Greg Hunt (Flinders, Liberal Party, Shadow Minister for Climate Change, Environment and Water) Share this | Link to this | Hansard source

by leave—I move opposition amendments (1) to (13) together:

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

[commencement of exemptions for trade exposed activities]

(2)    Schedule 1, page 4 (after line 14), after item 3, insert:

3A  At the end of section 21

Add:

        (4)    Certificates must only be created for the bona fide installation of a solar water heater intended to remain in its original configuration and location for the life of the unit.

        (5)    Certificates must only be created for the installation of a solar water heater having a volumetric capacity of not more than 700 litres.

[creation of certificates for solar water heaters]

(3)    Schedule 1, page 5 (after line 14), after item 7, insert:

7A  After paragraph 39(3)(a)

Insert:

           (aa)    for a year after 2014 and before 2031—the required GWh of emerging renewable energy source electricity for the year; and

[emerging renewable energy source electricity]

(4)    Schedule 1, page 6 (before line 1), after item 8, insert:

8C  At the end of Division 2 of Part 4

Add:

40A Required GWh of emerging renewable energy source electricity

        (1)    The required GWh of emerging renewable energy source electricity for a year is set out in the following table:

        (2)    The required GWh of emerging renewable energy source electricity for a year specified in subsection (1) is a component of the required GWh of renewable source electricity for that year specified in subsection 40(1).

        (3)    The following table sets out the emerging baseload technologies and their features that qualify as providing emerging renewable energy source electricity for the purposes of subsection (1):

        (4)    The regulations may provide for additional emerging baseload technologies to be added to the table in subsection (3).

        (5)    A generation unit for a technology listed in subsection (3) must be 1 MW capacity or greater to qualify as emerging baseload capacity capable of providing emerging renewable energy source electricity for the purposes of subsection (1).

        (6)    The regulations must make provision for the inclusion of emerging renewable energy source electricity in relation to:

             (a)    the acquisition of electricity by a liable entity;

             (b)    the creation and transfer of certificates;

             (c)    the calculation of the renewable power percentage for a year;

             (d)    the required renewable energy of a liable entity for a year;

             (e)    the surrender of certificates by a liable entity for a year

              (f)    the renewable energy certificate shortfall of a liable entity for a year.

[emerging renewable energy source electricity]

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

emission-intensive trade-exposed activity means an activity that is taken to be an emission-intensive trade-exposed activity under the regulations.

[trade exposed activities]

(6)    Schedule 2, item 3, page 7 (lines 17 to 21), omit the item.

[trade exposed activities]

(7)    Schedule 2, item 8, page 8 (after line 15), after section 38A, insert:

38AA Regulations in relation to emissions-intensive trade-exposed activities

        (1)    The regulations must determine the activities that are emissions-intensive trade-exposed activities for the purpose of a liable entity receiving a partial exemption for a year that is used in working out the liable entity’s renewable energy certificate shortfall for that year under section 38.

        (2)    Regulations made for the purpose of subsection (1) must commence on or before 1 January 2010, which must be after the end of the disallowance period for the regulations (subject to section 42 of the Legislative Instruments Act 2003).

        (3)    In this section:

disallowance period for regulations means the period:

             (a)    beginning on the earliest day on which the regulations are laid before a House of the Parliament in accordance with section 38 of the Legislative Instruments Act 2003; and

             (b)    ending on the day on which 15 sitting days of each House of the Parliament have passed since the regulations were laid before the particular House of the Parliament.

[trade exposed activities]

(8)    Schedule 2, item 8, page 8 (line 17), section 38B, omit “The”, substitute “(1) Subject to subsections (2) and (3), the”.

[consequential – trade exposed activities – aluminium industry and food processing industry (sheet 5868)]

(9)    Schedule 2, item 8, page 8 (after line 22), at the end of section 38B, add:

        (2)    If the aluminium production industry is determined to be an emissions-intensive trade-exposed activity in regulations made under subsection 38AA(1), the partial exemption of an aluminium producer is to be calculated to be equal to 90% of the producer’s total acquisition of electricity during the relevant year.

[trade exposed activities – aluminium industry]

(10)  Schedule 2, item 8, page 8 (after line 22), at the end of section 38B, add:

        (3)    Regulations made under subsection 38AA(1) must determine a food processing activity, to the extent that it is trade-exposed, to be an emissions-intensive trade-exposed activity. The partial exemption of an emissions-intensive trade-exposed food processing activity for 2010 and any later year is to be calculated to be equal to 90% of the additional renewable source electricity acquisition obligation of the activity during the relevant year.

        (4)    In subsection (3):

additional renewable source electricity acquisition obligation means the amount of renewable source electricity that the activity is required to acquire under this Act after the commencement of the Renewable Energy (Electricity) Amendment Act 2009 in addition to the amount of renewable source electricity that the activity was required to acquire under this Act before the commencement of the Renewable Energy (Electricity) Amendment Act 2009.

[trade exposed activities – food processing industry]

(11)  Schedule 2, item 8, page 8, (line 23), omit “Authority’s”, substitute “Regulator’s”.

[Regulator to manage partial exemptions for trade exposed activities]

(12)  Schedule 2, item 8, page 8 (line 23) to page 9 (line 9), omit “Authority” (wherever occurring), substitute “Regulator”.

