Martin Ferguson (Batman, Australian Labor Party, Shadow Minister for Primary Industries, Resources, Forestry and Tourism) Share this | Link to this | Hansard source

I rise this morning to speak on the Energy Efficiency Opportunities Amendment Bill 2006 and, in doing so, I indicate on behalf of the opposition that we support the bill. I say that because the purpose of this bill is to amend the Energy Efficiency Opportunities Act, which appears to have a number of ambiguities that make it unworkable in its present form. It is therefore appropriate that in a bipartisan way we seek to remedy these deficiencies to guarantee its capacity to be implemented in an appropriate way in industry.

The bill has a number of objectives. Firstly, we want to ensure that, as was originally intended, the year in which energy use triggers the obligation to apply the register is properly defined. Secondly, participants in the program will be required to submit their assessment plans within 18 months of the day after the end of the trigger year. Thirdly, assessment plans will be required to cover the five-year period starting on the day after the end of the trigger year, and subsequent plans must start on the day after the end of the previous plan. Fourthly, the requirements for assessment plans will be consistent throughout the act. Fifthly, and finally, the secretary’s powers can be delegated as necessary for efficient administration.

Obviously, as we all appreciate, this bill is about tidying up some administrative problems with the original act, but I also believe we should address some other problems concerning energy efficiency in Australia. I say that because the bill will not address the urgent need for greater energy efficiency across all sectors of the economy, including our homes and the important transport sector, not just business. For that reason at the end of my contribution on behalf of the opposition, I will move a second reading amendment bringing to the attention of the House some of the serious policy matters which we believe need consideration in going forward on the energy efficiency front in Australia. We very frankly believe there is an urgent need for us as a nation to address greater efficiency in our transport fuel use. This means a national focus on the long-term neglect of the policy area of public transport.

For far too long the Commonwealth has not been willing to work in tandem with state and territory governments to do something about improving public transport, especially in our major capital cities. If we were to make some progress on that front, it would lead to huge improvements in energy efficiency and would also have a dramatic impact on reducing emissions in Australia as part of our international global requirements. That is important because, when you think about it, we have become a nation that drives 500 metres to the local shop instead of walking. We have cities that are uncomfortably congested, that waste fuel and time, which is a cost to business, and that are a source of stress to people trying to carry out their daily lives with reasonable ease. Just think about those issues in the context of not only the cost of running business but also the stress on ordinary people seeking to handle issues of work and home and improving their quality of life in terms of stress management.

It is also about time we fronted up to the fact that we have become a nation that switches on an air conditioner the minute the lounge room seems too hot in summer. One of our biggest problems each summer is peak load energy capacity, which is putting huge demands on infrastructure, especially in major capital cities, such as Brisbane, Sydney and Melbourne. Around Australia, we are a nation that assumes that our energy supplies are infinite. I simply say that we can no longer take that for granted, nor can we continue to ignore the greenhouse implications of our energy use.

The challenge to Australians is to get smarter about energy consumption in our homes and in our industries, our factories and our buildings. We all appreciate, given the global warming debate at the moment, that these are very serious policy issues that have to be confronted in the energy efficiency quest that are unfortunately not addressed in this bill. In addition, the bill does not take up the challenge of diversifying our energy supplies, which is part of the energy efficiency debate. The government, as we all appreciate, has been muted in its support for alternative fuels and renewable energy technologies, yet these are an important part of our energy solutions. As I pointed out in October last year, the government also missed a great opportunity to take up the bipartisan recommendations of the House of Representatives Standing Committee on Environment and Heritage report Sustainable cities, many of which deal with energy efficiency initiatives that could make our cities more liveable and also considerably improve the operation of business. Nevertheless, on behalf of the opposition, I welcome the government’s initiatives to address energy efficiency opportunities in the business sector and I look forward to the first public reports arising from this program that will be due by the end of December 2008.

Having that said, can I also say it is about time that we as a nation tried to bring together a consistent approach on this front through cooperation between the states and territories and the Commonwealth government. This is of concern to industry. As we try to further strengthen Commonwealth, state and territory relations, one of the issues we have to think about in the energy efficiency debate is to get a nationally consistent approach, rather than each tier of government seeking to layer onto business additional costs for meeting different requirements at state and federal levels. This is a very serious issue because it also goes to the cost of running businesses. In a tough global market, we have to do whatever we can to relieve industry of the administrative nightmare and additional costs of meeting some of these requirements.

