Lyn Allison (Victoria, Australian Democrats) Share this | Hansard source

The Democrats support the Renewable Energy (Electricity) Amendment Bill 2006 but we are disappointed that it ignores so much of what has been said to the committee. It ignores recommendations 8 and 9 of the Tambling report—the government’s own report—which were to increase and extend MRET. It ignores all of the submissions to this bill, which pretty much said the same. They said that MRET—the mandated renewable energy target—should be increased and should be extended. The bill also ignores the inquiry into the government’s energy white paper, Lurching forward, looking back, which said much the same, amongst other things.

The fact is that the target for mandated renewable energy has pretty much already been met. There are a number of reasons for that. The first reason is that the conversion of the additional two per cent of renewable energy to 9,500 gigawatt hours by 2010 was based on a gross underestimation of energy use by that time, which means that we have less renewable energy as a percentage of the total being generated in this country now than when MRET was first put forward. That is a miserable state of affairs and also means that, for yet another renewable energy—we have just demolished the biofuels industry—this legislation does not take the opportunity to foster a renewable energy industry for electricity generation. It is a great disappointment.

The Democrats put in a quite extensive dissenting report to this legislation, which I will not go all the way through, you will be pleased to know, but there are some points that I want to make. It has become clear to us that the government prefers coal to renewable energy; it has made that perfectly obvious in its support of so-called clean coal technology. But, as we all know, that is a highly risky technology and it is unproven in the context of stationary energy generation. It is still very expensive, which is why a lot of money is presently being spent trying to make it less expensive—but it is not expected to be available until the middle of the next decade. By all accounts it is very unlikely that the costs can be brought down sufficiently to make the process viable. It is worth noting here that Australia has the third-lowest electricity prices for industry and the second-lowest for households in the OECD. Again, there are parallels with transport fuel. We have some of the lowest taxes in the world and lowest prices in the world, yet we wonder why there is so little interest in efficiency.

MRET has a number of flaws. I have already mentioned the first, which is that the target is not high enough. It certainly is nothing like two per cent—I am not sure what the figures are right now, but it would be around 0.5 per cent rather than two per cent of the total. The overall share of renewables in Australia’s energy sector certainly has not increased. In that sense it is a miserable failure. But it was an exciting market based mechanism and we certainly were very pleased to see the government move down this path. It is hard to imagine them doing the same thing now, but at the time it was innovative and was something that gave the renewable energy industry a kick-on. Of course, so many of the RECs were taken up by the old hydro projects because of the very generous baseline scheme. No doubt Tasmania benefited enormously and still are benefiting, and that is a good thing. They use their money wisely. I am told they used it to reinvest in wind power. That is really good. However, Australians paid extra—Tasmanians paid extra, too—for renewable energy that they should have expected in any case.

A nationwide carbon trading scheme would have been more desirable. That would far better account for greenhouse gas emissions and provide a level playing field on which truly clean technologies could compete. We have been calling for emissions trading for some years. The Australian Greenhouse Office had developed a scheme for emissions trading, but that has been gathering dust on the shelf of the AGO pretty much since it was developed. This government has done a major backflip on supporting Australia’s efforts to reduce emissions and increase its renewable energy.

The consequences of this failure to increase and extend MRET include a reduction of investment in renewable energy in Australia, a loss of potential export industry, a loss of jobs, and a failure to create more jobs, particularly in regional areas. I know that Tasmania has benefited from having the industry set up down there to make nacelles. We have a plant in Portland that is producing the blades for turbines, which is a massive undertaking and a really good start towards having that industry in Australia. But by all accounts it is not going to go too much further.

That failure means that we are as far away from achieving a reduction in our true energy consumption related greenhouse emissions as we ever were. We have massively increased our emissions from the electricity generation sector. Our saviour is the very generous undertaking we managed to get out of the Kyoto protocol to save our skins through not clearing land. We cannot pretend that there is anything good about our ability to almost meet our 1990 emission levels; it is all a bit of a sham. And, certainly, MRET has not played too much of a part in that.

On the question of the investment in the industry stalling, the Australian Business Council for Sustainable Energy said in their submission that investment had stalled because the target had essentially been met. They said:

We would also highlight that new investment in renewable energy projects has now effectively stalled as sufficient projects now exist to fully deliver the 9500 GWh target.

