Kim Carr (Victoria, Australian Labor Party, Minister for Innovation, Industry, Science and Research) Share this | Link to this | Hansard source

I table a revised explanatory memorandum relating to the Renewable Energy (Electricity) Amendment Bill 2009 and move:

That these bills be now read a second time.

I seek leave to have the second reading speeches incorporated in Hansard.

Leave granted.

The speeches read as follows—

Renewable Energy (Electricity) Amendment Bill 2009

Australia is increasingly faced with compelling evidence of the effects of climate change and the risks of not acting to reduce carbon pollution. We know that new data and scientific understanding compiled since the Intergovernmental Panel on Climate Change 2007 report are painting an even more worrying picture of climate change for the whole world.

The Australian people have clearly indicated that they expect our Government to take decisive action on climate change and the Government is committed to introducing the Carbon Pollution Reduction Scheme. So it is important to set foundations that will stand Australia in good stead to position us to take advantage of opportunities in a carbon-constrained world. We must provide our future generations with an economic and environmental legacy that matches the one we enjoy.

The world’s attention is focused on securing a post-2012 agreement at Copenhagen. And it is in Australia’s national interest to secure an ambitious deal that stabilises greenhouse gas emissions in the atmosphere at 450 ppm carbon dioxide equivalent or lower. What matters most as we try to secure a global deal is what we do at home. Our domestic agenda is our platform for Copenhagen in helping to shape a global solution.

In order to discharge our obligations to address climate change, the Carbon Pollution Reduction Scheme was recently introduced into the House of Representatives in May. In introducing this bill today, the Government is laying the second foundation of its highly significant institutional change in environmental and economic policy in Australia.

Renewable Energy Target scheme - part of a comprehensive approach

The Government’s commitment to a Renewable Energy Target of 20 per cent of our electricity supply to come from renewable sources by 2020 is a key measure within the Government’s comprehensive approach to tackling climate change.

The expanded Renewable Energy Target will complement the proposed Carbon Pollution Reduction Scheme now before the Parliament and will accelerate the development and deployment of renewable energy technologies.

The Council of Australian Governments agreed to the design of the Renewable Energy Target scheme on 30 April 2009, following extensive community consultation. As the Prime Minister observed at the time, that agreement represents a major step towards Australia’s low pollution future.

Today, in introducing legislation to give effect to the Renewable Energy Target, we move closer towards that low pollution future.

The Renewable Energy Target scheme will bring the Mandatory Renewable Energy Target and existing and proposed state and territory schemes into one national scheme, avoiding the inefficiencies, and administration and compliance costs, of multiple schemes operating around the nation. The legislative framework will ensure a smooth transition into the national scheme for the only existing state-based scheme, the Victorian Renewable Energy Target.

Electricity generation accounts for more than one-third of Australia’s current greenhouse gas emissions, so Australia’s transition to a low pollution future will require a significant transformation in this sector. The Renewable Energy Target scheme will accelerate deployment of a range of renewable energy technologies like wind, solar, biomass and geothermal power over the next two decades. Over the longer-term the Carbon Pollution Reduction Scheme will be the main driver of renewable energy deployment.

As a transitional measure, the Renewable Energy Target scheme will help transform the electricity sector and drive the low-pollution electricity generation that we need to tackle climate change. It will deliver on the Government’s commitment that 20 per cent of Australia’s electricity supply will come from renewable sources by 2020.

The Renewable Energy (Electricity) Amendment Bill 2009 amends the Renewable Energy (Electricity) Act 2000 to increase the existing Mandatory Renewable Energy Target from 9,500 gigawatt-hours to reach 45,000 gigawatt-hours in 2020. This change will increase the existing target by more than four times. Building on the existing Mandatory Renewable Energy Target framework, the new Renewable Energy Target scheme will create a guaranteed market for additional renewable energy deployment, using the mechanism of tradeable renewable energy certificates that are created by renewable energy generators. And this in turn will attract additional investment and create additional jobs in renewable energy in Australia.

The Renewable Energy Target scheme is part of the Government’s economically responsible approach to tackling climate change. It focuses on providing support for the most cost-effective renewable energy technologies.

The expanded Renewable Energy Target will accelerate green jobs and together with the Carbon Pollution Reduction Scheme will drive around $19 billion in investment in the renewable energy sector in the period to 2020.

Key design features of the Renewable Energy Target scheme

Higher annual targets under the expanded Renewable Energy Target scheme will apply from 1 January 2010 and will reach 45,000 gigawatt-hours in 2020. To provide renewable energy investors with even greater legislative certainty, the 45,000 gigawatt-hour target will be maintained until 2030.

The Renewable Energy Target scheme includes many of the features of the current Mandatory Renewable Energy Target, including eligible sources and banking of renewable energy certificates to promote smoother investment over time. It is a broad-based incentive which provides a significant platform for accelerating the deployment of a range of renewable energy technologies.

The Government recognises that households are keen to do their bit in the fight against climate change. The Renewable Energy Target will assist with the upfront costs of installing small-scale renewable energy systems, including household solar photovoltaic systems, by introducing a ‘Solar Credits’ mechanism. Solar Credits work by allowing owners of small scale renewable energy systems to earn multiple renewable energy certificates for renewable energy produced by these systems.

Solar Credits, which take effect for systems installed from 9 June 2009, will provide the solar industry with certainty and a solid platform for future growth.

A related bill, the Renewable Energy (Electricity) (Charge) Amendment Bill 2009, increases the level of the shortfall charge under the Renewable Energy Target scheme from $40 per megawatt-hour to $65 per megawatt-hour. The shortfall charge encourages compliance with the Renewable Energy Target scheme, as liable parties who do not meet their obligations to purchase renewable energy certificates will need to pay this charge. Increasing the shortfall charge to this level will allow the price of renewable energy certificates to be sufficient to drive investment in renewable energy in order to meet the Government’s significantly increased renewable energy targets. The level of the shortfall penalty will be monitored to ensure it remains effective as an incentive for investment in renewable energy.

The Government recognises the impact of the Renewable Energy Target on emissions-intensive trade-exposed industries in the context of the proposed Carbon Pollution Reduction Scheme and the additional pressures these firms are experiencing as a result of the global recession. As part of the consultation process, stakeholders suggested that assistance under the Renewable Energy Target should take account of the cumulative impact of the Renewable Energy Target and the Carbon Pollution Reduction Scheme.

The Government listened to industry and has therefore decided to provide assistance under the Renewable Energy Target, reflecting the cumulative impact of the Renewable Energy Target and the Carbon Pollution Reduction Scheme.

The Bill provides for regulations to be made to provide partial exemptions from liability under the expanded Renewable Energy Target. As agreed by COAG on 30 April 2009, partial exemptions will apply to those activities that are emissions-intensive trade-exposed activities under the Carbon Pollution Reduction Scheme. Exemptions will apply to 90 per cent or 60 per cent of an entity’s liability under the Renewable Energy Target, according to the respective category of assistance provided under the Carbon Pollution Reduction Scheme framework. All businesses will contribute to supporting renewable energy as the exemptions will only apply for liability above the existing 9,500 gigawatt-hour target.

The Bill also provides for a review of the operation of the Renewable Energy Target scheme to be undertaken in 2014 to coincide with the strategic review of the proposed Carbon Pollution Reduction Scheme. The review will allow the Government to ensure that the expanded national Renewable Energy Target scheme remains effective as a measure to increase the deployment of renewable energy generation in Australia.

Government funding for renewable energy

The Renewable Energy Target measure is complemented by significant direct support that the Government is providing to the renewable energy industry through a range of initiatives. As part of the 2009-10 Budget, the Government announced the $4.5 billion Clean Energy Initiative, which will kickstart a range of critical low-emission energy technologies in the marketplace.

As part of the Clean Energy Initiative, the Government will invest $1.6 billion in solar technologies, including $1.5 billion for the Solar Flagships program and $100 million for the Australian Solar Institute, which supports research into solar thermal, solar photovoltaic, and other solar energy technology. The Solar Flagships program will aim to create an additional 1,000 megawatts of solar generation capacity. This ambitious target is three times the size of the largest solar energy project currently operating anywhere in the world and may demonstrate both solar thermal and solar photovoltaic technologies.

The Clean Energy Initiative also includes $465 million to establish Renewables Australia, to support leading-edge technology research and bring it to market.

In addition, the $480 million National Solar Schools Program is giving Australian schools a head start in tackling climate change and conserving our precious water supplies – over 4000 schools have registered to participate and more than $10 million in grants have already been approved.

The Government recognises that we need to take action to tackle climate change with a comprehensive set of measures. Expansion of renewable energy generation represents a significant opportunity to reduce Australia’s energy sector emissions while driving $19 billion of investment and creating the green jobs of the future as part of an estimated thirty-fold increase in the renewable electricity sector by 2050.

The implementation of the expanded national Renewable Energy Target scheme as outlined in this bill represents a major step towards transforming the electricity sector and the Australian economy to contribute to a low pollution future.

But even with complementary measures like the expanded Renewable Energy Target in place, Australia’s emissions will still be around 20 per cent higher in 2020 than they were in 2000, as opposed to as much as 25 per cent less with the Carbon Pollution Reduction Scheme.

Without the Carbon Pollution Reduction Scheme, we can’t halt climate change.

Without the Carbon Pollution Reduction Scheme, we will keep making climate change worse.

And the simple fact is that without the Carbon Pollution Reduction Scheme, we have no means to deliver our emissions reductions targets, which are ambitious, but necessary.

Renewable Energy (Electricity) (Charge) Amendment Bill 2009

The Renewable Energy (Electricity) (Charge) Amendment Bill 2009 amends the Renewable Energy (Electricity) (Charge) Act 2000 and, together with the related Renewable Energy (Electricity) Amendment Bill 2009 Renewable Energy (Electricity) Amendment Bill 2009, implements the expanded national Renewable Energy Target Scheme to deliver on the Government’s commitment to ensure that 20 per cent of Australia’s electricity is supplied from renewable sources by 2020.

This bill increases the level of the shortfall charge under the expanded Renewable Energy Target scheme from $40 per megawatt-hour to $65 per megawatt-hour. The shortfall charge encourages compliance with the Renewable Energy Target scheme, as liable parties who do not meet their obligations to purchase Renewable Energy Certificates will need to pay this charge. Increasing the shortfall charge to this level will therefore act as an incentive for investment in renewable energy in order to meet the Government’s significantly increased renewable energy targets.

The level of the shortfall penalty will be monitored to ensure it remains effective as an incentive for investment in renewable energy.

According to data published by the Office of the Renewable Energy Regulator, there has been a consistently high level of compliance with the Mandatory Renewable Energy Target since the scheme began in 2001, which means that very few liable parties have paid the shortfall charge. The new shortfall charge seeks to encourage affordable deployment of renewable energy through continued high levels of compliance, while taking into account the significant increase in annual targets under the expanded scheme.

Simon Birmingham (SA, Liberal Party) Share this | Link to this | Hansard source

I welcome the opportunity to comment on the Renewable Energy (Electricity) Amendment Bill 2009 and the Renewable Energy (Electricity) (Charge) Amendment Bill 2009. I am pleased that the government has finally brought these bills to the Senate for consideration. The primary bill aims to set in place a renewable energy target of 20 per cent by 2020. It will also enable the government to introduce a new solar rebate scheme based on renewable energy certificates that come with small energy units such as solar PV systems. The legislation progressively increases the 9,500 gigawatt hour annual mandatory renewable energy target to a 45,000 gigawatt hour mandatory renewable energy target, to be reached by the year 2020. The coalition parties support this objective, but I emphasise to the government as we enter this debate that this is not a blank cheque. We come to this debate with conditions and with the hope to be able to negotiate a satisfactory outcome to ensure and guarantee the passage of these bills.

The bills also replace the solar rebate of $8,000, which the coalition introduced in government, with the solar credit scheme. It will issue RETs to installers of PV systems of 1½ kilowatts or less and will ensure a trading scheme that provides some form of rebate—though not as generous as the previous scheme, I note—for solar panel installations. Under the bills, wholesale purchasers of electricity or liable parties are required to meet a share of the renewable energy target in proportion to their share of the national wholesale electricity market. Those who do not meet the target will face financial penalties.

As I said, the coalition welcomes the opportunity to debate these bills and hopes—with the government’s cooperation—to see their smooth passage through the Senate. We do so because our vision from this side of the chamber is for a clean energy economy. We believe that Australia has great capacity to transform its energy base and in doing so to provide for a clean energy future for all Australians, by using the great mix of technologies that are available to Australia and that are continually being advanced and developed.

In my own state—and, indeed, Mr Acting Deputy President Bernardi, in your own state too—of South Australia there remains great potential for the growth of clean energy, great potential in geothermal, great potential in solar, great potential that is already being recognised in wind, great potential around all parts of Australia for wave and tidal energy and great potential for the development of clean coal opportunities and carbon sequestration opportunities—not just through carbon capture and storage but through new developments in fields like algae, like the opportunity to capture carbon and to store and use it not just in a carbon capture manner but for agricultural benefit in the long term as well. We recognise all of these opportunities, but in particular we wish to see the step towards a clean energy economy taken but taken in a manner that actually preserves Australia’s interests—that is, Australia’s economic interests and the interests of Australian industry, households, farmers and the entire Australian community.

It was the coalition which first introduced Australia’s mandatory renewable energy target. It was one of the pioneering steps that the Howard government took in relation to climate change policy that, thanks to the politics pursued by those on the other side of the chamber, have been largely ignored or rewritten in history. Nonetheless, at the time the Howard government brought in the 9,500 gigawatt hour target which, taking account of already existing renewable energies in Australia, provided for an almost 10 per cent renewable energy target. We moved in the last phase of our government to support a 15 per cent clean energy target. As was the case during the last campaign, when Mr Rudd—as he did on the ETS, by trying in a failed gesture to bring its commencement date forward—sought to make a gesture of one-upmanship, as he liked to do time and again, and raise it to a 20 per cent target we indicated support for the principle of that 20 per cent target. Having done that at the last election, we are frankly gobsmacked that it took the government so long to get its house in order and to bring this legislation to the parliament and that it decided to scramble it up with its far more controversial ETS package and, along the way, stuffed around the renewable energy sector so comprehensively.