The act took effect on 1 July this year, and companies that used over half a petajoule of energy in 2005-06 have until March next year to register under the program. It is my understanding that, to date, six companies—Alcoa, Hanson Australia, New Hope Mining, Queensland Alumina, Rio Tinto and Leighton Holdings—have registered for the program. If that is incorrect then I request that the minister corrects the record for the purposes of ongoing debate on this issue. This is a long way short of the 250 corporations estimated to have an obligation to register. We would appreciate in the response from the minister some comment on these issues. I say that because this is something the government must pursue with greater vigour if the program is to have any credibility at all, not only domestically but also within the international community with respect to how we as part of the global community make progress on trying to encourage industry to be more efficient. I simply say to industry that efficiency in energy use is also smart in terms of reducing costs because throughout the world, as we now appreciate, the real cold war is about who controls energy. And if you can guarantee efficiency in energy consumption then you can assist in maintaining a competitive position, especially with the emerging economies of China and India. For that reason, the opposition will be taking a great interest in the register for the program at the end of next March.

I also point out to the House that registered participants will then need to submit a plan to undertake assessments of energy efficiency opportunities, to then carry out those assessments and to report publicly on the outcome of the assessments. That is about public accountability in terms of the endeavour of the Australian parliament to encourage industry to take this issue seriously. For that reason, firms will be free to make decisions on investments identified by their normal business processes. It is about industry actually accepting its responsibility. Obviously the act is targeted at large energy users to address the perceived energy efficiency gap. If anything, it is important to the Australian community, but there is also a secondary objective, which is about encouraging industry to get smarter in how they run their businesses on the energy front.

In Australia both the level of energy efficiency and the rate of improvement since 1973 are, interestingly and worryingly, seriously lower than in other major industrialised countries. Perhaps the low relative price of energy in Australia might explain some of the difference between Australia with its lower rates of energy efficiency improvements and countries with similar energy prices such as Canada and the US. So perhaps one can conclude that because we are so rich in energy at a relatively cheap cost there has not been pressure on the Australian community, both on us as individuals and on business and government, to pay more serious attention to the issue of energy consumption and waste.

We do not want to get to a situation where there is a campaign from the more extreme in the Australian community—for example, some of the Greens or the environmental NGOs—to force up the price of energy to try to ensure that we take energy efficiency seriously. We should do it for the right reasons. We should do it because it is environmentally smart. Households should do it because it is a cost to the running of their own households. Business sector costs could also be considerably reduced.

More generally, I point out to the House that experience in Australia and overseas has shown that there is often a gap between best-practice energy efficiency and actual practice. Across all aspects of life, as private citizens or in industry, the capacity to improve our performance in energy efficiency is there waiting to be grasped by each and every one of us. Whilst some technically feasible energy efficiency improvements will not be economically viable, there is also evidence that firms often do not take up energy efficiency opportunities that are cost effective. This is known as the energy efficiency gap. The decision to introduce a mandatory assessment measure is aimed at addressing this gap and comes in light of the fact that previous government programs have shown that a significant number of cost-efficient energy improvements have been overlooked by the participating firms.

Obviously this bill is about providing a prod—about getting them to take seriously some of the options that are currently available but have been neglected. In that context we should appreciate that business accounts for over 80 per cent of Australia’s primary energy consumption. However, a relatively small number of businesses are responsible for the majority of this energy use. ABS data suggests that the 250 largest business energy users account for around 60 per cent of all energy used by business. Given the coverage of well over 50 per cent of the emissions, the up-front compliance cost to business of an average $49,700 per firm and recurrent annual costs of $87,600 per firm, this seems reasonable coverage initially. In the longer term, however, Labor would like to see the program extended to cover a greater proportion of emitters. This, if anything, is a start in encouraging industry to get serious about this energy efficiency challenge.

With that in mind, I point out to the House that, with rapidly rising energy costs and increasing concern about the implications of climate change, coupled with one of the most rapid economic expansions in history, particularly in China and India, it has never been more important for us to conserve our energy resources, to get the most out of them and to move to cleaner energy sources and technologies.

As we go through this debate about global warming and try to factor in the cost of reducing emissions, business has to get smarter about how it reduces its cost through energy efficiency, but we as a community also have to be serious about the potential impact of an increase in cost of energy and water on people who are retired and on people who are in low-income households. It is appropriate that the community does the right thing on the better use of water and the more efficient use of energy. Business has a capacity to bear the costs of some of these tough decisions that we as a nation must make.

