Peter Garrett (Kingsford Smith, Australian Labor Party, Shadow Minister for Climate Change, Environment and Heritage) Share this | Hansard source

Kingsford Smith) (10.13 am)—I am grateful to have the opportunity to welcome the Australian Energy Market Amendment (Gas Legislation) Bill 2006 today. The proposed national regime will replace the nine different regulatory regimes operating across the country and streamline access to gas pipelines. That is certainly long overdue and welcome. The amendments contained within the bill confer the powers of regulation and management of the proposed national gas regime to Commonwealth agencies and to the federal minister. I note that the bill’s provisions reflect the agreement undertaken by Commonwealth, state and territory governments at the Ministerial Council on Energy. The regulatory framework proposed in this bill, of necessity, now relies on the states and territories passing complementary laws. That is something which, in due course, ought to happen to enable a regulatory framework of this scope to be enacted. The timing of this bill, designed as it is to allow for the establishment of a national framework to regulate access to gas pipelines, could not come at a more crucial moment, because gas has come in for a hard time in the parliament and in public debate over the last couple of weeks.

As debate has raged over how we should deal with the threat of climate change, with the spectre of a potential four-degree increase in temperature hovering and the creation of a world described by NASA scientist Jim Hansen as ‘practically a different planet’, the Howard government has taken a surprising and disappointing stance and, at times, seems to almost completely discount the contribution gas is capable of making to address climate change. Given the consequences of even a two-degree increase in temperature, it is extraordinary that the government would be dismissive of such a vital source of energy—yet that is exactly what it has been doing.

Whenever the issue of baseload power provision has been raised by anyone in parliament, on television, radio or in print, the federal government has fallen over itself time and time again to say that only coal or nuclear power have the capacity to provide baseload power in Australia. It is the case that the Prime Minister and other ministers mention gas on a couple of occasions here and there, but the general thrust of the government’s position and comments, including statements made by the Prime Minister in question time, is that it will fall upon coal or nuclear power to provide baseload power in the future.

That is just not correct. Consider the international experience. The truth is that, in 2000, gas provided 54 per cent of Russia’s energy needs, 52 per cent of the Middle East’s energy needs and 16 per cent of North America’s energy mix. Gas is more than capable of providing a share of Australia’s baseload power and, importantly, it is also extremely flexible.

The fact is that most of the growth in our energy consumption is in demand for intermediate and peak power. That is really where the demand for energy comes from and that is where the demand for energy must be met—in intermediate and peak power. It is on those hot summer afternoons, when everyone turns up their air conditioning full blast—that kind of demand—where gas and also solar power are particularly well suited. In fact, gas is such a flexible source of power that it can be used to provide baseload power, the power that is needed to keep everything quietly ticking over during the night and, with the flick of a switch, it can be used to provide a couple of minutes of peak power or 12 hours of intermediate power.

Apart from its flexibility, gas also has between 30 per cent and 50 per cent less carbon emissions than coal. That is quite a significant reduction. Furthermore, all the work that has been done to develop clean coal technologies, such as geosequestration, could also potentially advantage gas, as many of the same principles can apply to bearing the carbon load from gas as apply to bearing the carbon load from coal.

Traditionally, we have not used gas to provide baseload power in Australia because the price of coal has been so low. The price of coal-fired baseload is around $30 per megawatt hour, compared to around $38 per megawatt hour for gas-fired generation. This has meant that, whilst domestic gas prices in Australia are amongst the lowest in the OECD and the lowest in the world, gas is still more expensive than coal under existing policy settings. Despite its flexibility and availability, Australia has gas reserves of more than 110 years worth at current rates of production, and this does not include the large volumes of Queensland and New South Wales coal seam gas.

Yet just last week the Minister for the Environment and Water Resources, Mr Turnbull, told the Sydney Morning Herald that it would be ‘short-sighted and selfish for Australia to use its large gas reserves to cut emissions in Australia, because the rest of the world did not have that luxury’. That is an extraordinary position to take, particularly as Australia’s greenhouse pollution is expected to soar by some 27 per cent by 2020. If we wish to avoid this kind of emissions expansion—and the need for us to reduce emissions is indeed urgent—then we clearly need to invest in gas and other clean energy sources here in Australia.

It is difficult, I think, for people to understand why the Howard government is so keen to perpetuate the myth that only coal or nuclear power can provide baseload energy demand. I believe the Minister for the Environment and Water Resources needs to stop talking down Australia’s gas and renewable energy sectors and start doing his job. This is not about the gas industry’s technological inadequacies—and the bill before us clearly shows what the potential for gas is—but the minister for the environment’s indifferent approach on climate change is seriously to be regretted.

We argue that any government that takes the risks inherent in climate change seriously must also take the role of gas in the country’s energy provision very seriously. Federal Labor certainly does, as does the industry itself. Just two days ago AGL announced its decision to join the Chicago Climate Exchange. This is further compelling evidence of the lost economic opportunities created by 11 years of climate change denial and complacency under the Howard government.