I have spoken many times in this place about the damage that is being done to the solar industry thanks to the approach of the Rudd government. We saw last year on budget night the solar industry surprised with a means testing on the $8,000 solar rebate. There was no consultation. There was no consideration by the government of the impact of this rebate on the solar industry, particularly of the impact it would have on the effectiveness of the rebate to achieve the maximum possible generation of electricity.

By excluding households with a gross income above $100,000, the government ensured that only small solar systems were installed. We were told—it was witnessed and evidenced—through the various inquiries undertaken in the Senate about numerous instances of this and we saw the long-term average size of solar systems shrinking because of the government’s means testing. Not only did they persevere with their ridiculous means testing; but on 9 June this year they scrapped the solar panel rebate prematurely. Having given countless assurances to the industry that there would be a smooth transition from the rebate to their solar credits arrangement, they then up and scrapped the rebate without having introduced into this parliament the legislation for this renewable energy target and for the solar credits arrangement at all. They left the solar industry hanging out there on a limb with one program abolished and the other without even the legislation in this place. One wonders what the government were thinking when they decided to both drag their heels in regard to this legislation and scrap the previous legislation in the manner in which they did.

Then, just a few days later, on 22 June at 8.30 am, the government, again without any warning to industry, scrapped a second renewable energy incentive scheme. This time, it was the Renewable Remote Power Generation program. This was a program that helped families, businesses and not-for- profit organisations who were not connected to the power grid to install solar, wind or other renewable energy units. This was a clever program because the only alternative that those people in remote and rural settings had was to use diesel power generation.

So the government had a longstanding, well-supported and well-taken-up program which the Howard government had put in place. Through it, people who did not have access to the power grid, instead of installing diesel units, installed solar units or other clean energy units with a subsidy from the government and support from the government. But no, again, this was scrapped pre-emptively on 22 June and, as a consequence, we see the solar industry sitting in limbo without a rebate for those off-grid systems, without a rebate for those on-grid systems and with nothing coming out of the solar credit system yet because the government has dragged its heels.

We do welcome very warmly the decision of the government to bring this forward, and not just to bring it forward but also to decouple it from the ETS. Not only did the Rudd government delay the introduction of their renewable energy target, which they knew from day one in government was their policy and their plan, but they also tied the legislation, this renewable energy target, to their emissions trading scheme for political motives. In a sense, they took their own legislation hostage. They said, ‘You can’t have this without that; you cannot have the RET without the ETS.’ It was a maddening decision by the government, and you have to wonder why on earth they decided to inflict such pain on the renewable energy sector—such uncertainty on the many businesses operating in that sector and such uncertainty on the many households that have tried to achieve and to take up renewable energy options. The linking of these schemes was unnecessary; nobody supported it, and you have to question why they did it. Indeed, the Clean Energy Council, at the height of the scrapping of the rebate programs by the government back on 16 June, said:

Any political tricky manoeuvre to hold the legislation up now will simply end up being a remarkable own goal.

Well, an own goal it has been proven to be, of course. With the defeat last week of the ETS legislation, the government has agreed, at long last, to decouple these bills—

John Williams (NSW, National Party) Share this | Link to this | Hansard source

Some of them.

Simon Birmingham (SA, Liberal Party) Share this | Link to this | Hansard source

and to do exactly what the coalition asked for from day one. Senator Williams makes a valuable interjection: ‘Some of it.’ I will come to some of our foreshadowed amendments very soon that are important, as I said, to the passage of these bills. I re-emphasise that our support for the target and for these bills is not a blank cheque. Indeed, the coalition will seek a number of amendments to these bills. We are not satisfied with what has passed through the House of Representatives. I acknowledge the good work of Mr Hunt, Mr Macfarlane, Mr Robb and others on the coalition side in the other place in negotiating with the government to achieve concessions thus far to ensure that we have a system in place that both sides can and will support. But we are not satisfied with what passed the House of Representatives and we expect further changes during this debate in the Senate.

We will firstly, as Senator Williams alluded to, seek a full decoupling of the renewable energy target from the flawed emissions trading scheme that was voted down by the Senate just last week. We have been successful in securing the principle of decoupling. Certainly, if you listened to the language of the minister or, in particular, the Prime Minister on this matter, you would be led to believe that total decoupling had occurred, but it has not entirely happened. In particular, it has not happened for key affected industries. We believe that the framework of compensation and qualification under the ETS should be replicated but decoupled so that the start date for that compensation framework will be 1 January, irrespective of whether the ETS has been passed. That must occur for all affected industries.

We seek coverage of the aluminium sector for both its existing MRET and its expanded renewable energy target liabilities to the 90 per cent already offered by the government for the latter. At this stage we are not willing to accept the idea that the government limit its compensation in this sector in narrowly defined ways. We want to preserve and protect, as we have said all along, Australian jobs. That has been a priority of the coalition, along with ensuring the growth of renewable energy in Australia. We do so recognising the trade exposed nature of industries like this sector and the reality that, without this type of protection, we will simply see such industries close down in Australia, with jobs and the industries moving offshore to countries with less clean regulations than Australia. We will see the leakage of carbon emissions to those countries for no environmental benefit, with possibly even worse outcomes—yet to the economic detriment of Australia. So we are pushing hard and we expect the government to continue to negotiate in good faith on these issues, as we acknowledge they have done to date in earlier discussions and we hope that will continue behind closed doors and in the committee stage here.

We will also be seeking amendments regarding food processing to ensure that that sector is categorised for assistance under the renewable energy target as well. Protecting Australia’s food security is something that all members of the coalition have stood up for for a long time. We did so in the water debate and we will do so in this debate as well, because in the end Australia has a valuable role to play in food security not just for our country but also for the rest of the world.

The coalition will also seek to remove a loophole in relation to the multiplication of RECs for industrial heat pumps. We will also move that a portion of the RET be banded and reserved for emerging renewable technologies such as baseload solar, geothermal, wave, tidal and biomass. We will seek that 8,875 gigawatt hours or 25 per cent of the additional 35,500 gigawatt hours of renewable energy be reserved for these sectors. We do so in response to lobbying from the clean energy sector and from many of the parties involved in this, and because we recognise the importance of ensuring that this target is not just about clean energy but also about growing Australia’s capacity in the clean energy sector.

Growing our capacity does not just mean putting in place a mechanism that encourages further proliferation of the already well-developed and cheap wind opportunities that may exist—cheap by comparison with some of the others at this point. It also means ensuring that Australia, if it is to have a renewable energy framework, actually develops key baseload capacity. We want to make sure that the renewable energy target delivers on baseload potential for Australia’s future—not just the technologies that provide, potentially, additional energy at peak level but cannot be relied upon for that all-important baseload potential.

We have already been successful in securing amendments that recognise renewable gas or waste coalmine gas as a zero-emission source of energy, as it is in the United States and Germany. We are happy that the government has accepted that. We believe this will save some 400 jobs in the sector, but we believe the government should consider extending this support to 2030, not just to 2020.

I note, again as a South Australian senator, the enormous potential role that the gas industry can play in also reducing our emissions over time. Natural gas can meet future baseload power generation requirements for Australia. It can be a key partner to this renewable energy technology. Where we have technologies, like wind, that may not be reliable, gas has the potential to be able to be wound up or wound down in accordance with the power generated by some of those other technologies, so it can complement these sectors. I know that companies like Santos, one of South Australia’s major companies, have been working very hard to explain this potential to the government.

In conclusion, I emphasise the coalition’s commitment to a clean energy future for Australia and to continuing to work with the government through the Senate process, in good faith, to achieve the changes that I have outlined—changes that we believe will secure Australia’s future and our economic position and protect Australia jobs while at the same time giving Australia a world-leading position in developing renewable energy technologies.

As I emphasised, our support is not a blank cheque. Whilst we will support the second reading of the bill at the conclusion of this stage of the debate, we do reserve our position on the third reading depending on the progress of the amendments that I have outlined today and amendments in the committee stage. But we welcome the fact that this bill is before us and we look forward to working in a cooperative manner with the government to, hopefully, ensure that Australia has a bright, clean energy future ahead of it.

Christine Milne (Tasmania, Australian Greens) Share this | Link to this | Hansard source

I rise to support the Renewable Energy (Electricity) Amendment Bill 2009 and the Renewable Energy (Electricity) (Charge) Amendment Bill 2009 before the house. The Greens have been campaigning for a very long time to increase the renewable energy target in Australia. We noted that, at the last election, the government promised a 20 per cent renewable energy target. The Greens went to the election with a 25 per cent target, and we believe now, in view of the advances in renewable energy, it could go to a 30 per cent target. So we welcome this legislation, and there are many amendments which I will be proposing which would improve it. I will be putting those to the house in the committee stage and will discuss them in a moment.

First I want to talk about the cost of the delay of this legislation. It was a Rudd government promise in 2007. It has taken till June 2009 to get it into this parliament. The renewable energy industry has been waiting all of that time for this expansion, for this long-term signal for investment, and in the meantime we have been losing jobs and some of our brightest and best overseas. Every time people talk about job losses in the fossil fuel sector, they should instead talk about opportunity cost to the renewable energy sector and the new manufacturers and the move to the zero-carbon economy as our brightest and our best leave the country. On top of David Mills having left for California, Spark Solar have said quite clearly that all of their engineers around the world are Australians who trained here but went overseas because the opportunities were not here. We saw Vestas pull out of north-west Tasmania. We have seen BP Solar leave the country. We have seen so many leave the country—and on and on it goes—while waiting for this investment in renewable energy.

The Greens argue that we could not only have a renewable energy target but we also need a gross feed-in tariff on top of that target to bring on those technologies which will not be advantaged under the renewable energy target. We would put in a specific tariff for solar thermal, geothermal and wave power on top of the renewable energy target so that you maximise the technologies available now and bring on the technologies of the future.

This is a huge opportunity for Australia and it was held up because the government chose to try to wedge the coalition and link it to the CPRS in the context of giving exemptions to the big energy users around Australia, in particular under pressure from the aluminium industry. So when it came to a choice between going ahead with a renewable energy target and not getting the exemption for those big energy users, both the government and the coalition chose the big energy users above the renewable energy sector. According to the Clean Energy Council, that decision to delay in June has cost $2 million a week. So for all the rent-seekers pleading for the extra special treatment that they have been given under this legislation, it has cost the renewable energy industry a huge amount not only in dollar terms but also in terms of certainty and jobs and long-term planning. That is why I am pleased that this legislation is here. I will be working to get it through and I will not see anything that jeopardises its getting through as quickly as possible, because I want to see this industry sector expand.

I have to say that I was devastated to see the government under pressure again from the coalition to brown down this legislation by including coal gas in a renewable energy target. Coal gas is not a renewable energy source; it is a fossil fuel. It is a nonsense to watch in the lower house the government amending its own legislation to take out the word ‘renewable’ from several sectors of the renewable energy target legislation. What sort of a nonsense is that? I was reminded in fact of Alice in Wonderland, because I wondered at what point are people going to acknowledge the stupidity of what goes on in this parliament. I note that in the lower house Mr Hunt went on and talked about a ‘renewable gas’. So we now have coal methane as a renewable gas, according to the member Mr Hunt. I have to remind him of what Humpty Dumpty said to Alice in Wonderland. He said:

If I had a world of my own everything would be nonsense. Nothing would be what it is, because everything would be what it isn’t. And contrary wise, what is, it wouldn’t be. And what it wouldn’t be, it would. You see?

And so now we have a fossil fuel no longer being a fossil fuel; suddenly it is a renewable gas. What utter and complete nonsense that is!

No-one is saying that we ought not to be dealing with coal seam methane, with coalmine gas. Of course we should be dealing with that and, again, it is the incompetence of the government that they have failed to get a smooth transition from the New South Wales scheme GGAS. That should have been looked into. But the way to deal with this is to put pressure on the coalmines to ensure that they must deal with that gas. Those people who are currently generating energy from that gas are independent of the coal companies but the coal industry refuses to invest in it because it has not got a big enough return for them. They want 20 or 30 per cent return on their investments and they will not do it. So it is time that governments forced the coalmining industry to deal with its waste, and it should not be done under a renewable energy target because this is a financial mechanism to see the rollout of renewable energy.

Now you are going to see people around Australia who were quite prepared to pay an additional cost for renewable energy, because they thought it meant that solar was going out there, that wind was going out there, that they were seeing a big expansion out there. They were prepared to pay for that because they want to see the jobs, the manufactures, our brightest and our best in Australia doing this work that our universities are training them to do. Instead of that they are suddenly going to find that they are paying more for renewable electricity because coal seam methane is in there and we have exempted the big energy users. How is that reasonable? It ought to have been dealt with elsewhere and there is absolutely no justification, as I indicated, for these exemptions for the big industries, and I would like the government to respond to this.

The argument is that these industries are trade exposed. They are not trade exposed when it comes to a renewable energy target, because almost all of their competitors work under a renewable energy target. Have a look around the world and what have you got? In the United States many state governments have adopted renewable energy targets, including California’s target of 33 per cent of its electricity from renewables by 2020. Waxman-Markey also has a renewable energy component and the EU-wide renewable energy target for 20 per cent of final energy consumption is to come from renewables by 2020. The UK has got a target of 15 per cent, and on and on it goes. Japan has got a target. Canada has got a target. China has set a target of 15 per cent of primary energy supply to come from renewables by 2020. So all of them have got a renewable energy target. If anything, Australian aluminium has been sheltered because of the renewable energy targets imposed elsewhere. So tell me, in the absence of a CPRS, why should we exempt these companies from a renewable energy target when all their competitors are already paying that target?

Secondly, three of the four reports that were done on this showed that by bringing in renewable energy you are shaving off the peaks. In other words, on a hot summer’s afternoon you bring on your solar energy and so what otherwise would have been a higher pool price is actually brought down because you are bringing in that energy there. Three out of the four reports say that there is downward pressure on the wholesale pool price because you are bringing in the renewables. So if they are not paying for the renewable energy target and are exempt from it, how am I to be assured they are not going to get a windfall gain from this? They do not pay for the renewables, but they get the benefit from the dropped pool price.

