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Monday, 9 December 2002
Page: 9922

Mr KELVIN THOMSON (8:00 PM) —The Renewable Energy (Electricity) Amendment Bill 2002 aims to improve the administrative integrity, effectiveness and efficiency of the Renewable Energy Electricity Act 2000. That act established the mandatory renewable energy target, frequently referred to by people who are interested in these things as the MRET, of an additional 9,500 megawatts of renewable energy by 2010. This is the only mandatory greenhouse abatement measure introduced by the Howard government, which often uses it to demonstrate its alleged commitment to greenhouse abatement. We supported passage of the original legislation. We raised a number of concerns about that legislation and they continue to be of concern to us. I will come to those later.

This bill is specifically seeking to clarify definitions used in the act, including the definition of eligible renewable energy sources and the components of a power station. It seeks to clarify the provisions in relation to a relevant acquisition of electricity to ensure that only one entity is made liable in relation to the purchase of a particular quantum of electricity. Further, it seeks to clarify the provisions with respect to the claiming of renewable energy certificates associated with solar water heaters and to expedite the process by which certificates can be claimed for new solar water heater models as they become commercially available. The bill seeks to provide the Renewable Energy Regulator with the power to vary a number of assessments and determinations under the act, including the energy acquisition statement, the renewable energy shortfall statement and the 1997 eligible renewable energy baselines for accredited power stations. It also seeks to provide the Renewable Energy Regulator with information-gathering powers to enable effective monitoring and compliance with the provisions of the legislation and to allow for the suspension of an accredited power station under a number of circumstances, including where there is thought to be `gaming', whereby power station outputs are manipulated to increase the number of renewable energy certificates that can be created without increasing the actual renewable energy generation.

The government's proposed amendments represent an improvement to the MRET scheme and Labor will be supporting them, but they are not substantive in nature and they do not really address the deficiencies in the mandatory renewable energy target. The original bill—and it is worth taking the House back to this—sought to accelerate the uptake of renewable energy in grid based applications so as to reduce greenhouse gas emissions; as part of a broader strategic package, to stimulate renewables and provide an ongoing base for the development of commercially competitive renewable energy; and to contribute to the development of internationally competitive industries which could participate effectively in the burgeoning Asian energy market.

Before I talk about what I see as the government's failure in addressing those quite laudable objectives of the original bill, I want to take the House to some of the places around the world where a more serious, more realistic and more forward-looking approach has been taken to the question of renewable energy. In Europe we find that a recent European Union project pulling together 11 specific sectoral studies has concluded that reducing greenhouse gas emissions by 15 per cent by the year 2010 would generate about two million net jobs across Europe. This is because most of the changes provide extra jobs. Public transport provides more jobs than private transport, efficiency improvements provide more jobs than energy production, and cycleways, footpaths and so on are more labour intensive than roads. If applied to Australia, this translates to 100,000 jobs. The European Union initiatives include renewable energy targets, so Romano Prodi, President of the European Commission, recently announced a new renewable energy goal for the 15-nation European Union of 22 per cent of its electricity from renewable sources by 2010. To achieve this goal the European Commission allocated $2 billion for research over the next five years to sustainable energy projects—a twentyfold increase over the last five years.

In the United Kingdom the government has the objective of getting 10 per cent electricity from renewables by 2010 and 20 per cent electricity from renewables by 2020. The British Wind Energy Association says offshore wind alone will create 19,000 jobs and the UK's first wind turbine plant, a $30 million project, provides 170 jobs. In the USA, in California there is a target of 20 per cent electricity from renewables. That will provide 28,000 job years in construction and 3,000 permanent operating jobs—four times the jobs of the same power generation from gas turbines. For the USA as a whole, a high energy efficiency scenario could produce a net gain of 1.1 million jobs by 2010, and if such a scenario were translated to Australia you would get 70,000 new jobs overall. The United States Solar Industries Association make the point that energy conservation and solar energy create four times as many jobs as using oil, gas or electricity for energy needs and that solar thermal power plants create 2½ times as many skilled, high-paying jobs as fossil fuel power stations.

From this I think the message is clear: development of the renewable energy industry means both reduced greenhouse gas emissions and more jobs. Australia is uniquely placed, with ample supplies of renewable energy sources such as wind and solar, to lead the world. I also make the point that many of the jobs created from harnessing this clean energy can occur in regional Australia, and I believe that renewable energy projects should be developed as a matter of priority in regional Australia and that that is where the scope for these projects most successfully lies. Such an approach would give us a smooth transition to an energy mix that has an increased market share of renewables and, as the above examples demonstrate, would provide more jobs overall for regional Australia.