AGL’s historic announcement demonstrates the company’s commitment to tackling climate change but also highlights Australia’s isolation from global efforts to cut greenhouse pollution. As it turns out, clean energy companies are continuing to seek opportunities outside of Australia. AGL’s move to the Chicago Climate Exchange shows how many golden opportunities are being missed. The fact is that Australia should and could be the regional hub for emissions trading and clean energy but, instead of a hub, there is a hole. Nothing can happen. Australian financial institutions are blocked until Australia ratifies the Kyoto protocol and establishes a national emissions trading scheme.

AGL’s Managing Director, Paul Anthony, has stated that his company’s membership of the Chicago Climate Exchange allows it to ‘trade allowances with other companies around the globe seeking to reduce their own carbon footprint and access the global buyers for its many carbon offset projects’. It is clear the government’s failure to act is costing jobs and threatening our precious environment. A discussion paper released almost five years ago by the gas to liquids task force recognised the potential for gas to liquids technology. It stated:

There is a significant potential market for ultra clean diesel, and this provides an opportunity in the future for GTL—

gas to liquids—

diesel.

So what is preventing the gas industry from taking a more substantial role in Australia’s energy mix? Firstly, investment in energy infrastructure requires very long lead times and certainty. The Howard government’s failure to provide the security of a carbon signal has resulted in both the coal and gas industries being frustrated in making investment in the provision of new power plants because, while the government may pretend that climate change is not real—or, at least, not very urgent—the gas and coal industries know that a carbon signal is coming. They know they are moving into a carbon-constrained economy, and they are not willing to commit substantial sums of money—indeed, as much as billions of dollars in assets—that may become stranded in this new environment. That is why, secondly, the gas industry needs a carbon price signal and a carbon emissions trading scheme to trade the carbon in. That is why on 7 February this year Grant King, Origin Energy’s Managing Director, told ABC radio that his industry wants to see a carbon trading scheme. He said:

We’d like to see a commitment to introduce an effective carbon-pricing regime. We believe that that needs to be sooner rather than later. That’s necessary to ensure that companies who are making major capital investments which have 20, 30, 40-year lives can make decisions knowledgeable of the future regime in relation to carbon-pricing.

This is also why on 22 February 2007 the CEO of the Petroleum Producers Association, Belinda Robinson, told her Australian Oil and Gas Conference that she was bewildered by the federal government response to climate change. She said:

We do need to explore all options for all energy supplies that are cleaner and greener than we’ve had in the past but they’re out there; they’re 10, 20 years away. The bewildering part has been that we’ve got gas now, there’s no new technology that has to be advanced to be able to deliver on greenhouse gas emission reductions with gas.

I think that says it very clearly. While the Howard government has continued to marginalise the gas industry by refusing to recognise its capacity to provide baseload, intermediate and peak power demands, and has refused to acknowledge its lighter carbon load, Mr Howard has simply continued to talk up the prospect of a future nuclear powered Australia. In this future—and it is a distant future that arrives only in the 2030s or later—Australia has dozens of nuclear reactors dotted along the eastern seaboard. According to Dr Switkowski, they will meet one-third of Australia’s energy needs.

It is unclear how Australia will manage the tonnes of nuclear waste produced by such an intensive nuclear industry, nor is it clear where the waste will be stored, nor do we know where the reactors will be, and the cost involved in producing that power remains very expensive—and then, of course, the issues of risk around nuclear non-proliferation have somehow resolved themselves overnight, although we are not told how. Although all of these issues remain in abeyance, gas, which has the capacity to provide us with energy right now, is underrated and maligned.

Of course, it is a fact that Australia’s emissions have been rising exponentially, but apparently that also is not a problem. If you believe the Prime Minister, nuclear power in the future will answer all of our energy needs. Nothing could be further from the truth. In fact, pursuing this nuclear future will not only drive up our carbon emissions through inaction on multiple fronts necesary—and the mining, milling and building of nuclear power plants will create emissions—but will also radically increase the risk of accidents and proliferation and open up the prospects of terrorism on Australian soil. That is why this Labor Party under Kevin Rudd resolutely rejects nuclear power.

When we look at the Australian Energy Market Amendment (Gas Legislation) Bill, we recognise that the replacement of nine different regulatory regimes operating across the country with one proposed national regime to streamline access to gas pipelines is necessary and welcome. But when we examine the potential and clear role that gas could play in assisting us to meet our greenhouse gas emissions in Australia at a time when climate change is an issue of significant importance, we can see very clearly the failures inherent in the Howard government’s approach.

The Labor Party would ratify the Kyoto protocol. We would give Australian businesses and farmers access to income streams that flow from ratification and we would give Australians access to the international negotiations that are about to begin—negotiations that will determine how we move forward as an international community in our fight against climate change. This legislation is important, and it also emphasises why Australia’s gas industry has to be brought in from the cold and counted as a part of the solution to Australia’s spiralling carbon emissions.

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