At the moment, most of them do not care because they are on bulk power contracts, but they are going to have to renew those in this period when we are dealing with a renewable energy target. They are just looking after themselves to see that they get a windfall gain. I hope I can get the support of the coalition or the government to acknowledge that we do not want these sectors to get a windfall gain on the back of the Australian taxpayer, the average consumer out there, who is having to pay more so that the aluminium industry can do that.

What is even worse is that the long-term future of the aluminium industry depends on it producing green aluminium from renewable energy and not from coal fired power or anything else. It needs renewable energy to be competitive in a zero carbon economy. Unless we can get enough renewable energy in Australia to power these industries, they will then go offshore. The threat is not that they will go offshore now; there has been no-one suggesting that they would. Where would they go when everybody else around the world has got a renewable energy target? No, the threat to them is the failure to move off coal fired power, resulting in them ending up uncompetitive when their competitors have moved to green energy. Already there is green aluminium being produced from geothermal energy in other parts of the world. So let them take note of this: if we want a steel industry and an aluminium industry in Australia in the future then we need to transition to renewables as fast as possible.

Let me go through some of the other issues. Of course we want to see an expansion in the target to 30 per cent by 2020. We do not support the inclusion of coal seam methane, a fossil fuel, in a renewable energy target. We do understand the need to deal with coal seam methane, but it should have been done somewhere else—not in the renewable energy target and not requiring people to pay for it in that context.

We think a gross feed-in tariff should be brought in in addition to the renewable energy target for the reasons that I have said: to bring on geothermal, solar thermal and wave power. We believe the target should be expressed in percentage terms rather than in gigawatt hours. The reason for that is that if energy demand increases out to 2020 and you have set a specific gigawatt hour target then it will form less and less as a percentage of total energy. The ABARE report suggested it might only be 17 per cent if energy demand increases. So the Greens are saying: ‘Why not set it as a percentage target, and then the gigawatt hour target can reflect that percentage, rather than set a gigawatt hour target which may not necessarily, in the end, give us 20 per cent renewable energy?’

We are also saying that we should remove the 1.5 kilowatt hour cap for PV systems and in fact increase the cap to 10 kilowatt hours for other technology types such as small wind and hydro. This is particularly important for remote renewable systems, and it is a disaster. To get rid of one system supporting remote renewable systems and have nothing to replace it is another government disaster. There is nothing in this. Under the renewable energy target there is about a fifth of the level of support of the previous scheme for off-grid.

Let me talk about who these people are: these are Indigenous communities; these are farming communities; these are people who are not near the grid and who need this support to get off a reliance on diesel. It has been hugely successful and those senators in this chamber who represent areas in which there are communities living off-grid understand just how important this remote support was, and it is now gone. That is unacceptable. I want the government to come in here and accept this proposed Greens amendment to remove that 1.5 kilowatt hour cap so that we do not disadvantage those communities that are off-grid. If the government are not going to accept the proposed Greens amendment, what are they going to do for remote communities? You are prepared to bend over backwards for coal seam methane. You are prepared to bend over backwards for the aluminium industry with megaprofits. But where is the bending over backwards for remote communities? That is something we have to fix.

Another thing we need to fix is to add the number of phantom credits that are being created to the total target. Again, we want 20 per cent of energy to be renewable. If you give out five certificates for one unit of energy, you end up having given out, yes, the target number of renewable energy certificates, but that will not represent, in terms of energy, the same amount. We have to deal with that issue and we need to add those phantom credits onto the target.

We also need to limit the banking of renewable energy certificates to four years because we do not want to see a situation where there is so much generated in the first few years that the banking occurs but where you then have the old boom and bust cycle in investment in renewables. We want to even that out and we would like to limit banking to four years.

We also would like to see the operation of the scheme and the adequacy of the target reviewed after two years, not left until 2014. We think this needs to be carefully monitored and reviewed and, if necessary, the target needs to be adjusted upwards over this period of time. If you leave it until 2014, that will be too late in the scheme of things. We also want a review of the target to be triggered if the certificate price drops below a threshold of $40 for a period of six months. That is essentially a floor under the system, but we think that is necessary to maintain certainty in the longer term and to give some stability to the whole system.

I now want to come back to removing native vegetation. It is absolutely outrageous, and this is where doublespeak comes in. We had Minister Garrett at a global conference on biodiversity and ecosystems today saying that we have 1,750 species on the threatened species list in Australia and that we have to move to an ecosystem protection approach in order to look after our native ecosystems. And what have we got? We have a government subsidising native forest logging, the bottom dropping out of the woodchip market and the inclusion in this renewable energy target of, essentially, the burning of native forests.

I have had constituents writing in telling me that the woodchip mill in Eden—along with, of course, those in Tasmania—is just desperate for this to go ahead. I want the Minister for Climate Change and Water to tell me whether she is going to allow one certificate to be issued to a company like Gunns, Southern Forest or Eden, or to companies in southwest Western Australia for the destruction of native forest.

I would also like to know from Minister Garrett how that sits with the government’s new commitment to ecosystem support. This is from George Orwell’s novel Nineteen Eighty-Four, which was published in 1949. He had a definition for ‘doublespeak’, and that is what we have from the government when it comes to biodiversity protection and species protection and their support at the same time for the logging of native forests. You cannot have it both ways. As Orwell said at the time:

The power of holding two contradictory beliefs in one’s mind simultaneously, and accepting both of them....To tell deliberate lies while genuinely believing in them, to forget any fact that has become inconvenient, and then, when it becomes necessary again, to draw it back from oblivion for just so long as it is needed, to deny the existence of objective reality and all the while to take account of the reality which one denies—all this is indispensably necessary. Even in using the word doublethink it is necessary to exercise doublethink. For by using the word one admits that one is tampering with reality; by a fresh act of doublethink one erases this knowledge; and so on indefinitely, with the lie always one leap ahead of the truth.

That is what happens when you have a government saying, ‘We are worried about ecosystems,’ to a global biodiversity conference and then bringing in legislation here that permits the generation of energy from the logging of native forests. That is a complete nonsense—logging the largest carbon stores in the Southern Hemisphere for so-called renewable energy. It puts a bitter pill into the mouths of the people who actually want to have renewable energy to know that they are going to be paying not only for coal gas but for the logging of native forests in terms of that energy. The people rubbing their hands together are the logging industry. You only have to look at their contribution in evidence to the Senate committee to see that they are salivating at the prospect of putting a floor under logging of native forests. So that has got to come out of the legislation and I urge the coalition to support that.

Equally, on the issue of solar hot water and heat pumps, the Greens want to see solar hot water on every roof in the country. We want to see a massive expansion of energy efficiency. We should have an energy efficiency target and an energy efficiency scheme that supports solar hot water. But by putting it in the renewable energy target I fear that you are going to have crowding of the target with heat pumps and solar hot water and not benefit the renewable industry. We need to be doing both: we need to be reducing demand and increasing the supply of renewables. Energy efficiency for one target and renewable energy for another target—maximum benefit. What I am seeing here is yet again the government undermining the renewable energy sector by squeezing the space for the new technologies. It is in fact the Alice in Wonderland or the George Orwell scenario.

Annette Hurley (SA, Australian Labor Party) Share this | Link to this | Hansard source

Throughout the various inquiries that have occurred over the past year into Australia’s response to climate change one thing has been perfectly clear: if we as a nation are to move to reduce our carbon emissions at least cost to the economy and whilst maintaining energy security, we must fast-track investment and research and development into renewable energy alternatives. The renewable energy target will not, by itself, turn around Australia’s increasing emissions but it will play its part in a suite of measures to decrease Australia’s dependence on fossil fuels into the future, and it is certainly a fact that Australia has by world standards a very high dependence on fossil fuels.

Given the rejection of the CPRS in the chamber last week, the government has agreed to decouple both the Renewable Energy (Electricity) Amendment Bill 2009 and the Renewable Energy (Electricity) (Charge) Amendment Bill 2009 from the legislation in order to provide business certainty to the hundreds of renewable energy businesses and thousands of Australian consumers seeking access to renewable technologies. This is despite evidence from a legislation efficiency and environmental perspective that the bills made more sense operating together with joint transitional assistance.

Just last night, on Lateline Business, Mr Andrew Petersen of PricewaterhouseCoopers, when questioned whether the decoupling of the bills made sense, said:

I don’t think it does. I think they do talk to each other, there’s a language here in relation to elements of all policy around your greenhouse gas emission reduction, whether it’s energy efficiency, a carbon pollution reduction scheme, or whether it’s the mandatory renewable energy target.

Indeed, the Senate Economies Committee heard evidence that over 20,000 jobs will be created in the renewable energy sector due to renewable energy technology changes. Modelling by McLennan Magasanik Associates undertaken for the Department of Climate Change, modelling by Access Economics for the Clean Energy Council and research undertaken by the Climate Institute all support these estimates. The committee also heard that modelling undertaken at a sub-state level incorporated inherent biases. Modelling tools do not allow for disaggregation below a sub-state level to take account of any abatement opportunities generated and therefore do not take into account any of the new jobs created in the renewable energy sector. I think that is a very important point for people who do not understand that modelling is a useful but often inaccurate tool. The sub-state regional modelling figures quoted by some in the opposition do not actually make sense. It meant that the more negative modelling presented on this issue was fundamentally flawed in its projections regarding employment in regional Australia; we have heard a lot from the National Party on that issue. Modelling by both Treasury and the Minerals Council projects that real wages will continue to grow with both the RET and the CPRS.

Many submissions were received from the renewable sector, in particular the solar energy area, highlighting the potential damage to the industry and its job potential should the RET legislation be further delayed. The government was not going to allow the creation of more than 20,000 jobs in this area to be sacrificed because of the inability of those opposite to come to a united position on climate change. The RET bills implement an agreement on a renewable energy target reached by COAG on 30 April 2009. This agreement aims to have at least 20 per cent of Australia’s electricity supply coming from renewable sources by 2020.

This renewable energy technology bill expands the mandatory renewable energy technology scheme and replaces various state and territory schemes with one national scheme. That is also important for business certainty and for those businesses that have a national base. It continues many of the features of the mandatory renewable energy scheme, such as eligible sources and the banking of renewable energy certificates to encourage smoother investment.

At the 2007 election, the Liberal and National parties made a commitment to 15 per cent renewable energy targets by 2020. The Greens, as Senator Milne said, committed to 25 per cent and the government to 20 per cent. We have heard commitments from all sides that appear to support getting this legislation passed and operating, with a predictable divergence of views that the RET does not go far enough or goes too far. We have already had over the desk a number of amendments to these bills. But I think we must keep in mind the central fact here: we need this bill passed. I believe that the 20 per cent target by 2020 is achievable, but it will indeed present some serious challenges. The government, in designing this scheme, have worked very diligently to get the balance right. There are several factors in this. Let us have a look at some cold, hard facts about the transition we have to undertake.

Coal-fired power currently accounts for 80 per cent of Australia’s electricity generation. Australia is reliant on fossil fuels to generate electricity, and these account for over a third of Australia’s emissions of greenhouse gases. These are the facts that the government is grappling with in any realistic discussion about transitioning to a low-carbon economy. These are the facts that the government has taken into account when designing both the CPRS and the RET scheme, with the understanding that both will be necessary if we are to reduce our contribution to global emissions. At the moment, the production of baseload power from renewables is neither physically nor commercially viable. This is not to say that it cannot be viable and achievable in a relatively short time frame but that today it is simply not viable. So we do have to make compromises.

The CSIRO, in providing evidence to a recent inquiry, pointed out that geothermal, a form of renewable energy that has enormous potential in my home state of South Australia and indeed in other states, and which I think has universal support in this parliament, is looked on as a baseload technology. It does not have the intermittency and variability challenges faced by wind, wave and solar technologies. However, the technology is not yet up and running, and it is some years from being commercially proven on a large-scale basis. I have followed this technology for probably about 10 years. I know they always feel they are very close to getting it up and running, but I believe it is still some years away from being operational on a large scale. I watch with great interest the development of Geodynamics’s proof of concept operations with Origin Energy in the South Australian outback town of Innamincka, which is to progress to a commercial demonstration. Though only a very small town—if you blinked, you would miss Innamincka, I think—it will be a trial project to generate the town’s electricity entirely from geothermal energy supply.

Having noted the concerns regarding baseload generation and our current dependence on fossil fuels, there is also much to be optimistic about concerning our ability to fast-track renewable investment and development in Australia. Evidence provided by the Clean Energy Council highlighted the important contribution renewable sources could make to generating electricity. I think through Australia we have all seen the start of that, and it has been well canvassed. The committee heard that Australia is one of perhaps three or four countries with the potential to power itself entirely from renewables in the future. However, this will require diverse investment and commercialisation across a broad range of renewable technologies in really what is a fairly short time in our country.

The RET is only one measure the government have put in place to ensure Australia is well placed to take advantage of these opportunities. Other measures the government have introduced will ensure we give Australia’s renewable energy sector every opportunity to compete viably over the long term. They include $0.1 billion for the Australian Solar Institute to support research; $1.5 billion for the Solar Flagships Program; $0.5 billion for the Australian Centre for Renewable Energy to promote development, commercialisation and deployment of renewable technologies; $0.5 billion for Renewables Australia to support technological research and bring it to market; and $0.5 billion for our National Solar Schools Program. All of these measures will assist in conjunction with the RET to assist the fast-tracking of renewable technologies and assist with the commercialisation of these sectors to eventually become competitive with traditional electricity generation. I would like to emphasise that commercialisation aspect, because in my many years of contact with new and emerging technologies it is not so much the research and development but the commercialisation at which companies get stuck. I think we need to concentrate very heavily on ensuring that transition from a prototype to a commercial operation.

The committee received evidence on a number of other factors affecting our renewable energy measures, and some concerned some of the problems that have arisen. Senator Milne was critical of some of the transitional measures to assist companies, and I am not so critical. I think that we do need to ensure that—and we are talking about the RET today, but this concerns, hopefully, the introduction of the CPRS—the transition goes as smoothly as possible and that the adjustment occurs after the introduction of those two measures.