[Regulator to manage partial exemptions for trade exposed activities]

(13)  Schedule 2, item 14, page 10 (line 11) to page 11 (line 29), omit “Authority” (wherever occurring), substitute “Regulator”.

[Regulator to manage partial exemptions for trade exposed activities]

The coalition clearly and strongly supports the passage of a 20 per cent renewable energy target for Australia. We believe in the vision of solar, geothermal, wave, tidal, wind and other emerging technologies. We also believe that it is possible to improve this legislation, so for that reason we propose six amendments today. One of those amendments in relation to the renewable gas source, otherwise known as waste coalmine gas, has in large part been met by the government. We accept those changes, and I will speak to the government’s amendment in particular. We thank them for that consideration and we therefore withdraw our amendment. We believe that more could be done, but that will be for discussion between the industry and the government. We will support the industry in that. Today we have guaranteed a future for 400 jobs and we have guaranteed the beginning of the saving of 90 million tonnes of CO2.

There are five other remaining amendments which are encompassed within this package. Firstly, we seek a full and complete decoupling of the energy intensive sector from the emissions trading scheme. I believe that there may have been some in good faith misunderstanding in negotiations that the government may well be willing to consider. I advocate very strongly that what we have presented is critical to our support of this bill. What we propose is very simple—that the decoupling process ensures that all recognised emissions-intensive trade-exposed sectors are covered under the renewable energy legislation, under either the 90 per cent or the 60 per cent exemption category, but that the date on which that coverage will be provided will not be tied or coupled in any way to the emissions trading scheme and that the commencement will not be linked but will begin on 1 January. So there will be no trigger from the CPRS and no delay in commencement. If that is met, it will go a very large way to meeting the concerns of the opposition. I commend these amendments most strongly to the government and I stress how important they are. Otherwise, key sectors will remain uncovered and there will be a significant risk. If this amendment is passed then we can make real progress in getting the legislation passed over the next few days.

The second of our outstanding amendments is in relation to aluminium. What we seek is very simple. We seek to ensure that the 35½ thousand gigawatt hours of new energy carries with it a 90 per cent exemption for the aluminium sector, because it is perhaps the most energy-intensive and trade-exposed sector of all. Because the margins are thin, those jobs could pass. We also seek to ensure that the first 9½ thousand gigawatt hours, because of changes in world circumstances and because of the threat of what might happen in other conditions, will now be covered. This is also very significant to us. These concerns in relation to the aluminium sector must be underlined as being extremely important. I note, however, that we have had good-faith discussions. I thank both the Minister for Climate Change and Water, Senator Wong, and the minister assisting the minister. We are making progress on these issues.

Food processing is also an extremely important issue. We want to see progress which will guarantee security for the food processing sector. In addition—I will speak more about this in the second round of discussions—we wish to ensure that a loophole in relation to the heat pump sector is dealt with. We see that there is the multiplication of units and that they are effectively being given away under a subsidy which was never intended. It began under us, it has been distorted during the current year and now it is time to close that loophole. The last area is in relation to emerging technologies. We are deeply concerned about a crowding-out effect. I will address that in more detail in the coming five-minute period. Very simply, we want to see that there is banding—(Time expired)

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

I respect that the shadow minister has some further submissions to make in relation to the amendments which he has moved and will respect that in the forthcoming five-minute contributions. I speak to a number of the issues that the shadow minister has raised in support of the amendments that the opposition has moved. Firstly, there is the relationship between the renewable energy target and the Carbon Pollution Reduction Scheme and the so-called issue of decoupling the two pieces of legislation. Yesterday, as I remarked before, the Minister for Climate Change and Water announced interim arrangements that will set aside the link between the renewable energy target and the Carbon Pollution Reduction Scheme legislation until such time as the CPRS passes the Senate. The government decided and the Coalition of Australian Governments agreed on 30 April this year to provide assistance under the renewable energy target to activities that are emissions-intensive and trade-exposed under the CPRS legislation.

That was a position that was consistent with the arguments of the industries that are emissions-intensive and trade-exposed, because they wished to see consistent application of the regime between both pieces of legislation. The government respected that. COAG respected it and also recognised the cumulative cost impact of the renewable energy target and the carbon price to be delivered by the CPRS. However, the Coalition of Australian Governments agreement was made in the context of the CPRS legislation coming into force. As I remarked earlier, the cost impact of the renewable energy target alone is certainly small for most industries. In the absence of legislation implementing the CPRS—at this point in time, at least—the scope and basis for assistance under the renewable energy target has had to be reconsidered by the government because of our commitment to the passage of the renewable energy legislation. It is fundamentally important to ensure that it pass in order to unlock the significant investment that will be made in renewable energy sources. The government does not support the amendment that has been moved by the opposition in relation to this decoupling, as it provides assistance to all emissions-intensive trade-exposed industries, not just those that are electricity-intensive.

As the shadow minister has indicated, the government has had good-faith discussions with the opposition in relation to this issue, but at this point in time I think it is also evident that the government is unmoved by the submissions that have been made to it by the opposition. Discussions will continue in this respect; however, the renewable energy target assistance, in the absence of the CPRS, should, in the government’s view, be targeted to highly electricity-intensive emissions-intensive trade-exposed activities in the period before the CPRS legislation is in force. The government remains committed to providing assistance to all of the so-called EITE industries to help manage the cumulative costs of the CPRS and the renewable energy target once both pieces of legislation are in force.