We also have to be aware at a state, territory and federal level that these tough decisions can actually impose serious cost imposts on ordinary people, especially low-income people and people who are dependent on the pension and trying to live from week to week. I say that in the context that I believe we have to make some very serious decisions on this front in the foreseeable future. But we also have to, as a community, be caring about those who might find it difficult to bear the cost of some of these serious and tough decisions which we have got to make in our own best interests as a nation and in the best interests of the global community. That is important because total energy consumption for Australia is 3,000 petajoules per annum and is estimated to cost $40 billion annually.

In that context can I point out that in the foreseeable future, especially on the east coast of Australia, there are some very serious energy generation decisions that have to be made. I simply say to some of those state governments on the east coast that in the next 18 months to two years you have to make these tough energy decisions, including on fossil fuel, otherwise by 2010 or 2015 we are going to have serious energy problems in terms of adequacy of supply and security of supply.

We as a community can no longer avoid these tough decisions, not only on energy consumption but also about guaranteeing our future access to energy at a reasonable price, by running away from the tough decisions on generational capacity. For far too long the Commonwealth and state ministerial councils have failed to solve some of the issues which are barriers to these investment decisions, and I simply say that time is running out. If we do not make these decisions in the foreseeable future then there is a capacity in some of our major capital cities to see the lights go out by 2010 or 2015. I raise these issues because they are seriously related to the debate about energy efficiency. On the east coast it is no longer a question of energy efficiency alone; it is also a fundamental problem of baseload capacity.

In that context, it is made worse by the fact that industrial energy consumption is 40 per cent of the overall cost, giving an energy bill of $16 billion per year. As we all understand, although many firms now achieve impressive economic returns by using energy more efficiently, numerous studies continue to uncover significant potential. Experience in Australia and overseas has demonstrated that it is possible to save 10 to 15 per cent of this over a five-year program. That can assist in the next couple of years because of our tardiness in making some of these energy generation decisions in the immediate past years. Making these improvements—that is, a 10 to 15 per cent reduction in energy use over the five-year program—would result in reduced costs of up to $2 billion annually, would strengthen Australian industry and would make it far more competitive in the tough world markets that we seek to make progress in.

It is very clear that there is an economic imperative as well as an environmental—greenhouse—and resource conservation imperative to get more out of our energy use in industry and business. But it is not just energy efficiency that is important. We have to, as I have said, do more about a reliable and cost-effective energy supply for Australia’s industries and consumers. In particular, we have to provide a national energy framework that will deliver—and this is a very serious issue—the $35 billion of investment in this sector that is needed over the next 10 years, and that goes to generational capacity.

The truth is that we in Australia today have a national energy market in name only. We have gone backwards on the issue of microeconomic reform in more recent years in Australia. It was started by the Hawke and Keating Labor governments, but it is almost as though it has come to a sudden halt, a very serious halt, in the energy market. I say that because I believe that the Prime Minister is doing nothing on this front except conducting a futuristic debate about nuclear power that is nothing but a diversion from the real issues and the decisions that have to be made today.

I acknowledge that a few weeks ago Ziggy Switkowski released the Prime Minister’s nuclear energy report—and I must say I think this is a very important contribution to this debate. It is a thorough analysis of energy capacity and opportunities in Australia. For the first time, in an objective and constructive way, it starts to factor in the relative cost of carbon across all energy opportunities. To my mind that is important, because we are going to have this debate. Businesses already are starting to factor into their investment decision the cost of carbon, which can be anything from $7 to $10 or $15 to $20 per tonne. That is part of the Ziggy Switkowski report. He factors in, given different costs of carbon, at what point nuclear power might actually stack up in Australia economically. So obviously this is part of the debate that we have to have about the energy decisions we make in Australia.

As shown in the Prime Minister’s report, and as I have been saying for some time, whilst nuclear power is important beyond Australia in places such as China, India and France, for example, where 75 to 80 per cent of power is already generated from a nuclear capacity, it simply does not stack up in Australia economically on the basis of all the available evidence today. I predicted that. That effectively means that a futuristic debate about whether or not nuclear power becomes viable in Australia is way outside the time frame that requires us to make decisions on the energy generational front at the moment—which goes to immediate decisions about investment in electricity today.

