Pat Conroy (Charlton, Australian Labor Party) Share this | Link to this | Hansard source

I move:

That this House:

(1) recognises the importance of investment certainty for clean energy investors;

(2) notes that:

(a) under the Mandatory Renewable Energy Target (MRET), around 3,500 MW of new renewable energy capacity has been commissioned since 2001, with total investment to date of $18 billion;

(b) the Clean Energy Council estimates that there is potential for another $18.7 billion in clean energy investment if the MRET policy was retained in its current form;

(c) over 24,300 people are directly employed in the renewable energy industry;

(d) the Australian Energy Market Commission has found that the cost of the MRET accounted for approximately three per cent of residential retail electricity prices in Australia; and

(e) reducing the greenhouse gas emissions intensity of our electricity generation sector is essential if we are to reduce Australia's carbon pollution; and

(3) calls on the Government to commit to retaining the MRET at the legislated 41,000 gigawatt hours by 2020.

The renewable energy target is a crucial piece in Australia's armoury against climate change and our attempts to decarbonise our energy generation sector.

The most up-to-date figures have shown that the RET so far has resulted in the total deployment of over 7,000 megawatts of energy generation, and this represents over 13 per cent of our electricity generation sector coming from renewable energy sources. Over 24,000 jobs are in the renewable energy industry—mostly as a result of the RET. Emissions in the Australian economy have been 22.5 million tonnes of CO2 equivalent lower as a result of the renewable energy target.

It is important to note that the RET was bipartisan. The coalition when last in government introduced it and they also supported the expansion of the target to at least 20 per cent of Australia's electricity generation, with a fixed target of 41,000 gigawatt hours. The term at least is very important in this debate, because the RET is under attack right now from the government, who seem divided between those who want to abolish it and those who want to reduce the target to some floating percentage figure. I will be very interested to hear the contributions from the members opposite about whether they are in the abolition camp—and I suspect the next speaker might be—and later speakers who will certainly be arguing for a whole variety of options there. But the government certainly painted their colours on this particular issue, by appointing a climate change denier as the head of their review. So it will be no surprise when they support a reduction in the target or possibly the abolition of the target. This is no surprise coming from the Prime Minister, who is the most anti-environment Prime Minister we have ever seen. If you saw his little trip overseas recently, you saw this in spades.

The fact is that the 20 per cent renewable energy target is very important for combatting climate change, it is very important for industry and it is very important that it remains unchanged. The independent expert Climate Change Authority has recommended no change and has stated that the fixed target is crucial to industry confidence. Industry forecasts state that there will be nearly 20,000 jobs at risk and $15 billion of additional investment lost if the target is changed. Quite rightly, a range of actors have said that there is a huge sovereign risk issue if the fixed target is abolished with less than six years to go before 2020.

On the impact of the RET on prices, the independent experts, the Climate Change Authority, have found that the renewable energy target actually reduces wholesale energy prices by increasing supply and providing a source of energy with a low marginal cost of production. The Climate Change Authority broadly agree with AEMO that, in terms of retail electricity prices, the impact is around three per cent of retail energy prices or less than $1 a week on average. In fact, some independent models predict electricity prices will actually rise if the RET is abolished.

I urge everyone listening to the debate to ignore dodgy consultancy reports that might get quoted by the other side that somehow forecast huge price reductions if the RET is abolished or claim that the RET is responsible for huge parts of electricity bills. Trust the independent, apolitical experts through the Climate Change Authority and AEMO, who say it is less than $1 a week for a great carbon abatement task and a great industry development target that works with ARENA and the Clean Energy Finance Corporation to build a renewable energy industry in this country, which is vital if we are going to de-carbonise the economy and be part of the clean energy industrial revolution that is happening around the world. The coalition has abolished ARENA already, in direct conflict with a promise it made before the election—no surprise. This government loves breaking promises and it is certainly trying to do the same for the Clean Energy Finance Corporation.

In being an efficient way of combating climate change, the Climate Change Authority has found that the RET's cost of abatement is around $40 a tonne, more than the carbon price but much less than Direct Action will ever hope to achieve. So it is great for industry development. We have seen 24,000 jobs developed. It is, importantly, complementing the carbon price and reducing carbon pollution in the economy and it is supported by important industry groups like the Australian Industry Group, which says there should be no change. This is an important issue. We need to stick to the fixed target to support Australia's de-carbonisation. (Time expired)

Natasha Griggs (Solomon, Country Liberal Party) Share this | Link to this | Hansard source

Is the motion seconded?

