Penny Wong (SA, Australian Labor Party, Minister for Climate Change and Water) Share this | Hansard source

The senator raised a range of issues to which, if I could suggest—I am not going to debate the issue—I have probably responded in terms of what the government asserts is correct in relation to those issues. That includes her suggestion as to what proportion of the target will be taken up by solar hot water and heat pumps. I think I have responded to that, which is to say that the MMA modelling suggests five per cent. We have acknowledged there is an issue with heat pumps. I have also flagged the COAG review process, which I have discussed separately with Senator Milne.

In relation to the issue of native forests, I know the position that the senator puts on this. We did go to the election with a commitment to retain existing eligibility. I would make the point that this native forest biomass has been an eligible source under the current MRET since 2001. There are additional eligibility criteria in relation to the use of native forest biomass, including restrictions on the areas where the native forest wood waste can come from in order for it to be used in generation that is eligible to create RECs.

The expanded Renewable Energy Target Scheme agreed to by COAG on 30 April 2009 maintains this eligibility criteria, which ensures that only genuine waste from sustainable forestry operations can be eligible to create renewable energy certificates. The existing regulations underpinning this prescribe that, to be eligible under the Mandatory Renewable Energy Target, native forest wood waste must either come from an area where an RFA, a regional forest agreement, is in place or, if it is from outside an RFA area, it must be produced from harvesting carried out in accordance with ecologically sustainable forest management principles that the minister is satisfied are consistent with those required by an RFA, which I understand is referred to as an RFA-equivalent area.

The regulations also prescribe a primary purpose test—that is, the wood waste must be primarily harvested for a purpose other than biomass for energy production. The wood waste must also be either a by-product or a waste product of a harvesting operation for which a high-value process is the primary purpose of the harvesting—known as a ‘high-value test’—or a by-product of a harvesting operation that is carried out in accordance with ecologically sustainable forest management principles. The wood waste is taken to be from a high-value process only if the total financial value of the products of the high-value process is higher than the financial value of other products in the harvesting operation. The regulations define a high-value process as ‘the production of sawlogs, veneer, poles, piles, girders, wood for carpentry or craft uses or oil products.’ Woodchips are not specified as a high-value process, so waste from operations where woodchips are the primary purpose is not eligible. Sawmill residue produced by the processing of native forest timber is eligible without reference to the high-value test.