The Switkowski report represents an important contribution to the debate, but it is not going to keep businesses running this summer, nor is it going to deal with the increasing number of air conditioners that Australian consumers desire at this point in time. National emissions trading is about trying to force us to start thinking about some of these investment decisions.

That takes me back to the COAG Energy Market Review, also known as the Parer report, which recommended some four years ago a national emissions trading system. From my frequent discussions with industry, both peak industry councils and individual employers, not only in electricity generation but in industry generally, they now accept that we will have to develop an emissions trading system in Australia. They are simply saying they require the Commonwealth, in association with state and territory governments, to get serious about this debate.

Some months ago, a discussion paper was released by state and territory governments. It was originally going to be a green paper, but because of a lack of support across all state and territory governments it is merely a discussion paper. It sets out a framework to try and pursue some discussion. What is now required is national leadership to try and bring this together. Ordinary people, as a result of the global warming debate that has intensified over recent weeks, are expecting something to be done.

The truth is that industry is crying out for us to sort this out. They want it sorted out because they need certainty so that they can make investment decisions. They expect us to make serious progress as part of the ongoing dialogue about Kyoto. They want us to put in place in Australia a framework by about 2012 to 2015 which would enable us to give certainty to the private sector for the purposes of making these tough investment decisions.

I use this debate to highlight these matters because they are obviously part of the debate about energy efficiency. Energy efficiency is also intimately related to the debate about generational capacity. In that context, I simply say that there is an urgent requirement for us to try and work out, in partnership with industry and state and territory governments, how the Commonwealth can take us forward on the emissions trading front. As I said, investment certainty in the national energy and gas markets hopefully will eventually deliver lower electricity costs than the current variety of well-intentioned but unsuccessful ad hoc state and Commonwealth schemes already in existence. We need a national system that rolls those well-intentioned state and territory measures into a national outcome which is about neutrality across all energy options in the national market.

As I said previously, the impact on the Australian economy from the shift to an economy-wide emissions trading scheme and away from the current approach equates to a benefit of just over $1.2 billion in five years net present value terms through to 2010. So here we have, from this Parer report and other constructive contributions to the debate, an important statement. Here we are four years later and, in the Energy Reform Implementation Group report by Bill Scales released a couple of weeks ago, we see another important contribution to this debate. He said:

... ERIG has been struck by the significant concerns raised by market participants about market uncertainty in relation to possible future greenhouse gas abatement initiatives.

That statement obviously means that industry wants something done. He then said:

Market participants have indicated to ERIG that greenhouse risk constitutes one of the most important barriers to investment in the energy industry, particularly to new base load coal investments. ERIG notes that most market participants desire a coordinated and sustainable policy approach to greenhouse.

That is a cry from industry for national action, and it can only be achieved by a Commonwealth government working in partnership with the private sector and state and territory governments. As I have said today, the east coast needs to make baseload and peak load decisions on energy generation within the next two years. But, unfortunately, today no-one is prepared to invest because of the Howard government’s failure to introduce national emissions trading that would give investors certainty about carbon pricing in the future. As a result, Australians are paying more for electricity because of the ad hoc measures currently in place at a state and territory level and arbitrary hedging by market participants to offset unknown greenhouse risks in the future.

The simple fact is that the Prime Minister’s refusal to adopt national emissions trading is costing Australians money on their power and gas bills today and also making Australian industry less competitive in the tough global community that they have to operate in. I also believe that his failure to push ahead with some of the reforms necessary to deliver a truly national energy market, including both gas and electricity, is not good for Australia. In my own mind, I think the Prime Minister believes that he can get off the political hook with international debates about global emissions trading and nuclear power. That is only part of the jigsaw. We have to get serious about what we also do at home.

So I simply say on behalf of the opposition that our government at a national level at the moment needs to get on with the serious job of implementing a national emissions trading scheme and to allow the national electricity market to decide on the lowest cost abatement technologies. Let the market decide it. Government cannot pick winners. There is no doubt in my mind that nuclear power just does not stack up, but gas and renewables will. In particular, geothermal energy has enormous untapped potential in Australia. It is interesting to note that, in the future plans for the expansion of Olympic Dam in South Australia, potentially one of the largest uranium mines in the world, it is close to where very serious work is actually being undertaken at the moment with respect to accessing geothermal energy capacity.

