Adam Bandt (Melbourne, Australian Greens) Share this | Link to this | Hansard source

I move:

That this bill be now read a second time.

Australia is facing an energy crisis caused by the failure to face the reality of both climate change and the technological transformation that has changed the economics of the energy sector. Worryingly, Labor and Liberal look set to create another three- to five-year valley of death for renewables by reaching across the aisle to agree on a 'clean energy target' that counts new coal-fired power stations as 'clean' and leaves proposed new renewable builds in limbo because the existing renewable energy target will soon run out. As a result, the energy crisis we face will grow worse, as will the climate emergency we are experiencing.

It is worth recalling how we got to this point. Former Prime Minister Abbott set out to politically destroy the clean energy program of the Labor-Green power-sharing parliament, which included a price on pollution. Once in power, he acted on it and repealed as much legislation as he and his government could get away with. This set in train the beginning of an investment strike in the wholesale energy market at the same time as a lot of the existing coal-fired generation was starting to reach its retirement age. The uncertainty created by the Abbott government, with its virulent anti-carbon tax campaign and its climate denialism, meant that, even though renewable energy generation was falling in cost, investors held back decisions on the next wave of investment in new generation.

Then Labor joined with the coalition government in cutting the renewable energy target from 45,000 megawatt hours to 33,000 megawatt hours, intensifying the investment strike in the energy sector. As pressure mounted, fossil-fuel generators were able to game the market using peaks in demand to drive up prices and rake in the money. Instead of creating the certainty that was needed for a new wave of renewable investment that would drive down power prices, Prime Minister Malcolm Turnbull used an extreme weather event in South Australia to declare war on renewables. Despite the near-unanimous chorus from industry and experts calling for a new stable mechanism to drive investment in renewable generation, the Prime Minister has continued his war, refusing to stare down the coal industry stooges who spruik for government funded coal-fired power, and he's failing to act even on his own Chief Scientist's recommendation for a clean energy target. And now, disturbingly, the opposition have ditched their policy of an emissions trading scheme for the electricity sector and last week signalled that they would support a revised clean energy target that potentially includes coal-fired power generation.

Such a clean energy target would risk creating a valley of death for new renewable energy investment, which is only just recovering from the attacks on the renewable energy target. While the falling cost of renewables, which are now the cheapest new generation and soon will be cheaper than all existing fossil fuel generation, is accelerating investment, it's a precarious recovery. Indeed, the recent investment we have seen falls well short of what is needed. If Labor and the coalition agree on a clean energy target that includes coal but doesn't include any mechanism to start closing coal-fired generators, it may create a short-term valley of death for renewables. The Finkel review recommends not extending the RET, the Renewable Energy Target, which is the subject of the bill, past 2020 and 2030 but simply starting instead with a new clean energy target from 2020. Because of that, any Labor-Liberal deal may in fact put the brakes on some new renewables investment between now and 2020. I have spoken to renewables' investors concerned that if they build something before 2020, in reliance on support from the existing RET, support will run out in 2030 and this will put them at a disadvantage compared with investors who build after 2020 and who will have the reliance of a new clean energy target past 2030. In other words, building before 2020, over the next couple of years, potentially only gives you 10 years of support, but building after 2020 could potentially give you more. This in turn may encourage renewables investors to hold off for a few years, when we should be encouraging the exact opposite.

As much as the opposition might like to think they can simply turn up the dial on ambition if they win office, this goes against the Finkel report and the words of the Chief Scientist himself, who has repeatedly made it clear that the scheme should be given time to settle in and that there should be no short-term changes to the trajectory. Further, the whole Finkel report and the idea of a clean energy target is premised on COAG first agreeing to the emissions reduction trajectory, which then informs the emissions intensity level of the target. So, presumably then, any change to ambition would have to go back to COAG, allowing a recalcitrant state to hold out against any future progressive federal government.

