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

My question is to the Minister for Climate Change, Energy Efficiency and Water, Senator Wong.

Honourable Senators:

Honourable senators interjecting—

John Hogg (President) Share this | Link to this | Hansard source

Order! Senator Boswell, wait a minute. You are entitled to be heard in silence. Senator Boswell, continue.

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

My question is to the Minister for Climate Change, Energy Efficiency and Water, Senator Wong. I refer the minister to the $220 million co-generation plant established by New South Wales Sugar Milling Co-operative to produce renewable energy to help meet the nation’s 20 per cent renewable energy target. Is the minister aware that this massive investment was financed on the then reasonable basis that the renewable energy credits would be worth approximately $50? Is the minister further aware that since solar renewable credits flooded the market last year the REC price dropped to $24—it has come up a bit—making the plant so unviable that the receivers are expected later this week?

Penny Wong (SA, Australian Labor Party, Minister for Climate Change and Water) Share this | Link to this | Hansard source

I thank Senator Boswell for his question. He has consistently advocated for the interests of this particular company and I do have some information for him. The government has announced a redesign of the renewable energy targets to put in place two streams, as it were. One, a large renewable energy target, will give certainty to projects such as the one he is outlining. The second is a small renewable energy scheme which would enable small-scale householder type renewable energy products to receive support under the scheme.

In relation to the New South Wales sugar milling plants, I understand that when this project commenced the REC spot price was around $30—this was in 2005. I would again indicate that the price of these certificates—the RECs—is set by the market and depends on the supply of renewable energy as well as the demand created by the annual targets. I believe that the REC price on the spot market is currently around $40—I will check that but that is my recollection. I am obviously not aware of what contractual arrangements were entered into by the proponents of this project. If it is the case that the proponents have not entered into a long-term contract for the sale of renewable energy certificates outside the spot market this would obviously mean that they were more exposed to fluctuations in the spot price. I am advised that these plants in Broadwater and Condong commenced operation in late 2008. From the commencement of operations to mid-2009 the price of RECs on the spot price was between $40 and $50. I note that there have been some media reports that the plant’s difficulties are also related to lower than expected quantities of sugar cane trash being available for conversion. (Time expired)

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

Is it true that the government’s change to policy allowing domestic solar renewable energy credits after the plant was commissioned has effectively ruined this renewable energy project and placed the 2010 sugar harvest at risk of not having a plant available for the June crushing?

Penny Wong (SA, Australian Labor Party, Minister for Climate Change and Water) Share this | Link to this | Hansard source

I think, with respect, Senator Boswell, that the short answer to that is: no, that is not the government’s advice. We have made clear that we are altering the design of the renewable energy target to deal with the perception that small-scale renewable energy was taking up too much of the target. That is why we have split the renewable energy target into two parts: the larger renewable energy target, which gives a fixed, clear amount of the gigawatt hours that will be met through large-scale projects and then a separate scheme for smaller scale products, such as solar panels—which I think that you referenced—where support will be provided at a fixed price but will be unlimited. That is to give sufficient certainty for large-scale projects at the same time as continuing to give Australian households support for small scale renewables such as solar.

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

Given that the government has announced changes to fix up the mess with its scheme, with these changes taking effect from 1 January 2011, which you indicated, what happens in the meantime to these vast renewable energy projects which today are on their knees to financiers solely because of the government’s mismanagement?

Penny Wong (SA, Australian Labor Party, Minister for Climate Change and Water) Share this | Link to this | Hansard source

Through you, Mr President, I remind Senator Boswell that, when his party was part of the government, renewables actually went backwards. They went from 10½ per cent of our electricity supply in 1997 to 9½ per cent in 2007. We have made clear to the market by way of the announcement that was made on this issue what the targets will be. We will be introducing legislation to give effect to that but the government has made clear through the announcement that has been made what the targets for these projects will be and given clarity and certainty to the market as a result. The rest of the clarity and certainty will obviously depend on the Senate chamber and whether the Senate in fact passes the government’s legislation.