For that reason the opposition will take to the next election, as we took to the last election, a national emissions trading policy. That has to be about establishing, in consultation with the private sector, the principles which go hand in glove: guaranteeing our energy future in terms of access but also creating certainty for investment in Australia. Alternatively, we believe, the Howard government will be about picking technology winners and debating a futuristic international energy emissions trading scheme that will do nothing to solve investment uncertainty at home in Australia at this point in time. It will also do nothing to deliver the $35 billion worth of investment needed to meet the sharp rise in Australia’s energy demand over the next 10 years. Energy consumption in the world will double over the next 30 years and we are part of a huge growth in energy demand in Australia which requires us to make these decisions today.

In conclusion, on behalf of the opposition, as the shadow minister responsible for the bill I indicate our clear support for the proper endeavours in the bill to tidy up some of the administrative difficulties embodied in the original legislation. But I also call on the government to address energy efficiency opportunities in other sectors of the economy as a matter of urgency, while asking that they seriously turn their attention to how we go forward on the emissions trading front. With that in mind, I commend the bill to the chamber and move the following second reading amendment on behalf of the opposition:

That all words after “That” be omitted with a view to substituting the following words: “whilst not declining to give the bill a second reading, the House:

(1)

calls on the Government to introduce energy efficiency to all sectors of the community, including transport, and housing, as well as business;

(2)

condemns the Government for failing to support the alternative fuel and renewable energy industries; and

(3)

condemns the Government for not adopting the bipartisan recommendations put forward by the House of Representatives Standing Committee on Environment and Heritage in its 2005 report on Sustainable Cities”.

Ian Causley (Page, Deputy-Speaker) Share this | Link to this | Hansard source

Is the amendment seconded?

Bob McMullan (Fraser, Australian Labor Party) Share this | Link to this | Hansard source

I second the amendment. I thank the member for Moore and the member for Kooyong for facilitating my continuing to make my remarks now. The amendment does raise a number of important issues not covered in the bill, but of course I do support the bill. The Energy Efficiency Opportunities Amendment Bill 2006 is mainly technical in nature and will enhance the operation of the existing arrangements in a manner that is necessary and desirable. It is not of itself in that way a very important bill, but it is a bill about a very important subject and, together with the second reading amendment, gives us an opportunity to discuss some important issues relating to this matter.

The bill amends the Energy Efficiency Opportunities Act 2006 to establish mandatory energy efficiency opportunities assessments for large energy-using businesses and public reporting of outcomes following the announcement of this measure in the government’s energy white paper entitled Securing Australia’s energy future. The amendments that the bill makes are minor in nature. Essentially  they are about addressing some ambiguities of application and administration of the existing policy. I welcome this bill, and I welcome the amendment, which goes to broader issues about energy efficiency and related questions concerning alternative fuels and renewable energy industries.

I particularly support some of the remarks made by the shadow minister. If we fail to get our energy efficiency and energy pricing messages right, it is going to have a serious effect on the poorest households in our communities. It is that issue to which I particularly want to pay attention. Some data produced by NATSEM indicates the extent to which electricity is a very important part of household expenditure. Of course, we all know that intuitively, and I know it particularly because it is a big issue here in my constituency. Canberra is essentially a very affluent community, but one of the corollaries of that is that it is a very hard place to be poor. There are a variety of reasons for that, but one of them is climatic; heating in winter is very expensive and a very big burden on the poorest families. If we do not get the overall energy market efficiency measures, the price signals and then the social support to compensate for the consequences of price signals right, we are going to hit the poorest people very hard.

NATSEM, the National Centre for Social and Economic Modelling, at the University of Canberra here in my electorate—which I think is an outstanding national research agency—have done some work based on the recently released ABS household expenditure survey on the cost to consumers of electricity. They have found that across all households the average expenditure on electricity for the home was $17 a week. That is a lot of money. People in the lowest income decile—the lowest 10 per cent of households—spend less, but it is a higher proportion of their income; they spend about $13.60 a week.

The context in which I want to refer to that relates to some findings in the Switkowski  report. I do not agree with the conclusions of the Switkowski report, but that is not my point for the moment. I think it has done a lot of good work in establishing the factual foundation for debate about wide-ranging energy solutions and responses to global warming. The Switkowski report has said that nuclear energy is not viable unless we introduce a price for carbon, but that would increase the price of electricity by 20 to 50 per cent. I think that, to make nuclear power viable, electricity has to go up by more than that; but I want to do more work on the Switkowski report’s material before I get into any detailed critique of that. My assessment is that it has understated it, but it has certainly pointed in the right direction. It has certainly got the broad thrust of the implications right, particularly as it relates to nuclear power—and I want to speak about that but then come back to the more general question of energy costs.

