On 29 June 2000, the Senate referred the Renewable Energy (Electricity) Bill 2000 and the Renewable Energy (Electricity) (Charge) Bill 2000 to the Environment, Communications, Information Technology and the Arts References Committee for inquiry and report by 15 August 2000.

The impetus for the Renewable Energy legislation stems from Australia's potential obligations under the Kyoto Protocol to the Framework Convention on Climate Change, which was agreed in December 1997 and signed by Australia in April 1998 although Australia has not yet ratified the Protocol. The mandatory target for the uptake of renewable energy in power supplies was first outlined in the Prime Minister's statement Safeguarding the Future: Australia's Response to Climate Change. The Bills aim to give effect to the commitment made in the government statement.

Electricity generation contributed 65.2 per cent of `stationary energy' emissions and 37 per cent of total national emissions in 1998. Electricity emissions are currently showing very high levels of growth: 30.6 per cent between 1990 and 1998 and 10.3 per cent in the last of those eight years, that is for 1997 and 1998. Those figures underline the importance of encouraging the development of renewable and cleaner sources of energy.

The Committee was impressed with the enthusiasm with which this measure is being greeted by large sections of the electricity industry, representatives of the green movement and electricity users from industry. Although most witnesses appearing before the Committee sought amendments to the legislation, they stressed that they wished the legislation to proceed in one form or another. This support was not unanimous: a number of large industrial users of electricity were highly critical of the legislation and expressed concerns that are dealt with in the Committee's report. In some cases they sought clarification of the intent of the legislation and in others, they sought amendments to the Bills.

The Committee has made a number of recommendations which arise from its consideration of the issues raised and which, in its view, would help in cleaning up air quality, reducing our dependence on fossil fuels and assisting, at the same time, the development of new energy industries such as wind and solar, with all the jobs and economic opportunities those industries will bring.

Concern was expressed in submissions and by witnesses that the level at which the shortfall charge is currently set in the Bill ($40 per megawatt hour) was too low and that it might encourage liable entities to choose to pay the charge instead of buying renewable energy certificates. That would defeat the purpose of the legislation and provide no incentive for the development of renewable energy sources.

The Committee is recommending that the Government increase the proposed $40MWh penalty to a level that encourages liable entities to purchase renewable energy certificates rather than pay the penalty.

The Committee makes no recommendation as to the level of the penalty but urges the Government to consider the fact that even though the market will determine the value of renewable energy certificates, a penalty of $40/MWh is likely to deliver a rate of $70-$80/GWh which will be inadequate for the development of significant wind and solar energy industries. At $80/MWh it is likely that only the windiest sites would be viable and, as experience has shown overseas, these are often the sites which are the most environmentally and aesthetically contentious. Australia also has very significant solar resources which are unlikely to be tapped if the value of certificates is too low.

The tax treatment of the penalty is discussed in some detail in the report and the Committee is recommending that the issue should be clarified, that the penalty should clearly not be tax deductible and that it should at least be indexed for CPI increases.

A number of submissions raised concerns relating to the forms of biomass wastes that would be made eligible, and in particular, of the effect that the inclusion of waste from old growth or native forests could have on our forests. The Committee shares those concerns and recommends that non-plantation native forest wood products and wood wastes be specifically excluded from the list of eligible renewable energy sources.

A majority of submissions called for a legislated review of the effectiveness and design of the measure. The Committee was persuaded by the arguments put forward and it is recommending that the legislation be amended to provide for a wide-ranging review, to be held within 3 years of the introduction of the measure. It should be conducted by a person or body independent of any particular industry sector, and provide for public submissions to both the initial inquiry and public comment on its draft conclusions.

The Committee recognises that, once the Bills are passed, a great deal of work will need to be done before the measure is fully operative. The Committee urges the government to work towards having the national accreditation of renewable energy generators in place by 1 January 2001 so that no further time is lost in implementing a measure of great potential benefit to the environment.

I would like to thank the Committee Secretariat for yet another excellent report prepared in a very short time frame and under the usual pressure. I would particularly like to thank Ms Roxane Le Guen for her outstanding work as Committee Secretary, for the very high level of skills she brings to that demanding role and the enormous task of organising the many very substantial inquiries this committee has conducted in the past few years. I very much appreciate the unflagging support she has given to the committee and to me as chair. Thank you, Roxane, I hope you enjoy your new position with information technology after the 25th of August.

I commend the report to the Senate.