Tim Watts (Gellibrand, Australian Labor Party) Share this | Link to this | Hansard source

I second the motion and reserve my right to speak.

Dennis Jensen (Tangney, Liberal Party) Share this | Link to this | Hansard source

Science and economics are problematic bedfellows. Any attempt to shoehorn progress and expedite new technologies invariably leads to disappointment. The nature of scientific progress is not linear, nor can it be controlled or predicted. If the venture is not economic, then it is not sustainable. How ironic that Labor members seek to sustain an unsustainable idea and an unsustainable industry. When one introduces constraints by means of a renewable energy target, there are unintended consequences. It is known that the marketplace of ideas, like the marketplace of goods and capital, works best unfettered. Introducing artificial constraints that are demonstrably uneconomic perverts the efficient allocation of both human capital and financial capital. The ones left paying the price for Labor's nice ideas are the people of Australia. The RET will punish poor people disproportionately more than the wealthy. Labor has dropped caring for the poor and the working class for champagne socialism. Unrealistic divestments of time and capital and artificial crises punish those that can least afford to be punished. The RET has and will continue to cost jobs and push the cost of living much higher for many millions of Australian families.

What is known of Labor's policies now beyond any doubt is that they are wildly optimistic and woefully lacking in precise detail. There never seems to be any thinking of how the thing will work beyond the big idea. This RET scheme and the specific measures it advocates are completely discredited by having been born of a Labor government congenitally addicted to fantasy.

Honourable Members:

Honourable members interjecting—

Dennis Jensen (Tangney, Liberal Party) Share this | Link to this | Hansard source

Unfortunately, you are right. If science could be tamed and brought under bit and bridle, why should anyone trust Labor's future solution? Projects like nuclear energy present viable, safe, clean and economic alternatives to the energy crisis. Debate must move forward from rampant NIMBYism. In truth, the RET is an anachronistic plan that was dreamed up at a time when Australia still had surpluses. The geopolitical situation in the Middle East, Africa and Russia was also more benign, and yet the Labor Party wants Australia to stick to the same plan. How dumb. Our best options for getting to clean, economic sources of power lie with locally sourced, proven nuclear technologies.

I refer here particularly to the debate around thorium reactors and their important future role in the provision of clean energy. Specifically, I would like to see this happen in my home state of Western Australia. Canada, China, Germany, India, the Netherlands, the United Kingdom and the United States have experimented with using thorium as a substitute fuel in nuclear reactors. When compared to uranium, there is a growing interest in thorium based nuclear power due to its greater safety benefits and greater abundance. India's three-stage nuclear program is possibly the best-known and best funded of such efforts. Australia has the largest reserves of thorium. We have all the necessary materials and know-how in WA. It is tragic that, with this opportunity, Australia should fall behind India in scientific and economic endeavour.

In a 17-page submission last week, the Business Council of Australia described the RET as poor public policy that is no longer relevant to Australia's circumstances. Today, the Australian Energy Market Operator is set to cut national power demand forecasts for the third straight year. I join others such as Origin and EnergyAustralia in stating the obvious: the full costs are escaping assessment. We should allow the market to determine the best mix of technologies based on market principles, not some arbitrary decision made by Canberra based pen-pushers with little understanding of the drivers of economic competitiveness and technological development. It is my belief that in Australia, our nation should never sacrifice Australian jobs or our standards of living because of an idle threat. Time expired

Alannah Mactiernan (Perth, Australian Labor Party) Share this | Link to this | Hansard source

The proposal we have before us—the proposal we believe we will likely see from the government—to scrap the Renewable Energy Target is made from a very short-sighted point of view. It is being promoted on the basis that it will cut the cost of energy and therefore promote and expand Australian jobs and Australian industry. I put it that that is an extremely short-sighted view. We know that around the world people—countries and large economies— are moving towards and embracing emissions trading schemes. Those countries are putting themselves in a place where they are going to be reducing their carbon emissions and having less carbon-intensive production.

