Senate debates

Tuesday, 7 February 2017


Renewable Energy Target

8:06 pm

Photo of Christopher BackChristopher Back (WA, Liberal Party) Share this | | Hansard source

I have long been a lone voice in this place highlighting the unjustifiable and unsustainable failings of the large-scale Renewable Energy Target. Well, the chickens have come home to roost. Everybody now realises that Australia is at a crossroads, and energy policy is right in the middle of it. We have to do something. We know very well that Australia's postwar prosperity is dependent on the fact that we had a reliable source of cheap energy, and nowhere was this better evident than in South Australia where, under Premier Playford, they organised and ensured cheap, coal-fired power. They attracted manufacturing in naval shipbuilding and car manufacturing, and the place was the envy of Australia. Contrast that with today, where the cost of power to South Australians, when you look at spot power prices, is in many instances three times the cost of power in Victoria. It is $150 per megawatt versus $50-odd. But Victoria is catching up, as is Queensland, and that will happen nationally if Mr Shorten is ever allowed to get his way with 50 per cent.

What has happened in South Australia, as you know, Mr Acting Deputy President Gallacher, is that their reliance on intermittent wind power has turned into a disaster for households, schools, miners and business. We now have businesses putting off staff or closing because of the doubling of power costs. Only this week did we see BAEconomics come out with the statement that the bill to prop up green power will hit $3 billion this year. The cost of the subsidies, of course, will be borne right throughout the country.

To put it into some perspective, the target currently for renewable energy in 2017 is 26,000 gigawatt hours. We are currently on 16,000. What is the cost of getting the next 10,000? It is horrific. The estimates are that if we continue this mad subsidy towards wind power we will be looking at some $40 billion in costs which will go straight on to consumers. If Australians think power costs are bad now, they have not seen anything yet. That is not to speak of the inconvenience of the power blackouts in South Australia, which I publicly and nationally predicted in June last year would happen.

The Renewable Energy (Electricity) Act requires an electricity retailer to purchase a prescribed number of what are called renewable energy certificates and, having purchased them, surrender them to the Clean Energy Regulator. If you do not do it, the current fine is $65 per megawatt hour. By the time that is taxed up, because it is a fine, the $65 becomes $92. Guess where the $92 goes? It goes straight onto the consumer's bill. Only recently we saw ERM Power decide that, instead of purchasing the renewable energy certificates, they would pay a fine to the regulator. So there were no reductions in carbon dioxide emissions. The regulator is now very upset and is threatening criminal sanctions against ERM. It goes without saying that the decision will obviously be in favour of the most equitable activity to undertake. But remember that a fine does not allow tax deductibility. So once they send out their bill to consumers those businesses that would claim the GST back cannot do so on that component.

The large-scale renewable energy scheme has proven to be a costly failure. The scheme was never intended to act as an unchecked single industry subsidy. One of the ways we could alleviate the burden on consumers is to amalgamate the renewable energy certificates into the highly successful Australian carbon credit units which are driving our direct energy activities under this coalition government. They are the process by which we will achieve the targets that have been set and agreed to.

As you as a South Australian would know, Mr Acting Deputy President, a reliable, secure and affordable electricity supply is what Australia needs and what every Australian has the right to expect if we are going to live equitably and if we are going to have the jobs, growth and prosperity that this Turnbull government is driving. But we know where we are at the moment. We know that there is an unreliable and expensive source of electricity. We know that South Australia is an example of failure. We see that Victoria and Queensland are heading the same way. This evening I want to share that concern.

We know that the current policy settings, including the structure of the National Electricity Market, are not conducive to baseload generators. Let me tell you a little bit about them. If normally a baseload generator is undertaking some 40 megawatts per hour they must register and be what are referred to as 'scheduled generators'. What happens with wind and solar? It is a nice little deal, if you do not mind. They are actually called 'semi-scheduled'. Do you know what that means? It means they do not have to commit to what they say they will generate. That is in contrast to the United States of America where, if they contract to supply electricity to a retailer, they are contractually bound to so do. But here in Australia the legislation was so badly written that in fact the wind turbine operators get the phenomenal benefit at the expense of the Australian taxpayer of renewable energy certificates which at the moment you can buy for about $88 per certificate . It is not bad if you can get them, given the fact that they were about $35 in only September of 2015. Who holds them? Who holds them all? I will tell you who holds them. Yes, a lot of the big electricity generators hold them, but so do the banks and so do other investors. If you got in on the ground floor at $35 when they are now worth $88 and on their way to $92 or $93, it is not a bad deal. But that wind or solar generator who has the opportunity to do a deal and a power purchase agreement with a retailer can say, 'Oh, by the way, I want those renewable energy certificates but I do not have to you commit to actually providing you with the power that I have told you I will provide.'

So the first thing that has to happen to fix up this lamentable situation is to require those wind turbine generators to actually be fully committed and to be referred to as 'scheduled generators'. That is the first requirement we need. We need to force them to nominate in advance how much power they intend to deliver, when they intend to deliver it and, indeed, for how long.

Mr Acting Deputy President, you know as well as I do that if you were to look at power generated from tides you could predict out 100 years what tidal activity was going to be. Why we are not exploiting this in the northwest of Western Australia is beyond me. If you were to have a look at wave action you could predict literally 24 hours to 48 hours in advance what wave activity was going to be. If you look at power generated from coal or LNG, you know 100 per cent not only how much power but also the quality of that power that is going to be available to you. That is what the Australian community expects and requires—reliable, affordable, sustainable power, and not the nonsense that has led your state of South Australia into the economic demise in which it finds itself now. A simple rule change would lead to a level playing field and allow all generators the opportunity of providing affordable power safely and reliably irrespective of the weather.

I have made the point again and again over time: how is it that a country the geographic size of America without Alaska and a population that of greater New York can be as wealthy per capita as we are. No, it is not wool off the sheep's back—it has not been since the 1950s. No, it is not iron ore or coal. It is two words—and you knew about it in South Australia under Playford—and those two words are: cheap energy. That alone is what gave Australia the advantage that enabled us to enjoy what we enjoy in this country today. Tasmania has been fortunate with hydro-electricity—we see of course the Snowy Hydro scheme—and we should continue to promote them. This country, this taxpayer, this business, this industry, these miners expect a supply of reliable power. It will not come from wind. We need to stop that nonsense.