The shadow minister has also moved an amendment concerning the aluminium industry. As I foreshadowed in my second reading summation, the government does not support this amendment. The opposition amendment would give the aluminium sector more assistance by providing a 90 per cent exemption for both the existing mandatory renewable energy target—the 9,500 gigawatt hour MRET that is to operate in 2010—and the new renewable energy target obligations. The government, on this point, has been clear from the outset that its intention is not to provide exemptions from the existing mandatory renewable energy target scheme, which has, after all, been in place since 2001 and under which all aluminium entities, like other sectors, have been bearing their share of the mandatory renewable energy target liability. As assistance under the renewable energy target only applies to the expanded portion of the target, all industries will make a contribution to supporting the deployment of renewable energy. I will address the remaining opposition amendments as time permits.

Greg Hunt (Flinders, Liberal Party, Shadow Minister for Climate Change, Environment and Water) Share this | Link to this | Hansard source

The final amendment I turn to concerns the reservation of a portion of one-quarter of the new renewable energy certificates to be generated for the emerging technologies. These are the great technologies of solar thermal, solar concentrators, geothermal, ocean, tidal and biomass. These different forms of energy are the energy sources of the future. We have a deep and legitimate concern, backed by groups such as the WWF and the Geothermal Association, that the way in which this target is currently designed and will operate will crowd out these great visions of clean energy for the future. Therefore, this amendment seeks to achieve a target of 8,875 gigawatt hours by 2020, or exactly one-quarter of the 35,500 gigawatt hours of additional energy contained in this bill as the new and additional renewable energy target. We seek to ensure that that quarter—that 25 per cent or that 8,875 gigawatt hours of energy—is reserved for the emerging technologies. We would begin this in 2015 and ensure that 1,375 gigawatt hours are reserved and that each year thereafter an additional 1,500 gigawatt hours are reserved for the great technologies of the future. Solar thermal, solar concentrators, geothermal, ocean and tidal are the great energy sources which we wish to promote. We believe that there is a risk to them within this bill and we seek in good faith to present these amendments.

Let me just say this: negotiations are proceeding on the amendments all up in good faith. We thank the government for the two concessions they have made. We believe that they are important concessions and go some way towards ensuring passage of this bill. We want passage of this bill through the House. There are critical elements on which we are still to agree and critical elements which will determine the final position in the Senate. But there has been good faith today. There has been a resolution of the waste coalmine gas issue, and we believe there is the ground for significant progress on the other issues. There has been progress but not completion of the decoupling issue.

I thank the government for their engagement. I note that there are still fundamental critical concerns which need to be addressed in relation to emissions-intensive trade-exposed industries, the aluminium sector, heat pumps, food processing and the reservation of a portion of the new renewable energy for the great emerging sectors of solar thermal, solar concentrators, geothermal energy, ocean energy and tidal energy. I hope that we can have these amendments passed tonight and that we can work in good faith and continue the work of today and the weekend with the government. I commend the amendments to the House.

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

I continue my remarks in responding to the amendments that have been moved by the shadow minister, and appreciate the observations that he has made about the efforts on behalf of the government in trying to address the issues that have been raised. However, regrettably, I must report that the government do not support any of the amendments that have been proposed by the opposition. I seek to make some further comments in relation to the food-processing industry, which is also the subject of one of the amendments advanced by the shadow minister. As I said, the government do not support this specific amendment and, as I think I mentioned earlier in the second reading summation, there is currently no emissions-intensive trade-exposed category for food processing.

This issue in this industry has been identified, I imagine, for particular reasons by the opposition, but it does not appear to be supported on some evidentiary basis that distinguishes the industry in respect of the potential cost of meeting the expanded renewable energy target. Indeed, food processing itself is a very diverse activity within the economy and can include anything from the processing of dairy products to canned foods, and a whole host of other fast-food processing activities. It would be very difficult to define for the purposes of prosecuting an amendment as advanced by the opposition. There are, as a consequence of the diversity of the manufacturing processes engaged across the food-processing industry generally, some things in relation to which I have had some exposure in some of my previous work over the years, significantly different levels of exposure within the sector to electricity prices—that is, due to the different levels of consumption there are quite significantly varying levels of sensitivities to movements in electricity prices.

The impact of the renewable energy target on entities carrying out food-processing activities such as dairy processing is expected to be quite modest, in the government’s view and on the basis of the work that has been done. It would be inappropriate in the government’s view for renewable energy targeted assistance to be provided to businesses in the food-processing sector where there are other activities markedly more exposed to electricity prices. In approaching an issue such as this, consistency of application of the arrangements is absolutely critical to ensure that all industries and businesses are dealt with in an equitable way under the legislation. Food-processing businesses may qualify for transitional assistance, as I indicated earlier, under the Climate Change Action Fund in their implementation of new low-emission technologies. Of course, that is the avenue for entities within the food-processing sector, if they are substantial consumers of electricity, to look to once the legislation becomes operative.

