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Monday, 17 August 2009
Page: 8062


Mr COMBET (Minister for Defence Personnel, Materiel and Science and Minister Assisting the Minister for Climate Change) (9:23 PM) —by leave—I present a supplementary explanatory memorandum and move government amendments (1) to (20) on sheet CA209:

(1)    Schedule 1, page 4 (after line 11), after item 2, insert:

2A  Subsection 5(1)

Insert:

2008 WCMG limit has the meaning given by section 14.

2B  Subsection 5(1)

Insert:

eligible energy sources means:

              (a)    eligible renewable energy sources; or

              (b)    eligible WCMG.

2C  Subsection 5(1)

Insert:

eligible WCMG has the meaning given by section 17A.

(2)    Schedule 1, page 4 (after line 14), after item 3, insert:

3A  Section 8

Omit “eligible renewable energy sources”, substitute “eligible energy sources”.

(3)    Schedule 1, page 4, after proposed item 3A, insert:

3B  Paragraph 12A(2)(c)

Omit “eligible renewable energy sources”, substitute “eligible energy sources”.

(4)    Schedule 1, page 4, after proposed item 3B, insert:

3C  Subparagraph 13(2)(ba)(i)

Omit “eligible renewable energy sources”, substitute “eligible energy sources”.

3D  After subsection 13(2)

Insert:

      (2A)    An application that lists eligible WCMG as an eligible energy source from which power is intended to be generated cannot be made after 30 June 2010.

(5)    Schedule 1, page 4, after proposed item 3D, insert:

3E  Paragraph 14(2)(a)

Omit “eligible renewable energy source”, substitute “eligible energy source”.

3F  Paragraph 14(3)(b)

Omit “eligible renewable energy sources”, substitute “eligible energy sources”.

3G  After paragraph 14(3)(b)

Insert:

    ; and (c)    if some or all of the power generated by the power station is generated from eligible WCMG—the 2008 WCMG limit for the power station.

3H  Subsection 14(3) (note)

After “baseline”, insert “or the 2008 WCMG limit”.

3J  Subsection 14(4)

Omit “and (3)(a)”, substitute “, (3)(a) and (3)(c)”.

(6)    Schedule 1, page 4, after proposed item 3J, insert:

3K  Subsection 15A(1)

Omit “The”, substitute “Subject to subsection (3), the”.

Note:                The following heading to subsection 15A(1) is inserted “General rule”.

3L  At the end of section 15A

Add:

Applications that list eligible WCMG as an eligible energy source

         (3)    If an application that is properly made under section 13 lists eligible WCMG as an eligible energy source from which power is intended to be generated, the Regulator must decide the application on or before 31 December 2010.

         (4)    If the Regulator does not decide the application on or before that day, the Regulator is taken, on the following day, to have made a decision under section 15 refusing the application.

(7)    Schedule 1, page 4, after proposed item 3L, insert:

3M  At the end of Division 3 of Part 2

Add:

17A   What is eligible WCMG ?

         (1)    Waste coal mine gas is eligible WCMG if:

              (a)    the waste coal mine gas is used in the generation of electricity by a power station in the period:

                    (i)    starting on 1 July 2011, or if a different date is prescribed by the regulations, starting on that different date; and

                   (ii)    ending on 31 December 2020; and

              (b)    either:

                    (i)    the power station was generating electricity from waste coal mine gas at any time in May 2009; or

                   (ii)    if subparagraph (i) does not apply—the power station had generated electricity from waste coal mine gas before May 2009, and, as at the end of May 2009, the owner or operator of the power station has a plan for the power station to resume generating electricity from waste coal mine gas before the end of September 2009.

         (2)    For the purposes of this Act, the regulations may provide that waste coal mine gas has the meaning prescribed by the regulations.

         (3)    For the purposes of this Act, the regulations may prescribe limitations (in addition to those in subsection (1)) that apply in order for waste coal mine gas to be eligible WCMG.

(8)    Schedule 1, page 4, after proposed item 3M, insert:

3N  Paragraph 18(4)(a)

Omit “eligible renewable energy sources”, substitute “eligible energy sources”.

3P  At the end of subsection 18(4)

Add:

       ; or (c)    to the extent that the electricity was generated from eligible WCMG and is in excess of the accredited power station’s 2008 WCMG limit.

(9)    Schedule 1, page 4, after proposed item 3P, insert:

3Q  Paragraph 20(2)(b)

Omit “eligible renewable energy sources”, substitute “eligible energy sources”.

(10)  Schedule 1, page 5 (after line 14), after item 7, insert:

7A  Paragraph 25(2)(ca)

Omit “eligible renewable energy source”, substitute “eligible energy source”.

(11)  Schedule 1, page 5, after proposed item 7A, insert:

7B  Paragraph 25A(2)(f)

Omit “eligible renewable energy source”, substitute “eligible energy source”.

(12)  Schedule 1, page 5, after proposed item 7B, insert:

7C  Paragraph 30D(3)(a)

Omit “eligible renewable energy source”, substitute “eligible energy source”.

