Bob Baldwin (Paterson, Liberal Party, Parliamentary Secretary to the Minister for the Environment) Share this | Hansard source

Today I am pleased to be able to speak on the Renewable Energy (Electricity) Amendment Bill 2015. It is a bill that represents a balanced approach and that will implement changes to the renewable energy target to better reflect market conditions and allow sustainable growth in both small- and large-scale renewable energy in this country.

This is a government that balances the needs of the environment with the needs of the Australian public. This is a government that is looking to the future and recognising the importance of using renewable energy to power our lives. This bill will do just that. It will lead to more than 23½ per cent—not 20 per cent but 23½ per cent—of Australia's electricity being sourced from renewable energy, by 2020.

What is a RET? To break it down, the RET allows renewable energy power stations and owners of small-scale renewable energy systems to create certificates for each megawatt hour of eligible renewable electricity they produce. Electricity retailers and other liable entities need to purchase certificates created by renewable energy generators such as wind farms, solar farms, hydro-electric power stations, rooftop solar panels and solar hot-water systems.

Certificates are then surrendered annually to the regulator to demonstrate compliance with the RET and avoid shortfall charges. This creates a market which provides financial incentives to increase the generation of renewable electricity. The RET encourages the use of electricity from renewable sources, it reduces greenhouse gas emissions in the electricity sector and it ensures that renewable energy sources are ecologically sustainable.

The RET was the brainchild of the Howard government and was designed way back in 2001. Then, in 2010, it was hijacked by the Labor government and was expanded to ensure that, by 2020, at least 20 per cent of Australia's electricity comes from renewable sources. To achieve this, annual targets were increased to peak at 45,000 GWh in 2020.

Since the beginning of 2011, the RET has separately supported large-scale renewable electricity projects, such as wind and solar farms, and installations of small-scale renewable energy systems such as rooftop solar that we see on so many homes across the country. The annual targets under the LRET were amended to rise to 41,000 GWh in 2020.

Many of the good people in my electorate of Paterson already know the benefits of using renewable energy. There are homes across my electorate, like so many others, with solar panels scattered across their roofs, using renewable energy in their homes on a daily basis. Others choose to opt for renewable energy options when it comes time to deciding on their electricity or utilities provider. As a community and as a government we are focusing our attention on renewable energy and delivering outcomes.

My region is also home to the CSIRO Energy Centre where top-class research is undertaken into solar and renewable energy. In April last year I opened a $1.7 million solar thermal demonstration plant at the city of Newcastle's West Wallsend pool. A first-of-kind demonstration plant generates 30 kilowatts of electrical output and 150 kilowatts of heat for the swimming pool.

The plant combines a solar thermal field with new heat engine technology developed by the University of Newcastle and the Newcastle Institute for Energy and Resources. The Australian-designed GRANEX heat engine increases the efficiency of solar thermal energy, which means more electricity can be generated from the solar thermal field. The application of this technology could particularly benefit remote and regional communities and businesses, as well as have the potential for export sales. It is a great example of the world-leading renewable technology being developed in Australia.

So why is this renewable energy amending legislation so important? When my colleague Minister Hunt read this bill for the second time last month he outlined how it addresses problems that emerged more than three years ago with the renewable energy target. There was a significant drop in electricity demand, which occurred following the global financial crisis, which coincided with the closure of energy-intensive manufacturing plants, spelling disaster for wholesale electricity prices. And there were the changes to the renewable energy target, introduced by the Rudd government, and the effects of the phantom credit bank that are still being felt today.

This bill addresses those problems in a number of ways. Firstly, it adjusts the Large-scale Renewable Energy Target, LRET, to 33,000 gigawatt hours in 2020. It will increase the partial exemptions for all emissions-intensive trade-exposed activities to full exemptions. It will reinstate biomass from native forest wood waste as an eligible source of renewable energy. And it will remove the requirement for Labor's legislated biennial reviews of the RET.

When it comes to sustainable growth in the renewable energy sector, it is important that we have bipartisan support and our agreement with Labor is to legislate a Large-scale Renewable Energy Target of 33,000 gigawatt hours by 2020. This will result in more than 23 per cent of Australia's electricity being derived from renewable sources by 2020. It means cleaner, greener energy for our communities and our environment.

We will be working co-operatively with the opposition on a bipartisan basis to resolve any of the issues which may arise with the operation of the RET through to 2020. The agreement this government has reached with Labor will ensure that renewables continue to play an important role in Australia's energy mix in the future.

One of the things I like about this bill is that there will be no change to household solar in the Small-scale Renewable Energy Scheme. It means those who use solar or who have invested in solar or are thinking about doing so should continue to do so. For renewable energy on a small household scale, this is great legislation. Solar will be a winner, with significant new investment in small- and large-scale solar expected.

The bill will reduce the Large-scale Renewable Energy Target from 41,000 gigawatt hours in 2020 to 33,000 gigawatt hours in 2020. The reduction in the Large-scale Renewable Energy Target from 41,000 gigawatt hours to 33,000 gigawatt hours will result in 830 to 1,000 fewer wind turbines. This target is separate from the 850 gigawatt hours that is to come from waste coalmine gas generation each year until 2020 under pre-existing transitional arrangements.