The opposition also advanced an amendment, which the government also does not support, which suggests that the renewable energy target should be banded to ensure the deployment of less mature renewable technologies. The RET scheme encourages the deployment of renewable energy without, as I said before, picking winners within the mandated part of the electricity market that this legislation would entail.

As I said before, the expanded bounded renewable energy target is quite significant. It increases the current MRET scheme target by over four times, from 9,500 gigawatt hours to 45,000 gigawatt hours, by the year 2020. Modelling indicates that, due to the large size of the target, the RET will pull through a range of technologies including wind, biomass, solar and geothermal energy. In the area of geothermal energy, one of the barriers to investment has been the assumed distance of the potential resources for geothermal power generation from existing electricity grid infrastructure. Just recently in the region in which I reside, and where my electorate is located, a potentially significant geothermal field has been progressively discovered within the Hunter Valley, which is in the approximate location of the New South Wales electricity grid. That may well of itself change the investment calculus for geothermal energy. (Time expired)

Chris Hayes (Werriwa, Australian Labor Party) Share this | Link to this | Hansard source

At this stage of the evening in debating the Renewable Energy (Electricity) (Charge) Amendment Bill 2009 I would like to congratulate the government on their position on waste coalmine gas. As I explained earlier this evening, I have for some time had an association with Energy Developments Ltd. As a matter of fact, I worked for that organisation. I happen to know not only the extent of their operations and how much processing of coal seam methane activity in and about coalmines the company undertook but importantly the amount of CO2 greenhouse gas abatement that occurred. Sixty-five per cent of the electricity generated by Energy Developments came from landfill gas or coalmine gas. These gases produce methane, which is a greenhouse gas 20 times more potent than CO2. But, when we talk about coal seam methane gas, the original project I worked on with Energy Developments was at Appin-Tower mine—which is slightly out of my existing electorate near Appin, about 15 kilometres south of my electorate—which produces 97 megawatts of continuous power that is fed into the grid. Importantly, that mine alone abates over two million tonnes of CO2 equivalent greenhouse gas emissions each year.

Another mine at German Creek in Queensland, at which I also had the opportunity to work, is operated by Anglo Coal. At that mine EDL produces 32 megawatts of continuous power but, importantly, abates 800,000 tonnes of CO2 greenhouse gas equivalent each year. They are huge numbers and that is just two mines. A third mine—I cannot say that I worked at this one but I am aware the figures—is at Moranbah in North Queensland, which is abating 500 tonnes of CO2 equivalent greenhouse gases per year and produces 45 megawatts of continuous power into the grid. These are very good figures for the abatement of gases which would otherwise have been fugitive gases from coalmine production. These gases are actually being used to generate electricity which is now being put directly into our national grid.

The amendments the government has now introduced ensure that those figures will be addressed in the ongoing application of the RET system. I understand that they will not go into the calculation of the 20 per cent requirement for 2020. These organisations—and this is the important thing—raise their capital in the share market and they need the financial incentive to invest, to innovate and to develop these technologies. These companies—and it is not just Energy Developments but other organisations similar to Energy Developments—will use these provisions to be able to generate incentives to invest in the development of these technologies and are doing well in respect of the CO2 equivalent gases that they abate. If the government had not picked up these amendments and enacted these amendments of their own volition, these companies, these coalmines, would simply have flared these gases to atmosphere, which would have caused untold damage. Consequently, the government needs to be congratulated.

Question put:

That the amendments (Mr Hunt’s) be agreed to.

Robert Oakeshott (Lyne, Independent) Share this | Link to this | Hansard source

by leave—I move amendments (1) to (4), as circulated in my name, together:

(1)    Schedule 1, item 9, page 6 (line 4), omit ‘The Minister must cause an’, substitute ‘An’.

(2)    Schedule 1, item 9, page 6 (lines 10 and 11), omit ‘the Minister’s opinion’, substitute ‘the opinion of the Independent Climate Change Authority’.

(3)    Schedule 1, item 9, page 6 (line 13), before ‘Minister’, insert ‘Independent Climate Change Authority and the’.

(4)    Schedule 3, item 3, page 15 (line 15), omit ‘Australian’, substitute ‘Independent’.

For the interest of all members in the chamber, I will not be moving for a division, so everyone can go about their business. It is because I think in the next 4½ minutes I will win this argument and convince the government of the merits of the amendments! But if I do not then it is to again make a point that I have made consistently through the suite of legislation under the general CPRS banner via amendments. That point is that our role in the delivery of a market based response to the natural resource management question of our time should be as framework makers, and then we should let it go and be at arm’s length from the process in the future to let it establish a sense of—dare I say it—independence in a lot of the delivery of the market indicators on many of the principles and concepts that are evolving from this suite of legislation.

The point is being made again, via this renewable energy amendment bill, that we are seeing once again the centralisation of power. In the future, in some of the key decision-making issues around some of these principles and concepts, power will sit fairly and squarely in the hands of the minister and the executive. If we are going to talk about building a good investment environment in the future, trying to get genuine engagement with the community and letting the market rip in what is a market based response to these natural resource questions, then I would once again urge the government to consider some time in the future, if not now, the establishment of that independent authority to oversee some of the issues, principles, concepts and finer details of the market framework.

