99A  Subsection 5(1)


air source heat pump water heater means a device that uses a vapour compression cycle incorporating a compressor, an evaporator that collects energy from the latent and sensible heat of the atmosphere and a condenser that delivers heat either directly or indirectly to a hot water storage container.

This amendment provides for a definition of air source heat pump water heaters as being ‘a device that uses a vapour compression cycle incorporating a compressor, an evaporator that collects energy from the latent and sensible heat of the atmosphere and a condenser that delivers heat either directly or indirectly to a hot water storage container’. This makes air sourced electric based heat pumps distinctly separate from other, more efficient, heat pumps, such as solar, for example, so that they can be individually considered against other technologies.

12:08 pm

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

The opposition believes this seems to be a common-sense amendment. Unless we hear advice to the contrary, we would indicate our support for it. Obviously, it is being implemented to assist with further amendments as well.

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

I am grateful to Senator Birmingham for setting that out. I ought to have done that. This amendment sets the scene for other amendments, but I point out to my colleagues that they could support this amendment and not necessarily be committed to supporting other amendments. It is a precursor to further amendments but it is not contingent on the further amendments.

Photo of Penny WongPenny Wong (SA, Australian Labor Party, Minister for Climate Change and Water) Share this | | Hansard source

The government does not oppose this amendment.

Question agreed to.

12:09 pm

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

I move opposition amendment (2) on sheet 6154 revised:

(2)    Schedule 1, page 62 (after line 26), after item 116, insert:

116A  At the end of section 21


        (4)    If a solar water heater is an air source heat pump water heater, certificates may only be created for the installation of such an air source heat pump water heater if it has a volumetric capacity of not more than 425 litres.

This amendment quite simply seeks to put in place a cap for the eligibility of heat pump water heaters and places that cap at 425 litres. This figure has been agreed to on the basis that it provides a differential between commercial installations and residential installations. Most of these incentives around hot water services, solar systems and the like are targeted at residential installations, and we believe that is reasonable here. All senators would be aware that there are concerns about the extent to which heat pump water heaters have contributed to the generation of RECs and whether they have contributed unreasonably at the expense of others. That is not a debate I want to buy into on this one in particular, but we are seeking here very clearly to set a limit, and 425 litres is one that we have discussed with industry. We have engaged in consultation in that regard to attempt to find a reasonable point and we think that this is a reasonable point for such a cap to be put in place.

12:11 pm

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

The Greens will be supporting the coalition’s amendment. I think it is really important that we separate out the commercial and residential, and even the industry itself recognises that the time has come for action on this.

12:12 pm

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

I know that the running sheet indicates that this amendment is in conflict with my amendment below it. Whilst that is the case in the respect that I will be moving an amendment to get rid of air sourced electric heat pumps altogether, having that limit would still be an improvement on the status quo. I am already on the record—in the previous debate, back in August—about my concerns about electric heat pumps being part of this scheme, but the cap of 425 litres would be an improvement. We know how they were rorted previously in terms of commercial heat pumps. In that respect the government’s changes to the regulations were welcome, but there is still an issue of the auditing of it. The government’s moves in that regard were welcome, but this makes it absolutely clear that you cannot have commercial heat pumps larger than 425 litres, so I think it is a welcome development.

12:13 pm

Photo of Penny WongPenny Wong (SA, Australian Labor Party, Minister for Climate Change and Water) Share this | | Hansard source

The government does not support this amendment. We have had a long debate previously about heat pumps. They have obviously been included in the renewable energy target since 2001. They do use a renewable energy source to heat water and to displace conventional fossil fuel energy. We will not be supporting this amendment or, I foreshadow, Senator Xenophon’s amendment. However, I understand from Senator Milne’s contribution that the opposition has the support of the chamber in relation to this amendment. The Greens are supporting the opposition’s amendment and therefore the government obviously will not have majority support in the chamber for our opposition, so in the interest of the efficacy of the debate I put that on record but will not be seeking to call a division.

Question agreed to.

12:14 pm

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

I withdraw amendment (3) on sheet 6116 because it has effectively been dealt with by Senator Birmingham’s amendment. I move amendment (4) on sheet 6116:

(4)    Schedule 1, page 63 (after line 29), after item 119, insert:

119A  At the end of Subdivision B of Division 4 of Part 2


        (1)    The regulations must provide for air source heat pump water heaters to be phased out of the scheme constituted by this Act by the end of 31 December 2012.

