Simon Birmingham (SA, Liberal Party, Assistant Minister for Education and Training) Share this | Hansard source

I thank all senators who have contributed to this debate on the Renewable Energy (Electricity) Amendment Bill 2015. There has been a range of contributions, and I acknowledge that nearly every contributor has expressed their principled support in some way, shape or form for the ongoing development of the renewable energy industries in Australia and the importance of renewable energy as part of our energy make-up and mix. Different senators have brought different perspectives as to how that is best achieved, but I am pleased that it has been broadly a range of constructive contributions, notwithstanding some of the finer points of difference that different senators may have.

In relation to this legislation, it is important to understand that we are standing by the attainment and policy of a 20 per cent target for renewable energy by 2020. But what is happening under the current legislative framework is that we are tracking towards 26 per cent or more, which would result in Australians being required to pay for excessive generating capacity that is not needed in terms of our energy sector. This bill seeks to achieve balanced reform. It will provide certainty to industry, encourage further investment in renewable energy and better reflect market conditions. It will also help Australia to reach its emissions targets and protect jobs and consumer interests. On best available expectations, it will lead to around 23 per cent of Australia's electricity being sourced from renewable energy by 2020, still significantly more than the originally intended 20 per cent from when the current legislative settings were put in place.

This will be done in significant part by reducing the annual large-scale renewable energy target, such that it will reach 33,000 gigawatt hours in 2020, as against the current setting of 41,000 gigawatt hours. It will be maintained at 33,000 gigawatt hours from 2021 to 2030. This will help to encourage further investment in renewable energy by providing market stability and confidence, achieving a better balance between supply and demand. It means that the many renewable energy projects that are ready to roll will be able to proceed with certainty around the target, which I expect and am pleased to note appears to enjoy bipartisan support. It will better reflect market conditions.

The reality is that Australia has an oversupply of generation. Electricity demand is falling. The modelling and expectations on which the target had been set have proven to be fundamentally flawed. So the lower target means that additional capacity will be added in a far more responsible way that better reflects demand, as was the original intent of the legislation to achieve around 20 per cent, to meet the target of 20 per cent, and we believe it will still comfortably exceed that target.

It will reduce emissions in the electricity sector in a more cost effective way. The sector contributes about one-third of Australia's emissions. The lower target will still contribute to emissions abatement in the sector, but without supporting or requiring investment in renewable capacity and in electricity infrastructure that Australia simply does not need or have demand for at this time. That means we keep electricity prices down for consumers. The lower target means that Australians will not be paying for additional, unnecessary capacity.

Thereby, of course, it complements this government's actions in abolishing the carbon tax and reducing the electricity pressures felt by Australian consumers and Australian businesses, which have impacted cost-of-living pressures and the nation's overall competitiveness. But it will still support jobs in the renewable energy sector. With an achievable target that will attract more certain investment for renewable energy projects, there can be confidence around sustainable growth in the industry and therefore more jobs associated with the industry. It will continue the transition for Australia towards greater reliance upon renewable energy, with around 23½ per cent estimated to be attained by 2020—a far, far higher share for renewables than the originally intended 20 per cent target.

The bill will also help to ensure that Australian industry and business is protected where they are exposed to competition from offshore and particularly exposed to high energy prices. It will increase assistance for all emissions-intensive trade exposed activities to a 100 per cent exemption. This means that the electricity used by businesses carrying out these activities will be fully exempt from any RET liability. This will reduce the pressure faced by businesses carrying out emissions-intensive trade exposed activities, helping to ensure that they remain competitive with their global competitors and therefore protecting their businesses and jobs in those employers' industries and sectors. The impact of this change on other electricity users will be more than offset, though, by the reduction in the direct costs of the RET resulting from the lower Large-scale Renewable Energy Target.

Consistent with our election commitment, the legislation will also reinstate native forest wood waste as an eligible source of renewable energy under the RET. We will do this by basing eligibility on the same conditions that were successfully utilised and previously in place from 2001 through 2011. The use of native forest wood for the primary purpose of generating renewable electricity has never been and never will be eligible to create certificates under the scheme. Let me be very clear again: the use of native forest wood for the purpose of generating renewable electricity has never been and will never be eligible to create certificates under the scheme. Eligibility was and will continue to be the subject of several conditions, including that it must be harvested primarily for a purpose other than energy production. There is absolutely no evidence that this will lead to unsustainable logging or will have a negative impact on Australia's biodiversity. Indeed, of course, there is ample evidence to the contrary based on the operation of the scheme under these same conditions for a decade from 2001 to 2011. The use of native forest wood waste for electricity generation is more beneficial to the environment than just burning the waste alone or simply allowing it to decompose. Its inclusion as an eligible energy source will be another contribution towards meeting the target and will ensure that it is put to good use.

The bill will also remove the requirement for two-yearly reviews of the RET, providing the policy certainty that is crucial to attracting investment, protecting jobs and encouraging economic growth. One of our government's priorities is to protect consumers and households but also businesses from any extra costs related to the RET. It is also important for us to make sure that the new target of 33,000 gigawatt hours is achievable. For these reasons the Clean Energy Regulator will prepare an annual statement on the progress of the RET scheme towards meeting the new targets and the impact that it is having on household electricity bills.

A number of specific issues relating to the legislation were raised through the contributions of senators, particularly around matters of wood waste and the nature of the target. I am sure these will be canvassed at some length in the committee stage, so I do not intend to go through them in any further detail than I have already done at this stage. It is the government's conviction that this legislation provides the best possible way to support renewable energy in Australia without unnecessarily increasingly electricity bills for households or businesses and without increasing cost-of-living pressures for Australians and without making Australian industry and business less competitive than the rest of the world. It ensures that we will not be subsidising, and, more importantly, that consumers and businesses will not be subsidising, unnecessary electricity capacity and simply forcing that extra capacity into an already oversupplied electricity market.

It implements necessary reform, it makes sure that the RET scheme is once more effective, market-friendly, economically responsible and beneficial not only for the environment but for consumers as well. Perhaps most importantly, it ensures that we retain the commitment to a 20 per cent renewable energy target, that that commitment will be delivered and exceeded and that the original intent of the legislation is met. These amendments simply ensure that it is met in a more responsible way that takes account of and better reflects the changing circumstances that we have seen over recent years and the flaws in the modelling that occurred at the time of the initial legislation passing.

I commend the legislation to the Senate and look forward to the continued constructive contribution of senators during the committee stage.