The response that I have previously had from the minister on duty in the chair, the Minister Assisting the Minister for Climate Change, is that the government believe this issue is so important that it should have parliamentary scrutiny. I philosophically disagree. We could argue the same about interest rates. I would hope that we all believe interest rates and monetary policy in this country are incredibly important. However, we do not therefore give it parliamentary scrutiny. What we do is give it arm’s-length independence from the parliament so that we do have certainty and so that some of those hard decisions can be made in the greater public interest. This is no different. There will be tough medicine in some of this suite of legislation going through, and no-one who is involved in the political process—by our very nature we are populists—will want to deliver that tough medicine. So it is as much in the government’s interest as it is in the public interest that there be a sense of independence and a sense of being at arm’s length from the political processes so that we do let the science fly.

What we have seen over the last fortnight is a political mosh pit. We have seen and continue to see political rather than science reasons for decisions taken in what should be about the science of climate change and not the politics of climate change. If we do not see this establishment sometime in the near future, if not now, I am concerned that we will see the science of climate change by election cycle, by vested interests and by political donor. That is not a system of good government and it would not deliver on what is, as I say, the natural resource management question of our time.

If they are serious about this, I would ask the government, if they cannot consider it now through these amendments, to consider it at some point in the future. Governments will change; there will be different ministers in the chair. This is as much to protect the work that is being done now and delivering it for the future as it is about delivering good public policy for today. I would encourage the government to consider this amendment.

I might also make a point about the Greens amendment to this legislation, which will be discussed in the other place. It is exactly in line with the private member’s bill that we will see tomorrow. I will be interested in everyone’s response to that one as well. (Time expired)

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

I thank the member for Lyne for his diligence in pursuing this amendment. He is certainly extremely consistent on this theme. I am endeavouring to come to grips with his imagery about a political mosh pit; it is a theme that I am sure can be developed. However, as respectful as the government is in relation to the contribution by the member for Lyne concerning the amendments, the government does not support the amendments he has proposed—and the government does not support them because they suggest that the regulator would have the power to initiate the review, which is the subject of this issue, and also approve the qualifications of the person to conduct the review and to receive the report. That is not, in the government’s view, an appropriate role for the regulator.

The government’s bill provides, alternatively, that the review is required to be independent and to provide a report for the government’s consideration. The review is, however, a review of government policy approaches to achieving the government’s policy objective of accelerating the deployment of renewable energy to ensure that 20 per cent of electricity supply comes from renewable sources by the year 2020. As the minister has policy responsibility for the effective operation of the renewable energy target, it is appropriate in the government’s view for the minister to initiate the review and select the person who will undertake these functions. Having said that, I move:

That the question be now put.

Question agreed to.

Original question negatived.

by leave—I move government amendments (1) to (20) on sheet CA209:

(1)    Schedule 1, page 4 (after line 11), after item 2, insert:

2A  Subsection 5(1)

Insert:

2008 WCMG limit has the meaning given by section 14.

2B  Subsection 5(1)

Insert:

eligible energy sources means:

             (a)    eligible renewable energy sources; or

             (b)    eligible WCMG.

2C  Subsection 5(1)

Insert:

eligible WCMG has the meaning given by section 17A.

[waste coal mine gas]

(2)    Schedule 1, page 4 (after line 14), after item 3, insert:

3A  Section 8

Omit “eligible renewable energy sources”, substitute “eligible energy sources”.

[waste coal mine gas]

(3)    Schedule 1, page 4, after proposed item 3A, insert:

3B  Paragraph 12A(2)(c)

Omit “eligible renewable energy sources”, substitute “eligible energy sources”.

[waste coal mine gas]

(4)    Schedule 1, page 4, after proposed item 3B, insert:

3C  Subparagraph 13(2)(ba)(i)

Omit “eligible renewable energy sources”, substitute “eligible energy sources”.

3D  After subsection 13(2)

Insert:

     (2A)    An application that lists eligible WCMG as an eligible energy source from which power is intended to be generated cannot be made after 30 June 2010.

[waste coal mine gas]

(5)    Schedule 1, page 4, after proposed item 3D, insert:

3E  Paragraph 14(2)(a)

Omit “eligible renewable energy source”, substitute “eligible energy source”.

3F  Paragraph 14(3)(b)

Omit “eligible renewable energy sources”, substitute “eligible energy sources”.

3G  After paragraph 14(3)(b)

Insert:

   ; and (c)    if some or all of the power generated by the power station is generated from eligible WCMG—the 2008 WCMG limit for the power station.

3H  Subsection 14(3) (note)

After “baseline”, insert “or the 2008 WCMG limit”.

3J  Subsection 14(4)

Omit “and (3)(a)”, substitute “, (3)(a) and (3)(c)”.

[waste coal mine gas]

(6)    Schedule 1, page 4, after proposed item 3J, insert:

3K  Subsection 15A(1)

Omit “The”, substitute “Subject to subsection (3), the”.

Note:                The following heading to subsection 15A(1) is inserted “General rule”.

3L  At the end of section 15A

Add:

Applications that list eligible WCMG as an eligible energy source

        (3)    If an application that is properly made under section 13 lists eligible WCMG as an eligible energy source from which power is intended to be generated, the Regulator must decide the application on or before 31 December 2010.

        (4)    If the Regulator does not decide the application on or before that day, the Regulator is taken, on the following day, to have made a decision under section 15 refusing the application.