One industry that has got quite a lot of attention is the aluminium industry. The committee received evidence that, even on a pessimistic assumption, all but the aluminium industry will face an increase in costs of under 0.5 per cent, with the majority under 0.1 per cent. This represents less than the impact of a typical day’s movement in the exchange rates. In regard to the aluminium industry, the committee found that the RET would not change most of the factors the industry gives for operating in Australia. These were the cited by the industry itself as Australia having the natural resources, the integrated supply chain and a skilled workforce. The final reason citied by the industry for operating in Australia was competitive energy supplies. Other major producers of aluminium are Canada, China and the US. They have already introduced renewable energy technologies in most of the areas where the aluminium industry is operating, and Senator Milne went through that. We need to take into account what the aluminium industry is saying, and the government has covered that in the bills we have before us.

Finally, in regard to claims about the increases in electricity prices due to the increased RET, the committee heard modelling from Treasury, McLennan Magasanik Associates and the Clean Energy Council. They concurred that electricity prices would rise by approximately three per cent in the period 2010-20. Interestingly, modelling undertaken by the Business Council of Australia and ROAM Consulting found RET would make wholesale electricity prices lower than they would be otherwise, although I very much doubt that companies such as those operating in the aluminium industry would make windfall gains out of that.

No government, having brought in renewable energy technologies or the CPRS, would then abandon any industry. This government has always acted responsibly in terms of the economy, and it would keep a keen eye on the operation of industries like the aluminium industry and other industries that receive interim assistance cited by the government, such as aluminium smelting, silicon production and newsprint manufacturing. I am sure that this responsible government would not allow those industries to go under, despite some hysterical claims to the contrary.

Senator Birmingham also mentioned the natural gas industry. Being from South Australia, like Senator Birmingham, I recognise the importance of the natural gas industry. I have also heard them lobbying about the importance of natural gas and it being a cleaner energy source than coal or some other sources currently being used. Natural gas has the ability to step into the breach in a transitional period and reduce our carbon emissions. Clearly it is not a renewable technology and does not fit into these bills, but I echo some of what Senator Birmingham talked about and urge that it be considered in that transitional phase. I say to Senator Birmingham: it is the CPRS-type structure that allows the funding and flexibility to enable not only the natural gas industry but also other industries to be funded and supported in transition. That is why, I believe, the government wants them considered together: because there is the ability to support these industries under the CPRS. In that context, to consider the RET separately does not make sense.

To conclude, I reaffirm that tackling the issue of reducing Australia’s carbon pollution is decidedly challenging. It is not an easy process, but it has to be started now. The government has consulted widely, building on over a decade of analysis, modelling and policy formulation to give a scheme that will deliver real environmental outcomes at the lowest cost to the economy and with the smoothest transition possible. It is frankly absurd to suggest that any government would not seek to deliver these principles when seeking to introduce such a massive economic reform. However, the RET legislation is profoundly important to ensure the sustainability and growth of hundreds of businesses, which will see the creation of more than 20,000 jobs and the investment of an estimated $28 billion over the next decade. Not only is this important as part of our tackling carbon pollution; it is also economically and technologically important for Australia to be ahead of the game—or at least in the leading edge of the game—in developing these technologies. Australians have great faith in the ability of our scientists, engineers and technologists to develop those technologies. The current government, through Minister Kim Carr, has put additional resources and funding towards ensuring that we are developing that research capability in our universities and technical institutions throughout Australia and that it is supported and encouraged through our science and technology learning institutions. It is something that we can feed in to this renewable energy. It is vitally important that we pass this legislation. I commend the bills to the Senate.

Cory Bernardi (SA, Liberal Party) Share this | Link to this | Hansard source

In rising to make a contribution to this debate, I will flag that it should be relatively brief, for the benefit of the next speaker, Senator Xenophon. I begin by expressing my disappointment that it has taken two years for the government to introduce a bill that is clearly flawed. Is it irredeemable? That is a question that we are trying to negotiate with the government because we think that it can be improved. There are a number of areas where we have flagged amendments, which not only Senator Birmingham alluded to before but were also discussed in the other place. It has taken the government nearly two years to bring a flawed bill to this chamber. Originally they tried to do it by linking it to an even more flawed series of bills which they named the Carbon Pollution Reduction Scheme. It was an attempt at political extortion, for want of a better term. It was an attempt at extortion that clearly failed. It has been rejected not only by the coalition but by the minor parties. I am pleased that the government have seen at least a modicum of sense by bringing in the Renewable Energy (Electricity) Amendment Bill 2009 and the Renewable Energy (Electricity) (Charge) Amendment Bill 2009 as a stand-alone issue.

Renewable energy is an issue that is high on the priority list of many Australians. Many Australians think ‘what’s not to love?’ about renewable energy. It is clean, it is green and it is sustainable—all the things we like to think that we will support as a nation. But there are of course prices attached to this love of green energy. The question that will confront the Senate and that should confront every Australian is: is the price worth the results? Quite frankly, as these bills stand now, the answer is no, it is not. The consequences attached to these bills—pursuing a mandatory renewable energy target that is linked in some way to a flawed and ridiculous CPRS that grants exemptions for some industries but not for other vital industries and that will force every Australian consumer and every Australian business to pay more for their electricity—are pretty hefty price tags.

Clearly, not many people are willing to pay the personal cost of going into green energy themselves. I say that because I understand only around 10 per cent of people—it may be a few per cent more—actually opt in to green energy in their power bill. I have a confession to make: I am one of those 10 per cent. That surprises a lot of people, but I assure you it was a mistake; I ticked the wrong box on the electricity form. You are paying more for electricity to be generated that, I was assured, is saving the planet. But recently the ACCC have come out and said that you are not actually saving the planet. There are no additional emissions being reduced because you are opting in to green energy right now. They have forced the electricity companies to change their marketing methods. That is a concern because good-natured and well-minded people who are seeking to do the right thing by the planet have been wholly unable to rely on the marketing claims attached to green energy power producers. I think that is cause for some concern. Is what we are told now actually going to be an accurate reflection of the consequences and impact attached to these bills?

The coalition are serious about trying to get these bills through parliament because we think that there is ultimately a net benefit if we can get the amendments through that we really need to have. We also want to satisfy ourselves that there will be real benefits for the environment. There are, as I said, a number of questionable marketing campaigns that have been run. We also have no idea what the price of the electricity increases is actually going to be, not only for businesses but for individual households. Senator Hurley, in her contribution, said that there would be around a three per cent electricity price increase between 2010 and 2020. From where I stand, that beggars belief. I have not seen a three per cent annual price rise in electricity for as long as I can remember. The most recent price rise that I recall seeing on my bill was in the region of 15 or 16 per cent, and yet Senator Hurley gives us an assurance, thanks to some modelling. She made a bit of fun of modelling and how it can produce anything you want—and then relied on it. It seems quite absurd, really. But she said there is going to be a three per cent increase in electricity costs. That beggars belief. I do not think anyone in this place or in Australia should take that at face value.

It is disappointing that, in concocting these bills and the mandatory renewable energy target, the government has decided to ignore or leave out the consequences for a number of key industries, such as the food production industry. It has chosen to disregard the important contribution to sustainable energy that other forms of energy outside wind and solar can make, including, as Senator Hurley said, the geothermal projects in South Australia. South Australia is really quite a leader in renewable energy. I believe we have over 50 per cent of the wind power that is generated in Australia. I say that with a degree of pride because I think it is a good thing for us, but having such a high reliance on wind power in our state actually poses a threat to our state and our peak power supplies. We know that wind and solar cannot provide baseload power. Wind can be good for the peaks and troughs in the system. It can provide general smoothing of electricity generation, but when it comes to baseload power it is not going to be there. Quite frankly, I cannot see it being there for decades and decades and decades to come, if at all. In fact, I have some question marks about renewable energy outside of geothermal, which is really just a new way of producing a steam turbine, or going to a nuclear energy process to provide for Australia’s future energy needs, if we are insistent on moving away from coal.

Going back to the substance of this bill, the other part of it that causes me some philosophical internal debate is, I have to say, the fact that we are mandating that people have to pursue a particular course of action, whether or not it is actually going to be good for them personally, for their businesses or for our country. I remain unconvinced about whether this is the right approach or whether a market led approach, where people would recognise the benefits for themselves and be able to opt into it, is the right approach. Are we, at some particular level, disadvantaging our nation, our states, our households or our families by having to support this bill? That question will remain with me until the final outcome of this bill is determined, quite frankly—and we will have to determine whether we are doing the exactly the right thing.

How this is going to end up is now in the government’s hands. The coalition will be moving amendments. I understand that other parties and independent senators will also be moving amendments. We will be doing so with the intention of improving the bill. We will be doing so with the intention of making it workable. And we will be allowing the second reading to proceed, in the hope that the bill can be salvaged in the committee stage. Accordingly, I join with other coalition senators in reserving my right to make a final decision about whether to support this bill based on whether it can be fixed—because right now it is horribly flawed. It is another ill-considered piece of legislation from a government that is more concerned with spin than substance.

Nick Xenophon (SA, Independent) Share this | Link to this | Hansard source

I can indicate my support for the second reading of the Renewable Energy (Electricity) Amendment Bill 2009 and the Renewable Energy (Electricity) (Charge) Amendment Bill 2009. For the last week the Senate has debated a package of climate change and renewable energy related bills. It cannot be overstated that these are some of the most important pieces of legislation that the Rudd government will be dealing with, and some of the most important pieces of legislation that we will be dealing with as a parliament, for many years—particularly in the context of their potential economic and environmental impact.

These bills go beyond politics; they go beyond the terms of governments. It is vital to get our climate change and renewable energy policies right for the future of our nation, for the future of our children. Our environment needs urgent action. The community demands that the government acts responsibly so that we can have a package of measures that work to reduce greenhouse gases, that work to deliver the maximum environmental benefit, but do so in the context of being economically responsible. Our economy, especially our growing renewable energy sector, needs investor certainty; and each is vital to our future sustainability. That is why it was pleasing to see that both the government and the opposition have come together in recent days, after the decoupling of the CPRS legislation from the renewable energy target legislation, to have constructive talks in relation to getting this legislation through. But let us make it clear that that should not be about the lowest common denominator; it is also important that we have the best possible policies in relation to renewable energy targets.

The Senate has an important role to play in improving this legislation. I believe the legislation needs to be improved. There are loopholes—indeed, rorts—with respect to renewable energy that need to be addressed, and they need to be addressed in the context of these bills. So I strongly support the intent of these bills. But, as a member of the Senate Economics Legislation Committee, which held an inquiry into these bills, I became aware of a number of anomalies. I will set out those concerns primarily in the committee stage, but I will touch on them briefly in my second reading contribution.

What I propose to do now is provide a background by outlining the outcomes of the consultations that my office had between the submission of my minority report and the circulation of these amendments. Those discussions centred around these broad themes: firstly, ensuring the short- to medium-term viability of the solar industry; secondly, supporting the long-term development of emerging renewable energy technologies; and, thirdly, ending the rorting of RECs, renewable energy certificates, within the water heat pump sector.

In relation to the solar industry, my office was contacted by a number of leading solar water heating and installation services from around Australia, including Think Water in Colac and Summerland in Tweed Heads. These businesses reported a drop of around $10 in REC prices between June and July with the delay of these bills. They also expressed concern about the future viability of their businesses and the possibility of job losses. These concerns were shared by installers of photovoltaic electricity panels, who have also called for the swift passage of this legislation to ensure the short-term viability and long-term certainty of their industry. Through discussions my office has had with Adrian Ferraretto and Liam Hunt from Solar Shop, which has operations nationwide and is based in Adelaide, the impact of the delay of the RET becomes patently clear. In May this year the Solar Shop had $25 million of panels ordered; however, after the announcement of the delay of the RET orders, this dropped to $20,000. They both outlined the history of the solar panel rebate, which has been the subject of constant change, delay and at times cancellation since its introduction in January 2000. This has done little to provide for certainty for that investment confidence in the industry. They pointed to modelling in the German renewable energy sector that indicates that the number of jobs created per megawatt of solar energy installed is between three and seven times more than by other renewable energy technologies.

In my conversations today with representatives from the Clean Energy Council and associated organisations, the need for PV solar to provide renewable energy generation in the short to medium term was stressed yet again. I must say that, while I think the Clean Energy Council has taken an active interest in this debate, as is entirely appropriate, they will do themselves a favour if they come out and speak out against the rorts that we have seen in relation to the heat pump sector. I think they should do that sooner rather than later if they want to enhance their credibility. It is already a credible organisation but I think it is important that the Clean Energy Council speak out in relation to what is clearly rorting in the heat pump sector. That is something that must be attended to.

This industry is vital in the transition to reliable renewable energy in the longer term, and it is trying to prepare itself for future energy grid parity in terms of PV solar. It must be provided with greater certainty and confidence. While the industry may be able to sustain these sorts of adjustments in the short term, should they continue and become long-term losses businesses will close and jobs will be lost. That is why we need this legislation.

In relation to emerging renewable energy, one of the big issues has been how to better support emerging renewable energy technologies such as geothermal, wave energy, solar and solar thermal. If we want to reduce our reliance on coal, the best way to do it is to have reliable alternatives to baseload electricity generation. Geothermal is clearly the best of the best in relation to that. It is still an emerging technology, as is wave energy, as is solar thermal—which may not provide power 24/7 but could provide power for those peak times. These are exciting technologies that need support, and that is why I think it is important that there be a particular emphasis in relation to them. I am concerned, in relation to this current legislation, that there simply are not the clear signals to give that support to this particular sector.

I am concerned that we are putting too many of our eggs in the wind energy basket and that we have a massive increase in wind energy and wind farms, which do not provide that baseload power certainty that you need if you want to wean an economy off coal. I think that more needs to be done. To give an example, in South Australia during a heatwave in February this year, the reliability of the wind farms dropped to three per cent. The wind was not blowing and the farms were not providing regular power. I am not against wind energy at all. I think that it has an important role to play in renewable energy technology, but it is important to combine it with, for instance, gas as an interim measure. It is not a renewable but it is certainly much, much cleaner than coal and it gives you that baseload certainty.