As highlighted in our energy white paper, Australia has an oversupply of generation capacity and some of that is aged. From 2009-10 to 2013-14, electricity demand has fallen by about 1.7 per cent per year on average. This is due to many factors, including declining activity in the industrial sector, increasing energy efficiency and strong growth in rooftop solar PV systems which has reduced demand for electricity sourced from the grid.

This government welcomes a diverse energy mix in Australia but we also recognise that circumstances have changed since the 41,000 gigawatt hours target was set. This new target of 33,000 gigawatt hours directly addresses these issues. It represents a sound balance between the need to continue to diversify Australia's portfolio of electricity generation assets, the need to encourage investment in renewables while also responding to market conditions, the need to reduce emissions in the electricity sector in a cost-effective way and the need to keep electricity prices down for consumers. Most importantly, this new target of 33,000 gigawatt hours by 2020 is achievable. The bill will also give the renewable energy industry the certainty it needs to grow. In order to do that, there will not be a review of the Renewable Energy Target until 2020. Instead, the Clean Energy Regulator will provide an annual statement to the parliament on how the scheme is tracking towards the 2020 target and any impact the RET is having on electricity prices.

I have outlined in the past how this is a government that protects industry and jobs. The renewable energy industry and the employment it provides for hardworking Australians is no exception. However, in order to protect the industry and jobs, there will need to be a 100 per cent exemption for emissions-intensive and trade-exposed industries from costs associated with the RET—including Tomago Aluminium in my electorate. This bill will increase support for all emissions-intensive and trade-exposed activities to a full exemption from all RET costs—that is, the costs of the original target as well as the costs of the expanded target. A full exemption will protect jobs in these industries and ensure they remain competitive.

The reduction in the direct costs of the RET resulting from the lower Large-scale Renewable Energy Target will more than offset the impact on other electricity users of the increase in assistance for emissions-intensive and trade-exposed activities. The bill is about protecting jobs in the emissions-intensive and trade-exposed sectors by reducing their costs. It does not matter whether it is aluminium, zinc, silica, cement clicker, copper, newsprint, packaging, industrial paper and many other industries—this bill is designed to protect those jobs. So this bill is to be supported.

One of the other issues the minister raised was the need to reinstate biomass from native forest wood waste as an active eligible source of renewable energy. Renewable energy is diverse and there are many, many, many sources. This government is committed to the inclusion of wood waste as an eligible form of renewable energy generation and this will be included in legislation. Native forest wood waste was in place as an eligible source of renewable energy under Labor's own legislation until November 2011. As my colleague Minister Hunt told ABC Radio a fortnight ago, if wood waste is going to lie on the floor of a forest to rot and create methane, or if it is going to be burnt and create CO2, then surely it is much better to make use of it, to turn it into renewable energy and reduce emissions as a consequence. It is not just a theory, it is the practice. That is why Labor previously legislated and why the European Union in many places incorporates biomass. Similarly, it is why the Climate Change Authority has also recommended that it be reinstated in the original form as legislated by the Labor Party itself.

Consistent with our election commitment, this bill reinstates native forest wood waste as an eligible source of renewable energy under the RET, basing eligibility on exactly the same conditions that were previously in place under the ALP. One of the objectives of the RET is to support additional renewable generation that is ecologically sustainable. We are reinstating native forest wood waste as an eligible renewable energy source because there is no evidence that its eligibility leads to unsustainable logging or has a negative impact on Australia's biodiversity. In all cases, the supply of native forest wood waste is subject to Commonwealth and state or territory planning and environmental approval processes, whether within or separate from the Regional Forest Agreement frameworks. Burning wood waste for electricity generation is more beneficial to the environment than burning the waste alone or simply allowing it to decompose. Its inclusion as an eligible energy source is another contribution to the target. Reinstatement of native forest wood waste as an eligible fuel source represents a return to common sense.

When it comes to the environment, this government has the runs on the board. We have the Green Army out across the country revegetating, repairing and improving hundreds of areas—a magnificent bunch of young Australians working hard while gaining practical environmental experience and training. This government is returning water to the Murray-Darling Basin to ensure the survival of the country's most important food bowl and to see habitats and wildlife restored. And we have just had the World Heritage Centre praise the significant and unprecedented work undertaken by Australia to protect the Great Barrier Reef and make it clear the reef will not be listed as 'in danger'.

This bill is consistent with the government's conviction that policy decisions must be based on sound economic principles and real-world experience together with outcomes. What we want to do is encourage efficiency, competitiveness and better outcomes for electricity consumers and Australian families. This bill reflects changes which have occurred in the electricity market and will allow for sustainable growth in small- and large-scale renewable energy. This bill will provide certainty to the renewable energy industry and its jobs, and it will encourage further investment while helping Australia reach our emissions targets. This is a good deal and this bill should be supported. I commend the bill to the House.

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