We are going to be disadvantaged by the removal of the Renewable Energy Target in two very clear ways. One is that we will have an economy that continues to be fossil fuel dependent; that will bring with it considerable cost. It is true that what we are asking for is a trade-off in the short term—a short-term additional cost to energy prices—for the long-term benefit of reducing costs. It is about making a short-term loss in order to make a much more substantial and longer-term gain. Bloomberg, for example, has projected that, while removing the Australian RET would only save around $10 per year per domestic consumer—a very small amount—after 2020, the net position of the RET will be one of reduced energy prices. We will get that benefit—a short-term pain for a very substantial long-term gain. I put it that we might even see pain accelerating as more and more economies move to emissions trading schemes—just as we found, before Australia introduced a price on carbon, that our airlines going into the European Union airports were being charged a levy because we did not have a carbon price.

We can expect to see this writ across the economies of the developed nations. They are not going to simply allow Australia to access their markets without placing a price on our carbon intensity, such as we see in our very big trading partners. Seven of the major cities in China now have emissions trading schemes; Korea is moving to an emissions trading scheme; the states of the United States with the biggest economies have emissions trading schemes. We will see, built into our costs, a cost we are going to have imposed on us—a penalty paid for the fact that we have not decarbonised. So not only will we be losing that long-term benefit of having a decarbonised economy and cheaper energy prices but also, in the short term, we will find ourselves hit with a levy because of the carbon intensity of our manufacturing and those things that we seek to export.

The member for Tangney talked about the nuclear power industry. That is an industry whose very development was underpinned by government and this fantasy about free markets being that thing that has created innovation did not happen in nuclear energy. That was government funded. It did not happen with the internet; it did not happen with touchscreen; it did not happen with Wi-Fi—all of these technological developments were, in fact, underpinned by government investment in research and development. This is very short sighted. Even if you were not at all concerned about climate change, you would be concerned about the long-term economic consequence about Australia remaining—with its little pal 'canadia'—with those little pockets that are still allowing their economies to be driven fundamentally by the fossil-fuel industry and not getting with the program and not giving us the opportunity of those long-term reduction costs. (Time expired)

Angus Taylor (Hume, Liberal Party) Share this | Link to this | Hansard source

Religious belief is based on faith not facts. The new climate religion, recruiting disciples every day, has little basis on fact and everything to do with blind faith. The new theologians of the green Left are not focused on the hilltop at Calvary, but on hills closer to home—many in my electorate, near Lake George, Gunning and Crookwell. And heaven help the heretics who question them. If you listen to Labor and the Greens, an immediate shift to renewable energy is necessary to avoid Armageddon.

At the other extreme, some believe, we do not need any of this. Of course, the coalition is taking a middle path. We have concluded that well-targeted emissions reduction via Direct Action is good policy. The great virtue of Direct Action is that it provides incentives, not penalties, for emissions reduction across the country. But the hard work starts now. As policymakers, our job is to minimise the cost of reaching our emissions-reduction target, particularly given our economy relies on energy-intensive exports.

Today's The Australian reports on definitive economic modelling of the Renewable Energy Target recently completed by Deloitte. It tells us what should be obvious: the scheme is poor policy in its current form. The massive subsidy we single out for the wind industry via the LRET is one of the biggest but least understood corporate welfare programs ever conceived. Wind energy typically costs well over $90 to $100 per megawatt hour. The alternative is conventional energy, currently priced about $30 to $40 per megawatt hour, in the absence of a carbon tax. To make things worse, the electricity grid needs extra investment to absorb the intermediate supply from wind.

Deloitte tells us that the cost of reducing carbon emissions via the Renewable Energy Target is a $125 per tonne, more than five times the cost of Labor's job-destroying carbon tax. The total cost to the economy is expected to be $34.1 billion, in today's dollars. The extravagance of these massive subsidies to the wind industry is being paid for directly by electricity consumers and generators. Indeed, we have hardly begun. For large-scale renewables, which has come to mean wind, the current target of 16.1 terawatt hours moves to 41 by 2020. At the same time, the market price of delivering those renewables will increase sharply, reaching a legislative cap in the near future.

According to Deloitte, by 2020, the RET will cost the economy $3.4 billion per year. It will destroy almost 5,000 jobs and will drive a substantial reduction in investment and real wages. That is what bad policy does. It wastes money, costs jobs, costs investment and reduces income across the nation. It is true that the cost of renewables will come down over a period of time, but solar will trump wind easily on this count.

