Wilson Tuckey (O'Connor, Liberal Party) Share this | Hansard source

The Energy Legislation Amendment Bill 2006 is important legislation that sets out to remedy a situation that has developed where investors have spent their money and been caught out by the return available to them. The classic case is the pipeline from Karratha to Bunbury in Western Australia. A man called Sir Charles Court, whom I admire above all other politicians, took a risk with Western Australian taxpayers’ money to build a pipeline from the North West Shelf to Perth and south from there and entered into a take or pay contract for the gas which ensured that the export of that wonderful and now huge Australian resource could commence. He took that risk and many a noted economist criticised him for doing so because the economics at the time did not add up. But Sir Charles Court was never a man to think only of today. Unlike many people we meet in the market and the political field today, Sir Charles always had forward vision. I was most fortunate to deal with him in respect of my local government responsibility. If you had a need for housing blocks in your small town and the state lands department said they would have a problem in doing the work, he would ask, ‘Could you and your council do it, Wilson?’ and if you said yes he would say, ‘Okay, there’s the land. Fix it.’ That is exactly what occurred in our town. Sir Charles was an amazing politician and this massive resource project, built around his initiatives, was ready and able to supply when the world discovered liquefied natural gas and, more particularly, its benefits from an environmental perspective.

It is interesting that years later his son sold that pipeline. The minister that had the job of doing it gave, in my view, a too optimistic prediction to investors as to the prices that they might be able to charge in the future. The government changed, a regulator was installed, the regulator went in the reverse direction and as a result the company concerned went broke. The pipeline is now in the possession of a different company and at this stage they are doing some upgrades to meet the demands of industries in the Perth metropolitan area. The previous speaker mentioned the pipeline that was also built from that resource project directly to Kalgoorlie and the benefits that has brought in a competitive sense to the mining industry of that region.

This legislation, put in the simplest of terms, is saying that you can apply, prior to investing your money, for a 15-year exemption from the regulator coming in and telling you what you can charge for gas. In other words, you can plan to make profits on your investments. These investments are often painted as being the property of extremely rich people. However, the investors that typically take on these very large infrastructure projects are called fund managers. Fund managers are the people who invest the money, provided each week in millions of workers’ pay packets or pay slips, from the nine per cent compulsory superannuation scheme. That money is accumulating at a huge rate. In fact, Australia is battling to find investment opportunities within our landscape for that money. So those people want to know, when they invest all those workers’ superannuation funds, that they can deliver to them an economic return on their moneys. The legislation also points out that, when people are seeking that exemption, the National Competition Council will look at the circumstances of ‘market power’: what alternatives people using this gas have in respect of energy and, consequently, if they can be held to ransom—and I do not think we want that to happen. Fundamentally, it is a decision of the Ministerial Council on Energy, which brings the states and their particular regulatory powers into this issue and of course the legislation picks up the recommendations made by the Productivity Commission in its Review of the gas access regime.

I note the fact that people can seek exemption from regulation for 15 years of operation. The first incentive in this legislation removes the threat of the regulator intervening to impose third-party access provisions, including price regulation on new pipelines. The second incentive allows a proponent to seek an exemption from price regulation for a proposed international transmission pipeline which will deliver foreign gas to Australia. The special area of note here is the Papuan pipeline coming down through Cape York. The key driver of this second incentive is the importance of securing Australia’s long-term energy security needs whilst recognising the additional complexity of international infrastructure projects. In other words, this is a piece of machinery legislation that will encourage investment in the delivery of natural gas around Australia and make it more attractive for industry and electricity generators to use it while it delivers environmental benefits. Whilst natural gas is a hydrocarbon and its use emits carbon dioxide, with the accompanying greenhouse problems, it is of course a more efficient gas to use and the carbon emissions are not as great as they are with coal use.

However, every time we deliver more gas to a consumer, or an overseas customer, we deplete those resources. I am not one to say that we should not do that, but I am one to say that, in that process, we are ignoring the potential for renewable energy resources, which could give us a perpetual source of energy. These resources are well known; nevertheless, they can be subject to considerable criticism if their application is incorrect. The classic example of that is wind power generation. We have a hang-up with wind generators, but their capacity to reliably supply energy into a grid, where you have to be able to adjust production to demand when people want it, is limited. Typically, the wind blows strongest when all the lights are out. That is not a good choice for grid power consumption.

There was a case quoted in the Australian some time ago of two wind farms in New Zealand, of I think some 150-megawatt capacity, that were experiencing 100-megawatt fluctuations in their generation output over periods of five minutes. The people who have to transmit this power were more worried when it went up than when it came down. They now have a serious problem managing that resource. There is not a wind farm in Australia that can stand alone and deliver electricity into a market—not one—for the simple reason that you would be blowing up people’s computers one minute and the lights would go out the next. That is not to say that there is not potential for how wind power generation might be utilised. I will come back to that.

The same applies to solar—photovoltaics. If you try to supply an electricity demand, other than with a very large battery bank, it does not work; and, just when you want to turn the lights on, they stop generating. I might add that, in a total sense, both of those resources are mickey mouse; they do not have the capacity to meet the huge demand for energy that exists in Australia, or for that matter any other part of the world.

In the Kimberley region of Western Australia we have a tidal resource that is totally predictable. Unlike wind, you know exactly when it is capable of generating the electricity you need. Consequently, it can be managed so that you can even out its fluctuations. There is well-known technology—some of it used, by the way, in the Snowy, where they pump water back to a higher reservoir and use it again to supply peak power demand. You can do that with the tides. The tides of the Kimberley region of Western Australia have a mean level of 11 metres, twice a day. With modern technology you harvest the tide on the way in and on the way out. You only really have to worry about neap tides. They can be adjusted in the high peak of production and stored water can fill that gap.

