Kate Chaney (Curtin, Independent) Share this | Link to this | Hansard source

I move:

That this House:

(1) notes that under its Inflation Reduction Act, the United States of America (USA) has committed more than one trillion (AUD) in incentives to accelerate the USA's transition to net zero by 2050;

(2) acknowledges that, with our abundant natural resources, Australia is well-placed to become a renewable energy superpower;

(3) further notes that business representatives have raised concerns that Australia is lagging in the race to decarbonise, in part due to:

(a) unwieldly state and federal approvals processes;

(b) low investor confidence due to decades of climate inaction;

(c) the comparatively high cost of doing business; and

(d) competition from other countries with stronger support structures for new industries; and

(4) calls on the Government to commit to an urgent, comprehensive and well-funded plan to increase our international competitiveness in decarbonised industries.

I'm calling on the government to act now to increase Australia's international competitiveness for new energy industries. We cannot overestimate the scale and impact of the United States Inflation Reduction Act, which broke new ground with its A$1 trillion investment in green and renewable energy. This is the most significant climate legislation in US history. Approximately two-thirds of this IRA budget is allocated to uncapped tax incentives for different stages of production within clean energy industries. These tax incentives deliver a deafeningly loud signal to investors doing new energy business in the US.

But what about us? Investors are looking for reasons to choose Australia over other countries. Companies are actively looking to develop and grow their renewable operations in Australia but they need this government to give them tangible confirmation of Australia's energy transition vision and to give them the confidence and certainty that Australia will welcome and incentivise the new energy opportunities currently knocking on our door.

There is much discussion about Australia's natural advantages—our abundance of sun, wind and critical minerals. Australia is one of the few countries in the world with all the input minerals and materials required for lithium batteries. But we face a very real risk of remaining a country that digs and ships rather than being a serious and competitive producer of new energy, unless we make sure downstream processing projects are established onshore. We need to accelerate Australia's response to the IRA by incentivising value-adding projects onshore or we will miss out.

Independent research from Mandala Partners found that the key driver for financial close for downstream projects is incentives that help mitigate total operating costs throughout production cycles—not loans and not upfront grants but long-term, embedded incentives that encourage advantages in production.

Production tax credits are a proven mechanism that are now being used prolifically under the IRA. A production tax credit means you pay less tax when you actually produce something. Instead of money paid upfront for something that may or may not turn into something tangible, production tax credits are payable only when you deliver, so taxpayers are paying for results.

The introduction of a production tax credit in Australia would provide a clear signal that Australia is ready and willing to invest in value-adding downstream projects. It would allow global companies to be rewarded for value adding in Australia without losing out on manufacturing credits elsewhere.

The way production tax credits usually work is to attach the credit to phases of manufacturing and production for a set period. In the US, the manufacturing of batteries, solar panels and wind turbines, as well as the processing of critical minerals, attracts production tax credits, as well as further bonus tax credits for components made in the US. The US package has also committed tax credits for any investments in zero-emissions electricity generation facilities or energy storage technology.

The Smart Energy Council has reported that, due to the attractive US incentives, many of its member companies are moving their facilities to the US or proactively considering the IRA incentives. This isn't a potential risk; this is already happening.

In Australia there have been calls to apply production tax credits to the processing and value-add phases of critical minerals, as well as more broadly to secure the development of the renewable energy production and manufacturing industry.

As we know, critical minerals such as lithium, nickel, cobalt, silicon and rare earth elements are essential components in many rapidly growing clean energy technologies. They're critical because they can't be easily or cost-effectively substituted. The supply of these minerals is concentrated in a small number of places. Western Australia accounts for around half of global lithium production and is a major exporter of nickel, cobalt, manganese and rare earth elements. This government has already put nickel on the official Critical Minerals List and in February announced a 50 per cent royalty discount for 18 months to address serious competition in that market, which was a positive step.

It's essential that we accelerate opportunities in WA's critical minerals sector and capitalise now on the position that critical and battery minerals will play in decarbonising the global economy. The Chamber of Minerals and Energy of Western Australia believes that the window of opportunity is narrow to unlock Australia's potential as a major participant— (Time expired)

Ross Vasta (Bonner, Liberal Party) Share this | Link to this | Hansard source

Is there a seconder of the motion?