More importantly, I think we should encourage geothermal and other emerging technologies. As Senator Bernardi pointed out, geothermal energy is something that South Australia has an abundant supply of. It is a matter of tapping it and tapping it as soon as possible so that we can wean ourselves off coal. Yesterday I met with Susan Jeanes, from the Australian Geothermal Energy Association, John Grimes, from the Australian and New Zealand Solar Energy Society, and Kellie Caught, from WWF; to discuss ways forward to support emerging technologies. Their input was most helpful, as have been the conversations with bodies such as Vast Solar and Oceanlinx, as well as organisations such as the Clean Energy Council and the Australian Industry Greenhouse Network. I believe that strategic support should be provided for emerging technologies, and I foreshadow that I will be moving an amendment to this purpose in the committee stage.

As a South Australian senator, I would like to make special mention of the significance of geothermal hot-rock energy generation. I was recently up in Innamincka, not in relation to geothermal, and there is a real excitement in that community in the far north of South Australia about the potential of geothermal in terms of powering local communities and being a mainstream source of power. I have raised these issues with the minister’s office and I am looking forward to some positive outcomes. I think that is the way forward, and we need to deal with that as a matter of urgency.

In relation to what I call the ‘heat pump rort’, this is a real concern, and there are two areas that have emerged through my discussions and my office’s discussions in relation to this. The first is that a multiplier effect is operating on commercial heat pump installation that results in a flooding of RECs, which devalues their value. The second is that air-source heat pump technology does not actually generate any energy and hence should not qualify for RECs. Let me address each of these issues in turn. The issue of multiplier effect was first brought to my attention during the Senate Economics Legislation Committee inquiry into these bills on 5 August 2009. I quote from the Hansard of that day, when Mr Warring Nielsen, of the Gas Industry Alliance, reported:

The abuse has come through the fact that in the MRET calculations of calculating RECs there is a loophole that exists in the quantity area in excess of 700 litres when you can put three heat pumps together in parallel and you get a multiplying effect. That means you can put anything up to 30, 40 or 50 heat pumps into an installation for no cost whatsoever. In just one audit we have taken on our own customer base, we have had 30 customers where we have had gas installations in place and they have put in heat pumps to the tune of around $2.6 million and they have generated RECs of around $6.2 million. They have been overcapitalised completely and they have just been rorting it to develop RECs. And even tonight I have had a phone call from a plumber in Victoria telling me that the rorting is going on in Victoria where people are pulling out continuous gas flow units and sticking in heat pumps and saying they are replacing electric.

That sort of rort should not be allowed to go on. It is an abuse of the scheme, it is an abuse of the system, and I will be moving an amendment so that we put an end to that. At the very least, where that abuse has occurred and where it has been manifestly occurring around the country, we should immediately put an end to the 700 litres or more capacity and we should also phase out those heat pumps. They are quite different from those that require solar panels.

It beggars belief that this should be part of this scheme, and it is a rort that must be addressed. I think that many senators on both sides would privately acknowledge that this is a real problem. I will discuss further how that rort operates, but once a unit exceeds 700 litres it is deemed a commercial installation and a consumption standard no longer applies as it does for the domestic usage, and the total RECs are then calculated by the total tank volumes multiplied by the maximum level of energy saving of the unit, not the actual consumption. In practice, this means that while two units will receive 60 RECs a third unit can receive over 570 RECs. This provides the opportunity for a company to oversupply the needs of its business and then use the resulting maximum RECs to subsidise the installation to a level that is attractively cheap to the purchaser. Clearly, using this loophole to secure more RECs and to line the pockets of a company, while currently legal, is a rort. While this avenue is open to all heat pump installers, the vast majority of the industry in Australia is not choosing to participate in it, because it believes that it is unethical. However, one operator has been brought to my attention who is exploiting this loophole. The amendment that I am proposing will close that loophole.

My second amendment in relation to heat pumps will, as I indicated, phase out air sourced heat pumps over the next six months. In the conversations that my office has had with Nick Smith from Elgas and Warring Nielsen from the Gas Industry Alliance, it became clear that the industry could accept the removal of air source heat pumps as long as solar source heat pumps remained eligible for RECs. To put it another way: if a heater or a heat pump has a solar panel, then it should qualify as being energy efficient, but if it relies on a refrigeration unit and electricity it should not be eligible for RECs.

My other concerns are in relation to the waste coal gas sector but I understand that that has been the subject of negotiations with the opposition. It is something that I will refer to during the committee stage.

There are two other points that I should also mention before concluding. Firstly, I have consistently advocated the decoupling of the CPRS and the RET bills, and I commend the government for agreeing to decouple these bills. In terms of the politics of it, the government really could not do anything else. It was quite right for the government to maintain its position until the CPRS bill was defeated but the government understands that the only way forward now is to decouple the bills. I commend them for going down that path.

Secondly, there ought to be a more rigorous review of the RET. I foreshadow an amendment that will introduce clearer guidelines and a biennial review. I note that Senator Milne has put up an amendment to that effect and, subject to discussions with Senator Milne, it may be that I will support that amendment rather than introduce the amendment that I have drafted. But I think it is important to look at the environmental and economic impact of this scheme.

It is important to note that we need to get this right. We need to get rid of these loopholes in particular and make sure that those who are involved in renewable energy are given the investment certainty they need and that we do not have a crowding-out of this market of renewable energy certificates by wind power so that the emerging technologies miss out. We need to make sure that other technologies in terms of waste dumps, that have been very effective in abating emissions, are not crowded out of the market.

To that degree, I pay tribute to the work that LMS, a South Australian operator, has done nationally in relation to this. My fear is that while a company such as LMS may not put its investments on hold, it may not expand as much as it could have because the market has been crowded out. But that will be less of a problem if we get rid of some of these rorts, particularly in relation to air heat pumps. I look forward to both the opposition’s and the government’s arguments in relation to those, because I do not believe they can be justified at all under a scheme such as this, which is about renewable energy. I look forward to the committee stages of this bill.

Helen Polley (Tasmania, Australian Labor Party) Share this | Link to this | Hansard source

I rise this afternoon to speak in support of the Renewable Energy (Electricity) Amendment Bill 2009 and the Renewable Energy (Electricity) (Charge) Amendment Bill 2009 and in support of the strong steps being taken by the Rudd government in relation to climate change. There are very few people left today who do not comprehend the seriousness of climate change and the very real effect it is having and will continue to have on our ecosystems.

The effects of climate change will spare no nation, will be long and entrenched, and will affect our lives and societies in ways that we perhaps do not yet fully anticipate. Australia will be amongst the most vulnerable and most threatened by climate change. We are the driest continent on Earth at a time when the Earth is getting drier. Our tropical areas will get wetter and our parched, drought-stricken areas will get drier. We boast a unique and valuable catalogue of fauna and flora that is found nowhere else in the world—due to the many millions of years of evolution since Gondwana broke away. These flora and fauna are already showing signs of stress and decline due to changes in air temperature, ocean temperature and habitat.

There is a tendency to sit back and despair at how much we as a nation have to lose through the effects of climate change. However, the Rudd government chooses not to linger on such despair but instead has put forward a comprehensive package for reducing our emissions and thereby inspiring the international community with what can be achieved. The fundamental aim of the renewable energy amendments bills is to ensure that 20 per cent of our electricity supply comes from renewable sources by the year 2020.

The easiest and most sustainable way to reduce our impact on the environment and to minimise the effects of climate change is to invest seriously and sensibly in renewable energies. We as a race have found ever increasing ways to use electricity to power almost every aspect of our lives, and this carries many great advantages. However, we must become serious about limiting the use of conventional electricity generation and instead use such renewable options as wind, sunlight, waves and geothermal energy. These power sources are limitless in their application because they are infinite; they can replenish themselves in a short space of time and it often costs nothing to generate and harness their energy. The benefit is therefore twofold—less finite fossil fuels are used and they are, instead, replaced with infinite energy resources which expend no energy to create energy, and therefore the CO2 emissions created are less.

The catalyst for achieving the target of 20 per cent by 2020 through this legislation will be the introduction of renewable energy certificates. Power generators can create these certificates by creating renewable energy and then trade or sell these in the electricity marketplace to any organisation that may carry a liability. Market forces will then work their magic with liable organisations choosing between either surrendering their certificates to demonstrate their compliance with the scheme or paying a fee for a shortfall in meeting their own targets.

This is a simple yet highly effective means of giving incentives to energy generators to change old habits and to invest in a renewable energy sector that offers significant long-term benefits, both financially and environmentally. The introduction of a renewable energy target will open up an expected $19 billion investment in the sector, leading up to 2020. Such unprecedented levels of investment will significantly boost job creation, innovation and the economy and will do so in a sustainable manner.

The renewable energy target will not work in isolation, however. The Rudd government has planned carefully to create an interwoven set of policies and legislation that will work together to realise the maximum benefit and to arrest climate change, working across the community in a number of significant ways. The initiatives include: $500 million for the Renewable Energy Fund, to aid the development and distribution of renewable energy in Australia; $150 million for solar energy and clean energy research; 80,000 solar systems installed on Australian rooftops under the previous Solar Homes and Communities Plan; continued incentives for the installation of household solar power systems through the new Solar Credits scheme; investment in information on the best means of reducing energy consumption through the Solar Cities program; $4 billion to install ceiling insulation in 2.9 million homes as part of the Energy Efficient Homes Package, along with 420,000 solar hot water systems; the National Solar Schools Program, with up to $50,000 per school in grants to install solar power, rainwater tanks, solar hot water systems and other renewable energy items; the Green Loans Program, to provide low-interest loans of up to $10,000 to make homes more energy and water efficient; and the National Rainwater and Greywater Initiative, to provide up to $500 in rebates for the installation of household rainwater tanks and greywater systems. The list is as long as it is comprehensive and provides multiple opportunities for making a difference to the way we use energy and water, the amount we use and where we source it.

We cannot work in isolation when we attempt to combat such a broad and complicated issue as climate change. Legislation needs to be changed. We need to change not just policies and processes but mindsets and societal expectations and standards. The Rudd government is working constructively at a multipronged approach to this issue and will draw the initiatives together to have the greatest and most tangible possible effect.

However, the greatest threat posed to the establishment of a renewable energy target in this country is not the complex nature of the problem of climate change and lowering emissions; it is the entrenched, oppose-at-any-cost mindset of those opposite. It is the belief that if we sit by and talk idealistically about which way is better or worse and who is more or less likely to be affected then the problem somehow will resolve itself. The opposition have clearly demonstrated that the issue of climate change is too much for them to tackle and that they would rather stymie any attempt to move forward to actually achieve something positive. Hopefully, finally they will do what is right and support these bills. But I have to say, Mr Acting Deputy President Bernardi, that I think your contribution clearly demonstrated that there are still many sceptics on that side of the chamber. This scheme, along with a suite of other complementary initiatives and programs, is not a half-baked rush forward with no thought for consequences. It is a carefully measured, well-balanced step in the direction that we must go.

I speak with conviction on this issue largely out of my hopes for my home state of Tasmania. Tasmania is a uniquely positioned state that will be able to maximise the benefits that can be drawn from the renewable energy target scheme. Tasmania is currently the leader in renewable energy generation in this country, with 87 per cent of mainland Tasmania’s installed electricity generation capacity coming from renewable hydro or wind power. We are the only state to generate a significant portion of its energy from hydroelectric power, with the Hydro being the predominant source of electricity in Tasmania for nearly a century—Tasmania leading the way again. Tasmania also boasts one of the best performing wind farms in the world, in the far north-west. Our position right in the path of the roaring forties westerly winds makes us a prime candidate for extended application of wind power generation. A project currently in the middle of the procurement phase will see a 60-turbine wind farm established in the north-east with 129 megawatts of power generation capacity.

In addition to wind, a number of companies are currently exploring Tasmania’s geothermal resources. Tasmania’s geology is considered amongst the best for geothermal power generation in the country. We also have the added advantage of a small land size with a highly decentralised population, meaning that high-voltage transmission lines will not be far away from any geothermal power plant. Continuing on, Tasmania also has excellent wave power and tidal opportunities, another means of generating electricity. All of this constitutes enormous potential for Tasmania to take its place as the premier producer of renewable energy in this country and a significant source of contribution to the renewable energy targets. We have a proud history of using renewable energy first and foremost and have thrived on the financial, tourism and social benefits stemming from that.

Supporting the renewable energy target scheme is the only way to support more such programs and initiatives and grow jobs in this sector and jobs in general. The entire Tasmanian economy could benefit enormously from a strong step in this direction. A speech by the member for Franklin, Ms Julie Collins—an excellent member for Franklin, I must say—recently highlighted that 500 permanent jobs and 1,300 construction jobs at the height of activity could be created by the renewable energy target scheme. Such an investment in a sustainable future and in job creation cannot be ignored by Tasmania and, likewise, should not be ignored by this nation or by this chamber, particularly those opposite.

Now is a time for optimism and bold steps, not for naysaying and political opportunism. As a legislator, as a parent and, most importantly, as a grandmother, I will do whatever I am able to do to ensure that the planet is left in a better state for my children, my grandchildren and future generations than it otherwise might have been. Setting a renewable energy target of 20 per cent by 2020 is a step I and they could be proud of. I commend the bill to the Senate.

Ron Boswell (Queensland, National Party) Share this | Link to this | Hansard source

The Senate is debating the Renewable Energy (Electricity) Amendment Bill 2009 and related bill and I have followed this issue very closely. I was active on the Senate Standing Committee on Economics in its recent inquiry into this legislation and before that as a member of the Senate Select Committee on Climate Policy. I have had numerous discussions with Australia’s businesses, large and small, about the impact of RET and I have seen how millions of dollars have been invested, relying on the RET being passed by the parliament. There are claims and counterclaims about how the RET works, which makes it a complex matter.

The coalition has stipulated reasonable amendments. In order to pass this bill, these amendments include stand-alone trade assistance for emissions-intensive trade-exposed industries, increased trade assistance for aluminium, and assistance for trade-exposed food processing businesses. The complexity of RET and its relationship with the CPRS acts to divert attention from the enormous impact this bill will have. However, there is a clear way through. There is an aspect of RET which cuts through all the political palaver. I would like to quote from the submission put forward by Catholic Health Australia to the economics committee inquiry into this bill, which cuts straight to the chase. Catholic Health state:

… the Bill will see an increase in energy costs for health and aged care services. We estimate this adverse impact on Catholic Hospitals in 2010 to be $650,000, leading to $1,685,000 in 2020. The adverse impact for Catholic aged care services will be $365,841 in 2010, growing to $1,035,261 in 2020. Accordingly, the total cost of the Bill for Catholic health and aged care providers is likely to total $1,022,436 in 2010, raising to $2,720,591 in 2020.