(13)  Schedule 1, page 5, after proposed item 7C, insert:

7D  Division 12 of Part 2 (heading)

Repeal the heading, substitute:

Division 12 Varying 1997 eligible renewable power baselines and 2008 WCMG limits

(14)  Schedule 1, page 5, after proposed item 7D, insert:

7E  At the end of Division 12 of Part 2

Add:

30G   Varying 2008 WCMG limits

         (1)    The Regulator may, by written determination, vary the 2008 WCMG limit for an accredited power station.

         (2)    The Regulator must make a determination in accordance with guidelines prescribed in the regulations.

Increase in limit

         (3)    If a determination increases the 2008 WCMG limit for an accredited power station, the determination has effect for the year or years specified in the determination.

Decrease in limit

         (4)    If a determination decreases the 2008 WCMG limit for an accredited power station, the determination has effect only for the years following the year in which the determination is made.

(15)  Schedule 1, item 8, pages 5 to 6 (table), omit the table, substitute:

2010

12500

2011

14825

2012

17150

2013

19050

2014

20950

2015

22850

2016

27450

2017

32050

2018

36650

2019

41250

2020

45850

2021

45000

2022

45000

2023

45000

2024

45000

2025

45000

2026

45000

2027

45000

2028

45000

2029

45000

2030

45000

(16)  Schedule 1, page 6 (before line 1), before item 9, insert:

8A  Subsection 66(1) (after table item 5D)

Insert:

5DA

to vary the 2008 WCMG limit for an accredited power station

section 30G

the nominated person for the power station

(17)  Schedule 1, page 6, after proposed item 8A, insert:

8B  After paragraph 138(ca)

Insert:

            (cb)    for each power station for which there is a 2008 WCMG limit—the limit (including any variation of that limit under section 30G); and

(18)  Schedule 1, page 6, after proposed item 8B, insert:

8C  Paragraph 140(da)

Omit “eligible renewable energy source”, substitute “eligible energy source”.

(19)  Schedule 1, page 6, after proposed item 8C, insert:

8D  Paragraph 141A(c)

Omit “eligible renewable energy source”, substitute “eligible energy source”.

(20)  Schedule 1, page 6, after proposed item 8D, insert:

8E  Paragraph 160(2)(b)

Omit “eligible renewable energy sources”, substitute “eligible energy sources”.

The additional supplementary memorandum concerns an amendment that will enable existing power stations using waste coalmine gas as a fuel source to participate in the renewable energy target scheme for a specified period. As I indicated in the second reading summing up, the cessation of the New South Wales Greenhouse Gas Reduction Scheme, known as GGAS, may impose a significant cost on existing electricity generators using waste coalmine gas. Affected entities have indicated that currently profitable projects could be forced to close under these changes. Inclusion of these existing generators under the Renewable Energy Target scheme is intended as a transitional measure to underpin the continued viability of projects that have already been committed.

Over time the Carbon Pollution Reduction Scheme, the CPRS, will provide an increasing incentive in favour of low-emissions generation such as waste coalmine gas. To provide this transitional support the amendment restricts eligibility to existing waste coalmine gas fuelled power stations and limits the period over which generation from these power stations will be eligible to create tradeable renewable energy certificates, or RECs. This period is to begin on 1 July 2011 and to end on 31 December 2020. The case for extending eligibility beyond 2020, and thereby allowing new projects, is not, in the government’s view, strong; and the measure is not appropriate.

A carbon price under the CPRS will provide an increasing incentive in favour of low-emissions generation, including waste coalmine gas. The CPRS will also provide a strong incentive to reduce fugitive emissions to reduce the CPRS liability. The amendments also impose annual caps on the amount of generation for which each eligible waste coalmine gas fuelled power station can claim RECs. Each power station’s cap, called the 2008 waste coalmine gas limit, will be set by the RET scheme regulator. The annual eligibility cap is to be based on the power station’s generation from waste coalmine gas in 2008, with adjustment for unusual factors such as plant outages and taking into account 1997 generation baselines set under the RET scheme for power stations which commenced operation prior to 1 January 1997. Waste coalmine gas is not a renewable energy source and is not intended to contribute to the 20 per cent target for renewables in 2020.

To clearly differentiate waste coalmine gas from renewable energy sources, the amendments create a new concept of an eligible energy source that comprises the current list of eligible renewable energy sources and separately eligible waste coalmine gas. To ensure the inclusion of waste coalmine gas under the renewable energy target does not crowd out renewable energy generation, these amendments increases annual targets under the expanded RET scheme for the years 2011 to 2020 to account for the amount of eligible waste coalmine gas fuel generation in these years. Specifically, the target for 2011 has been increased by 425 gigawatt hours to account for the half year of eligible generation and the annual targets for 2012 to 2020 have each been increased by 850 gigwatt hours.

To ensure that no renewable energy is displaced, total eligible waste coalmine gas generation will not exceed 425 gigawatt hours in 2011 or 850 gigawatt hours for the years 2012 to 2020. That is equal to the amount by which the annual targets are increased under the RET. Increasing the targets will ensure the government is able to deliver on its commitment to achieve 20 per cent of renewable energy in Australia’s electricity mix by 2020 while meeting the need for transitional assistance for the waste coalmine gas generation sector.

These provisions are to commence, subject of course to passage through parliament, on the day on which the act receives royal assent. I commend these particular amendments concerning this issue to the House. This is a matter in which I have had extensive personal experience in my capacity in the portfolio. These are important amendments to be made and I commend them to the House.