Zali Steggall (Warringah, Independent) Share this | Link to this | Hansard source

I second the motion and reserve my right to speak.

Jerome Laxale (Bennelong, Australian Labor Party) Share this | Link to this | Hansard source

I'd like to thank the member for Curtin for raising this matter today, and I'd like to take this opportunity to acknowledge all her hard work in this place on matters relating to Australia's transition to renewable energy. She is in this place because she wants to see Australia move away from fossil fuels and transition to renewable energy generation. On that issue, the people of Curtin, the people of Bennelong and the majority of Australians agree. It's why the member and I were both elected.

Australia elected a government to invest in clean energy, to implement land and energy policy anchored in renewable energy and to take meaningful climate action to protect our environment. We both won blue-ribbon Liberal seats because we believe in strong climate action and that Australia is uniquely positioned on the global stage to take advantage of our vast and diverse natural resources and become a worldwide renewable energy superpower.

Our country is home to some of the world's most potent solar and wind energy potential, thanks to having more sunlight than almost anywhere else on earth and above-average wind conditions. It's widely known that Australian solar is the most effective and efficient solar in the world. Our natural advantage presents a significant opportunity for Australia to transform into a renewable energy superpower which will drive substantial economic growth, create thousands of jobs and solidify our position as a leader in global climate action.

However, transitioning to a renewable energy future is not without its legislative and political challenges. Complex state approval processes remain and need to be addressed. I too have received feedback on slow state planning assessment processes and have raised the matter with colleagues accordingly. In her motion, the member for Curtin is right: decades of climate inaction have led to low investor confidence. But, since the election of the Albanese government, we have seen that start to turn around.

Since May 2022, the Albanese government has approved enough renewable energy projects to power almost two million homes. That's enough to power all households in Tasmania, South Australia, the Northern Territory and the ACT combined. That turnaround is important, but we also acknowledge that there's more to do. To further shore up investment to reach the 82 per cent electricity generation that our targets call for, the Labor government moved to provide certainty for investors in renewable electricity generation. Our revamped Capacity Investment Scheme, announced last year, will underwrite 32 gigawatts of new electricity, consisting of nine gigawatts of storage and 23 gigawatts of variable renewable energy generation.

We saw that, despite this positive progress, intervention was still needed to provide investment certainty. So we did it, and it was well received. The Australian Aluminium Council, the Australian Industry Group, Energy Consumers Australia, the Clean Energy Council, the Smart Energy Council, the Climate Council, Rewiring Australia and a host of others all acknowledged the government's Capacity Investment Scheme and how essential it was to continue a steady rollout of renewable energy.

It's not just solar, wind and battery storage; our government has invested in other forms too. Our $2 billion Hydrogen Headstart initiative, designed to kickstart local production and industry, underlines our ambition to position Australia as a frontrunner in renewable green hydrogen production. Recognising the immense potential of hydrogen as a clean fuel, this initiative is designed to catalyse technological advancements and anchor a new industrial sector capable of propelling economic growth across the regions.

All our policies are about turning our green and renewable energy potential into reality, and I challenge the member for Curtin and those who may read this speech at a later date to compare our approach in less than two years to that of the former Liberal government in nearly a decade. In their years, we had a decade of climate delay and denial, and it continues today. In the Liberals and Nationals, we have parties deeply opposed to the large-scale renewable energy rollout. In the Liberals and Nationals, we continue to have climate sceptics, conspiracy theorists and MPs spreading misinformation about offshore wind, solar farms in regions and battery storage in our suburbs. And in the Liberals and Nationals we have parties that have, in their support of nuclear energy, put forward an energy policy whose main effects will be to extend Australia's reliance on coal for energy generation.

There's a reason why the member for Curtin and I are in this chamber. We'll continue to work hard to get renewable energy as part of our energy mix.

Ross Vasta (Bonner, Liberal Party) Share this | Link to this | Hansard source

There being no further speakers, the debate is adjourned and the resumption of the debate will be made in the order of the day for a later hour.