Senator MILNE —I do not know if you were here earlier in the afternoon when we were discussing what appeared to be a loophole with regards to the renewable energy target, but I will put it to you in case you were not here. I would like to know how many 2010 generation year renewable energy certificates you expect to be registered in 2011.

Mr Livingston —We have not done an estimate of that, but because of the way the small units work, you have 12 months to create your RECs. So there will be some installations installed this year which will be created next year and will not be in the target. We have not done an estimate of that overhang.

Senator MILNE —So you have not done an estimate? You have no idea?

Mr Livingston —We have not done an estimate, no. We will do that at the end of the year and we will work it out then. It is mechanistic in the act.

Senator MILNE —The problem is that at the time the legislation was passed the intention of the RET amendment was to keep the REC surplus to no more than 20 million RECs. That was our clear intention in the Senate when we moved those changes. So what plans do you have to account for the 2010 generation RECs registered late—as in, beyond 31 December—in order to keep the RECs surplus below the 20 million RECs, as was intended in that debate? What do you intend to do about it?

Mr Livingston —We will have to follow the act, as legislated, and the regulations, and if that results in a number larger than 20 million there is nothing we can do about it. We must follow the act.

Senator MILNE —Yes and no. Are you not intending to deal with the issue? The amendments were designed to constrain that surplus to 20 million. There are clearly going to be more than 20 million because at 31 December those RECs from this year will not be registered. Some people are saying it could be more than two and a half million—maybe up to 6 million—RECs. Clearly, that is a big issue for people investing in the sector because it is going to keep the price low and it is an unintended consequence of what we did. I just wanted to know what thinking you have done around it, or are you saying that you have no intention of doing anything?

Mr Comley —I think that what Mr Livingston is saying is that it is a policy matter, so it is a matter for the department and the minister; it is not a matter that the Office of the Renewable Energy Regulator can address, because they have to implement the terms of the legislation.

Mr Livingston —I do not have the power to change it.

Senator MILNE —So you will not be able to do anything; it will have to be a parliamentary decision that informs your thinking in relation to this.

Senator Wong —The regulator implements the legislation. The provision you are referring to, as Mr Comley explained, is a particular discretion of the minister.

Senator MILNE —So I guess the issue for me is: when are we going to address this, because we know it is a problem?

Mr Comley —I do not think there is any particular time frame. As Mr Livingston said, there is not an estimate at the moment of the overhanging—the amount that may be caused by this situation—and therefore it will be a matter for the government when there is better information about that issue.

Senator MILNE —How are we going to get that information? We know it is going to be a problem, so who is going to do the assessment of what the overhang will be?

Mr Comley —It will be a matter for the government and the department is considering that issue.

Senator MILNE —So you are considering that right now?

Mr Comley —Yes.

Senator MILNE —So there will be some assessment of what the overhang will be and then we will hopefully be able to address it in the time frame?

Mr Comley —Then it will be a matter for the government to consider that policy.

Senator MILNE —Sure—I understand that. Thank you.

Senator Wong —I should be clear: I think it is a power, not a discretion. Is that right?

Mr Comley —My understanding is that it is a legislated formula at the moment, so it will require a legislative amendment if a policy decision were taken.

CHAIR —That concludes the examination of the Climate Change and Energy Efficiency portfolio. After a break the committee will commence its examination of the Sustainability, Environment, Water, Population and Communities portfolio. I thank the minister and departmental officers.

[7.27 pm]