The renewable energy generators said pretty much the same. Most of the projects needed to meet the cumulative MRET have already been built or committed or are in the advanced planning stages. Auswind said that there were projects in the pipeline but they had not been, and would not be, taken to the next stage. That is because of the next problem with MRET, which is the investment cliff, as it is called. Auswind said:

This investment cliff is clearly evident in the number of projects and associated investments that have now banked up in Australia. These projects, nineteen wind farms with a total capacity of 1369 MW, have received planning approval and yet have not been taken to the next stage.

So it is not just to do with orange-bellied parrots and the possibility of one being at the site of the Bald Hills wind farm once every thousand years, and even then not necessarily being clipped by a turbine. It is the fact that MRET is going nowhere. It is already up to its limit in terms of commitments. It does not help that Minister Campbell is so opposed to wind farms, as he has now demonstrated twice pretty effectively, but it is the government’s policy which militates against further development.

Loss of jobs is a big issue. The great pity is that these jobs could have been developed in regional areas. We hear a lot in this place about the need to support the regions and the country, but not too much has happened. According to one of our submissions:

The Renewable Energy Industry as a whole provides around 15,000 direct and indirect jobs across Australia ... The activity from upgrading existing infrastructure and developing new projects has also contributed to significant levels of investment in regional Australia which has also generated increased levels of employment ...

And so on. Industry growth also led to the establishment of manufacturing facilities to support wind farm installations. The nacelle factory in Tasmania, the blade factory in Victoria and tower manufacturing in Tasmania are all part of the benefits of MRET. But whether they continue, as I said, is another problem.

The Wind Energy Association said there are also lots of examples of investors going offshore as a result of this government’s inaction. They said:

The investment cliff is also clearly demonstrated by the amount of investment that is proceeding offshore to countries and regions providing market incentives for the renewable energy sector ... Novera Energy withdrew from the Australian Stock Exchange on April 4th 2006, and relocated to the UK.

The UK is a country that at least fosters its renewable energy, particularly wind. The company expressed its disappointment at what it considered to be little incentive for market innovation in Australia’s renewable energy industry and said that the market was a very difficult one for small companies, given competition by larger companies and state owned enterprises for limited renewable energy opportunities. Another example is Investec. The Wind Energy Association said:

The Investec Bank (Australia) Ltd, in its submission to the Victorian Government’s Paper “Driving investment in renewable energy in Victoria – options for a Victorian market-based measure”, states that: “The practical reality is that the Commonwealth MRET scheme delivered significant impetus to the nascent renewable energy in Australia and resulted in the development and construction of many landmark projects since its introduction in 2000. However, with the non-renewal of the MRET scheme and its targets, this momentum has stalled, with many renewable energy projects across Australia unable to be brought to construction and many renewable energy stakeholders leaving Australia for more conducive jurisdictions”.

And there are plenty of them out there. Australia is indeed going backwards. We are lurching forward, but mostly going backwards.

The migration of business offshore is resulting in billions of dollars lost to investment in Australia, including the monetary value of the lost emissions reductions. It is just so disappointing that this government is so uninterested in the sector. Auswind’s sentiments were shared by the Roaring 40s, who said:

Without this change—

that is, increasing and expanding MRET—

the Australian Wind Industry is likely to stall and emerging capabilities in the industry will, in our view, locate off-shore.

That is the sorry story. It is such a shame that this bill does not do anything about it. The minister will talk about how wonderful the sector has been, but we have now reached a stage where there is not going to be too much more by way of wind energy, particularly, and solar. That is because so many other sources have been included that should not have been and because there have been so many miscalculations about what two per cent really means. As I said, it is a lost opportunity.

And now the government is talking about nuclear power. That is where we have lurched to. We are having, as we all know, an inquiry into comparisons between nuclear and coal to see whether it is viable. We know that wind and solar are viable and just need to be given the right incentives and the right market mechanisms to get them going. It is all there. The technology is known. If you are talking about wind, it is not that much more expensive than coal-fired power; it is getting closer all the time. It would beat coal hands down if there were some mechanism in place that required coal to be responsible for the cost of its emissions. But we are never going to go down that path, apparently. A carbon tax would do it. An emissions-trading system would do it. But the government is not interested in those things either. Again, Australia is a backwater on energy. Whether it is transport fuel or electricity generation we do not have a clue, and we do not seem to care about it.