Gary Gray (Brand, Australian Labor Party, Shadow Minister for Resources) Share this | Hansard source

I rise to speak on the Renewable Energy (Electricity) Amendment Bill. Energy is front and centre in national economic debates. Twenty-one years ago Labor created the National Electricity Market, the NEM, because Australia needs a robust energy framework and a responsive market. The RET has been part of our National Electricity Market and the national electricity policy framework for about 14 years. But as electricity markets began an unprecedented trajectory, five years ago, we knew that our old energy certainties were not going to continue. We needed to review where we were and where we were going, not just with the network itself but also with the RET. So, although Labor did not support the appointment of Dick Warburton and his committee to do that work—we believed it should have been done by differently constituted group—I thank Dick, Shirley In't Veld, Brian Fisher and Matt Zema for the work that they did. I thank them for the transparency which underpinned their review. It is an important review, and Dick and his team should be acknowledged for their work.

Over recent years, we have seen complexities which both enable and weigh on the capacity and efficiency of our electricity market, and we need to ensure a way forward that will strengthen markets and create a price for electricity that is understood, a price signal that can be both sent and received, and price reflectivity for producers and consumers of electricity. We need to support stronger and diverse growth opportunities for our energy industry and specifically for our renewable energy sector. Diversifying Australia's renewable energy supply through our vast solar, wind, wave and thermal resources make sense. Labor is committed to the renewable energy industry, because, deployed effectively, it is widely supported in our community and it makes economic sense.

Across the world, energy consumers are moving to renewable technologies. As customers they are voting for renewable technologies. In Europe we have seen the massive value of old power utilities and networks destroyed as customers have moved, wiping trillions of dollars off the value of publicly listed electricity generation and distribution firms.

Labor are committed to renewable energy because we know renewable energy is good for the environment, it helps lower carbon emissions and it responds to consumer demand. Energy generation contributes around 30 per cent of Australia's total CO2 emissions, so we do need to look at this sector and we do need to utilise technologies to get it to respond to that carbon footprint. We also need an electricity market that is efficient and that can respond quickly to the needs of consumers and whatever disruption comes next. We need an effective price signal that operates in our electricity market.

The renewable energy target, the RET, plays an important role in diversifying Australia's energy supply. It is also a bipartisan instrument. Labor and the government have sat down in good faith to discuss the future of the RET, and I give due credit to Ian Macfarlane and Greg Hunt for their terrific endeavours and the open and frank way in which we discussed a range of issues. I also give great thanks and pay tribute to Mark Butler and Chris Bowen for the work that they did in order to help negotiate the bipartisan position on this policy issue and resolve the impasse that has been in place for the better part of the year. The conversations and negotiations were genuinely highly useful.

There is a deep, 13-year history of bipartisanship on the current RET that spans the leadership of prime ministers Howard, Rudd, Gillard and now Abbott. Bipartisanship has been at the heart of Australia's nascent renewable energy industry. This industry, much like any industry, craves the certainty created by such strong political consensus. Certainty begets business confidence and allows renewable energy businesses to build, invest and set plans for the future. Bipartisanship paved a solid and reliable path towards investment and growth in renewable energy. Businesses were sure footed when travelling along this path. Consensus is important because we do not want to see the RET revisited based on the vagaries of an electoral cycle.

Australia's progress on renewables was such that, not so long ago, Ernst & Young placed Australia in the top four countries in their renewable energy country attractiveness index. Prior to the last election, Australia sat alongside the economic powerhouses of China, the United States and Germany. Unfortunately, recent events have highlighted the fragility of investor confidence and certainty, and have led to a situation where the two sides of politics had to get together again to safeguard business confidence and create the right environment for investors by settling on a new target. We know the devastating impact that uncertainty has had on the renewables industry. Uncertainty kills investment, and it did no less to the entire renewables economy.

This policy area should not be treated like a political football on an ideological playing field. I want to make it clear that the Labor Party are committed to the RET and that the parliament is also committed to the RET. There is genuine bipartisan commitment to the RET, now at 33,000 gigawatt hours. Labor is pleased that there is finally the basis for an agreement on a RET of 33,000 gigawatt hours. That is a significant shift from the target of 41,000 gigawatt hours; but, if is legislated, we hope it will provide certainty for the industry to restart the building of projects. It should also provide certainty to the energy-intensive trade-exposed sector.

Prior to the 2013 election, the RET of 41,000 gigawatt hours enjoyed bipartisan support for large-scale renewables, with an uncapped program for rooftop solar energy. After the election, the government embarked on an attack on the RET on the basis that it was providing too much capacity to the electricity market and causing price increases. Much of that rhetoric has been rejected by the government's own Warburton review in its report, which was released early last year. Since 2013, we have seen billions of dollars in investment stall and hundreds of jobs lost in this industry. In 2014, investment in large-scale renewables plummeted by 88 per cent.