But each and every one of these renewable resources, which are there forever—and the tides, by the way, have the capacity to replace all the energy, of every variety, consumed in Australia; that is how big a resource it is—can be used to make hydrogen. Here we are today watching fuel prices going through the roof. I think I have informed the parliament previously that only 12 per cent of the world’s population owns a motorcar today. That is predicted, reliably, to grow to 16 per cent by 2020. But in that same period the world’s population will grow from six billion to eight billion. So we are not talking about 16 per cent of today’s population; it will be 16 per cent of a population that is 25 per cent larger than it is today. There will still be enough liquid hydrocarbons around to meet that market, but it will be so expensive to harvest, to extract from the ground or the distant oceans. You will be able to name any price you like for that fuel—if, for instance, Australia stays dedicated to that marketplace.

We have all sorts of people telling us about biofuels—you know, ‘Grow a crop.’ That will be good in the end. If we do enough of that we will be able to drive our cars wherever we like, but there will be no food in the supermarket when we get there. As for the argument that you can convert our rather sparse agricultural capacity: in the wheat debate, I keep reminding people that the United Kingdom grows more wheat than Australia. If we are going to keep converting that resource then we naturally reduce our capacity to feed ourselves or other segments of the world. If you compare the value of grain on the food consumption market, it is possible that that would also force the price of automotive fuels up substantially.

Visualise the farmer who is being told today, ‘Grow some canola.’ In parts of my electorate it would take a third of your acreage to have enough fuel to put in next year’s crop. In fact, on an acre of land a farmer could put up a major photovoltaic panel and be making hydrogen from groundwater that is causing other problems in his farming practice, and he could pump store it. The new tractor would be a very simple piece of machinery. The farmer could virtually make one himself. He would buy four hub motors, as used in a Hall pack today, to drive the wheels of the tractor, then buy separately an electrical generator pack that takes hydrogen. There are three 300-kilowatt buses running around Perth as I speak with exactly this sort of pack. The technology and the reliability of equipment are improving every day. I might add that the fuel cell that converts hydrogen back to electricity and water was first invented in 1839. That farmer could then in fact have the pack as a separate implement, which he either attaches to or puts into his tractor when he is using it, and his harvester when he uses that at a later time, and he could make all his own electricity.

For householders, CSIRO has already announced that it has developed a box about the size of a microwave oven which you can hang up in your garage and connect to either the mains or a solar panel on the roof and produce enough hydrogen daily to run a fuel cell car 150 kilometres. But what are we doing about that? It’s like three-tenths of what’s-her-name!

This parliament is talking about making it easy to get gas from one side of the country to the other—and still liquefying it by burning natural gas—when, within close proximity to most of the gas resources in Australia, there is a huge tidal resource which could be generating the electricity to liquefy the gas we sell overseas and consequently extend the resource of our gas deposits and reduce the emissions associated with that process. It does not even get a mention. Nobody wants to know about it.

I have argued in this place before, and I will argue again, that we need to use hydrogen as the fuel for our mobility here and in other parts of the world. Of course, half the energy consumed in Australia is used to turn wheels. With regard to the nuclear debate, I think our best opportunity is to use hydrogen as the fuel for mobility and keep using coal to generate base-load energy. Notwithstanding the continuing level of emissions, the problem would be diluted to the extent that you would get a 100 per cent saving using hydrogen in motor vehicles and for transport simply because it is reconverted into water. If you follow one of those buses around Perth, you will see steam coming out of the exhaust pipe. This is where Australia should be going.

Industry is getting on with this—I have visited General Motors in Detroit and I have been briefed on their progress—but what they all need is some targets. The governments of the world should be saying, ‘If you want to drive a taxi in Sydney or London, it must run on hydrogen.’ By the way, BMW has the capacity to sell you tomorrow a reciprocating motor that runs on hydrogen. All of a sudden you will have a massive clean-up and, if the fuel is created here in Australia from renewable energy, you can virtually fix the price. The only fuel of tidal power is money—and we have it running out our ears. We are buying tollways all around the world. Yet we are not investing—and there are union super funds in this category—in works of this nature. It is up to governments to say, as the Californians did years ago, that car emissions will be limited to X by a certain date, to Y by another date and so on. And it happened. Industry said in the beginning, ‘That’s impossible,’ but they met the targets. President Kennedy told the Americans they would send a man to the moon, and industry geared up and did that—and, by the way, they used hydrogen as the fuel to get there.

There is no rocket science—if I can use the pun—in any of this. School kids—and our Prime Minister, I might add—have been making hydrogen in school laboratories by electrolysis for probably 100 years. And that is the process. They call hydrogen the energy transfer agent. You put electricity into water and you create hydrogen. You deliver it to, say, Sydney, you put it into the tank of a taxi and it is reconverted into electricity and water—the hydrogen created by putting energy into water in the Kimberleys is converted into electricity and water. And it is there forever. It does not matter. The tides will be there for as long as the moon circumnavigates the earth—if the sun stops shining for my farmers to produce hydrogen on their properties, we will have other problems. These are the challenges for us in energy. I welcome this legislation. It is going to make it easier to deliver a non-renewable resource around the country, but we must seriously consider these other options now. (Time expired)

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