[waste coal mine gas]

(7)    Schedule 1, page 4, after proposed item 3L, insert:

3M  At the end of Division 3 of Part 2

Add:

17A What is eligible WCMG?

        (1)    Waste coal mine gas is eligible WCMG if:

             (a)    the waste coal mine gas is used in the generation of electricity by a power station in the period:

                   (i)    starting on 1 July 2011, or if a different date is prescribed by the regulations, starting on that different date; and

                  (ii)    ending on 31 December 2020; and

             (b)    either:

                   (i)    the power station was generating electricity from waste coal mine gas at any time in May 2009; or

                  (ii)    if subparagraph (i) does not apply—the power station had generated electricity from waste coal mine gas before May 2009, and, as at the end of May 2009, the owner or operator of the power station has a plan for the power station to resume generating electricity from waste coal mine gas before the end of September 2009.

        (2)    For the purposes of this Act, the regulations may provide that waste coal mine gas has the meaning prescribed by the regulations.

        (3)    For the purposes of this Act, the regulations may prescribe limitations (in addition to those in subsection (1)) that apply in order for waste coal mine gas to be eligible WCMG.

[waste coal mine gas]

(8)    Schedule 1, page 4, after proposed item 3M, insert:

3N  Paragraph 18(4)(a)

Omit “eligible renewable energy sources”, substitute “eligible energy sources”.

3P  At the end of subsection 18(4)

Add:

      ; or (c)    to the extent that the electricity was generated from eligible WCMG and is in excess of the accredited power station’s 2008 WCMG limit.

[waste coal mine gas]

(9)    Schedule 1, page 4, after proposed item 3P, insert:

3Q  Paragraph 20(2)(b)

Omit “eligible renewable energy sources”, substitute “eligible energy sources”.

[waste coal mine gas]

(10)  Schedule 1, page 5 (after line 14), after item 7, insert:

7A  Paragraph 25(2)(ca)

Omit “eligible renewable energy source”, substitute “eligible energy source”.

[waste coal mine gas]

(11)  Schedule 1, page 5, after proposed item 7A, insert:

7B  Paragraph 25A(2)(f)

Omit “eligible renewable energy source”, substitute “eligible energy source”.

[waste coal mine gas]

(12)  Schedule 1, page 5, after proposed item 7B, insert:

7C  Paragraph 30D(3)(a)

Omit “eligible renewable energy source”, substitute “eligible energy source”.

[waste coal mine gas]

(13)  Schedule 1, page 5, after proposed item 7C, insert:

7D  Division 12 of Part 2 (heading)

Repeal the heading, substitute:

Division 12—Varying 1997 eligible renewable power baselines and 2008 WCMG limits

[waste coal mine gas]

(14)  Schedule 1, page 5, after proposed item 7D, insert:

7E  At the end of Division 12 of Part 2

Add:

30G Varying 2008 WCMG limits

        (1)    The Regulator may, by written determination, vary the 2008 WCMG limit for an accredited power station.

        (2)    The Regulator must make a determination in accordance with guidelines prescribed in the regulations.

Increase in limit

        (3)    If a determination increases the 2008 WCMG limit for an accredited power station, the determination has effect for the year or years specified in the determination.

Decrease in limit

        (4)    If a determination decreases the 2008 WCMG limit for an accredited power station, the determination has effect only for the years following the year in which the determination is made.

[waste coal mine gas]

(15)  Schedule 1, item 8, pages 5 to 6 (table), omit the table, substitute:

[waste coal mine gas]

(16)  Schedule 1, page 6 (before line 1), before item 9, insert:

8A  Subsection 66(1) (after table item 5D)

Insert:

[waste coal mine gas]

(17)  Schedule 1, page 6, after proposed item 8A, insert:

8B  After paragraph 138(ca)

Insert:

           (cb)    for each power station for which there is a 2008 WCMG limit—the limit (including any variation of that limit under section 30G); and

[waste coal mine gas]

(18)  Schedule 1, page 6, after proposed item 8B, insert:

8C  Paragraph 140(da)

Omit “eligible renewable energy source”, substitute “eligible energy source”.

[waste coal mine gas]

(19)  Schedule 1, page 6, after proposed item 8C, insert:

8D  Paragraph 141A(c)

Omit “eligible renewable energy source”, substitute “eligible energy source”.

[waste coal mine gas]

(20)  Schedule 1, page 6, after proposed item 8D, insert:

8E  Paragraph 160(2)(b)

Omit “eligible renewable energy sources”, substitute “eligible energy sources”.

[waste coal mine gas]

I present a supplementary explanatory memorandum to the bill. The additional supplementary memorandum concerns an amendment that will enable existing power stations using waste coalmine gas as a fuel source to participate in the renewable energy target scheme for a specified period. As I indicated in the second reading summing up, the cessation of the New South Wales Greenhouse Gas Reduction Scheme, known as GGAS, may impose a significant cost on existing electricity generators using waste coalmine gas. Affected entities have indicated that currently profitable projects could be forced to close under these changes. Inclusion of these existing generators under the Renewable Energy Target scheme is intended as a transitional measure to underpin the continued viability of projects that have already been committed.

