Gary Gray (Brand, Australian Labor Party, Parliamentary Secretary for Regional Development and Northern Australia) Share this | Hansard source

I rise to speak on the National Greenhouse and Energy Reporting Amendment Bill 2008. Speaking on greenhouse measures may seem a little odd for me—after all, I did describe climate science as ‘pop science’ in the 1990s. I wish I had not said that. Climate change is real. Greenhouse measures are serious and they have serious implications—implications that will affect how we create wealth, how we travel and how we work. At all times our greenhouse measures must enhance our national capacity to create wealth, because it is wealth which allows us to improve living standards; it allows us to protect our environment. Without wealth creation we will suffer lower living standards. Without wealth creation we will suffer a degraded environment. And without wealth creation our ability to respond to climate change will be reduced. For these reasons, the government must get emissions trading schemes right.

This bill amends the original 2007 legislation passed through this place by the Howard government exactly 12 months ago. The 2007 legislation provided the first plank of what is now becoming a comprehensive emissions trading scheme. I looked over the 2007 debate in Hansard. The current Minister for the Environment, Heritage and the Arts, the member for Kingsford Smith, was scathing of the Howard government’s ‘sloppy bill’. He acknowledged the urgent need for progress but lamented the poor process and lack of consultation.

After reading the Hansard, I looked at other parliamentary reports. According to the Senate Standing Committee on Environment, Communications, Information Technology and the Arts investigation into this legislation, it was found that the department did not consult with stakeholders during the drafting stage. The committee’s report found that stakeholders did support the intent of the legislation. It also found that, in its original form, there were various problems with this legislation.

I noted with some interest the speakers list from the passage of the original legislation. In 2007, the member for Wentworth was, of course, appropriately, lead speaker for the Howard government on this legislation. He was followed by my Western Australian colleague, the member for O’Connor—a great champion of the environment—and the member for Pearce, as well as the member for Ryan and the former member for Deakin. It is surprising that the current member for Calare, the then Assistant Minister for the Environment and Water Resources, did not speak. It is also surprising that the member for Higgins did not speak. The member for Groom, who has just spoken, did not speak at that time. The member for Flinders, the current shadow minister, did not speak. If, as the member for Wentworth then claimed, the legislation demonstrated the Australian government’s commitment to an effective climate change response, the lack of coalition speakers in this place for their legislation was, at least, revealing. I am still unclear as to the current position—or maybe that should be ‘positions’—of the members opposite.

What is clear is that the Rudd government is responding to deep-seated calls from the community, business and industry to address carbon emissions. Indeed, by many public measures, carbon emissions are the most important environmental issue. It is clear that the people of Australia gave the Rudd government a mandate to implement practical and fair measures to reduce Australia’s carbon footprint. And it is clear that this amendment bill that we are debating today will strengthen the National Greenhouse and Energy Reporting Scheme.

Cutting carbon emissions will have costs: prices will rise; industry will change. It will not be easy; there will be pain. Australians often have an inconsistent attitude to the environment—proffering great concern but not always living up to their high ideals. According to a Newspoll published last year, nine out of 10 Australians believe that a quarter of Australia’s energy should come from renewable sources by 2020. But, according to this year’s National Green Power Accreditation Program’s March Quarterly status report, only 9.1 per cent of Australian households are buying their power from a green energy provider.

Green energy is also an option for Australian companies trying to reduce their greenhouse gas emissions. And Australian companies are world leaders in cutting their emissions. But what has been missing is a nationally consistent, internationally recognised and coherent measuring system. An article in the Australian Financial Review of 19 September 2007 regarding the passage of the 2007 original Howard government legislation reported:

The investment community finds emissions data hard to use because the figures can’t be compared. There’s no consistency in the items factored into reports, there’s variation in the ways companies calculate emissions and occasionally companies don’t even explain what they’re actually measuring.

The Howard government’s National Greenhouse and Energy Reporting Act 2007—introduced by the member for Wentworth exactly a year ago—laid the foundation for an Australian emissions trading scheme. The robust data that, as we speak, is being collated because of this 2007 legislation will form the basis of future emissions liabilities under emissions trading. Importantly, that data will also inform the Rudd government’s decision-making process during the establishment of any emissions trading system. The 2007 legislation established that from 1 July 2008 companies would need to report their emissions and abatements under a single national framework. Before the Howard government scheme was introduced, hundreds of Australian companies were already providing the same or at least similar data to various voluntary state, territory, national and international greenhouse reporting programs. Each program had been developed in isolation and, in some cases, companies were preparing numerous differing reports to be submitted to different programs.

This amendment bill will amend the National Greenhouse and Energy Reporting Act 2007 to make changes to the public disclosure provisions and to clarify matters of administrative detail. It also addresses some of the complexity of reporting requirements and, at the same time, adds in obligations to differentiate and quantify direct as well as indirect emissions. It will allow the minister to specify conditions for methods of measuring greenhouse gas emissions and to specify a rating system for such methods. It will provide greater clarity for the public and investors with the publication of the methods of measurement.

