David Gillespie (Lyne, National Party) Share this | Hansard source

This is a very interesting bill, to say the least. I hate to disappoint listeners and members in this chamber, but I can't support it, because of the reasons I'll outline. The Future Made in Australia (Guarantee of Origin) Bill 2024 and associated bills are really quite extensive, but, on reading an analysis guided by the investigative powers of the Parliamentary Library, it has confirmed my worst fears. This is another renewable subsidy boondoggle.

We all know that the current renewable energy subsidy scheme will come to an end at the end of 2030. The hope then was that everyone would just be paid for electricity, not paid for generating large-scale renewable energy target-induced large-scale generation certificates, small-scale renewable energy schemes developing small-scale technology certificates, and energy efficiency certificates and energy savings certificates—at least in New South Wales, Victoria and the national electricity market.

There is a cost to all these certificates that we have in our system now. The value of these gets paid for by retail and wholesale customers. That's included in the price that people pay for their electricity. They sound really innocuous—large-scale generation certificates, small-scale technology certificates, energy efficiency and energy savings. They're all innocuous, but basically it's about $4 billion every year just to meet the 2024 targets. The LGCs from large-scale wind and solar are $1.6 billion. There are 33 million of these certificates floating around already. Similarly, the cost to retail customers of small-scale technology certificates to meet the 2024 target is $1.516 billion. The Victorian scheme is $788 million and the New South Wales Energy Savings Scheme is $108 million.

These LG and ST certificates will come to an end at the end of 2030, but this new Guarantee of Origin scheme is all about carbon emissions accounting and more certificate generation. The whole system is going to create registered holders of either a production certificate or a delivery or consumption profile, and they will generate PGO certificates for each batch—each one-megawatt hour—of green electricity that produces green hydrogen. This certificate will add a whole new level of complexity and will continue the current system onwards from 2031.

The industry can actually touch up the value of their certificates, and that is buried in the details. These certificates will then be labelled 'REGO' certificates, and after 2031 starts there will be the ability for them to be aggregated, so even small-scale renewable projects that are used to generate green hydrogen will be able to take part in this festival of a second line of payments behind the electricity or the renewable energy generation. The Guarantee of Origin scheme was originally planned for hydrogen, but it could be applied across the board in many other sectors.

We have had to have a moment of reality—both economic reality and reality about the amount of energy produced in hydrogen compared to the amount of energy that is invested and used up in generating the hydrogen. Legislators and regulators thought that, just by creating a parallel scheme to LGCs and STCs—that we are burdened with now—we would, all of a sudden, have an amazing huge hydrogen superpower in this country because everyone around the world will want to buy green hydrogen. But, around the world, renewable hydrogen projects are being jettisoned time and time again. The hard-nosed energy return on energy investment is really negative with hydrogen. In terms of electrolysis alone—which is what is planned to produce green hydrogen; there are people who are deadly serious about appropriating colour labels to hydrogen—the serious people who need hydrogen need an awful lot of it for rockets and missiles. And, if you do want to produce steel in a green way, you will need a massive increase in the amount of hydrogen to do that, rather than using coal and gas to produce steel.

There are 70 million tonnes, in the whole world, of hydrogen being produced as we speak. Seventy-six per cent of that comes from gas, and 23 per cent comes from coal. But, by 2050, the plan was to increase that to 287 metric tonnes, mainly in the green energy and the hydrogen superpower plans that this government has for Australia. It would have to be massively scaled-up, beyond anyone's rational comprehension. Around the world, we have, in total, only 5,000 kilometres of hydrogen pipelines that can actually take hydrogen gas and cryo-compressed liquid hydrogen. We would need three million kilometres of new pipes. You can't put that amount of hydrogen into gas pipelines or into gas turbines. There is a limit to how much hydrogen you can use. Also, to make hydrogen by electrolysis in these hydrogen hubs—which is the plan, using our renewable energy certificate makers—they will need nine litres of distilled fresh water to split with electrolysis and heat to make one kilo of hydrogen. In a country like Australia, to get pure hydrogen means either setting up a desalination plant and then a distillery filtration system or taking water out of our rivers that is already dedicated to growing food and providing water supply for cities. To get 287 metric tonnes of hydrogen would use prodigious amounts of water, which Australia doesn't have.