In Australia, one of our greatest opportunities lies with wind power. There is now 25 gigawatts of wind power installed worldwide. In Denmark, which has been leading the way in this area, 20,000 jobs have been created, mainly through turbine construction; in the USA, there have been 70,000 jobs created, mainly through the installation of wind infrastructure. In Australia, we have 100 megawatts installed, creating about 800 job years worth of work, with an additional 300 megawatts committed and an additional 1,500 megawatts planned by 2005, which means an additional 10,000 job years over the course of the next three years. If we are able to up our wind power generation to, for example, three gigawatts, we get 13,000 job years plus 850 permanent jobs in maintenance and operation and, of course, there is potential to go even higher than that. Reasonably recently we saw the approval of the country's largest wind farm, with the Victorian government approving the development of a $270 million, 180-megawatt wind farm at Portland in western Victoria. That project has the potential to deliver 2,000 jobs in regional areas. There is a lot of potential for wind farm projects in Victoria, and I think the Victorian government should be congratulated for recognising the important role that wind energy will play in the state's economy and for recognising the need for clear planning guidelines. I believe that there is great scope in this area to ensure that clean, renewable energy projects such as the one at Portland are developed.

Let us look at the area of solar cells or photovoltaics. Ten years ago there were only 50 megawatts of solar cells or photovoltaics installed worldwide; this year there are 400 megawatts of solar cells or photovoltaics worldwide. The prices are now one-tenth of what they were 10 years ago as economies of scale increase and the technology matures. In the USA, this has translated into a $2 billion-a-year industry, now employing 25,000 people. The projections are for the installation of solar cells to grow to two gigawatts by 2010 and to grow dramatically thereafter to 12 gigawatts by 2020. In Australia, 33 megawatts were installed in 2001, creating 600 direct jobs. Manufacturing capacity is planned to grow from 20 megawatts to between 100 and 120 megawatts by 2010. If we can get these current growth rates to continue, there will be more jobs—more jobs in regional areas.

Another area I want to touch on is energy efficiency potential. A report has been released as part of Energy South Australia's demand side management plan, highlighting the potential for South Australia to improve energy efficiency by at least 20 per cent over a 20-year period. Based on international and interstate experience, we can achieve this using cost-effective energy measures. If these energy measures were to be scaled up across the country, using the South Australian example we could look forward to between 10,000 and 30,000 jobs nationally. Similarly, with solar hot water: we have got Australia's largest manufacturer employing 150 people and supplying approximately three per cent of all homes, and if we could expand this we could get many more direct jobs and get that significant impact on reducing Australia's greenhouse gas emissions. We need to understand the potential for solar direct hot water manufacturing; it creates 9.9 jobs per million dollars of annual spending, so if we were making and installing 10 million solar hot water systems a year we would employ twice as many people as we do making eight million cars.

I turn now to what the Howard government has been doing. Despite exciting developments undertaken around the globe and the incredible potential for renewable energy to dramatically increase its share of energy generation in this country, it is clear that the Howard government has failed to seize its opportunity. The example of solar cells demonstrates how, under the Howard government, Australia, rather than being a world leader, has been slipping behind. If we look at the 2001 national survey of photovoltaics, we find that back in 1996 we led the world in per capita manufacture of photovoltaic systems and, although we had an increase from 7.5 megawatts to 10 megawatts capacity over the past five years, we fell behind Japan and Spain in per capita manufacture of photovoltaic systems. Japan now dominates the manufacture of these products. Our relative share of photovoltaic usage fell 50 per cent between 1996 and 2000. The uptake of photovoltaics is greatest in the USA and European countries where subsidies are making PV manufacture competitive with residential electricity prices. In my book, there is potential for an extra 10 million grid-connected rooftop systems in Australia.

The example of solar cells is just one of a range of failures in the area of renewable energy. Analysis undertaken by the Business Council for Sustainable Energy has revealed that, far from the MRET delivering an additional two per cent market share of renewable energy, which is what the government said it would do, renewables will struggle to maintain their present market share of total electricity generation. That two per cent target was revised by the government and converted into a target of 9,500 gigawatt hours. The latest electricity generation projections developed for the Greenhouse Office show that electricity generation in 2010 is projected to be 270,000 gigawatt hours. So as a consequence, instead of being a two per cent additional target, which it was supposed to be, it is really a miserly half a per cent target. As noted by the Business Council for Sustainable Energy, this is merely maintaining the 1996-97 market share; it is a long way short of the two per cent increase that was intended by the measure.

