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Monday, 9 December 2002
Page: 9937

Mr SIDEBOTTOM (9:11 PM) —It gives me a great deal of pleasure to speak on the Renewable Energy (Electricity) Amendment Bill 2002 as my home state of Tasmania is the renewable energy and electricity capital of Australia and, in particular, my electorate, on the north-west coast of Tasmania, is the wind energy capital of the state. Needless to say, this amendment bill has great significance for my state. The bill before us amends the Renewable Energy (Electricity) Act 2000, which I had the pleasure of speaking to earlier on, to clarify key definitions in the original legislation and to provide for greater efficiency and effectiveness in the administration of the legislation. A number of minor deficiencies in the operation of the legislation have been revealed, and these need to be addressed to ensure the maintenance and the integrity of the legislation and the achievement of its objectives.

I am also pleased to note that the minister in his second reading speech made it quite clear that the amendments were:

... in no way to impact on the government's commitment to conduct an independent and thorough review of the Renewable Energy (Electricity) Act 2000 as mandated under section 162 of the current act ... As such, changes to the policy underpinnings of the Renewable Energy (Electricity) Act need to be made in an informed rather than a reactionary manner, having regard to all participants in the market and noting the importance of a stable investment environment for the uptake of renewable energy technologies.

I applaud that approach, although I know that certain sections of the industry were peddling demands for this review to take place before its commencement in January 2003. However, the minister quite rightly has deemed that that review will take place appropriately. We urge all people who want to have input into that review to do so and that the various questions which were outlined by both the shadow minister for the environment and the shadow minister for resources be looked at during the review.

I mentioned before that Tasmania was the pre-eminent renewable energy generator in Australia. I would like to share some information on that. I would also like to talk about the impact of MRETs in particular on Tasmania and their significance to my state, both now and in the future. Hydro Tasmania is the major generator in Tasmania to date. It is hoped that other players will take part in the generation of renewable energy in my state. The shadow minister for resources and I met recently with some of the potential players in my electorate. Tasmania contributes over 60 per cent of Australia's renewable energy. Hydro Tasmania, as the predominant generator, has a work force of over 780 people, electricity generating assets with a value of over $3 billion and a total generating capacity of 2.518 megawatts from 32 power stations, including 27 hydro-electric power stations, two wind farms and more than 50 dams. You can see that renewable energy is a very important product in my home state and a significant generator of wealth and jobs.

But there is more to come. The MRET scheme is the key to a greater capacity for renewable energy generation and jobs, especially in regional Australia, as was so eloquently outlined by the shadow minister for the environment earlier this evening. The MRET scheme provides the first true recognition of the external environmental costs associated with fossil fuel power generation in Australia and, accordingly, provides an appropriate incentive for renewable energy generators. This we all agree with. This we supported in 2000 when the bill was first introduced. This government's renewable energy certificate scheme has been designed to stimulate an additional 9,500 gigawatt hours of renewable energy production by 2010.

Hydro Tasmania has responded to this mandatory target in a number of ways: for example, in the refurbishment of existing power stations, the development of new mini hydro projects and, most importantly for my electorate, the development of new wind farms. Hydro Tasmania has secured development approval for a large 130-megawatt wind farm at Woolnorth in my electorate, in north-west Tasmania. The first 10.5 megawatts have recently been commissioned. What a sight wind farms are, in an area with the cleanest air and with the cleanest water in the world, apart from Antarctica. That assessment comes from the CSIRO. I was very pleased to have that confirmed. Two other sites, Heemskirk, on Tasmania's west coast, and Musselroe, in the north-east of the state, are at an advanced stage of investigation. Development applications have been submitted for them. These two projects will have a total installed capacity of around 300 megawatts. In addition, Hydro Tasmania is progressing with significant interstate wind development opportunities in South Australia, announced recently, and in Western Australia. So Tasmania, through Basslink and renewable energies, is beginning to make its way into the energy market of mainland Australia.

The current commitments by Hydro Tasmania to develop 420 megawatts of wind farm capacity in the state—and up to 1,000 megawatts could be developed—have been used to lever investment in the local manufacture of wind turbine components. This is the very important connection between the MRETs, the stimulation of further renewable energy generation and, from that, the stimulation of economic development, both directly and indirectly. In Tasmania, that connection is best demonstrated by Hydro, with its dams and wind energy. There is that very important synergy in my state. With the development of Basslink, we will be able to participate in the national energy market. That has tremendous possibilities for my state in the future.