Across much of the Western world, policy makers are focused on one easy option to begin decarbonising our electricity grids, while the cost of renewables comes down: natural gas, because it is abundant and because it halves emissions. The United States has presided over a game-changer, achieving rapid reductions in carbon emissions, containing the price of electricity and putting manufacturing back on the map—all on the back of cheap gas. It has given Obama an incredible political opportunity. He is claiming this is a triumph of his new direct action policy when, in fact, gas has done most of the work.

But there is a hitch for us. In Australia gas is more expensive than in the US, because we export it. Of course, there are strengthening calls from the left for a reservation of gas for domestic purposes. We should ignore these calls because we have alternatives. Bear in mind that the electricity grid is responsible for less than half of our emissions. Land use, transport, fuel, agriculture and industry are all responsible for the rest. Indeed, these areas have been central to delivering our Kyoto obligations and will be central to Direct Action.

Burchell Wilson, chief economist of the Australian Chamber of Commerce and Industry, said in today's TheAustralian:

The renewables industry has been standing over the graves of Australian manufacturing concerns, crowing about the jobs the RET is creating in the wind industry.

In short, by 2020, if the renewable energy target is not restructured, the costs will explode and we will all pay for it.

That is why this government is conducting a review of the target and why we committed to this review before the election. Fixing the RET is the next step towards ending the age of entitlement—in this case, wind-industry entitlement.

Clare O'Neil (Hotham, Australian Labor Party) Share this | Link to this | Hansard source

It is a great privilege to speak in support of the motion put forward by the member for Charlton. In the motion, he indicated—in quite some detail—the outstanding performance of the Mandatory Renewable Energy Target and it is in that vein that I stand to support his words.

His motion speaks to investment. We have seen total investment to date of $18 billion under the Mandatory Renewable Energy Target. The Clean Energy Council has estimated the potential for another 18.7 billion jobs, 24,300 people directly employed in the renewable energy industry—and that does not even get us started on the assistance this will give us in managing climate change.

It is very hard for me to understand how a government could set about dismantling a policy that is such a global success story, but having heard some of the contributions on the other side of the House I am starting to understand a little bit more about where this push is coming from. I am genuinely shocked to hear some of these contributions, because the people who have made contributions to this debate from the other side are people who are about facts and science. Yet what we have heard today is climate change described as a religion. I am genuinely surprise that in 2014, in this parliament, in Australia, we are having this debate right now.

It is the sort of thing that could only be contemplated by a Prime Minister who, while he no longer describes himself as a climate-change denier, could, at best, be described as climate change ambivalent. His attempts to water-down global efforts to tackle climate change are embarrassing to me and embarrassing to many other Australians. We saw so much of this on his recent trip overseas, where the Prime Minister tried to put together what he called a conservative coalition of nations who are refusing to tackle climate change head-on. Perhaps unsurprisingly, there were very few interested parties to join in this crusade. Even the Conservative UK energy and climate minister would not get on board with this. The New Zealand PM, John Key, rejected the conservative coalition and, in fact, Canada's Stephen Harper is the Prime Minister's only friend in trying to undermine international efforts to address climate change.

We have also seen it very clearly in the rhetoric that is being used around this review of the Mandatory Renewable Energy Target. The government has named self-proclaimed climate sceptic Dick Warburton to head the review. There have been many media reports of other people engaged in this review process who have long histories of work in traditional energies, such as oil and gas, which have a significant stake in the Mandatory Renewable Energy Target.

What I find so frustrating and outrageous about the discussion we are having right now is that building a strong renewable energy market in our country is so clearly in Australia's economic interests. The member for Hume has left the chamber, but both of us have a history in management consulting and we know that Australia needs to work to build industries where it has a comparative advantage. I cannot think of another industry that faces this nation where we have such a clear advantage in trying to deal with these issues.

We should be the powerhouse of renewable energy all over the world. We should be exporting the technology we invent in this country to countries all over the world because we have the science capability, we have the culture of invention and, practically, we probably have more wind, more sun and more waves around our country than just about any other country in the world. We also know that this should be where we focus our energies, because Australia has more to lose from climate than just about any other country in the world. Australia is already seeing weather patterns changing; Australia is already seeing agricultural products not delivering the same outputs as normal; in Australia the vast majority of our population lives on the outskirts and rising seas could see some of our cities facing issues of flooding; and Australia will have to step in to help nations around us that will literally be submerged, not in centuries to come but in this century.