The 20 to 50 per cent increase in electricity costs that would be required to make nuclear power viable would cost low-income families, on the NATSEM data I have just quoted, between $140 and $350 a year. That is $350 a year for our poorest households. For average households, it would cost about $450 a year. That is a lot for all of us, but I know in my own area, and every member of parliament would know in their area—particularly where there are concentrations of low-income families—that the idea of paying another $350 a year on the electricity bill would really have serious consequences for the life choices of those households.

In preparation for a recent speech I made here in Canberra to the Australia Forum, it became clear to me that the cost for average families would be a problem. The Switkowski report established that the minimum increase in electricity prices to make nuclear power viable was a 20 to 50 per cent increase. In fact, I believe it would be even more. But, even if the Switkowski report’s modest assumption should prove correct, it would hit families hard. Low-income families often need to spend a higher proportion of their income on electricity, especially here in Canberra.

My critique is that the government in advocating that we need to go to the nuclear power model is in effect saying to the poorest households in my electorate, ‘You have to pay $350 a year for the pleasure.’ The government is not admitting it; it is saying that we can go in that direction without that cost. But Switkowski says that we cannot. But I do not want to mislead—it is probable that any proper response to climate change will put upward pressure on electricity prices. It will not need to be as much as for what I regard as the economically unviable option of nuclear power. Switkowski actually says that, even if we see a 20 to 50 per cent increase in electricity prices, there will still need to be government assistance for the initial investment to get nuclear power going. Why anybody would contemplate that I cannot imagine.

But realistically, as the shadow minister said, it is probable that any proper response to climate change will put upward pressure on electricity prices. Therefore, while we are addressing this, we need to make sure that we have measures in place that will respond to the adverse social consequences of increases in electricity prices, particularly on low-income families. In public policy debates in Australia we tend to get a narrow focus, and people who are very compassionate on social justice issues generally talk about environmental issues and have proposals for their solution which would have profound consequences on electricity prices and therefore on the living standards of Australian families—and they do not blink an eyelid. I suspect they do not see the connection.

I support this bill and I support the second reading amendment moved by the shadow minister, but I want to say to the government that the energy choices that it is making are taking us in a direction that will have a very big impact on low-income families, and I want to say to people on the other side of the debate, who think that there are easy solutions with very expensive renewable energy options supplying our electricity, that they want to wish away the social justice implications of those changes. We have to face up to both. We have to deal with climate change. I do not regard nuclear power as a viable solution, but we have to deal with climate change and we have to deal with an emissions trading system for carbon—and that is going to have consequences on electricity prices. Both the government’s route and the opposition route have implications—one much more than the other, in my opinion. But whichever route we go down we need to realise that our energy solution, as with our water solutions, have the potential to have profound social justice implications, and we need to factor that into our thinking and into our policy responses. This bill is a useful bill in what it does. Its significance is in what it does not do. But I hope the bill receives a speedy passage.

Mal Washer (Moore, Liberal Party) Share this | Link to this | Hansard source

It is a pleasure to be able to talk on the Energy Efficiency Opportunities Amendment Bill 2006. I thank the previous opposition speakers for their contribution, which I thought was very constructive. The Energy Efficiency Opportunities Amendment Bill 2006 provides minor technical amendments to the Energy Efficiency Opportunity Act 2006 so that it will correctly reflect its original policy intent and facilitate effective administration of the act. The bill, in accordance with the original legislative intent, clarifies that corporations do not need to register if they are already registered, makes clear that the period allowed for program participants to submit their assessment plans and the consequential timing of the five-year assessment cycle start immediately after the energy use trigger year, and enables efficient administration by allowing the secretary’s powers and responsibilities to be delegated to acting senior executive service employees.

The proposed changes are not new policy and will not have any financial impact on the budgeted cost of the program. The Energy Efficiency Opportunities program was established in July this year when the act came into effect. Under the program, large energy users are required to assess the potential to improve their energy efficiency and report publicly on the assessment. Energy efficiency is when the same or a higher level of useful output is achieved using less energy input.