Currently, there are approximately 450 companies reporting under the National Greenhouse and Energy Reporting Scheme. By 2011 this number is expected to increase to around 700 companies. There is significant business support for this action. The business community has been calling for an emissions trading scheme and it is the business community which began to work out how to develop one. Ten companies operating in Australia, with a total market capitalisation of around $600 billion, say they want this. I will now go through the stories of BHP Billiton, Rio Tinto, Woodside, AGL, Santos, Alcoa, Origin Energy, Westpac, Wesfarmers and BP. Why do they say they want it? That question can really only be answered by them. They have run the numbers. These firms have factored in carbon prices, their business planning demands that they do it, analysts and stakeholders demand it and shareholders expect it. A position on carbon has often helped define the reputation and public standing of companies—Origin Energy comes to mind.

When the previous government decided to investigate the possibilities of emissions trading, Prime Minister Howard established a prime ministerial task group to advise on the nature and design of an emissions trading system. A Canberra Times article, dated 26 March 2007, summarised the submissions made by Australia’s top firms and found:

Australia’s most important resource companies including BHP Billiton, Rio Tinto, Woodside, AGL and Alcoa have come out in support of a national carbon emissions trading system to fight global warming.

The article went on to say that, of the almost 200 submissions posted on the task group’s website, almost all called for emissions trading. The big Australian, BHP Billiton, on page 3 of their submission, stated:

It is clear that an effective, sustained global response to the threat of climate change is required.

In the near term it is recognised that linked national emissions trading systems—ETSs—are more likely than a single global system. BHP Billiton stated:

BHP Billiton supports the development of a global, market-based mechanism for valuing and trading emissions entitlements and reductions, on the basis that it is broadly-based … efficient, and phased in such a way that industry and the economy have sufficient time to adjust.

On page 5 of their submission, BHP Billiton further stated:

Australia is vulnerable to climate change, as are many of the nations in this region. Acting alone, Australia can do little to mitigate the growth in global emissions.

However, BHP Billiton continued:

Australia can play a leadership role in encouraging an effective, efficient and equitable global scheme taking advantage of its resources and skill endowments and accepting its share of global efforts to mitigate greenhouse gas emissions.

BHP Billiton have had a climate change policy since 2002 and they further revised it in 2007. Not only are companies such as BHP Billiton supporting moves to establish an ETS; they are actually committing to voluntary reductions of their emissions. In 1995 BHP Billiton took part in the Australian greenhouse challenge, a program that encouraged reductions in greenhouse gas emissions.

Even earlier, in 1993, BHP Billiton started measuring greenhouse gas emissions and have publicly reported their resulting data since then. As to an emissions trading scheme, BHP Billiton have already identified emissions trading as an area of opportunity.

BP are a global company with a market capitalisation of US$232 billion—that is, a quarter of the size of the Australian economy. They have almost 100,000 direct employees, with significant oil and gas production and refining capacity in the global marketplace. Their submission to the Prime Minister’s task group advocated the need for a global carbon price and a well-designed emissions trading scheme. Under the heading of ‘The reality of how global carbon markets will be built’, BP argue:

There is a real possibility that an effective global market will develop through the convergence and linking up of a number of regional, national and sub-national carbon markets (i.e. a ‘bottom-up’ approach to developing a global market).

BP go on:

This seems much more likely than following the ‘top- down’ approach of designing a global market from scratch.

On their website, BP state their support for:

… precautionary action to limit greenhouse gas emissions and works to combat climate change in several ways, even though aspects of the science are still the subject of expert debate.

I am a Western Australian, and a great Western Australian icon, Wesfarmers Ltd, are also very supportive of an ETS. On page 1 of their submission to the previous government, Wesfarmers stated they:

… have no doubt about the desirability of actions aimed at reducing greenhouse gas emissions because of the likely adverse effects this build-up will have on life on earth.

Wesfarmers are a major Australian public company which began in 1914 as a farmers cooperative and was listed on the ASX in 1984. Wesfarmers operate the chemical and fertiliser business, CSBP, in Kwinana, which is in my electorate, so I take a keen interest in their policies and activities. On the second page of their submission, Wesfarmers state:

While a trading system is more complex to design and administer than a straight out tax, and while it is subject to demand variations, the cap and trade schemes most often canvassed have a strong appeal in terms of certainty of achieving environmental objectives.

Personally, I, like Jeffrey Sachs, am drawn to a carbon tax, but businesses want an emissions trading scheme and that is what our government have said they will get. Wesfarmers have for several years disclosed their greenhouse emissions through a sustainability reporting process and are well placed to meet the reporting requirements set up by this bill.

Rio Tinto, another major company operating in Australia, accepts the concept of an emissions trading scheme as one part of a comprehensive climate change policy. On page 3 of Rio Tinto’s submission, the company warns of the possible negative consequences of an ETS but concedes that early action by Australia, with others, may help shape future international policy.