I want to take a cursory look at some of the economic development that flows from this development of renewable energy capacity and generation in my home state. There is the development of Woolnorth and of the nacelle assembly plant which has been announced by Vestas, for which the first sod is soon to be turned. There is the great possibility, through Basslink, of a link into the national energy market. There is the continued use of the MRETs to stimulate further renewable energy electricity generation on the mainland and the greater demand for wind energy and those products that go with it. As well as these developments, there is a possibility of blade manufacturing in my electorate. Significant jobs will develop from that. With them will come technology transfers, which are so important in the development of high-skilled, high-tech jobs in regional Australia. It is a perfect nexus for us. The MRET scheme contained in the legislation is absolutely vital to this development.

We look forward to these developments, particularly Hydro Tasmania's association with Vestas and hopefully with other players who are coming on board. We look forward to the further downstream processing that will come not only with these developments but also with wind tower construction in my home state and with the very important manufacturing that is associated with fibreglassing. We have some of the best fibreglassers in Australia in my electorate. From designing and building terrific boats, emergency shelters and magnificent surfboards, I hope we will go on to develop not only nacelle manufacturing components but the blades themselves. We certainly hope that that will be associated with these developments.

In all, the MRET driven renewable energy capital expenditure to 2010 in my home state will, I am led to believe, involve $5.5 million in mini hydro projects, asset upgrades of $208 million, wind farm developments of $620 million—that is just those involving Hydro Tasmania, not other private players—and wind farm developments on the mainland totalling some $440 million, with a total investment based on MRET renewable energy targets and the credits that go with that of $1.47 billion. So it is absolutely essential that we do not hear any more from the Parer report and its recommendations for the abolition of the MRET scheme.

The shadow minister for the environment made it quite clear tonight that we oppose the abolition of the MRET scheme and, not only that, we believe it is vital to the development of the renewable energy industry and to the reduction of Australia's greenhouse gas emissions. The shadow minister made it very clear tonight that Labor will not scrap MRET. In actual fact, we will increase the target, because we believe that is one of the most important ways to stimulate further generation of renewable energy, particularly renewable energy in electricity. My party in my home state and Hydro Tasmania reject in the strongest possible terms the proposal that MRET should be abolished. It is a very successful, world-class policy initiative that has provided significant incentives to renewable energy generators. It is a critical kick-start for the renewable energy industry and represents a strategic step to establishing a long-run industry with value within Australia and for export.

Unless this recommendation is withdrawn quickly, it has the potential to rapidly halt the development of renewables in Australia. Hydro Tasmania's view— and that of my state—is that it is a measure compatible with emissions trading. As emissions trading penalties are increased, the value of RECs will decline until the full value of renewable energy is recognised in the emissions trading value. The two measures will coexist and complement each other. As the shadow minister for the environment pointed out earlier, the abolition of MRET would send very strong signals about the high level of sovereign risk in Australia and undermine investors' confidence in any future measure, including a national emissions trading scheme.

In moving to a market based solution, the Parer draft report has resolved to take a technology neutral position. The report concludes that, judged purely on the basis of greenhouse gas abatement, MRET is poorly targeted, administratively complex and economically inefficient, as it is likely to result in marginal producers. It is correct in these conclusions if the only objective of the MRET program is greenhouse gas abatement. The report has failed significantly to assess the industry development aspects of the MRET program. MRET has three policy objectives, only one of which is greenhouse gas abatement. By far the most important aspect, and one ignored by the report, has been its operation as an initiative to foster the development of new industries, particularly in regional Australia, as demonstrated in my electorate and in Tasmania as a whole. In this regard, it is similar to other industrial development initiatives offered by government.

Without MRET, it would not be possible to establish a wind turbine manufacturing facility in Tasmania. Should MRET be abandoned, the Vestas investment I mentioned earlier, particularly in my electorate, and similar investments elsewhere, will be jeopardised. It is only via such investments in manufacturing plant and access to world-class technology design that the costs of wind generation can be driven down in the long term, enabling it to compete on equal terms with fossil fuel plants.