We can do a lot better than this. A very significant report released recently by Origin Energy blew out of the water claims that cutting greenhouse gas emissions would lead to substantial increases in electricity costs. That report was done by McLennan Magasanik Associates, and it assessed the impact on electricity prices of renewable energy and gas-fired generation. They concluded that the increase in electricity prices as a result of increasing the renewable energy target would be very small, that it would have a minimal impact on the cost competitiveness of Australian industries that are energy intensive and that Australia would remain amongst the countries with the lowest electricity prices. That research backed up modelling by the New South Wales Treasury which suggested that Australia could indeed meet its Kyoto target—that is, an eight per cent greenhouse gas emission increase between 1990 and 2008-12—without a significant rise in electricity prices for industrial consumers. We have also seen work done by the Tariff Network of Experts, who also concluded that an increase in the MRET would have a very minor impact on electricity prices.

Those reports completely undermined the claim by ABARE, the Australian Bureau of Agricultural and Resource Economics, that energy prices would rise dramatically if we were to ratify the Kyoto protocol and meet our target. Let me add that the Howard government claims it is going to meet the target in any event. Frankly, some of the contributions by ABARE cast doubt on the independence of its analysis concerning the economic implications of ratifying the Kyoto protocol. In addition to the government's failure in these areas, a recently released report of the COAG Energy Market Review Panel, chaired by former Liberal minister Warwick Parer, recommended that MRET be abolished altogether. This is an irresponsible recommendation. It has destabilised what is a fledgling growth industry which has been making investment decisions on the basis of certain expectations. It has generated an issue of sovereign risk. The report has also recommended replacing the Queensland 13 per cent gas scheme and the New South Wales benchmarks with an emissions trading regime. It seems to me that the MRET can play and needs to play a very important role in Australia meeting its obligation to contain greenhouse gas emissions.

It is unfortunately the case that this government has been completely indifferent to its obligations internationally. The latest projections announced by the government back in August said we are around three per cent above the Kyoto target. The government not only is not meeting its Kyoto obligations but also is unwilling to ratify the Kyoto protocol. Along with the United States, it is doing its best to scuttle and undermine that collective international effort to tackle climate change. As a result, Australian companies will be prevented from gaining important overseas business opportunities to both develop new projects overseas and sell abatement to Europe and Japan.

Regrettably, the government has not only shown indifference to meeting the target and tried to undermine it internationally but also been effectively undermining the work of the Australian Greenhouse Office. The former head of the Australian Greenhouse Office, Gwen Andrews, made comments recently that the government's own economic studies showed that promising to meet the Kyoto target while not ratifying the Kyoto protocol `was not an optimal policy position' because it shuts Australia out of the trading mechanism and opportunities which the protocol establishes. If the government were fair dinkum about these matters, it would accept the advice of the former head of its own Greenhouse Office and move to ratify the protocol. It is also a matter of concern to me that Gwen Andrews has suggested that the most recent figures show greenhouse emissions now being projected to exceed 1990 levels by 14 per cent—that is, six per cent more than the Kyoto target and double the blow-out predicted by the environment minister in August. Those projections show that the government's strategy to curb greenhouse gas emissions is an abject failure.

Instead of acting positively to address these issues, the government has allowed the Australian Greenhouse Office to descend into drift and chaos. Since Gwen Andrews and her deputy left the Greenhouse Office way back in April, the government has not moved to advertise those positions and replace them. In the meantime, it implemented a review of the Greenhouse Office, which was conducted by former Liberal minister Warwick Smith. That review was presented back at the end of June, but the government refuses to make it public. What sort of transparency do we have here? While the Greenhouse Office goes round and round in circles—rudderless, no leadership, no performance—the government simply sits on the report by Warwick Smith which many believe recommends that the office be abolished as an independent agency and absorbed into the Environment Australia department. That would be a most unsatisfactory situation. Certainly the opposition do not support it. We take it as indicating a lack of bona fides on the part of the government concerning climate change issues. I call on Minister Kemp, as I have done previously, to remove the uncertainty over the future of the Greenhouse Office by making public the Smith report and moving to ensure that the Greenhouse Office leadership is re-established so it is able to do the job it was established—with a great deal of fanfare and trumpeting on the part of this government—to do.

I turn from the government's failures to what Labor would do. The Origin Energy report that I just referred to, Incremental electricity supply costs from additional renewable and gas-fired generation in Australia, provides us all with a detailed assessment of the cost impact on Australia's electricity supply arising from specific policies that would increase the mandated renewable energy target, the MRET, to five per cent—indeed to 10 per cent in the Origin Energy survey—by the year 2010.