Large energy users are those which use over 0.5 petajoules, which is a factor of 10¹⁵, in a year—which equates to the electricity needs of 10,000 Australian households and would cost over $5 million. Around 250 companies in Australia would meet this criterion and they account for roughly 60 per cent of all energy used by business. Obviously, firms which use large amounts of energy would have a particular incentive to increase energy efficiency and reduce their input costs. However, there was a gap between best practice energy efficiency and actual practice. This program requires a more active engagement by asking firms to look at their unique energy circumstances and assess where improvements could be made.

Orica, which has been trialling the program assessment, has identified opportunities that could save up to $1.2 million and reduce energy gas emissions by 30,000 tonnes per year. Companies such as Alcoa World Alumina Australia, Hanson Australia, New Hope Mining, Queensland Alumina, Rio Tinto Ltd and Leighton Holdings have already registered, with many others preparing to apply before the March 2007 deadline.

A major challenge to our economic growth and living standards will be to meet a projected 50 per cent increase in energy demand while moving to a low-emissions future by 2020. The Energy Efficiency Opportunities program sits alongside a range of measures which pursue the benefits of using more efficiently, such as energy market reforms, solar cities, improved appliance and building standards, and targets for reduced energy use in government operations.

The recently released Energy Efficiency in Government Operations policy sets the strategy for Australian government agencies to achieve revised energy and sensitive portfolio targets by 2012. The 2006 policy sets targets of 7,500 megajoules per person per annum for office tenant light and power, and 400 megajoules per square metre per annum for office central services. The 2006 policy also provides a proactive management framework for agencies to identify, monitor and manage their energy consumption. This is achieved by specifying minimum energy performance standards in contracts and leases for new buildings, major refurbishments and new leases over 2,000 square metres. This was recently demonstrated with the new headquarters for the Department of Industry, Tourism and Resources. Congratulations, Minister: the new building uses innovative technologies to cut its environmental footprint and achieves 4.5 stars out of a possible five stars under the Australian Building Greenhouse Rating scheme.

Whilst improving targets for reducing energy use and government operations is very important, it is also important to consider its procurement activities. The Australian government is a significant purchaser of a range of goods and services. In the 2003-04 financial year, agencies spent over $17 billion. Government agencies’ procurement activities can impact upon greenhouse gas emissions from energy consumption in buildings and vehicles, on waste and landfill from paper equipment and office refurbishments, and on the consumption of scarce resources.

The House of Representatives Standing Committee on Environment and Heritage recently looked at green office procurement as part of its inquiry into a national sustainability charter. It found that there is a need for comprehensive policy, targets and practical guidelines if agencies are to improve their environmental performance. Many of the issues can be addressed within a context of developing the sustainability charter. Some agencies have developed successful initiatives in green office procurement, such as the Department of the Environment and Heritage. In fact, they recently launched a website, www.sustainability.gov.au, which provides other agencies with advice, checklists and case studies on best practice in this area.

Assessing and implementing change in our own backyard to improve energy efficiency and reduce emissions is critical; however, we must not lose sight of the fact that we are part of a global environment. Even though we produce a fraction of greenhouse emissions, 1.46 per cent, Australia plays an important role in bringing together major emitters to develop clean energy technologies. Australia is a founding member of the Asia-Pacific Partnership for Clean Development and Climate. The partnership is a groundbreaking alliance of six Asia-Pacific countries—us, China, India, Japan, the Republic of Korea and the United States. The partnership was created to develop, deploy and transfer cleaner, more efficient technologies and to assist in meeting national pollution reduction, energy security and climate change concerns. The partnership can make a difference, as it brings together the commitment of half the world’s population, half of the world’s GDP and the countries that contribute 50 per cent of emissions and 50 per cent of the world’s global energy.

China currently produces 14.6 per cent of worldwide emissions and is undergoing amazing economic growth. It is urbanising at a rate of a city the size of Brisbane every month. It alone will be responsible for 39 per cent of the rise in global emissions and is set to overtake the US as the world’s largest emitter. The United States currently emits around 23.5 per cent. China will not embrace change in relation to climate change if it imperils in any way its energy security, which is fuelling its economic growth.

Last month, Australia invested $60 million of the $100 million committed for 42 partnership projects. One of these projects involves $8 million in funding to CSIRO for a mobile carbon capture project, which will capture CO from coal-fired power stations. Initially, it will capture around 1,000 tonnes of CO, but the aim is to grow that very rapidly to 50,000 tonnes per year, as a demonstration plan, and ultimately to have a commercial operation of around 2½ million tonnes of CO emissions per annum. This technology is ready to be rolled out and trialled in various power stations around Australia and ultimately overseas.