But that is not all. They go on to say:

The adverse impacts as a result of the Bill come in addition to that of cost impacts of the proposed Carbon Pollution Reduction Scheme. Catholic Hospitals are likely to meet an increase in energy costs of $10.8 million in year one of a fully operational carbon trading scheme, for which the Government is yet to propose any adjustment packages to meet the needs of not-for-profit health and aged care providers.

We have heard about the price of groceries going up. We have heard how fuel and energy will go up. Every day there is another cost that goes up. Now we hear the nitty-gritty from Catholic Health about how the RET and the CPRS will cost them millions of dollars that they cannot recoup from their clients. They have asked for help from the government but there is nothing forthcoming. The RET will impact not only on Catholic hospitals but on all hospitals across Australia. Where in state and federal budgets is there allowance for RET and CPRS expenditure? What programs will have to be cut in order to pay for RET and the CPRS? This government was elected on the promise to bring down grocery and fuel prices. All we have seen is those prices go up. And now the sorry mess that passes for health in this country, due to the negligent state governments, is going to suffer even more. I urge the Senate and the public to cut through the green rhetoric that passes for political debate and become aware of the reality of what the RET and the CPRS mean.

This bill mandates that 20 per cent of Australia’s electricity supply in 2020 comes from renewable resources. The 20 per cent target is achieved by combining the 45,000 gigawatt-hour target included in this bill with the 15,000 gigawatt hours of renewable energy generation that existed prior to 1997. By mandating renewable energy we are requiring energy users to pay significantly higher prices for electricity. We have a $40 product, which is the cost of generating a megawatt hour of electricity from coal, but we are asking people—no, we are forcing people—to pay $100 or more for that product. It costs $100 to produce a megawatt hour of electricity from wind power and it costs $200 to produce a megawatt hour of electricity from solar photovoltaics. Technologies such as geothermal, solar thermal, wave and tidal energy and other such things have not even been developed enough to the point where we can say what they will cost. Maybe the cost will be somewhere between wind and solar—it may be higher or it may be lower; we do not know.

The 45,000 gigawatt hours of renewable energy needs to be subsidised because it is expensive, and it would not be produced without a subsidy. Electricity users will pay this subsidy through higher electricity prices passed on by electricity retailers such as Origin Energy and AGL. Electricity retailers or some large industrial users are required to purchase renewable energy certificates on an open market and surrender these at the end of the year to the government. These certificates, which could cost anywhere between $30 and $93, represent the subsidy to renewable energy generators. Renewable energy certificates are created by renewable energy generators for each megawatt hour of electricity generated. As the target ramps up electricity, retailers are required to purchase and surrender an increasing number of certificates in proportion to the amount of electricity they purchase from the wholesale market.

For example, in 2010, an electricity retailer will be required to surrender an amount of certificates equal to about five per cent of its electricity purchases. So, if a retailer purchases 10 million megawatt hours of electricity from the wholesale market, it would have to purchase and surrender 500,000 certificates to the government. In 2020 the percentage increases to over 16 per cent and therefore requires the same retailer to purchase and surrender more than 1.6 million certificates costing anywhere between $30 and $93. Electricity retailers will not absorb the costs of subsidising renewable energy. These costs will be passed onto industry, businesses, schools, hospitals and households. They will force electricity prices up.

The government’s modelling suggests an increase in retail electricity prices of between three and four per cent, but we heard in the recent economics committee inquiry from one of Australia’s largest electricity retailers that it will increase retail prices by up to 7.5 per cent. It must be noted that this increase is not an increase on today’s electricity prices; it is an increase on electricity prices that would have already increased as a result of Labor’s flawed, friendless and now defeated ETS. It is a 7.5 per cent increase on prices that would have already increased by about 35 per cent because of the ETS.

Yes, increasing renewable energy is a good thing, but do we have all the policy levers right? There are utterly credible doubts about our capacity to invest the billions of dollars required to achieve the 20 per cent target in the time frame. There are utterly credible concerns that there will be insufficient investment in transmissions infrastructure for all the windmills to come online. Australia is not Denmark, where everyone lives within cooee of each other. This is a massive continent where graziers used to call STD to ring their own shearers’ quarters.

Today we read that necessary maintenance investment in Victoria’s power supply industry is not going ahead and that everyone will have to prepare for less reliable power. Is that why people voted Labor at the last election? Take the case of the Murray Goulburn Dairy Cooperative. They are high energy users and are trade exposed. The RET squeezes their profit margins to the extent that they will have terrible trouble competing in export markets. They cannot sustain the cost increases and will be forced to pass the cost back to dairy farmers.

The Australian Dairy Industry Council submission to the Senate Standing Committee on Economics inquiry states that the RET will further add to the cost burden on farming families that would already be imposed by the CPRS by increasing electricity costs to processors and farmers. The cumulative increase has the potential to seriously impact on the industry. They add:

Although dairy processing is highly trade exposed in most products—the main activities do not meet the cut-offs for EITE classification. We believe this is a flaw in the CPRS system that will see less competitive food processing and farming in Australia and lead to carbon leakage. Our major competitors in the world dairy market—

that is, New Zealand—

will provide support for dairy processors and/or exclude farm emissions or will not have an ETS at all.

The Murray Goulburn Dairy Cooperative told the economics committee that its liabilities under the CPRS would result in income losses to its 2,500 farming members of between $5,000 and $10,000 and that the RET would impose an additional $1 million in 2010, rising to $2 million by 2020.

I have been told by an abattoir in Queensland that its RET costs alone will be $315,000 in 2010 and would rise to $850,000 by 2020. Like dairy, these additional costs cannot be absorbed and will be passed back to the sheep and beef graziers. By all means, let’s have more renewable energy and less carbon, but do not pull the wool over everyone’s eyes and insulate them from the costly truth. The only cheques in the mail from the RET and the CPRS will be the ones paid by working families to the government to pay for the extravagant cost of green schemes.

The totalitarian approach of the Rudd government would give the Spanish Inquisition a run for its money. The pointy hats opposite gleefully torture anyone who raises their hands with so much as a question, yet that is exactly what parliaments are for: to explore the issue and make sure everyone’s voice is heard.

Here I stand—I am speaking up for the thousands of patients in Catholic hospitals and demand that the climate minister explain to me and them how they will pay for the RET and CPRS costs? To whom will they have to refuse a bed? Minister, tell us: what services should they shut down; which sick people should they turn away? It would be a truly mongrel act to allow that to happen.

Evidence to the economics committee inquiry was very helpful in focusing the mind on the real outcomes of the unamended RET. We were reminded that the Productivity Commission, in its submission to the Garnaut review, said:

... with any effective emissions trading scheme in place, the MRET would not achieve any additional abatement but impose additional costs, most likely lead to higher electricity prices, provide a signal to lobby for government support for certain technologies and industries over and above others. Reserving a proportion of electricity generation for renewable energy sources changes the generation mix in a way that increases abatement costs for no additional emission reduction benefit. These problems would be further compounded if state-based renewable energy target schemes were retained or introduced.

The Garnaut review itself states:

There is an interesting and seemingly perverse consequence of expanding MRET at the same time as the emissions trading scheme ... Having both schemes operating side by side could ... increase in coal-fired power generation (by more than 2000MW) as gas-fired plants are crowded out by MRET. This would not occur if the emissions trading scheme were operating without MRET.

The Treasury, in its report, Australia’s low pollution future: the economics of climate change mitigation, in October 2008, says:

The impact on GNP of the expanded RET, taking into account both increased GDP costs and the reductions in international income transfers, is $5 to $5.5 billion. The average cost of mitigation per tonne of CO2 from expanding the renewable energy target is around three times the average price of permit prices in the CPRS.

Mr Michael Hitchens, the Chief Executive Officer of the Australian Industry Greenhouse Network, told the committee:

... what the RET effectively does, for no additional reduction in CO2 emissions, is add about $350 million in 2010 to electricity consumers’ costs, and that rises to about $1 billion by 2020. That is for no added environmental benefit.

I then asked him why the government was proceeding down this path. Mr Hitchens replied:

I am at a loss. I have quoted four independent reports that have either been done for the government or by government agencies and none of them find a good economic or environmental case for the policy.

That is where I find myself today in this debate: I am at a loss. I concede that investments have been made pursuant to an expanded RET and acknowledge that increasing renewable energy is a worthy aim, but I do not want to see healthy Australian industry and jobs go down the drain; nor do I want to see longer waiting lists in hospitals across the country.

As legislators we have a responsibility to face up to these truths, not to ignore them and hope they will go away. We are called to act with discernment. The coalition amendments are sound and seek to alleviate the problems of RET. Any reasonable government would accept them. The government said this week that it would decouple the RET and the CPRS legislation. They have failed to do so. All they have done is offer interim trade assistance for a select three industries. Other trade exposed industries have been left out in the cold, with RET assistance remaining contingent upon passage and commencement of Labor’s flawed ETS.

Australia’s most energy-intensive industries—aluminium, silicon and newsprint—have been offered stand-alone trade assistance, but the aluminium industry says it is not enough to ensure ongoing viability. Other industries like iron and steel, sugar refining, plastics and chemicals, pulp and paper, glass, and cement and lime will receive no trade assistance under RET until an ETS is passed and commences—and agricultural processing will receive absolutely nothing even if an ETS is passed.

If the coalition were to pass Labor’s renewable energy legislation as currently proposed, Australia’s most significant trade advantage, cheap and secure supplies of energy, would take an enormous hit and this would be felt by every trade exposed business in the country—and every hospital and ultimately affect blue-collar jobs across manufacturing, mining, mineral processing and food processing.

On the one hand the Rudd government is wedded to grandiose stimulus plans and on the other it seeks to destroy jobs and industry. There will be precious little left to stimulate by the time they have finished adding carbon and renewable energy costs onto every hospital bed, conveyor belt, coffee machine, personal computer, dragline, plasma TV, nail gun, electric light, pool pump, fridge, assembly line, boiler and jackhammer. You name it, it is going to cost a lot more under CPRS and ETS—and RET.

Guy Barnett (Tasmania, Liberal Party) Share this | Link to this | Hansard source

I stand tonight to speak on the Renewable Energy (Electricity) Amendment Bill 2009 and the related bill and place on the record my strong support for the renewable energy target, in particular the 20 per cent target by 2020, and, as a proud Tasmanian senator, note the important contribution that this will make to our home state of Tasmania. If this legislation passes with the appropriate amendments—and I will come to the amendments and the importance of them shortly—this could be the catalyst for significant development in hydro and, specifically, wind power.

I would like to address right up front the importance of wind power. We have seen at Woolnorth wind power developments already in Tasmania. We know that Tasmania is a renewable energy state. In fact, well over 95 per cent of our power is renewable energy. We also know that Hydro Tasmania is in fact the largest generator of renewable energy in Australia. It is a proud fact. Most Tasmanians are not proud of that fact. Hydro actually own and operate in Tasmania some 29 hydro power stations worth $4.8 billion based on the last estimates that I have been briefed on. They have a number of renewable energy projects, primarily in wind, through their joint-venture partner, China Light and Power. They own what is called Roaring 40s, a very forward-thinking and progressive company. They are doing a lot of good work, including looking at a development at Waterloo wind farm in South Australia and specifically the Musselroe Bay wind farm in north-east Tasmania. I want to place on the record my thanks for the recent briefings I have had from Matthew Groom from Roaring 40s and also Alex Beckett from Hydro Tasmania. I thank both of them for their professional assistance and briefings.

There is no doubt about the fact that Tasmania is a state that is proud of its renewable energy history and its culture. Indeed, when my father finished university back in the 1950s he looked at a job in the hydro sector but instead pursued other options and ended up being a farmer and a small-business operator in Northern Tasmania. It is very important for Tasmania.

The prospects for the Musselroe Bay wind farm development have advanced markedly as a result of the passing of the renewable energy target legislation, certainly by the House of Representatives. If we can pass it through the Senate with the appropriate amendments, conditional upon those appropriate amendments, then it will be a tremendous boost and it will send a signal certainly to Roaring 40s and to the industry generally of the prospects for that Musselroe Bay wind farm and renewable energy developments more generally.

The Clean Energy Council in its statement of 16 August indicated that if this legislation were passed it would unleash $28 billion worth of new investment and 28,000 new, clean jobs over the next decade. They also say:

The CEC will continue to push for amendments to ensure the government’s promised target of 45,000 GWh of clean energy by 2020 is reached ..

There is a fair chance of that, depending upon what happens in the committee stage here in the Senate with respect to the amendments and if the government does the right thing and ensures that they are considered and passed.

The Musselroe Bay wind farm is a $350 million investment in Tasmania and in north-eastern Tasmania more specifically. It will create 150 jobs during the construction phase and it will meet the electricity needs of up to 55,000 homes. It will have a 140 megawatt capacity. Already the development application has been approved. They are really ready to go. Obviously finance will need to be arranged and locked in, but if this legislation is passed it will send a signal to the developers and to financiers that this is a very live prospect. It will be the given the green light if this RET legislation is passed with the appropriate amendments.

Last week, as I have indicated, I was briefed by Hydro and Roaring 40s and they were both eager for the federal government to fulfil its promise of renewable energy targets. A number of significant projects in the pipeline have been left on hold, because you have to remember that the government has been sitting on this legislation for over 12 months. That is a great disappointment for those in the renewable energy sector, including in Tasmania. Of course, the Howard government introduced Australia’s first renewable energy legislation, and the legislation before the parliament this week only builds on that. The Liberals strongly support a renewable energy target of 20 per cent by 2020. If this is legislated, it will be a huge boost for wind farm developments generally, not just at Musselroe Bay in north-east Tasmania.