As such, if a Labor-Liberal clean energy target deal is struck, there will be at least three years during which a paltry target will be in place, new coal will be incentivised and new renewables placed at a further disadvantage, and with a Prime Minister now actively canvassing how to use Commonwealth funds to extend the life of existing coal-fired power stations and others calling for a direct subsidy of new coal, and with coal potentially also being subsidised by a new clean energy target, it's not difficult to imagine a scenario where government support encourages the building of a new coal-fired power station during this three- to five-year valley of death. In turn, once built, the pressure will be immense on future governments to not adjust the clean energy target or withdraw support so as to devalue these plans.

In other words, a Labor-Liberal clean energy target deal we saw mooted in the papers last week, which includes coal, is a recipe for hobbling renewables and subsidising the new build of what would otherwise be stranded fossil fuel assets. It's a seriously bad move that has short-term failings, the potential to lock in long-term fossil fuel assets and the lack of any real mechanism to turn up the dial, should a future government have more ambition. Overarching all this, without any complementary mechanism to retire coal-fired power stations, there will be less incentive to build new renewables to take their place, especially if governments start flagging a willingness to pay to keep coal stations open longer, as the Prime Minister did last week.

The renewable energy target legislation works. People know how it works. Recharging the renewable energy target is the single most important action that this parliament could take to invigorate investment in energy and drive down electricity prices and drive down pollution. Despite the uncertainty of the last few years, the renewable energy target has proved its worth and has been the single most important driver of investment in new generation.

The Clean Energy Council estimates that over the last two years the RET has delivered over 40 projects, worth $8 billion under construction, throughout rural and regional Australia, which will deliver over 4,000 megawatts of new generation capacity and more than 4,000 jobs. But they warn that this unprecedented level of new investment is not nearly enough to replace the ageing coal generation that's continuing to close over coming decades. It will stall before 2020 unless future policy certainty is established.

That is why this bill, the Renewable Energy (Electricity) Amendment (Continuing the Energy Transition) Bill 2017, amends section 40 of the Renewable Energy (Electricity) Act to replace the static yearly target of 33,000 megawatt hours of renewable electricity and sets out new, yearly targets from 2020 to 2030, increasing by 2,165 megawatts a year. The final target in this bill for 2030 is 55,500 megawatt hours. The bill retains the existing structure of the Renewable Energy (Electricity) Act, which puts in place the renewable energy target scheme and increases the ambition.

This bill alone, without the other existing policies and targets at a state level and the other policies the Greens would seek to put in place, will ensure renewables grow to around 30 per cent of generation over the next decade, and it is part of our approach to get Australia running on 90 per cent renewables by 2030, which we know is technically feasible and we just need government policies to make it happen. If this bill is supported, investors will have another 12 years of certainty about the investment environment for renewables going forward.

So, really, we are at a crossroads. We have to decide which suite of policies is going to be put in place to drive the renewable energy transition and allow the orderly retirement of coal-fired power stations. We may be less than 12 months away from a change of government. In those circumstances, where it looks like this rotten government is going to be turfed out on its ear, really the question for the opposition is: why do a deal now with a government for a very bad piece of legislation that sets up a period of two to three years during which new coal-fired power stations will be encouraged? Given that we know that this government is bending over itself to bankroll that and find ways of funding it, why do that when we could hold out for, potentially, 12 months and put in place a much better suite of legislation? Why not put a revised emissions intensity scheme back on the table, as Labor had originally proposed—one that has some teeth? Why not complement it with a renewable energy target, as this bill proposes, so that we have a mechanism that pulls out coal from the system in an orderly way—an EIS—and a mechanism that brings in renewables, which is what this bill would do?

I commend this bill to the House.

Tony Smith (Speaker) Share this | Link to this | Hansard source

Is the motion seconded?

Andrew Wilkie (Denison, Independent) Share this | Link to this | Hansard source

I second the bill and reserve my right to speak.

Tony Smith (Speaker) Share this | Link to this | Hansard source

The question is that this bill be now read a second time. The time allotted for this debate has expired. The debate is adjourned and the resumption of the debate will be made an order of the day for the next sitting.