David Van (Victoria, Liberal Party) Share this | Hansard source

Without a doubt, the transition to net zero is inevitable; however, this legislation, the Climate Change Bill 2022 and related bill, is unnecessary and unachievable. The world is moving towards producing carbon neutral energy, and this is a good thing. The globe will at some point in time reach net zero, and I would say ideally sooner rather than later. However, given at the Paris accords rules, Australia already cannot walk back our NDC for 2030, even if anyone actually wanted to, and the government knows this. So the bill before us today is a redundant piece of legislation.

On top of that, with the solutions we have today, according to some of the best scientific minds, the target of 43 per cent today is not achievable. The mechanisms to achieve this will cost the taxpayers billions, and the government have not shown us how this will be achieved. Australians understand that the sooner you want something built the more it costs. Lowering emissions is not just a slogan but also a massive, integrated effort encompassing the entire economy that needs to be built. The Labor government would like to say that they are ambitions with their emissions reduction target of 43 per cent. This bill before us today reflects their decision to lock Australia into this commitment.

Personally, I am more ambitious than those opposite as to what I would like to see our emissions reduction target be. However, I am not blind to reality, unlike those opposite. I believe we need to be as pragmatic as we are ambitious. The Paris accord allows us to update our targets when we know we can meet them, and I believe that this is the approach Australia must take. Yes, I too believe that renewables are part of the future, but while planning for the future we must also concern ourselves with the present. It does no good to small-business owners, Australian manufacturers, the elderly and those struggling to keep the lights on if all we have is a plan to increase renewable energy in the future but no plan for how we're going to keep the lights on today at an affordable price.

Let us not forget that, when Labor first announced, in December 2021, their plan to legislate a 2030 target, the now Prime Minister stated, 'Labor's plan is to create jobs, cut power bills and reduce emissions.' He pitched to the Australian people not one but two targets backed by:

… the most comprehensive modelling ever done for any policy by any opposition in Australia's history since Federation.

Prime Minister Albanese said that their policies:

… will see electricity prices fall from the current level by $275 for households by 2025, at the end of our first term if we are successful.

We've now seen the government already walk back on that promise, not at the end of their first term but after 110 days or thereabouts. In fact, those opposite have been so fearful about the promise to reduce power bills by $275 that they won't even utter those numbers anymore, because while those opposite sat in opposition they had the ability to grandstand and talk about emissions reduction without giving a single thought to energy supply.

However, those with any sense know that you cannot talk about emissions reduction without also talking about supply of reliable energy. These two factors are intrinsically linked. It's called physics. As stated by the International Energy Agency, 'The world is experiencing the first truly global energy crisis in history.' Yes, in large part this is because of the Russian invasion of Ukraine, and I'll have more to say on that later today. However, it highlights what should be a bleedingly obvious point: there are and always will be unexpected outcomes and events. If the last three years have taught us anything, it is that we really do not know what the future holds and that we can only be prepared for the future by ensuring we are protected against a whole range of scenarios. This means ensuring we have a secure, reliable supply of energy. Russia's invasion of Ukraine has highlighted how running into this transition with your eyes closed will only end in tragedy.

The country of Germany stands as a stark reminder of this. It has spent more than US$743 billion transitioning its electricity system, boosting wind and solar to more than 45 per cent of generation since 2000. And, as we have heard during Environment and Communications Legislation Committee hearings since this bill was introduced, even after spending all this money on renewable energy, they are struggling to get to the target of producing energy below 300 grams of carbon dioxide per kilowatt hour. In fact, Germany now has Europe's most expensive retail power and cannot function without imported Russian gas.

In June, Germany announced it would be restarting some of its coal plants due to the shortages of gas due to the Ukrainian war. What is more surprising is that this announcement came from the German Green Party's finance minister. However, it should not be a surprise that, when faced with complete and utter economic failure due to the inability to create power, even the greens in Germany seem to make some sense. Mind you, the German greens have a far better hold on reality when it comes to national security than those opposite.

JP Morgan's 2022annual energy paper explicitly states:

… countries that reduce production of fossil fuels under the assumption that renewables can quickly replace them face substantial economic and geopolitical risks—

as Europe currently shows us. If the energy transition is to succeed, we cannot disconnect the generation methods we currently have before we have a replacement for them. Europe severely miscalculated, and they are now paying the price for it, with a likely recession, a lower rate of growth, a decline in competitiveness of exported energy-intensive goods, higher food prices and domestic political tensions.