Last week, the Rudd Labor government refused to separate the renewable energy legislation from their failed emissions trading scheme legislation. Now they have done the right thing. They have seen the light and taken on board the requests and the urging of the coalition, specifically Malcolm Turnbull, Greg Hunt and Ian Macfarlane. I commend those spokesmen for the coalition and thank them for their lobbying to make this happen. It is looking positive. I am very pleased that the Labor government has backed down and agreed to the coalition request to decouple the renewable energy legislation from the overall ETS package. It is, however, critical that the government agrees to our amendments—and appropriate amendments put by whomever in this place—to protect the aluminium, cement and food-processing industries in particular.

About one hour west of the Musselroe Bay wind farm is the Rio Tinto-Comalco smelter at Bell Bay. Together with members of the Tasmanian Liberal Senate team I had a tour there some months ago. It is a fine establishment and a significant contributor to the Tasmanian economy, particularly the Northern Tasmania region. It employs around 600 people plus an additional 60 full-time equivalent contractors. The business directly contributes to the local economy through payment of $50 million in salaries per year as well as an annual spend of around $175 million on goods and services from more than 300 Tasmanian suppliers. They are very community oriented too, which is well known in and around George Town and the Bell Bay area. They certainly provide significant investment in social programs and partnerships. It is Australia’s only aluminium smelter using predominantly renewable energy. It is the only smelter of its kind and produces around 180,000 tonnes per annum of aluminium.

We know for sure that, under the government’s failed and flawed ETS scheme put to parliament last week, which has now been rejected, the smelter at Bell Bay would have copped it in the neck and big time. We know that and we also know that under this legislation it is very important that we get the amendments right to protect their interests because there will be higher power charges. They need proper protection and a level playing field. Why would we wish to export jobs in emissions-intensive trade-exposed industries? Yes, it is important that they be properly protected and that we do not export jobs unnecessarily to China, India or elsewhere.

About another hour west of Bell Bay is Railton, which is the home base for Cement Australia. Cement Australia make a tremendous contribution to their local industry and, again, an amendment needs to pass through this Senate chamber to protect their interests. Cement Australia provide about 130 direct jobs, but, of course, those jobs support about another 500 jobs in their local community. It was some time ago that I toured Cement Australia, and I know other members of the Tasmanian Liberal Senate team have toured that facility. We have a high regard for the management and the workers at Railton. We also know that they are doing it tough at the moment. In the transition period of any future ETS and any future arrangements, they need to be taken very seriously. They do not want to take on undue costs, whether from power prices or elsewhere.

I put on record my thanks to Todd and Robyn Loydell for their recent briefings and information that they have provided. They have been very professional and forthright in their views. Likewise, I put on record my thanks to Jenny Jarvis and her team and to John Lemberg, the general manager of operations, at Rio Tinto at Bell Bay. I also want to mention the need for an appropriate amendment to protect the interests of the food-manufacturing sector. Tasmania has a lot to gain from this legislation. I believe it could be the catalyst for a major multimillion dollar development in north-east Tasmania. We can really make a difference in Tasmania if this legislation is passed with the appropriate and correct amendments.

Some years ago I visited Denmark as part of a parliamentary delegation. I visited the Vestas factory there and noted that a very high proportion of their energy comes from wind. That was an excellent visit. I learnt a great deal about the importance of wind energy to the Danish community. Of course, it is also the home of Tasmania’s own Crown Princess Mary. Being a proud Tasmanian, it was great for me to be in Denmark at that time. We can learn a lot from interstate and overseas, but the options and opportunities now are very significant indeed.

Finally, on a different approach to renewable energy, I commend the work of KUTh Energy and the hot rocks approach to renewable energy. They are doing quite a bit of work in Tasmania, which should be commended and supported. We hope that their progress continues. It will be energised if this legislation passes with those appropriate amendments. Having made those points, I conclude my comments and express hope for the future as it relates to this legislation.

Doug Cameron (NSW, Australian Labor Party) Share this | Link to this | Hansard source

I am pleased to have the opportunity to participate in the debate on the Renewable Energy (Electricity) Amendment Bill 2009 and the Renewable Energy (Electricity) (Charge) Amendment Bill. This debate marks progress on an important element of the government’s strategy to deal with the reality of global warming and climate change. After more than a decade of lost opportunities under the Howard government, it is this Labor government that has ratified the Kyoto protocol, designed and introduced legislation on the Carbon Pollution Reduction Scheme, decided on a renewable energy target, invested $4.5 billion in clean energy initiatives, developed the Solar Flagships program, implemented the Solar Homes and Communities Plan, invested $4 billion in the Energy Efficient Homes package and committed $12.9 billion towards a national water strategy. These are the initiatives of a government that cares about the future. These are the initiatives of a government that has a plan, a strategy and a vision for the future—a government that has a vision for a comprehensive national and international approach to reducing CO2 emissions.

Contrast this record with the record of the opposition. While in government, they presided over a decade of lost opportunities, a decade epitomised by inertia, pandering to the sceptics and deniers within their own ranks. We now see a continuation of the divisions and the weakness of the Leader of the Opposition, Malcolm Turnbull. Malcolm Turnbull is an opposition leader incapable of producing policy in the interests of the nation, incapable of exerting discipline on his party room rabble and incapable of recognising what is in the national interest.

I have been fortunate enough to participate on a number of Senate inquiries into climate change. Following those inquiries, I am even more convinced about the urgency of dealing with the scientific reality that our planet is warming, the icecaps are melting, sea levels are rising and drought, storms and severe weather patterns are becoming more common. I am pleased to be a member of a government that recognises the great political, economic, social and environmental challenges arising from global warming. I am pleased to be a member of a government that has been honest and upfront with Australians on the need to deal with climate change and the reality that this cannot be done without cost to the economy and to the community. The cost is manageable and the cost will be accepted by our community, who want a future for their children and grandchildren.

Despite the fear campaigns from the deniers and the sceptics of the opposition, the Australian public have overwhelmingly accepted the scientific reality and the political necessity to deal with climate change. No amount of clever, and many times not so clever, one-liners from Senator Joyce can change the fact that the public want action on climate change. No amount of misinformation and scare tactics from Senator Boswell will change the fact that it is in the national interest to deal with this issue. No amount of ideological claptrap—and I apologise—from you, Acting Deputy Speaker Bernardi, will change the fact that Australians want an environmentally sustainable future for our kids. No amount of dogma from Senator Abetz and Senator Minchin will change the fact that the scientific community have overwhelmingly warned of the dangers of inaction.

This bill is the start of dealing effectively with climate change. It is incumbent upon the Leader of the Opposition, Malcolm Turnbull, to show some leadership, some courage and some wisdom and unite the rabble that makes up the opposition party room. The member for Wentworth must ensure that the coalition works effectively with the government in the national interest. If, as many believe, he is incapable of doing this, then he should get out of the way and let someone of courage and conviction lead the coalition.

It takes courage and conviction when powerful industry lobbies mobilise their huge financial and political resources against a government determined to do the right thing for future generations. It takes the courage and conviction of a Labor government to stand up against the short-termism and opportunism that underpins much of the criticism from big business. We are determined to not only have this bill pass the Senate and become law but also ensure that the Carbon Pollution Reduction Scheme is passed in the interests of our nation.

Having sat through the Senate inquiries, I am disappointed, but not surprised, that vested interests want a continuation of business as usual. I hear much bleating from big business at the cost that some industries will bear as the government moves to stabilise and reduce CO2 emissions. I never hear much from the same big business groups on their contribution to increased greenhouse gases and global warming. It seems to me that many an Australian business has an all care, no responsibility approach to the pollution of our atmosphere by industrial emissions. It is quite confronting when you see the difference between the rhetoric of our business leaders and the more mature rhetoric of business leaders in Europe, in the UK and, increasingly, in the United States. Many of our business leaders have failed to come to grips with the need to use the challenge of climate change as an opportunity to create new jobs and new technology, develop the skills of the Australian workforce and ensure that our nation benefits from the employment creation arising from a carbon constrained economy.

I have heard so much from the coalition that is no more than a carping negative criticism. I have even been lectured by Senator Boswell on the need to stand up for blue-collar workers. This is the same Senator Boswell who consistently stuck his hand in the air to take basic rights away from the working people of this country. Senator Boswell should not lecture me about standing up for blue-collar workers. It is a bit rich to be lectured about looking after blue-collar workers by one of John Howard’s Work Choices warriors. It is the Labor Party who is looking after workers in this country. It is the Labor Party who is standing up against the carbon polluters of this country. It is the government that understands the long-term needs of our economy, our community and our environment.

I have been forced to listen to Senator Boswell’s claptrap on climate change for months, his predictions of job losses and the demise of the agricultural industry. He even asserted that sugar industry workers would never support a Labor government as a result of the CPRS. Let us have a look at the sugar industry. The government’s decision to move decisively on climate change has opened up a range of opportunities for the sugar industry. One area of particular benefit to regional New South Wales and Queensland is the sugar industry cogeneration projects, which will increase employment and provide renewable energy capacity from Grafton in New South Wales to Tully in North Queensland.

The sugar industry accepts that the jobs are green jobs and they are the result of the government’s policy. On 6 August evidence was given by the Australian Sugar Milling Council and Mackay Sugar in relation to the benefits of the renewable energy target. Very powerful evidence was given by Mr Gary Longden, Mr Mark Moriarty, Mr Dominic Nolan and Mr John Power on behalf of the Australian Sugar Milling Council and by Mr Eddie Westcott, the chairman of the board of Mackay Sugar. The evidence is that they represent farmers who are 94 per cent of their shareholders. These are the farmers who are allegedly represented by the National Party. And what do these representatives of the farming community say? I quote from the Sugar Council:

It is pretty straightforward. We support the national renewable energy legislation framework as it is proposed. We support the proposed penalty price and we want to see the overall scheme design and structure remain as it is. We do not want to see it revisited.

These are the representatives of farmers. These are the representatives of regional and rural Australia—the real representatives, not the fake representatives of the National Party who stand up here and call doom and gloom every time they stand up. The sugar industry submission is that they will, as a result of our legislation, build an additional 500 megawatts of capacity which will serve about 290,000 households in regional Queensland and New South Wales. Their submission is that, by 2016, 70 per cent of households in Far North Queensland will be supplied by renewable energy from sugar mills. In the Burdekin, Herbert and Townsville areas the sugar mills will supply greater capacity than required for household consumption and 80 per cent of households around the Whitsunday hinterland will also be supplied. In the Wide Bay-Burnett area almost 50 per cent of households will be supplied by sugar industry renewable power generation and 40,000 households in northern New South Wales will also be supplied.

These fantastic initiatives will not only result in the use of sugar cane biomass to generate electricity but also be extended to wood waste, woody weeds and, in particular, camphor laurel—which is a pest species in northern New South Wales. The sugar industry, as a result of the government initiatives, will be in a position to generate in excess of 2,000 construction jobs, along with 150 permanent jobs. Using a very conservative multiplier of effect for jobs of four for every permanent job, these initiatives could result in 750 permanent jobs in regional New South Wales and Queensland. Is it any wonder that Senator Boswell was what I described at the hearing as gobsmacked? Senator Boswell, the arch enemy of renewable energy and climate change, admitted, ‘I am in an absolute fix on this one.’ He went on to say, ‘I am caught in a real bind with this one.’ Of course Senator Boswell is in a bind, because the realities of the opportunities of acting quickly and effectively on climate change is there for everyone to see in the sugar industry in regional and rural New South Wales and Queensland.

The coalition have also been running hard on a scare campaign in the mining industry and have used what was clearly a misrepresentation of economic modelling done by the Minerals Council. This modelling was designed to spread fear amongst mining workers for their job security. Let me tell the coalition that the fear campaign is not working. The ABC radio program AM last week broadcast from Muswellbrook in the Hunter Valley. I know Muswellbrook well. I lived in Muswellbrook with miners, power workers and farmers for 12 years. I was a member of the Muswellbrook community. Presenter Tony Eastley spoke with a number of coalminers, who offered some very revealing opinions about the emissions trading scheme, and in the space of five minutes they blew away Senator Joyce, Senator Boswell and all the other coalition and coal company fearmongers. They blew them right out of the water. The first of those workers was Dave. Dave is not his real name, but he feels that if he were to reveal his identity he would face retaliation from his employer. Dave is a fifth generation coalminer from Muswellbrook. He has been in the industry for 20 years. He likes his job and he is on good money. He is a dump truck driver who works 12½-hour shifts. Dave is one of the blue-collar workers that Senator Boswell has been claiming to represent so vociferously in recent months. Dave is comfortable with being described as a ‘green miner’. Tony Eastley went on to ask:

TONY EASTLEY: Now we’re using not your real name because you are concerned about ramifications ...

DAVE: Coal has been around here for over a hundred years but I think we’re going to have to look for other sources for our energy generation and if we’ve got to have an ETS introduced and some pits are forced to close, then, well, that’s just what’s got to happen because there’s no life on a dead planet.

So the coalminers get it, the workers get it, but the coalition want to create fear and loathing. Eastley also spoke to three other miners, CFMEU members who seemed perfectly happy to be identified by their real names—Warren Cook, Geoff Drayton and Adam Dever. This is how the interview with these three men went:

TONY EASTLEY: Well regardless of an ETS, whether it is now or sometime in the future, the coal industry is booming, governments have poured in more than half a billion dollars to help expand Hunter Valley coal rail lines. And some of the world’s biggest mining companies are tipping in billions of dollars to expand their operations around the town of Muswellbrook, from where we’re broadcasting this morning.

That is not the scene that the coalition is trying to develop in relation to the coal industry in this country. The coal industry is booming. Jobs will still be created in the coal industry. Jobs will be there for the future. Tony Eastley then went on to say that he caught up with three miners and the interview continued:

WARREN COOK: Third generation underground coal miner, now working in an open cut mine, 58 years of age and probably a couple of years off retirement.

TONY EASTLEY: What about you Jeff?

JEFF DRAYTON: No, no, about seven years for me is as long as I’ve been in the mines. I have a father who spent about 25 years, a local, I’ve spent all of my 40 years here and now have family and three young children.

TONY EASTLEY: Adam I don’t want to insult the other blokes, but you look a bit younger than them.