Labor will not alter the aims of the RET if it regains government at the election due next year. Labor will seek to grow the renewable energy sector further if it wins government next year and will use the revised RET as a floor to build on. Labor believes a strong renewable energy target is a critical part of Australia's response to climate change, and transitioning our economy to a clean energy future is a mission that binds us all together. The RET has been the driving force behind billions of dollars of investment in clean energy that has delivered thousands of new jobs in hundreds of communities through the installation of clean energy systems in thousands of businesses and millions of homes.

Labor believe that renewable energy has an important role to play in Australia's energy mix and that we should rebuild the policy structure required to see the industry return to growth. Labor recognises that energy sector policy is complex and interrelated. It is important, therefore, to get the policy settings right. Labor would take steps to increase the size and diversity of the renewables market and would move to reunite the electricity production sector with the climate change portfolio—reversing the Abbott government's portfolio split. Labor strongly supports aligning electricity generation with climate policy. The reason for that is straightforward: 30 per cent of our CO2 emissions are generated by the electricity sector. It makes sense to reunite these two policy objectives under one policy umbrella. While Labor has convinced the government of the need to maintain the RET and has worked to achieve consensus in this policy area, there are some aspects of the bill that the government has got wrong. My party cannot support the inclusion of native wood waste in the target. Labor does not support burning native forests as a renewable energy source. We oppose it. We opposed it in government, and we oppose it now.

Aside from the inclusion of native wood waste, there is another anomaly in the RET scheme which needs to be fixed and which has been overlooked. The self-generation exemption for the RET allows for incidental amounts of electricity to be provided to external parties. What this means in practice is that in remote areas, especially in my home state of Western Australia, the power generated by, for example, a major minerals processing facility can be used to power telecommunications or television and emergency services communications over remote areas in a cost-effective way. Under the current law, there is a risk that such use may trigger a substantial RET liability—that is to say, the loss of a partial exemption, and that may occur to the minerals processor. This imposes a disproportionate penalty on the provider, which would then make the use of incidental electricity completely uneconomic. The Warburton review recognised this anomaly. In section 712 of the report: 'It is noted that the panel recommends self-generators be permitted to supply incidental amounts of electricity to third parties for community services on an otherwise dedicated line, while still being eligible for the exemption.' Unfortunately, I am informed that the government's current bill does not address this issue.

As the renewable energy target has shown, renewable energy reduces emissions and supports new manufacturing jobs and may also put downward pressure on wholesale power prices. Leaving the RET alone would please some in the industry as well as many members of the community who have embraced renewable energy. Some established investors would be happy. Some newer investors would be unsettled. With excess supply in the wholesale electricity market and with reduced investment in renewables, it would have been a challenge to reach the 41,000 gigawatt hours in the required time frame by 2020 for the RET to stay on track. Modelling conducted by the Warburton review and work commissioned by the Clean Energy Council found that to keep the RET on track we would need an additional newly-built 9,000 megawatt hours of renewable energy capacity by 2020. That equates to around 1,500 to 1,800 megawatt hours of new renewable energy each year to the end of 2020. The Warburton review did encouragingly find a significant project pipeline, including 6,000 megawatt hours of projects that already have planning approval. I accept that some projects in this pipeline have withered, but others will come along. But I do not want to understate how challenging it will be to significantly ramp up our renewable energy build. In 2013 we reached the highest annual wind installation of 655 megawatts, and some predictions have up to 900 megawatts scheduled for installation in 2015. But there is still a big gap between 900 megawatts and the 1,500 megawatts a year that will be required.

We hope that the government heeds Labor's concerns about certain aspects of this bill. I also hope that the considerable areas of bipartisanship that I have mapped out today do create some desperately needed certainty for industry, that this parliament is at least taking a step in the right direction. I congratulate the two ministers, Hunt and Macfarlane, for the work that they have done, and shadow ministers Bowen and the member for Port Adelaide for the work that they have done to ensure that we can reach this deep bipartisan agreement. We also need to accept that, as we continue to progress to reform our energy markets, the RET is only one part of that. We do need to have reforms that orient our electricity markets and our networks in a market-driven way to allow price signals to be sent and price signals to be received. In this context, our regulators and the role that our regulators play in ensuring that our industry works efficiently and effectively and that prices to consumers are kept at levels that consumers can afford to pay is critically important. The AER in that context is a critically important regulator.

I ask the government to ensure that the regulator decisions that are made that support customers, consumers and communities in their desire for affordable, reliable, safe and efficient energy supplies are maintained. I have noted in the past my concern that the New South Wales government's decision to fight the AER's assessments in recent weeks is in conflict with all of those objectives. We need to have governments that support regulators, that support good market outcomes, that support prices for consumers and that are in the interests of all of our community and in the interests of a sound industry. I commend this bill to the House.

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