Over time the Carbon Pollution Reduction Scheme, the CPRS, will provide an increasing incentive in favour of low-emissions generation such as waste coalmine gas. To provide this transitional support the amendment restricts eligibility to existing waste coalmine gas fuelled power stations and limits the period over which generation from these power stations will be eligible to create tradeable renewable energy certificates, or RECs. This period is to begin on 1 July 2011 and to end on 31 December 2020. The case for extending eligibility beyond 2020, and thereby allowing new projects, is not, in the government’s view, strong; and the measure is not appropriate.

A carbon price under the CPRS will provide an increasing incentive in favour of low-emissions generation, including waste coalmine gas. The CPRS will also provide a strong incentive to reduce fugitive emissions to reduce the CPRS liability. The amendments also impose annual caps on the amount of generation for which each eligible waste coalmine gas fuelled power station can claim RECs. Each power station’s cap, called the 2008 waste coalmine gas limit, will be set by the RET scheme regulator. The annual eligibility cap is to be based on the power station’s generation from waste coalmine gas in 2008, with adjustment for unusual factors such as plant outages and taking into account 1997 generation baselines set under the RET scheme for power stations which commenced operation prior to 1 January 1997. Waste coalmine gas is not a renewable energy source and is not intended to contribute to the 20 per cent target for renewables in 2020.

To clearly differentiate waste coalmine gas from renewable energy sources, the amendments create a new concept of an eligible energy source that comprises the current list of eligible renewable energy sources and separately eligible waste coalmine gas. To ensure the inclusion of waste coalmine gas under the renewable energy target does not crowd out renewable energy generation, these amendments increases annual targets under the expanded RET scheme for the years 2011 to 2020 to account for the amount of eligible waste coalmine gas fuel generation in these years. Specifically, the target for 2011 has been increased by 425 gigawatt hours to account for the half year of eligible generation and the annual targets for 2012 to 2020 have each been increased by 850 gigwatt hours.

To ensure that no renewable energy is displaced, total eligible waste coalmine gas generation will not exceed 425 gigawatt hours in 2011 or 850 gigawatt hours for the years 2012 to 2020. That is equal to the amount by which the annual targets are increased under the RET. Increasing the targets will ensure the government is able to deliver on its commitment to achieve 20 per cent of renewable energy in Australia’s electricity mix by 2020 while meeting the need for transitional assistance for the waste coalmine gas generation sector.

These provisions are to commence, subject of course to passage through parliament, on the day on which the act receives royal assent. I commend these particular amendments concerning this issue to the House. This is a matter in which I have had extensive personal experience in my capacity in the portfolio. These are important amendments to be made and I commend them to the House.

Greg Hunt (Flinders, Liberal Party, Shadow Minister for Climate Change, Environment and Water) Share this | Link to this | Hansard source

The opposition will be accepting these amendments. We appreciate the fact that the government has listened to the quite extensive representations which we have made over the previous months. We have in fact asked questions about this issue. Australian companies Envirogen and Energy Developments did have their future at risk. Today’s decision is not perfect, but what it does is this: it includes waste coalmine gas under the renewable energy legislation, it guarantees that existing operations and existing jobs in the hundreds will be saved and it makes a significant step towards achieving the 90 million tonnes of savings which can be made from waste coalmine gas if it is captured, flared and used to generate electricity, so as to offset the need for the fossil fuel production of energy.

Therefore, I make these comments in relation to these amendments. First, we believe that the principle of including waste coalmine gas under the renewable energy legislation is sound. Second, we accept the decision of the government to increase the total target so as to accommodate the waste coalmine gas sector. We think that that was a sensible and prudent action. I understand it may have been necessary to meet some of their political requirements, but we have no opposition to it.

Third, we will not oppose this, but we do have some concerns and we implore the government to have these discussions with the companies involved. We think that the year 2030 would be a better year than 2020. Some of the renewables investment made by the relevant waste coalmine gas companies, Envirogen and Energy Developments, is predicated on a 2030 date. It will cost the government no more. It will make no difference in terms of dollars and it will make no difference to the cap. I would simply extend those figures until 2030 and I would ask that the government enter into negotiation with the companies. Our job was to secure the future for those companies to make sure that existing renewable energy jobs were not lost, and we have done that. It has been a difficult fight. We are happy. We have more to do on other issues but we are happy that waste coalmine gas is in the system in the way it is in New South Wales, as it is in Germany, as it is in the United States. So the principle has been established.

In government, we would move to make sure that additional space was made and that the period for these investments was extended until 2030. However, the government of this day have not done that. We urge them therefore to, firstly, consider extending the period in which existing waste coalmine gas projects are eligible from 2020 until 2030. Secondly, we urge them to enter into discussions with the waste coalmine gas energy providers about extending the range of activities beyond those which are currently in existence to those which may be in existence. There may need to be a separate mechanism. There may need to be an additional component, but we believe that that should happen. On this day, however, there has been a significant victory for the waste coalmine gas sector.

I acknowledge the work of the two companies involved. They were concerned about rural jobs; they were concerned about 90 million tonnes of emissions. Now we need to broaden what they want on two fronts, but that is a debate for another day and for the government to deal with the companies directly. But, as I say, we would urge the government, firstly, to extend the date for inclusion from 2020 to 2030 and, secondly, to seek a mechanism which would allow for new developments and new investment. Nevertheless, we regard this as a victory for common sense. I thank the minister for his work and I thank Senator Wong for her work. We will be supporting these amendments.