The problem of going it alone without the larger emitters, as alternative policies advocate, is that it will drive jobs offshore and make no difference to the global problem. These alternative policies say we should ratify the Kyoto protocol. Unfortunately, the reality is that it will not make any difference to global climate change. The main problem is that the protocol does not include major emitters such as China and the United States. As it stands, under the protocol, global greenhouse gas emissions are expected to still increase by 40 per cent on 1990 levels by 2012, compared to an increase of 41 per cent without the protocol. Even though Australia has decided not to join this agreement, it is reducing emissions to exactly the same level that is required under the Kyoto protocol and is on track to meet its Kyoto target.

Australia continues to push the UN Framework Convention on Climate Change for a more international response to climate change which must include all major emitters. An emissions trading system needs to be fashioned so that it projects the natural advantages that this country has, and it needs to be global.

There is no one single solution to the global challenge of climate change. We need to accelerate the development of clean coal technology, as coal is one of our natural advantages; improve energy efficiency, not only in appliances and buildings but also in the transport sector; develop further alternative energies, including renewable, as they can make a valuable contribution to our energy mix; support reafforestation and carbon sink activities; and investigate in a calm, rational, well-informed manner whether nuclear energy should play a role in our energy mix. The Australian government is actively involved in all these areas. Our commitment to addressing climate change is $2 billion. We will continue to provide a comprehensive strategy of meeting our climate change objectives, both in the short term and beyond 2012, without damaging our economic growth or living standards.

Ian Macfarlane (Groom, Liberal Party, Minister for Industry, Tourism and Resources) Share this | Link to this | Hansard source

in reply—I thank those members who have contributed to the debate on the Energy Efficiency Opportunities Amendment Bill 2006. The bill makes amendments to the Energy Efficiency Opportunities Act 2006 to correct a small number of technical anomalies. These amendments will properly align the act with the original policy intent and improve its administration.

The Energy Efficiency Opportunities program is a significant achievement flowing from the government’s 2004 energy policy statement Securing Australia’s energy future. It requires Australia’s largest energy using businesses to undertake energy efficiency opportunities assessments and publicly report on their business responses. This applies to an estimated 250 corporations that use more than half a petajoule of energy per year, covering around 40 per cent of Australia’s total energy use.

I note that the member for Batman in his contribution moved a second reading amendment and sought a response from the government to some issues that he raised. I respond by saying that there are six companies currently registered in compliance with the act and we expect that about 250 companies will be registered by the due date of 31 March 2007. We also expect that most companies will register late but still within the allowed period, and we expect them all to meet the deadline.

The government, through its Department of Industry, Tourism and Resources, is currently running workshops in capital cities to inform companies of their obligations. It is also writing to the chief executives of those companies to ensure that they are aware of their obligations to register by 31 March 2007. We are also, through the department, sending out regular newsletters and email reminders to the target companies so that they know their obligations and we are also making sure that they plan to register by the deadline. I also reject the amendment proposed by the member for Batman.

I say in closing that the bill amends the act which took effect on 1 July 2006 to clarify that corporations do not need to register if they are already registered. It makes clear that the period allowed for the program participants to submit their assessment plans and the consequential timing of the five-year assessment cycle start immediately after the end of the energy use trigger year and, for efficient administration, the powers and responsibilities of the secretary of the department may be delegated to acting senior executive service employees.

These amendments are consistent with the explanatory memorandum to the Energy Efficiency Opportunities Act 2006 and the obligations as set out in the Energy Efficiencies Opportunities Regulation 2006 and the energy efficiency opportunities industry guide. Enabling the Energy Efficiency Opportunities program to be delivered as originally intended will ensure that stakeholders are not confused by the discrepancies currently evident in the act and will improve the ability of the Department of Industry, Tourism and Resources to effectively administer the act.

Dick Adams (Lyons, Australian Labor Party) Share this | Link to this | Hansard source

The original question was that this bill be now read a second time. To this the honourable member for Batman has moved as an amendment that all words after ‘That’ be omitted with a view to substituting other words. The immediate question is that the words proposed to be omitted stand part of the question.

Question agreed to.

Original question agreed to.

Bill read a second time.

Ordered that this bill be reported to the House without amendment.