Richard Colbeck (Tasmania, Liberal Party) Share this | Hansard source

I move:

That the Commonwealth Scientific and Industrial Research Organisation GenCost 2023-24 report be referred to the Economics References Committee for inquiry and report by 10 October 2024, to explore assumptions and costings made in the report, including but not limited to:

a. asset lifecycles;

b. capacity factors;

c. energy type costings;

d. financing costs;

e. fuel costs;

f. augmentation requirements of transmission systems;

g. data standards techniques; and

h. other related matters.

This motion and this potential inquiry present a very genuine and specific test for the government. The GenCost report prepared by our revered organisation the CSIRO is being used extensively as part of the government's rationale in relation to its overall energy plan and, of course, has implications for the work that the opposition is doing in presenting its alternative plan.

There are a number of pieces of commentary, and I have taken the opportunity to read a number of those, particularly the assumptions that are made in the GenCost report and the impact that those assumptions and those costings have on the broader debate. I think it's quite reasonable that, given the weight that this document is being provided in the current national debate in respect of where we go in the balance in our energy system, the Senate Economics References Committee has the opportunity to consider and test a number of those assumptions and costings. We know that the GenCost report is not science, as has been touted, but a statistical data-gathering exercise and financial modelling. There is nothing wrong with that. There is no criticism in that. But, as a part of that process, there are assumptions that are made. Some of those assumptions have been questioned by experts in the energy field. This is an opportunity for this place to ask those experts to come forward and put their rationale for the reasons that they might question the assumptions that are in the GenCost report and then test those with the CSIRO.

The one thing that we do want—and I don't think that any of us could dispute it—is to provide to the Australian community the most reliable and low-cost energy mix and system that we can possibly achieve. This is about a system. It is about the energy mix that is delivered to the Australian people. So I think it's more than reasonable that some of the assumptions that are made by the GenCost report are appropriately tested. If the questions that are asked by that process mean that we end up with a better report next year, good on them.

For example, with respect to nuclear—and I'm not just going to talk about nuclear in this discussion because GenCost covers a range of energy types—the GenCost report includes financing costs for small modular reactors but does not include them for renewables. Yet GenCost report purports to calculate the cost of different energy technologies from the perspective of an investor. GenCost also only uses one data point to price SMRs, and in doing so has chosen a project by a start-up that's fallen over due to cost. It doesn't cost other elements in relation to nuclear either.

GenCost assumes coal and gas plants built in 2023 will always face Ukraine War induced fuel price spikes. We know that's not going to be the case. We know there are debates and argument over the volume of gas available in the market. The coalition has been arguing that there should be more gas in the market—and I think the government has finally coming to that realisation—because supply and demand are impacting on price and cost. There needs to be the appropriate supply of gas in the market to ensure that we have an effective, reliable and cost-effective electricity system. The government talks about it's Made in Australia campaign, but none of that will happen unless we have affordable, globally competitive energy prices. It just won't happen.

I recall looking at global energy prices back in 2004, and we had the third or fourth cheapest energy prices in the world. We now have some of the highest. When we look at why our energy companies aren't competitive, there is a prime reason. All of us should be doing what we can to ensure that our energy system is as reliable and cost-effective as possible because it's not productive to have large industry having to shut down because there's not enough energy in the system. It's just not viable to do that. An investment won't come here if that's the problem. We just cannot be putting ourselves in the situation where our energy system isn't reliable for industry or they won't invest.

One of the other things that GenCost doesn't do—and this goes to the point I make around total system costs—is that the CSIRO has confirmed they do not factor in augmentation of the distribution system to accommodate widespread rooftop solar and behind-the-metre storage. Australia has the highest concentration of rooftop solar in the world, but there is a cost for putting that energy back into the system. While we're using GenCost and the assumptions made in that to cost our system and as the core of our argument, it may be that we are better to move to a systems based costing mechanism for our discussion around energy. That's not where we're at right now. Where we are out right now is that the CSIRO's GenCost report forms the centrepiece of our energy system.

There have been a number of conversations, and I think for a period of time nuclear wasn't considered as part of GenCost because it wasn't mature or tested or—particularly SMRs—available technology. But if we look at where we sit with, for example, hydrogen—and we've had the Prime Minister and the Minister for Climate Change and Energy out there saying that coal-fired power stations could be replaced with hydrogen-fuelled power stations—that technology is nowhere near where it needs to be for intense industrial energy utilisation. There's no-one in Australia producing hydrogen for less than $10 a kilogram right now. It needs to be $2 to be competitive. Either we have to develop the technology to get the price down to $2 a kilogram or we're being told that the price of generating energy has to increase to the extent where $10, or perhaps $7 or $8, becomes competitive. That's taking things in exactly the opposite direction to where we want them to go.

We want the most reliable and cost-effective energy system that we can possibly have, and I think it's quite reasonable that we, as a parliament, test the assumptions and the costings that have been included by CSIRO in their GenCost report. A number of them are openly disputed, including even using the levelised cost of electricity as a mechanism within the report. As I said before, there are some economists out there who say that we should be costing what we're doing on a system cost basis rather than on individual elements of the system. Quite frankly, an overall system cost would be much better, because it would take into account the actual variations, fluctuations and demands of the overall system to make it operate in a way that we think should be appropriate.

I think whether the government is prepared to support this reference or not is a test for them. Are they up for a genuine debate in respect of the energy future of this country, or are they stuck in their own paradigm where they just trot out the memes, yell at us across the chamber and make extraordinary claims about what might happen with the utilisation of nuclear energy? Are they prepared to participate with the rest of the chamber in a rational debate in looking at this report, what it contains and the information it provides to the Australian people?

I was really disappointed when the CSIRO refused to engage with shadow minister Ted O'Brien in relation to some of the assumptions in the report. I feel it would have been a mature thing for them to receive his request, consider it, engage in a conversation and perhaps even provide a rationale as to why they'd chosen the assumptions that they made. Instead, they just said no. I think that's disappointing. This report is being presented to us as science. Genuine science and scientists are very happy to engage in that sort of exchange, because that's how the science improves: a question gets asked, an assumption is challenged, the challenge is explored, and the science progresses. But that's not the way that we've been treated as part of this debate. We're told: 'This is the document. This is it.' I think it would behove everyone if a much more mature discussion could be held, and I'm proposing that this is the vehicle to do it.