The hydrogen withdrawals around the world are falling like dominoes because everyone has gone with this promise of huge amounts of energy. They've been sold a policy position: 'We'll just change from gas and coal, and we'll make a lot of hydrogen.' These policies have been made by scientists, but they're political scientists. They're not necessarily hard-nosed chemical engineers or electrical power and gas and oil industry engineers who understand the scale of this project. That's why we've seen Fortescue Metals drop their plans. In the Financial Times, in America, in the financial pages, you'll see hydrogen projects meeting reality. But I'm concerned that we will continue on this path of thinking that this is actually achievable.

Australia does need a hydrogen industry because it's a very important industrial chemical, particularly if we're going to have missiles and rockets and things that are essential for our defence. We'll need a hydrogen source. We need it, but to think that we naively expect these plans to be reality is quite scary. In fact, Princeton University, Melbourne university and Queensland university, along with other energy groups, have analysed the cost of this green energy hydrogen superpower scenario, and it will mean 23,000 kilometres of new poles and wires and millions of acres for renewable energy projects, which will consume vast amounts of water. All these processes need to be constant to be efficient, but they will stop at night, on cloudy days or when the monsoons are coming and we have lows across all of Queensland and New South Wales.

To make hydrogen and then to make ammonia requires a huge amount of energy. We have to be realistic. You can have your grey hydrogen from methane—that's natural gas, and you get four molecules and one carbon. Or you can have blue hydrogen, which is splitting natural gas again—methane being split. This is called 'methane reforming'. You add on carbon capture and storage, which is a known technology. There are two ways to make it, but they're both energy intensive.

Could someone play the dark scary music again? Because we're going to talk about coal. There is a lot of hydrogen made from coal and it's called 'black' or 'brown'. Then there's pink hydrogen at the end. That's made by electrolysis of water, but the heat and the electricity are coming from a nuclear power plant that produces bountiful, constant energy at a reasonably low cost. I have visited hydrogen plants in Korea and Japan; the Standing Committee on Climate Change, Energy, Environment and Water did a tour. Korea and Japan have an amazing industrial capability, but their ambitions are being met by energy reality. They will invest billions and billions if they think it can be produced, but they're all coming to the same conclusion. We are in that situation here now.

I call all these schemes to everyone's attention. These new rego certificates will be traded like large-scale generation certificates, small-scale technology certificates and all these energy-efficiency and energy-saving schemes, which every electricity user pays for now. People have to realise that these green schemes are not free. They cost a lot on your electricity bill. The cost of the extra transmission in the system is also being subsidised separately by other policies. There's a huge grant allocation in the budget to help rewire the nation with a lot of grids that are totally unnecessary. They're there to supply a transmission vehicle for energy that is only going to be produced by a big solar farm for 24 per cent of the time, at best. If it's coming from a wind farm, either at sea or on land, it will be produced for an average of 34 per cent of the time over a year, at best. The rest of the time, they won't even have electricity in them, because they're plugged into these renewable megaprojects. Unless there is electricity being generated, which stops when it's cloudy or when it's night or when we have big rain events for days or weeks on end, it's just going to sit there. And all these grids get paid money for their capital costs. They have a fixed return on it.

Part of this renewable energy mania has involved New South Wales and Victoria, I'm told. The regulatory investment test was set by the regulatory system. Before a new grid could be built or upgraded, it had to go through the regulatory investment test. But that has been abandoned, so a lot of these grids are being approved without an economic basis.

But, again, guess what costs retail customers 42 to 45 per cent of their bill now? It's their grid costs. The energy-generating cost is actually one of the smaller parts of your bill. The cost at the power plant is one thing, but to get the power from the plant, which can be a wind farm, a solar farm or rooftop solar, involves a lot of grid costs. So this current plan is going to double or triple the costs—or quadruple them if they did the whole hydrogen superpower and green energy superpower plans. Our bills won't go up by just the 20 per cent planned for next year; it'll be multiples much greater than that. In fact, this whole value of certificates— (Time expired)

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