        (2)    For the purposes of subsection (1), the regulations must provide that, after the commencement of this section, each month the number of certificates that can be created for the installation of an air source heat pump water heater are proportionally reduced, so that no certificates can be created for such an installation after the end of 31 December 2012.

This amendment provides for electric heat pumps to be phased out of the renewable energy target by the end of 2012. I believe it is somewhat of a contradiction that electric heat pumps are eligible for renewable energy certificates. They can certainly be considered as energy efficient, but not renewable.

I know Senator Milne’s contribution on this—on a number of occasions—is that we ought to be looking at a separate energy efficiency scheme with respect to electric heat pumps in particular. I would urge the government to establish a separate energy efficiency scheme to deal with subsidising such technologies and leave the RET scheme to deal purely with renewable technologies.

I am also a realist, and I do have an alternative amendment in relation to the deeming rate for electric heat pumps. I will not be seeking to divide on this, but I would be grateful if my colleagues could indicate their views on this. I think there are some important principles at stake here with respect to electric heat pumps and whether they ought to be included in a renewable energy scheme as distinct from an energy efficiency scheme in the first place.

12:16 pm

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

The opposition welcomes the withdrawal of amendment (3) and thanks the chamber and particularly the Greens and Senator Xenophon for their support of our previous amendment. With regard to amendment (4), it is not the intention of the opposition to support this phase-out. We do recognise the validity of this industry and of this technology. We think the technology does have a valid place and provides an important alternative for households in terms of their choice of hot water service—a service that can reduce their energy consumption, and is therefore a positive in that sense and valid under this scheme. Equally, and importantly for households, it is a product that can be delivered and provided quickly in emergency situations. Regrettably, the time involved in installing, for example, solar hot water services is more difficult and more expensive and requires longer planning by households—which, when replacing a hot water system, is not always possible. At present, given current technology and current options, we think there is an ongoing place for the inclusion of heat pumps.

I also note that the chamber has already carried amendments facilitating a biennial review of the operation of the entire scheme and that Senator Xenophon and those elsewhere who share his concerns about this issue would be able, under that biennial review, to advocate for a phase-out or closure of heat pumps at some later stage.

12:18 pm

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

I indicate to Senator Xenophon that the Greens will not be supporting his amendment (4). Senator Xenophon asked for an indication on his amendment with respect to the deeming period for air source heat pump water heaters, and I indicate that we will not be supporting that either. But I want to make a few remarks as to what the thinking is. The problem we have here—which, as Senator Xenophon indicated, I have spoken about endlessly and I will raise it again to put it on the record—is that we ought to have a national energy efficiency target and we ought to have national energy efficiency schemes which support that target. If we did that, we would be taking out heat pumps from the renewable energy target and putting them where they should be, in an energy efficiency scheme—and the same with solar hot water. You would actually be making a really sensible division in looking at the effort that can be achieved from efficiency and the effort that can be achieved from the generation of renewable energy. We do not have that regime—and we ought to have one. We would have saved ourselves a lot of problems if indeed we had that scheme, but we do not.

We are facing a conundrum here, and the government will really have to engage very carefully in the next few years. With the phase-out of electric hot water in 2012, there will be quite considerable competition between heat pumps and solar hot water. If you take away the support for heat pumps—which the gas industry would very much like—it would mean that you would bring on instantaneous gas in approximately the same price range as heat pumps. And, as this phase-out of electricity goes on, it will change the mix in relation to solar hot water as well.

There is going to be a significant change after 2012 in Australia around hot water, and that is going to play out in this whole area of instantaneous gas, heat pumps and solar hot water units. That is something that the government is going to have to look at very, very carefully. But I do not think it is appropriate to effectively give gas a leg up by taking away the support for heat pumps in the meantime. I think heat pumps have a fantastic future. The possibility of being able to combine heating and cooling from this technology, in refrigeration and so on, into the future is fantastic. There are big opportunities coming down the line, and I think we are going to see radical changes in technology in the next few years.

So I wanted to put on the record that my concern with Senator Xenophon’s proposal is the change in the mix that it will provide between gas and the heat pumps, but I am also worried about how heat pumps might crowd out solar hot water. We just do not know what is going to happen here. That is why I am pleased that we have a review in place as a result of the support of the chamber for the amendment I put up earlier. That will give us a better handle on what is happening when that phase-out of electric hot water cylinders takes place.