I'd like to remind everyone that anyone who starts talking about renewables without first talking about firming does not know what they are talking about. And if they start talking about batteries as the answer to firming, then they doubly do not know what they are talking about. We've heard those in Labor and the Greens say that the solution to firming is batteries. Currently, batteries are not actually fit for grid-scale storage to address our emissions reduction and are unlikely to be before 2030. The outlook on when or if these will ever be available is uncertain. However, Australia is a key producer of critical minerals for batteries, and I do believe we can play an important role in processing those minerals, the manufacturing of batteries and the exportation of those batteries.

The Labor Party are correct when they state that renewable energy is the cheapest form of energy, but they're only correct in very small part. Again, as JP Morgan's energy paper stated, putting more renewable energy on the grid will not guarantee lower prices, because energy prices rest on an average cost of generation, not just the actual cost of a power source that can deliver energy on a continuous basis unsupported. As AEMO's 2022 Integrated System Plan states, we need to treble the firming capacity from dispatchable storage, including pumped hydro and gas fired generation, to firm renewables that are coming onto the grid. As I've said before, we do not have batteries on the grid to firm the power supply as it is.

Labor's policy to fund 400 community batteries of about the size of 500 kilowatt hours is simply inadequate and does not constitute a virtual power plant, or VPP. CSIRO data found that Victorian households use an average of 22 kilowatt hours between sunset and sunrise each night in winter. In this situation, a 500-kilowatt-hour battery could provide sufficient overnight power for only 23 households. This is the equivalent of needing one on every street, not in each suburb, as Labor plans. Assuming a nightly load of 22 kilowatt hours, it would take over 80,000 batteries to meet the power consumption needs of Melbourne's 1.8 million households. Even if the 400 proposed batteries were all built in Victoria, they would only meet 0.5 per cent of the city's winter night-time demand.

On the other hand, Snowy 2.0 has a capacity of 350 million kilowatt hours, with a capacity to meet Melbourne's nightly demand for over a week. Labor suggest that they can source batteries at $500,000 each, which equates to $1,000 per kilowatt hour. The Snowy 2.0, costing $4.5 billion for the 350 megawatt hours, comes out to only 12.9c per kilowatt hour. It's far more sensible, I would suggest.

There are currently viable firming technologies, such as hydro and gas—which we invested in when we were in government—as well as viable future technologies, such as green hydrogen and CCS. Furthermore, a clean and reliable source of firming our grid is through nuclear technology, which is established in over 30 countries and produces electricity with very, very low carbon emissions.

The Minister for Climate Change and Energy's calling nuclear energy the 'slowest' and 'most expensive' form of alternate energy is simply wrong. As we heard in the Senate hearings into this bill, the CSIRO is quoting costs for large third-generation nuclear power plants—which have a high variability in cost in the first place—not the small modular reactors that are currently being built in other countries. So we could look to them as the alternative, not the old, big, third-generation plants. While it is true that the costs of technologies such as wind and solar are lower when the wind is blowing and the sun is shining, when you add in the cost of transmission lines and storage, backup or other firming methods, the levelised cost is actually much higher, and evidence of that was given to the committee and shows that the cost of the renewable system is about 80 per cent higher than if we use nuclear. We only have to look at France, with about 65 to 70 per cent of its electricity generated from nuclear. Their carbon footprint is less than 50 grams per kilowatt hour, compared to Germany, who are struggling to produce energy below 300 grams of CO2 per kilowatt hour.

If energy transition is to succeed, we have to build firming sources like the Snowy Corporation is with 2.0 and Kurri Kurri or we have to keep coal-fired generation and other gas generation until the end of its natural life or fix the ones that are broken. It also means that we have to release more of our natural gas resources and invest in things such as blue and green hydrogen. The ACCC gas inquiry report specifically states that, to address the projected shortfall of gas in 2023 as per the AEMO GSOO, significant additional volumes of gas will need to be produced. I don't see how the government can stick to their promise of reducing power bills if they do not specifically support the additional production of gas, particularly in my home state of Victoria. This lack of support is hurting Australians already, with the report highlighting that users are now receiving offers at higher prices with less flexibility.

As I said at the start of my speech, I want to see the world transition and move to net zero as quickly as possible. However, as nations such as Germany are finding out, rushing in with your arms wide open and your eyes closed shut will only lead to pain, insecurity, instability and higher power prices. The government must start talking about how they are going to address these issues before they hurt Australians even more, as this bill will.