Greg Combet (Charlton, Australian Labor Party, Minister Assisting the Minister for Climate Change) Share this | Hansard source

I understand the issues that have been raised by the member for Lyne and respect his contribution. I did make the comments in introducing the proposed amendment that coalmine waste gas is not a renewable energy source and it has been defined in accordance with these amendments as an eligible energy source. There are very important public policy reasons for dealing with this issue in this particular way. The New South Wales GGAS scheme—introduced, I think, the better part of a decade ago by Premier Carr—is what could be described as a baseline and credit scheme. It has operated to encourage investment in some greenhouse gas abatement activities, and one of the activities that attracted such investment, consistent with the opportunities generated by the GGAS scheme, has been in the area of coalmine waste gas power generation.

There are a number of companies involved in this activity. Of the two principal ones, both of them developed a business plan and made their investments on the basis of GGAS being in operation. They account for some energy generation, following the capture of coalmine methane gas, which has contributed to the grid. However, their business plan is in significant part contingent upon the value of the certificates which are generated under GGAS for the abatement of greenhouse gas that they are engaged in. With the implementation of the Carbon Pollution Reduction Scheme and the renewable energy legislation, it is clear that there is a positive public policy purpose for making an amendment that the government is moving on this occasion in order to ensure that on a transitional basis those operations are able to continue. We have confined the eligibility for this transitional treatment under this proposed amendment to the year 2020 and we have specified that it is on the basis of 2008 levels of energy production by the existing coalmine waste gas generators. We have quantified the amount of power generation that would qualify for renewable energy certificates so that it operates up to the year 2020 in a defined production sense. In addition to that, in order to preserve and respect the renewable energy target that is contained in the bill—that is, 20 per cent of the electricity supplied by the year 2020 coming from renewable sources, or 45,000 gigawatt hours—the coalmine waste gas generation production which qualifies for renewable energy certificates under this amendment will operate in addition to the established target.

The government understands the issues that have been raised by the member for Lyne. We carefully considered all of these matters and adopted this as the most efficient public policy response. It is a transitional arrangement for the New South Wales GGAS, in effect, and we think it is the most efficient manner for dealing with it. In the overall scheme of things the expanded renewable energy target, with the support of the state and territory governments, is consolidating into a single national renewable energy arrangement. That is, I think, a particularly important thing. To reduce it to a pretty basic level, at stake here are 300 jobs—those of the people involved in this power generation. In my portfolio capacity, in my capacity as a local member and in my capacity as a minister in this government, I can assure you that we are going to support those jobs. We think we are doing it in an appropriate way. I move:

That the question be now put.

Question agreed to.

Original question agreed to.

by leave—I move government amendments (1) to (3):

(1)    Clause 2, page 2 (table item 3), omit the table item, substitute:

[commencement]

(2)    Schedule 2, item 2, page 7 (lines 14 to 16), omit the definition of emissions-intensive trade-exposed activity in subsection 5(1), substitute:

emissions-intensive trade-exposed activity means:

             (a)    if regulations are made for the purposes of subsection 167(1) of the Carbon Pollution Reduction Scheme Act 2009an activity that is taken to be an emissions-intensive trade-exposed activity under the emissions-intensive trade-exposed assistance program; or

             (b)    otherwise—an activity prescribed by regulations made for the purposes of this paragraph.

[partial exemptions]

(3)    Schedule 2, page 13 (after line 5), at the end of the Schedule, add:

22  Transitional regulations

The Governor-General may make regulations of a transitional nature relating to the transition from the application of paragraph (b) of the definition of emissions-intensive trade-exposed activity in subsection 5(1) of the Renewable Energy (Electricity) Act 2000 (as inserted by item 2 of this Schedule) to the application of paragraph (a) of the definition of that expression.

[partial exemptions]

I present a supplementary explanatory memorandum to the bill. The government is committed to passing legislation to implement both the Carbon Pollution Reduction Scheme and the renewable energy target scheme as both are needed, as I have said in this place on a number of occasions, to tackle climate change effectively. However, in order to provide greater certainty, the government has decided to amend the renewable energy target legislation currently before the parliament to include interim assistance until the Carbon Pollution Reduction Scheme legislation is in place. The legislation currently aims to provide assistance under the renewable energy target to activities defined under the emissions-intensive trade-exposed assistance program in the CPRS legislation. This was in recognition of the cumulative cost impact of the renewable energy target scheme and the CPRS. However, in the absence of legislation implementing the CPRS, the scope and the basis for assistance under the RET has had to be reconsidered by the government. The cost impact of the renewable energy target alone, as I have said in my previous submissions in relation to this issue, is related to electricity intensity and is small for most industries. However, the renewable energy target will affect firms using a significant amount of electricity as part of their production processes and where international competition limits their ability to pass electricity cost increases on to their customers. Aluminium smelting, the subject of some discussion in the second reading debate in relation to the bills, is one such obvious activity.

This amendment therefore allows for interim renewable energy target assistance to be provided to those emissions-intensive trade-exposed activities that will be most significantly affected by electricity price increases from the RET, namely those which exceed an electricity threshold of 3,000 megawatt hours per $1 million of revenue or alternatively 9,000 megawatt hours per $1 million of value added. Eligible activities are likely to include aluminium smelting, silicon production and newsprint manufacturing. In the case of interim assistance, an exemption would apply for 90 per cent of the liability that relates to the expanded portion of the new annual targets—that is, the amount of the target that is above the 9,500 gigawatt hours which exists under the existing MRET.

Once the CPRS legislation and its enabling regulations do come into force, the partial legislated exemptions from the renewable energy target liability would be provided for all emissions-intensive trade-exposed activities as defined under the emissions-intensive trade-exposed assistance program in the CPRS legislation. An exemption would apply for either 90 per cent or 60 per cent of the expanded liability above the existing 9,500 gigawatt hour target, corresponding to whether an activity is determined to be highly emissions intensive or moderately emissions intensive under the CPRS. If the CPRS passes before 1 January 2010, these interim assistance arrangements will never come into force. The government remains committed to assisting all emissions-intensive trade-exposed activities to help manage the cumulative impact of the CPRS and the RET once both pieces of legislation are passed. The amendment appropriately targets assistance under the RET and will provide greater certainty to support investment in renewable energy generation. These provisions are to commence on the day, subject to passage through the parliament, on which the act receives royal assent, and I commend the amendments to the House.

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