Santos is a major Australian oil and gas exploration and production company. It also expressed its support for an ETS. In the summary of its submission Santos states its support for:

… the introduction of an emissions trading scheme on a national basis, recognising that a well-designed scheme will be a key component of a portfolio of initiatives to reduce Australia’s greenhouse gas emissions.

In Santos Ltd’s greenhouse policy statement of September 2004 the company commits itself to actively pursue an emissions intensity reduction target of 20 per cent during the period from 2002 to 2008 using a portfolio approach, and to measure and report progress against this emission reduction target.

Australia’s largest energy provider, AGL, also expressed support for an ETS in their executive summary, found on page 2 of their submission to the Howard government’s inquiry. They said:

AGL accepts the scientific consensus that greenhouse gases in our atmosphere need to be stabilised … AGL supports appropriate early action taken by Australia to reduce emissions. Taking action now to cost effectively transition the economy towards a lower emissions profile will reduce future costs associated with action taken at the international level.

Origin Energy is yet another major energy company that supports the introduction of an emissions trading scheme. On page 20 of its submission, Origin states its support for a ‘cap-and-trade emissions trading scheme’. Origin says it wants:

... a national scheme administered by the Australian government as the preference over a States-based scheme.

It further goes on to say it wants:

… a start date as early as 2010, but no later than 2013.

These companies are not a bunch of greenies at the bottom of the garden. Origin Energy is a publicly listed company with a market capitalisation of over US$14 billion, and it supplies energy to more than 3.6 million homes and businesses across the country. It is also a major employer, with more than 3,400 employees in Australia, New Zealand and the Pacific.

A company I once worked for, Woodside Energy, is Australia’s largest publicly listed independent oil and gas exploration and production company. Woodside supports efforts to design a workable global emissions trading system, including the domestic prerequisites that would help prepare for this system. On page 3 of its four-page submission Woodside states:

Given the long timeframes for which oil and gas projects are built and therefore financially exposed to, Woodside sees the provision of long term certainty to these investments is of paramount importance, and needs to underpin any considerations regarding permit issue/allocation and secondary carbon markets, if these are to be effective.

Business is not alone in calling for certainty in this area. In the introduction to its submission, Westpac acknowledges that:

Business is also facing increased pressure from institutional investors, calling for greater clarity on how companies are strategically and tactically managing their response to the implications of, and exposure to, climate change.

Westpac is another example of an Australian company that has sought to win community acceptability through strong measures that cut its greenhouse gas emissions. According to page 2 of its submission, Westpac has reduced its greenhouse gas emissions by over 45 per cent since 1996.

I note the fact that the previous government was not interested in this issue at the time. But that did not stop corporate Australia from taking its own steps and creating its own expectations. The conveniently timed release last week of the Business Council of Australia’s paper Modelling success: designing an ETS that works was widely reported as a time bomb for the Rudd government. Well, I disagree—this is exactly the kind of dialogue the Rudd government welcomes. Business has to be confident, and it has to be certain that the government will commit to an efficient and equitable emissions trading scheme and will actually follow through on that commitment.

Unlike the process committed to by the previous government—noted for its lack of consultation—the Rudd government has entered into a comprehensive policy development process that involves genuine consultation. The Minister for Climate Change and Water and her cabinet colleagues are regularly meeting with key stakeholders as part of this process. In yesterday’s Australian Financial Review the member for Batman and Minister for Resources and Energy stated that meetings with business executives ‘constitute a very important component of the policy development process’. He went on to say:

The government knows it is vital to get the scheme right for Australian industry, jobs, exports and investment … The government is committed to a process of genuine consultation, and Minister Ferguson will work closely with both industry and cabinet colleagues to ensure the government gets the scheme right.

More formally, Ross Garnaut’s climate change review, the Carbon Pollution Reduction Scheme green paper and an eventual white paper are all important steps that will encourage dialogue and ensure that we get the scheme right.

This is a complex issue, and this bill seeks to clarify the important issue of measuring and recording emissions. Personally, I think that too often the issue of climate change and policy options like emissions trading schemes are not widely understood by the general public. It is incumbent upon this gov-ern-ment, and indeed this place, to do all it can to inform the public and enter into a dialogue with the community and with business so that diverse perspectives can better inform policy and the processes for making sound policy can be put in place.

I have been labelled as a climate change sceptic or—if the attacker is particularly belligerent—a climate change denier. I am neither of those things. Science, as an abstract concept, should not have believers and deniers. Science should enable us, as policymakers, to make better informed policy decisions. It is hard to do this with people who view science as no longer an objective testing of hypotheses but as a belief structure more closely linked with faith. That is why I am supportive of the government’s decision to seek a viable and responsible solution to a conundrum roundly identified and accepted by our community and by industry. I also think that it is important to invest in science to test these theories and to have the courage to pursue scientific method. I commend this bill to the House, and I encourage the members opposite to clarify their position on this issue.

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