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

In respect of the report of the Select Committee on Resilience of Electricity Infrastructure in a Warming World, I move:

That the Senate take note of the report.

This inquiry was initiated at a certain point in time and, subsequent to its commencement, the public debate and the public concern around the state of energy policy under this government intensified significantly. It happened that this committee was in a very good position to examine some of the more outrageous claims made by members of the government in relation to electricity shortages that occurred in both New South Wales and South Australia during the peak of the heatwaves this summer. It presented, consequently, a unique opportunity, a very timely opportunity, to articulate a clear policy vision for Australia's energy future, something which, as I have already pointed out in previous debates this afternoon, this government has absolutely failed to provide.

Labor senators were concerned that the majority report did not fully grasp the opportunity to lay out a complete vision and a sober vision for how we might effect what is doubtless a very difficult transition. It was for that reason that we submitted a dissenting report, while acknowledging that much of the evidence captured in the chair's report faithfully reflected the evidence that was received by the committee. I want to take the time this afternoon to step the recommendations that Labor senators made in that dissenting report.

The first related to the way that the electricity companies plan for a changed climate. The evidence that we heard was that the electricity companies have received no guidance whatsoever from the AER about whether it is reasonable to make additional investments to strengthen electricity infrastructure. We saw in the South Australian case very significant damage to infrastructure that had been built to appropriate design standards to withstand very bad windstorms. Yet, because of the severity of that storm—a very, very severe storm—that infrastructure was not able to withstand the wind speeds that it was subjected to.

In discussing this with the energy companies, what became clear was that there is no guidance at all about whether electricity companies are in a position to work to more demanding design standards in anticipation of a climate that is significantly more risky than the one that most of this infrastructure was built for. That is why Labor senators recommended that the AER and the AMC consider reviewing existing policies to ensure that the transmission and distribution asset owners have clear guidance as to what constitutes prudent investment to protect their networks against climate change risk.

We also recommended that government not provide public financing for new coal-fired power plants. This was widely reported as us recommending that the government stop doing this. Of course, the government does not presently provide financing for coal-fired power plants. That is because we have a National Electricity Market that imagines that new investment is undertaken by the private sector. The idea floated by government ministers that government ought to initiate some new program of investment in coal fired power stations is, quite frankly, extremely surprising and reckless.

The committee heard evidence from many different industry participants that the risks associated with building new coal fired power plants in the context of global commitments to reduce carbon emissions are such that these projects are not bankable and the application of public funds to projects of this kind would not represent a prudent application of public money. That was the clear evidence from policy experts and also the industry. That is why there are no private sector investors—with the possible exception of Clive Palmer, who was willing to bankroll a dinosaur farm. There are no private sector investors, in any serious way, proposing to invest in new coal fired plants.

We recommended that the government continue to provide support for emerging energy technologies because they face real technical and regulatory hurdles when they enter the market. We note the significance of the institutions established by Labor—ARENA and the CEFC—in providing support of this kind. We note the continuing attacks on those institutions by the government, led by Mr Turnbull, and by the previous government, led by Mr Abbott, and we strongly urge the government to stand down from their attacks on those institutions and to fund them properly in the budget. We heard that, as the range of next generation technologies in the market continues to diversify as a response to technological development and consumer preference, reforms need to be made to the National Electricity Market rules. These are reforms that would reward the provision of ancillary services, including the services associated with reliability and stability. It is way past time that the AER and the AEMC started examining these questions with seriousness and that the government accepted recommendations around rule changes of this kind.

We also recommended that the AER and the AEMC consider reforms to the NEM to reduce any technical barriers of entry for new energy technologies and to recognise and reward the new services they are able to offer to the grid. This was particularly in relation to the evidence we heard from battery suppliers who were concerned that unreasonably restrictive requirements, particularly around OH&S, may prevent the deployment of household-scale batteries. They were keen to see interventions to prevent unreasonable barriers of this kind being put in place.

As I have noted here on more than one occasion this afternoon, Labor senators reiterated our call for the government to end the uncertainty about national energy policy. We need a stable and consistent policy—probably an emissions intensity scheme. This seems to be the scheme most likely to gain wide-scale community support, but we need a consistent policy that can support investment in new energy infrastructure. There is a problem. Industry told us time and time again that, despite the fact that there is obviously a need for next generation technologies in the NEM, industry is unlikely to step up while policy uncertainty around carbon pricing remains. It is time for this to be brought to an end. It is time for a clear framework for emissions reduction to be put in place by the government. It is very surprising that we face yet another budget where we can confidently anticipate that there will be no serious plan by the government to deal with the energy crisis and no serious plan to deal with climate change.

We note that the Finkel review is underway. Labor senators called for that review to be made public as soon as possible, and for government to respond to its recommendations as a matter of urgency. To reiterate the point: there is a horrible vacuum in our national energy policy, and the sooner the government can initiate a proper response to this crisis, the better. I am not, however, holding my breath. We heard evidence, particularly from AGL, that there is an issue with ageing infrastructure and, in particular, with allowing investors to see when some of this ageing infrastructure may exit the market. We have recommended that the Australian government work with stakeholders on a framework to provide for the orderly exit of ageing generation. We sought to lay out a coherent plan; it is time for the government to do the same.

Sarah Hanson-Young (SA, Australian Greens) Share this | Link to this | Hansard source

Given the late hour, I seek to continue my remarks in relation to this report at a later date.

Leave granted; debate adjourned.