12:22 pm

Photo of Penny WongPenny Wong (SA, Australian Labor Party, Minister for Climate Change and Water) Share this | | Hansard source

Sorry, Senator Xenophon; I thought I had responded in the previous amendment to your request for an indication. The government is not minded to support either your amendment (4) or amendment (5), for the reasons I have previously outlined.

Question negatived.

12:23 pm

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

I move amendment (5) on sheet 6116 standing in my name.

(5)    Schedule 1, item 117, page 63 (after line 6), after subsection 22(2), insert:

        (3)    Without limiting subsection (1), regulations made for the purpose of that subsection must provide that, from 1 January 2013, the number of certificates that may be created in respect of the installation of any air source heat pump water heater are only to be created in relation to the first 6 years of operation of that heater.

I accept the Senate’s vote that electric heat pumps will remain eligible under the RET and I appreciate the contribution of my colleagues; however, I still believe that we need to acknowledge that it is not the ideal technology that we should be supporting when it comes to renewable energy. As such, I propose this amendment, which will reduce the deeming period from 10 years to six years for electric heat pumps. In other words, it will mean there will be less of a subsidy, if you like. Given that it will restrict the period from 10 years to six years, it will not knock out heat pumps but it will make them less attractive. Therefore, it will make solar heat pumps, as in using photovoltaic cells, more attractive than electric heat pumps.

Under this amendment, the deeming period will change effective from 1 January 2013, so there is, I believe, a very fair transitional period of some 2½ years before this would come into force, if it is passed. I understand the concerns of the industry about the impact this may have on their business but I believe it is vital that we strive to support renewable energy technologies, which is the intent of this legislation, as much as we can and that we encourage consumers towards these better alternatives. I note the pressure in recent times on the solar hot water heaters using solar panels. I know that in South Australia Rinnai laid off a number of workers—I think from 90 to 55 workers—and has been standing down people, not because they do not produce a good product—they do—but because the company has been crowded out in a sense by the electric heat pumps. This is about trying to redress that balance in a transitional way by adjusting the deeming period from 10 years to six years. I think it is a sensible compromise in the context of what we face as a policy dilemma.

I note Senator Milne’s contribution on this and I value that, but I would urge her to reconsider her approach in relation to this, because reducing the deeming period will make electric heat pumps somewhat less attractive and encourage greener technologies such as solar water heaters. Therefore, this is a half-way house, if you like, but it will actually send a signal that solar hot water heaters rather than electric heat pump heaters will be somewhat more attractive in the market place. That is why I see this as an alternative approach. It is also a step-down in the sense of having a transitional period of some 2½ years. I would urge colleagues to seriously consider this amendment.

12:26 pm

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

The opposition is inclined to support Senator Xenophon on this amendment. We do so seeing it a compromise on some of the concerns that he and others have raised around this sector. We do so noting that the amendment provides for a start date from 1 January 2013—a reasonable period looking forward in terms of providing some industry certainty. Also, we do so noting once again the review mechanisms that have been put in place and that there will be a review, I think, likely to be undertaken prior to that time. Therefore, there is a capacity to reconsider. As I said before in relation to our previous amendment, we do this not in any way disputing the validity of heat pumps but, just as consideration has been given to the extent of the incentive and subsidy provided for some other products, such as solar PV, within the amendments under consideration today we think it is equally reasonable to give some consideration as to the size and extent of the incentive or subsidy that is there for heat pumps. We see this as hopefully a reasonable way to achieve that.

12:28 pm

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

I am really concerned about the principle here of intervening in this way on the deeming period, for one sort of technology, without really understanding what it is going to do to the mix in that sector. I understand Senator Xenophon believes that this will actually drive solar, but it will not; it will drive gas in this particular sector. That is not the outcome that we want to achieve here. I totally agree that we are in a conundrum, because we do not know what the hot water sector is going to look like post 2012. It is very hard to make judgments about that right now. I really do not think it is a good principle to intervene in this way without a sense of exactly what we are likely to be driving or otherwise. My sense of it is that it should be in an energy efficiency scheme. But it is not; it is in this scheme. If you take away that support for heat pumps, then you drive gas. What that does to solar is hard to say, but it is not going to drive solar; it will drive gas.

12:29 pm

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

I would like to briefly respond to Senator Milne. If this amendment drives part of the market towards gas, which is not a renewable fuel but which is a fuel with a lower greenhouse gas profile than electricity generated by coal fired power stations, then that would be a good thing. I see gas as an important transitional fuel in order to achieve the ambitious targets we need to achieve in terms of reducing greenhouse gases. This is a halfway measure that would drive greener technologies, in relative terms, than would be the case if this amendment did not pass. I cannot put it any higher than that. Again I urge my colleague Senator Milne to at least reconsider that, but it seems that we will need to revisit this sooner rather than later once we have had the two-year review, if this amendment does not pass.