Robert Oakeshott (Lyne, Independent) Share this | Link to this | Hansard source

I will be brief. I only want to raise concerns that I do not think this is common sense. Probably the one thing about common sense is that it is not very common, because this is the Renewable Energy (Electricity) Amendment Bill 2009 and what I have just heard from the Minister Assisting the Minister for Climate Change is that waste coalmine gas, WCMG, which is being introduced as part of this amendment, is not a renewable energy source. So here we have the title of a bill—the renewable energy amendment bill—and we have an admission that an amendment is introducing an energy source that is not renewable, yet it is going to form part of renewable energy certificates and the renewable energy target.

I ask for some confirmation. How are people such as me and members of the community, who have not been party to negotiations, not to see this as once again a browning down of legislation from the government and once again an example of the exact point I made five minutes ago as to the very need for some arms-length independence in this process? This has got to be a science based process, not a political process, and what I see here in this amendment is some sort of agreement done between both sides of this chamber with some sort of individual company or industry sector that I have certainly never heard of before. I just asked my colleague next to me and he had never heard of it before. This WCMG is a new concept that has been introduced into this chamber. Here we have a government amendment on the back end of a renewable energy amendment bill and, at the same time, we also have confirmation in the introduction of this amendment that this is not a renewable energy source. I ask the minister: what on earth is going on?

Greg Combet (Charlton, Australian Labor Party, Minister Assisting the Minister for Climate Change) Share this | Link to 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.

Greg Hunt (Flinders, Liberal Party, Shadow Minister for Climate Change, Environment and Water) Share this | Link to this | Hansard source

The opposition will not be opposing these amendments. We welcome the fact that there has been a backdown by the government and that they are indicating a willingness to decouple. We will accept them as I note they offer an imperfect safety net for emissions-intensive trade-exposed businesses, but they nevertheless offer a safety net.

We will seek in the Senate to ensure that there is a full decoupling. Those amendments were moved in the House this evening and we will move them again in the Senate unless the government takes steps to negotiate, which it is, and then to present amendments of its own. We believe those negotiations are proceeding in good faith, and I underline that fact, and I thank the government for that, but let it be absolutely clear that these amendments need to go further. Instead of having the existing test which is in place for trade exposed businesses, we have an intensity in terms of electricity use of 3,000 megawatt hours per $1 million of revenue or 9,000 megawatt hours per $1 million of value-add. That will cover a much smaller range of businesses than was contemplated previously by the government. We have offered in good faith to the minister this evening a revised proposal which would go further than the amendment contained here. This provides a beginning. It provides a safety net at the very least for the ceramics and newsprint industries, for the aluminium industry and for others that are still yet to be defined.

But we can make this very clear and very easy by replicating the trade exposed provisions, which are already being developed by the government, but by separating them so as the commencement of those trade exposed provisions is not dependent upon passage of the CPRS legislation. There is a very simple solution here which would be acceptable and sensible, and that is to simply ensure that the commencement of the full trade exposed provisions for the 90 per cent qualifying firms and the 60 per cent qualifying firms is untied from the emissions trading scheme, will begin on 1 January 2010 and will not be dependent upon any other legislation. That is simple, it is elegant, it ensures that we have a clear way forward and that we will not face any blockage in this bill this week.

Having said all of that, we appreciate the fact that the government has made a significant concession. It has moved away from its view—expressed by the Minister for Finance and Deregulation as late as Friday night—that there would be no decoupling. This is a decoupling. It is not the full decoupling which we would ideally want, but it is a decoupling. Our view in the Senate will, to a significant extent, depend upon the additional work, but we accept that there is negotiation in good faith. I thank the government for that and we will accept these amendments.

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

In light of a couple of the observations made by the shadow minister, I think it is appropriate to put on the record a couple of things. The original construction of these arrangements—that is, the so-called coupling of the CPRS and the RET—was a consequence of what I think is an efficient public policy approach by the government; that is, it was out of respect for submissions made to the government by representatives from industries within the emissions-intensive trade-exposed sector that they believed that consistent treatment for the assistance that applies under the CPRS and the RET for those industries would be a desirable end. The matter was discussed at meeting of the Council of Australian Governments in, I think, late May this year, and it was agreed that, in the process of establishing the national renewable energy target scheme, that was an appropriate mechanism for dealing with the issue. That has been the context for the so-called coupling—against which the opposition has raised a number of objections on a number of occasions. It was suggested that that would be one of the reasons contemplated by the opposition for potentially voting against the renewable energy legislation.

In light of the decision by the opposition—a decision we believe to be irresponsible—to vote against the Carbon Pollution Reduction Scheme in the Senate, the government reconsidered this issue and, far from it being a backdown, it is demonstration of our firm intent to address climate change by, in part, ensuring the passage of the renewable energy target legislation. That is the appropriate construction for the amendment that has been put. I have explained it in some detail and I reinforce what I said earlier, and that is that I think it is an appropriate response in the current circumstances. With those remarks, I move:

That the question be now put.

Question agreed to.

Original question agreed to.

Bill, as amended, agreed to.