Instead of being a global leader on this clear area of comparative advantage, we are becoming a laggard. Recently we saw what I believe is the 140th country around the world put in place a renewable energy target, and yet at the same time we are having a debate about how to get rid of a policy that has delivered already so much for this country. China built more renewable energy capability last year than non-renewal. Almost three-quarters of new energy that was created in the EU last year came from renewable sources. US President Barack Obama has recently announced further investment in his country's renewable energy target. We must have a firm commitment from this government that the Mandatory Renewable Energy Target be retained at the legislated 41,000 gigawatt hours by 2020.

Ewen Jones (Herbert, Liberal Party) Share this | Link to this | Hansard source

Paul Keating famously said, 'In the race of life, always back self-interest.' Never has there been a truer word spoken when it comes to the Mandatory Renewable Energy Target. No matter where you stand on this debate, it is where your interests lie. As someone who has spent a fair bit of time with Greg Hunt, the Minister for the Environment, I can say that you will not find a more passionate defender of the Renewable Energy Target. In fact, the Howard government brought in the Renewable Energy Target and embedded into the legislation the need to review it regularly, and that is what is happening at the moment.

This debate is about self-interest. You have people opposite who lost the election clearly on the carbon tax, the job-destroying facts of it and that sort of thing. There is the transitional economy that Australia has at the moment where we are losing our manufacturing base, but why are we losing our manufacturing base? If I were an inner-city left-leaning Labor member, I would be very keen to make sure that we push this thing here, because I will be speaking directly to my constituents. If people in my electorate want to maintain manufacturing jobs in hot competition with China, which can land product in the yard next door to them cheaper than they can make it and lift it across the fence, that is the issue.

In the time I have left I would like to tell you a story about why I support the RET and why it is important in my electorate. I think we could have both. We could have coal fired baseload power with zero emissions. The algal project at James Cook University is the perfect example. To develop industry in northern Australia, we must have secure, affordable baseload power. The previous government spent $2½ million getting a case study on this and the result was that all other forms of energy were simply not sustainable, were not economically viable. The only thing that could be done would be a coal fired baseload power station. If you go to the MBD project at James Cook University, you will see that if we build it into the design of a power station we can produce coal fired power with zero emissions.

That is important for Australia, but it is also important in our region. Whilst we have a commitment to the environment and we are a regional leader on this, places like Indonesia, Thailand, Malaysia and Vietnam all have thermal coal. They all have access to this sort of thing, but they may not have the same great drive that Australia has to provide clean energy. So, if we can provide a baseload power station in northern Australia and provide it with zero emissions, we can then export that intellectual property to our nearest neighbours, to the Asia Pacific, and get them on board as well.

This is what we can do. This is what the renewable energy target was set up to do, and this is what we are trying to do in north Queensland. The fact is that when I was a candidate, when they had the launch of big solar—which the previous government walked away from—there was the CopperString project which was going to bring renewable energy all they way through to Mount Isa, and bring Mount Isa onto the grid. The previous government walked away from that—did nothing about it and let it wither on the vine.

At the launch of the project there was a question and answer session and the Labor candidate did not bother hanging around for it, leaving me to answer the questions. The basic question that was put to me was: why don't we support renewable energy or big solar? I said, 'It is not that I do not support it, but who is going to pay for it?' If you give someone a choice to pay an electricity bill of $500 or $510 and you both do exactly the same thing 99.9 per cent of people are going to take the $500 price. That is the fact of life. It comes down to an economic debate.

We live in the north, where a company like Sun Metals Corporation is paying above and beyond, and is only able to work at about 30 per cent capacity because of the cost of power and the price they pay for load shedding and all that sort of thing. That is a major industry. If you are not able to attract more industry to north Queensland then you have a problem. If you are not able to grow your economy that way you have a problem. They are not going to be able to build an energy-intensive refinery and hook it up to the nearest wind turbine; it is simply not going to happen.

I see that there is room for both here. I am a supporter of the RET and I am a supporter of direct action. I thank the House.

Debate adjourned.