12:30 pm

Photo of Penny WongPenny Wong (SA, Australian Labor Party, Minister for Climate Change and Water) Share this | | Hansard source

I make the observation that, on the basis of the indications to the chamber, this amendment stands or falls on the vote of Senator Fielding, so the chamber might have to test that. I already indicated our attitude to this amendment, Senator Xenophon, in my earlier contribution, but I want to make a brief response in relation to the interchange you just had with Senator Milne. What gas needed was a price on carbon. If you talk to the gas industry, you find out that the passage of the CPRS was what the gas industry, in its different forms, really required. Whilst it is still a fossil fuel, as you make the point, it is a less greenhouse intensive fuel than others—coal, for example. The government’s preferred position was a price on carbon and a renewable energy target. That would have dealt with a number of the issues you have raised far better than tinkering at this point with the renewable energy target.

Question put:

That the amendment (Senator Xenophon’s) be agreed to.

12:39 pm

Photo of Penny WongPenny Wong (SA, Australian Labor Party, Minister for Climate Change and Water) Share this | | Hansard source

I move government amendment (1) on sheet CA252:

(1)    Schedule 1, page 63 (after line 29), after item 119, insert:

119A  Subsection 23B(2)

After “multiplied by”, insert “a number that does not exceed”.

This is an amendment which enables the alteration, in certain circumstances, of the solar credits multiplier. It is in step with some of the amendments which have previously been dealt with. This amendment allows for the solar credits multiplier for small generation units to be reduced in circumstances specified in regulations. It is the intention that solar credits would be able to be reduced if the Renewable Energy Regulator determines there is systemic evidence of a range of issues, including relatively small or no out-of-pocket expense. We intend to consult industry on draft regulations that will come into force in the future in relation to this issue, so this amendment is to enable such regulations to be made.

12:40 pm

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

This goes to the issue of the dilemma that is out there at the moment, because we do not have a national gross feed-in tariff, so each state has different levels of support and different schemes in place such that we have the two extremes. We have New South Wales with a very generous feed-in target, Tasmania with nothing and everyone else somewhere in between.

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

Aren’t you afraid of the government of Tasmania?

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

I will take the interjection from Senator Birmingham. I trust that Tasmania, being such a laggard, can improve its position now that we have a couple of Greens in the cabinet. I certainly hope that is going to be the case, but I just use this at the moment, not particularly because I am a senator for Tasmania but, more particularly, to demonstrate to the Senate the range of different levels of support across the country. As a result of that, when you have a multiplier for the small-scale photovoltaic system at five and you have a cap limit at 1.5 kilowatts, you end up in a scenario where, in Tasmania, such a system installed would cost somewhere between $2½ thousand and $5,000, depending on the quality of the system and so on. In New South Wales there is evidence to suggest that, already, the same system would be free or almost free. We had a lot of evidence to the Senate inquiry, particularly from Solar Systems, Conergy and some of the big companies, that once you get down to a very small co-contribution from the household or it is free you get the same kinds of problems we had with the insulation program: the whole thing goes out of control and you end up with it being rorted. You can imagine how easily that could occur in this circumstance.

The issue is that if you do as those other companies suggested, and you increase the size of the system to, say, three kilowatts and reduce the multiplier to three, that would work in New South Wales, where it would still be a reasonable cost to households, but in Tasmania, as it currently stands, it would mean that the cost of a system would be somewhere between $10,000 and $15,000, putting it outside the capacity of an ordinary householder to be able to access this technology. This is a real conundrum and it is made because, in many ways, we do not have the kinds of uniformity we ought to have around the country. Nevertheless, I appreciate the fact that we have had a lot of discussion with the government about how we might go about fixing this. Initially, I was attracted to the idea of going to the three-three proposal, but having talked a lot to the industry they say that it is wrong to assume that there is going to be an explosion in free systems that we are told are already available in New South Wales.

It seemed to us that the best idea would be to give the minister power, through the regulations, to be able to monitor this scenario and to be able to change the size of the system and the multiplier when it came to the photovoltaic systems. This is purely to make sure that you get sustainable growth in the industry to make sure that you maintain your quality controls and you get a steady development of the industry.

Progress reported.

Debate interrupted.