Jenny McAllister (NSW, Australian Labor Party) Share this | Hansard source

The Attorney-General has very coyly referred to the coalition as having 'differing opinions' on renewables. It almost makes it sound like his colleagues aren't tearing each other to bits the moment the subject comes up. 'Differing opinions' makes it sound a little bit more like the Oxford debating society, but, based on the weekend reporting, one suspects that the situation is a bit more like Game of Thrones. If we're very honest about it, differing opinions don't generally induce the total policy paralysis that we are seeing from the government on energy. So let's call it what it actually is. We have full-throated disagreement between half-hearted environmentalists over in the moderates and the vociferous climate denialists of the hard Right.

It is becoming very clear that the job of the Prime Minister and the energy minister, Mr Frydenberg, of getting a clean energy target through the coalition party room is becoming more and more difficult every day. An anonymous source told the newspaper after the first coalition party room meeting on this that Finkel was dead. Unfortunately, it looks like he might be right. Unfortunately, for all of the boosters over there who would like to return to a 1970s version of Australian industry policy, the problem is that none of the participants in Australian industry are investing in coal. And there is a really good reason for that. It is because the numbers simply don't add up. The world has moved on and technology has moved on.

Oliver Yates, the CEO of the Clean Energy Finance Corporation, told a Senate committee that I sat on that he wouldn't invest in ultra-supercritical coal plants because it wouldn't be a good use of taxpayer funds. AIG wrote in February:

… new-for-old replacement of our coal fleet does not look like a good solution for price, reliability or the environment…

And, critically, they said this:

Electricity sector investors are unlikely to finance a new coal-fired power station in Australia again.

If coal was truly clean or cost effective, industry would back it. But the problem is: it isn't. Bloomberg, recognised as a global authority on these questions, provide a range of costs, but, for the levelised cost of electricity for wind in terms of dollars per megawatt hour, they say wind comes in at $118 per megawatt hour; solar comes in at $140; gas is still only $90 a megawatt hour. But ultra-supercritical coal, the preferred technology of many of the people on the other side, comes in at $203 per megawatt hour. And if you add carbon capture and storage to that, which you must do if you have any hope of reaching Australia's threadbare emissions targets, it comes out at $352 a megawatt hour. Once you do that, once you add in carbon capture and storage, coal is not the cheapest technology on the market. It is absolutely the most expensive. It is just under three times as much per megawatt hour as the most expensive estimates that are available for wind power.

The thing is: because of the enormous global expenditure on R&D in renewables and in storage technology, renewables are going to become cheaper and more effective in the coming years. Over the past seven years the cost of wind has dropped over 50 per cent and solar PV costs have dropped by 80 per cent. The technology is in transition. We have an enormous opportunity to adjust our arrangements in the national electricity market to respond to that, to use these technologies and to build a resilient system that can cope with the future. But all we get, instead, is a kind of hankering for an old-style of energy generation that doesn't make sense to business and doesn't make sense for the country.

If we have a problem, it's not actually that businesses are unwilling to finance coal. The problem is, instead, this: businesses lack the certainty to invest in any of the other options that would make sense. The business community has been crying out for certainty for years, and that has intensified since late last year. It's a cry that's reinforced in the report from Dr Finkel. It's also reinforced in the two reports from AEMO that have come through in the last seven or eight days. In their report on electricity forecasting insights, they note that energy system is going through a significant transition. I'm going to quote them. They say:

There is an important opportunity—

And there's that word again, 'opportunity', because it is our big opportunity—

for new market and regulatory arrangements, improved system planning, and new market, network, and non-network solutions, to support an orderly transition…

I am a former public servant and I'm fluent in public sector language. I can translate this for the benefit of senators and anyone else who might be listening. When you put it simply, AEMO are simply saying we need to adjust the market rules to make the market work so that we can benefit from new technologies. But what's more important is what they don't say. They don't say in their report that the solution is for government to get in and get its hands dirty in managing just one asset. They don't say the government should buy the Liddell power station. They do note in their advice to the Commonwealth government that, prior to the closure of Liddell, additional resources will be required, but they're very clear that 'most stakeholders see changes to market rules as the most economically efficient way to remedy this deficiency'.

Wouldn't you think that the idea that the market might be the way to respond to a shortfall in supply might get a little bit of traction from the Liberal Party? But there's no interest in that conversation. There's no interest at all because, presumably, the last sensible people in the Liberal Party are so tied up dealing with Mr Christensen, Senator Canavan and Mr Joyce and their obsession with returning to coal and managing that problem that they can't see what's right in front of them—that there are market solutions for this and there is an industry ready to invest, but there needs to be serious reform of the National Electricity Market to do so.

I know that coalition senators frequently come into this place and point to China. They like to point to China's reliance on fossil fuels and say: 'Look how big China is. Look how dependent it is on thermal generation. See how pointless it would be for Australia to participate in any kind of emissions reduction activity.' I want to point to recent reports coming out of China, because, unlike us, the Chinese are embracing the technologies that are emerging. China is ramping up its investment in renewable energy, planning for the future and planning to meet the growing demands on its electricity system through investment in new technologies.

In the first half of 2017, renewable sources—wind, solar, water—made up almost 70 per cent of new capacity in China's electricity system. I don't pretend that they're not coming off a low base. They have an electricity system highly reliant on thermal generation. But the new investment is overwhelmingly in renewables. That is because the Chinese government can see the writing on the wall and they know that they need to make the transition. They are going to do that as part of a commitment to a global solution for climate change. Colleagues, we have an enormous opportunity to get out in front of the herd, to make change before change is foisted upon us and to build an electricity system at this point in time when new investment is required to build the technologies of the future, not stick our heads in the sand and stare longingly at the past.