One of the report's key findings was that, for every five per cent increase in the MRET, the average cost to the wholesale market was of the order of $1 per megawatt hour, or 0.1c per kilowatt hour. This impact is lower than many of the regular wholesale price movements within the national electricity market and certainly much less than the currency fluctuations, so it clearly indicates that our greenhouse emissions could be substantially reduced at a modest cost to the electricity supply industry and without damage to our relative international competitiveness. The report indicates that moving to a five per cent MRET would enable us to reduce our greenhouse gas emissions by one per cent—that is, it would go one-third of the way towards meeting that gap of between eight per cent and 11 per cent.

Labor believes that MRET is vital to the development of the renewable energy industry and to reducing Australia's greenhouse gas emissions. Labor will not scrap MRET, which the government report recommends; we will increase the renewable energy target to five per cent by 2010. There is research available to demonstrate that increasing the target to five per cent would boost local renewable energy production, it would help us to achieve our Kyoto target by reducing greenhouse gas emissions and it would build a sustainable renewable energy industry for the future. This is an achievable, workable and significant target. It is an important step, and it represents a significant improvement on the present regime.

There has also been discussion, in the context of renewable energy, about whether the target is designed to support new capacity or whether it is equally valid for existing generation. There have been concerns raised that the financial benefit of the measure should reward only new investment in renewable generation for both existing and new generators. Labor notes that the government has announced the MRET review—the Minister for the Environment and Heritage announced this last week. I believe that this is an appropriate issue to be considered by the MRET review.

There was also a fair bit of debate, when the original legislation went through, about the use of native forest biomass. Concerns were expressed about the difficulty in defining waste. Timber that is not to be harvested often has high biodiversity and habitat value. There were concerns about the difficulty in limiting use to legitimate waste, the potential for an increase in overall harvesting due to the added economic incentives associated with the renewable energy certificates as biomass extractions, not limited under the RFAs, and the impact on greenhouse emissions.

I believe that this is an issue that should be examined by the forthcoming review. Some of the things that the review should examine are whether the MRET should be five per cent or a higher figure; whether there is a genuine problem regarding the baselines and unders-and-overs for existing hydrogenerators and, if so, how it should be resolved; whether the use of native forest residue would have a significant adverse effect on forest biodiversity, increase its greenhouse gas emissions or lead to an unsustainable increase in biomass from native forests; and the proper role of plantations and whether it is appropriate that they are excluded from the MRET definition. These are all things that the government's MRET review needs to consider.

The reason we need to have a renewable energy industry in this country is that the world's past energy patterns are unsustainable. We are already suffering some of the impacts of this in climate change around the world, including here in Australia. At question time, the Prime Minister talked about government initiatives to assist people who are adversely affected by the drought. If we do not take action to tackle climate change and to reduce our greenhouse gas emissions, the CSIRO projections are that there will be more severe and more frequent droughts in years to come. We will see not only droughts but more frequent and more severe bushfires, floods and cyclones. We have already seen the impact of climate change, with coral bleaching on the Great Barrier Reef. We see it in the projections for reduced snow cover and increased `natural' disasters, which should be referred to as climate disasters or greenhouse disasters. If the Howard government is concerned about the plight of farmers and the impact of drought, it would get serious about tackling climate change. It would ratify the Kyoto protocol on climate change. It would not seek to scrap the renewable energy target and to undermine that push into renewable energy. It would seek to build on that work.

The government's renewable energy policy is a `tale of two Warwicks'. Warwick Smith has been doing the review of the Australian Greenhouse Office and Warwick Parer has been doing the energy review. What do these two men have in common? Firstly, they are both former Liberal ministers in the Howard government—that seems to be a good way to get a gig carrying out an `independent' review. Secondly, their first name is Warwick—that apparently helps too if you want to get a job doing a review. Thirdly, they are both doing a hatchet job on the only things that this government has ever done to tackle climate change—on the one hand it established the Australian Greenhouse Office, and on the other hand it established the mandatory renewable energy target. In this case it is not `Alas, poor Warwick'; it is `Alas, poor sustainable energy future for this country,' and `Alas, poor renewable energy industry.'

There is a clear policy difference between our policy and the policy of the government in relation to climate change and renewable energy. We support action to tackle climate change and we support action to promote a renewable energy industry. The policy of the government is to scuttle and undermine renewable energy in this country.

Mr KELVIN THOMSON —The minister interjects. Regrettably, it is the states that have had to show leadership in tackling climate change. You have seen initiatives from Bob Carr, Steve Bracks, Mike Rann and others in the face of a lack of national leadership and a lack of national energy policy. There has been a lack of seriousness in combating climate change, reducing our greenhouse gas emissions and putting this country on a sustainable energy path that promotes those renewable energy industries that have a great future in providing jobs, investment and future economic development for this nation. (Time expired)