ADAM DEVER: Just a couple of years, I’m a 30-year-old, my father’s also in coal mining. Local lad, married with a few kids and spent my whole career in coal mining, about 12 years.

TONY EASTLEY: Warren if I can come to you first: what’s the industry like? You’ve been in it longer than anyone here at the table ...

WARREN COOK: Twenty-eight years in total, and probably no, certainly never better both as far as employment and also in money terms.

TONY EASTLEY: So you couldn’t be happier with the industry as it is?

WARREN COOK: As a long term employee I would say no, never been happier.

Jeff Drayton goes on to say that he has been in the industry only seven years and that there has to be concern  predominantly with developing clean coal technologies. The interview goes on:

TONY EASTLEY: Adam you’ve got three young girls and we mentioned your feelings about the future of Muswellbrook and the Hunter Valley, this coal mining area? Do you want to see a carbon tax introduced by the Government?

ADAM DEVER: Yeah definitely, definitely. It goes hand in hand. My main responsibility is my family, so I want to make sure my family is secure and my lifestyle and things like that, but I also don’t want to be the responsible generation for you know, damaging the environment and you know, for future generations to look back and say that’s the generation that could have done something and they didn’t.

This is the coalminers of this country saying what they think and what is important to them. They see the industry as important to them but they also see the future for their kids as being important. We have farmers in New South Wales and Queensland saying that they see opportunities in dealing with a carbon constrained economy. Yet what do we have? We have a coalition that is driven by a group of sceptics and deniers, a group who want to say, ‘Everything should continue on as normal, we should continue to pollute the atmosphere because we don’t really believe in it.’ That is what we have from the coalition, yet miners and farmers are saying, ‘You’ve got it wrong, you’ve got it so wrong.’ Miners and farmers are saying to you, ‘Give us leadership, give the government support for its vision, give the government support for its strategy,’ because that is where jobs will be built in the future. Those jobs will be environmentally sustainable, those jobs will deliver for this economy and this society in the future. We must be about building the jobs of the future, maintaining the jobs we have in the coal, steel and aluminium industries, ensuring that those jobs operate in an environmentally sustainable way because our responsibility is not to your doomed leader; our responsibility is to future generations in Australia. It is about time the Leader of the Opposition understood these issues. (Time expired)

Alan Eggleston (WA, Liberal Party) Share this | Link to this | Hansard source

What an interesting set of views from Senator Cameron. I assure you, Senator Cameron, that Malcolm Turnbull’s leadership is not under challenge. He is a man of great skill and ability. He has a great knowledge of finance and economics and that is something the Labor Party ought to fear as we go into record debt levels and record unemployment—having someone leading the opposition who understands economics and the power of the system of government that has produced the Liberal Party’s great record over the years should make you quake with fear, Senator Cameron. You were quite right, there is debate in the coalition about climate change, just as there is in the whole community.

David Bushby (Tasmania, Liberal Party) Share this | Link to this | Hansard source

And in the Labor Party!

Alan Eggleston (WA, Liberal Party) Share this | Link to this | Hansard source

And in the Labor Party, indeed. Of course, Labor Party people are not allowed to express their views. They have to toe the party line or face the discipline of the party machine. There is debate in the coalition because there is debate in the community. There are differences of opinion about the causes of climate change: whether it is due to greenhouse gases or simply a manifestation of evolving change which has occurred over the millions of years that the earth has been here and has gone through cyclical climate change. The fact that there is a debate is healthy, a very healthy thing indeed.

Doug Cameron (NSW, Australian Labor Party) Share this | Link to this | Hansard source

It’s lunacy!

Alan Eggleston (WA, Liberal Party) Share this | Link to this | Hansard source

Senator Cameron, ‘lunacy’ is a very powerful word. I suppose one could say that people who do not open their minds are more open to being described as such than those who do open up their minds and consider all alternatives. Whatever the cause of climate change, the coalition is keen to see renewable energy sources developed for their own sake, to reduce pollution and to make Australia energy self-sufficient. There is no doubt, it has to be said, that under both the ETS and the renewable energy scheme the cost of energy will go up. Whether or not you like it, Senator Cameron, there will be an impact on the Australian economy in higher prices for energy and consumer goods. That will have to work its way through.

The coalition have a very great record on renewable energy. In government the coalition passed legislation in 2000 establishing the Mandatory Renewable Energy Target Scheme, giving effect to commitments made by then Prime Minister John Howard in November 1997. The MRET was the first scheme of its kind in the world and has been a key factor in the growth of both renewable and waste energy electricity generation in Australia. As a coalition, as I said, our vision is of a clean energy economy. We strongly support the concept of a 20 per cent renewable energy target. We believe in the potential of solar energy, geothermal, wind, tidal and other forms of renewable energy to contribute to our green energy future. Clean energy is about broadening the base of our energy security.

One might ask: how committed are the Labor Party to renewable energy? The answer, from their record, one would have to say, is that they are perhaps not very committed at all—if their record on solar is anything to go by. In just over 18 months Labor have created widespread upheaval and anxiety within the renewables sector. Among other floundering election commitments, support for renewables has fallen casualty to Labor’s mismanagement of the nation’s finances. Solar energy is Australia’s most abundant potential source of renewable energy. However, as is well known, the solar energy industry in particular has suffered at the hands of the Rudd government. The first assault was delivered in the 2008-09 budget, when the $8,000 rebate for solar PV installations was removed for thousands of Australian families. On 9 June 2009 solar PV rebates were scrapped altogether with less than one day’s notice, leaving the solar energy industry again in disarray. Businesses were forced to scramble, to warn customers that they only had a few hours to get applications in before the $8,000 would close off.

When the Rudd government—again suddenly and without warning—scrapped the Renewable Remote Power Generation Program, families and solar companies were again sent into chaos. Solar companies continue to say that the Rudd government’s decision will cost them enormous sums and has resulted in staff being laid off. This time, no-one was given any chance to get their applications in. People started learning about the guillotine decision at 8.33 am and the decision was, however, effective from 8.30 am on 22 June. One of Australia’s leading solar companies, the Solar Shop, described the decision like this. The Managing Director, Adrian Ferraretto, said:

This is the third setback for the industry in as many weeks. We were promised a smooth transition from the $8,000 rebate to the new solar credit scheme and instead the old rebate was pulled early, with only hours of notice. The government then fiddled with the renewable energy target policy, making what was a policy with bipartisan support into an unwinnable piece of legislation. Now they have retrospectively pulled the RRPGP, which was a very popular and important program.

So there we are. Labor promised the solar PV industry a smooth transition from what was left of the coalition’s $8,000 rebate for solar credits. Faced with the fact that it was going to be difficult for them to get their flawed CPRS through the parliament, they decided they would link—or couple—the crucial renewable energy trade assistance measures under the RET to passage of the CPRS, which inevitably caused difficulties. As everyone knows, the coalition voted down the CPRS last week. Labor’s approach was in fact to make its own legislation on renewables hostage to the CPRS and to put the renewables sector in the objectionable position of being political ransom to the passage of the flawed Rudd-Wong CPRS. Now the CPRS has been defeated, we are left with the renewables legislation. It is very important to understand this debate about renewable energy and the renewable energy target legislation. It is not merely a media headline but a matter of vital concern to all Australians because the future wellbeing of important sectors of the Australian economy was at stake before the RET legislation was decoupled from the flawed CPRS bill. Now it will have an opportunity of passing.

It is important that the RET legislation is passed, because some very important Australian industries which would otherwise be in danger of suffering severe economic impacts will be assisted by it. One is the aluminium industry, which is particularly vulnerable to the effects of Labor’s CPRS or emissions trading scheme. This bill, the RET bill, provides eligibility for aluminium smelting to receive a 90 per cent exemption from liabilities that relate to the expansion of the schedule of targets under the RET. Exemptions from liability do not apply to the 9,500-gigawatt-hour target embedded in the existing MRET legislation, to the extension of this target for an additional 10 years or to potentially higher renewable energy certificate prices as provided under the RET bill. No exemptions from liability are provided in the period before the CPRS commences, so unless this bill is now passed, the aluminium industry will not receive any exemptions from liability.

I am the deputy chair of the Senate Standing Committee on Economics. Senator Hurley, who spoke earlier, is the chair and Senator Cameron, from whom we heard such a colourful and critical speech earlier this evening, is a member of that committee. The Australian Aluminium Council, in its submission to the committee, made the following comments:

The expanded Renewable Energy Target will impose costs on the aluminium industry in the same manner as much of the CPRS – through increased electricity costs. It addresses similar environmental objectives, operates over similarly long timeframes, and, like the CPRS, is a cost that will only be imposed on Australian producers, not competitors.

Aluminium has become known as ‘solid electricity’ because so much electricity is used in refining it. In terms of cost exposure to RET, aluminium smelting stands quite apart from other industrial processes. On this point, Mr Cransberg from Alcoa made the following comment to the committee:

Australia is home to six aluminium smelters. We are the key electricity using industry in this debate. We are by far the biggest user of electricity within Australia, and the department’s own analysis shows that aluminium smelting is an order of magnitude more electricity intensive than any other activity.

On consideration of the evidence presented before the committee, coalition senators view the risks of shifting Australia’s world-class aluminium production facilities to another country as too great for this country’s economy to bear. We believe it is very important that there is some sort of consideration given in this legislation to the interests of the aluminium industry. Coalition senators support the provision of a full 90 per cent exemption for aluminium smelting from the RET and MRET liabilities. Coalition senators, when it comes to other emissions-intensive trade-exposed industries, also support the provision of stand-alone exemptions from liabilities associated with the expanded schedule of targets under RET for emissions-intensive trade-exposed activities.

Many of Australia’s trade advantages have been built on the basis of secure and cheap supplies of fossil energy. Moving away from our traditional supply of energy is acknowledged to be much more costly for Australia than for other countries. Submissions to the inquiry were also received from a large number of organisations involved in waste gas from coal power sources. Coalition senators certainly support the expansion of eligibility of renewable energy sources to include electricity sourced from waste coalmine gas—WCMG—and waste industrial gases. The coalition believes that waste coalmine gas should be categorised as renewable energy.

Another matter which was brought before us was the issue of electric heat pump and water heaters. The Gas Industry Alliance brought to the attention of the committee some significant concerns regarding the eligibility of electric pump water heaters to generate renewable energy certificates. Coalition senators believe these issues raised by the Gas Industry Alliance should be supported.

Coalition senators have indicated that their support for the expansion of renewable and clean energy technologies and for this legislation will depend on the interests of those industries that I mentioned having their particular problems recognised and being supported under the legislation. The coalition accordingly supports the government’s target but insists that the legislation must accommodate existing exemptions for the emissions-intensive trade-exposed industries in stand-alone renewable energy target legislation. We believe that there should be a full 90 per cent exemption for aluminium smelting from the renewable energy target and mandatory renewable energy targets. We believe certainty and continued support should be provided to waste coalmine gases by including the waste coalmine gas industry as an eligible renewable energy source under the renewable energy target.

Most importantly, the government must move to address the costs imposed under this proposal on agricultural processing facilities, which are significant and which will ultimately be borne by farming families in industries that the government considers will be classified as emissions-intensive trade-exposed. The government must move to address issues associated with electric pump hot water systems by reviewing the technology and performance and tightening regulatory controls. The government must also make allowance for the future inclusion of new sources of renewable energy in the Renewable Energy Target Scheme.

So, while the coalition is supportive of the expansion of the renewable energy options provided under this legislation, the government must understand that it is a precondition for coalition support that the unreasonable and politically motivated linkage of the renewable energy legislation to the CPRS legislation must be broken and the two considered separately. If that is done, this bill will be assured of passage this week.

Louise Pratt (WA, Australian Labor Party) Share this | Link to this | Hansard source

I have but a few moments to make my remarks about the Renewable Energy (Electricity) Amendment Bill 2009 and I want to highlight the fact that it is the second pillar of the government’s comprehensive strategy to tackle climate change and prepare Australia for transition to a low-carbon future. It provides for an expanded renewable energy target, which we hope is going to accelerate the development and deployment of renewable energy technologies in Australia. To drive this expansion, we know liable entities are going to be required to purchase renewable energy certificates or face the shortfall charge, thus providing the incentive to drive investment in renewable energy. We are looking for a much-needed boost to the renewable energy sector when it is most needed.

The first pillar in the Rudd government’s comprehensive strategy to tackle climate change is of course the CPRS, which is designed to ensure that the Australian economy shifts towards a low-carbon future over the near to medium to long term by putting a price on carbon and a cap on emissions that tightens over time. Indeed, the RET and the CPRS are designed to work together. Our attempts to fast-track the renewable energy industry now, using the RET, will prove fruitless if we do not ensure a sustainable market into the future for renewables—by establishing a price mechanism for carbon through the CPRS—that is going to work over the long term. We need both if we are to prepare for the low-carbon future that we hope and believe is coming. We hope and believe this low-carbon future is coming, because the only alternative is unthinkable: a future devastated by disastrous climate change.

The Department of Climate Change recently released a report entitled Climate change 2009: faster change, more serious risks, which synthesises the latest science on climate change and its implications. As the title of the report implies, the latest science indicates that the world’s climate is changing faster than previously thought. It shows that, while uncertainties remain about some aspects of climate science, most of these uncertainties operate in one direction—in short, the bulk of the risks is on the down side: the risks that rising sea levels pose to Australian cities, concentrated so heavily on our coastline; the risks to Australian agriculture from reduced rainfall, especially in the Murray-Darling Basin; the risks to the welfare of Australian people from extreme weather related events, such as flash floods, bushfires and heatwaves; and the risks to our iconic national heritage, most particularly the Great Barrier Reef.

The latest science also reinforces the fact that climate change is not linear. We are confronting potential tipping points, and thus there is a critical need to avoid the risks of crossing dangerous thresholds—by taking action now to reduce our greenhouse pollution. The latest science confirms Lord Nicholas Stern’s conclusion:

There is a large probability of a devastating outcome …

Now, that, senators, is too great a risk for this nation to face, it is too great a risk for the globe to face, and this Senate must get on with the job of not only supporting the bill before us for a renewable energy target but also committing to cap Australia’s emissions and a trading scheme that provides us with a vehicle to do that. I commend the bill to the Senate.

Debate interrupted.