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Thursday, 12 December 2002
Page: 10581

Mr ADAMS (10:19 AM) —The purpose of the Renewable Energy (Electricity) Amendment Bill 2002 is to make legislative adjustments to the electricity from the renewable energy sources scheme. The original scheme required Australia's electricity retailers and other large buyers of electricity to collectively source an additional 9,500 gigawatt hours per annum of electricity from renewable sources by 2010. This measure was to increase the level of renewables based electricity generation from 10.7 per cent in the late 1990s to a projected 12.7 per cent by 2010.

It was also designed to increase investment in the renewable energy sector and was estimated to potentially reduce greenhouse gas emissions by about seven million tonnes per annum by 2010, through renewable energy electricity generation displacing high emission intensity fossil fuel based power generation. The scheme established the mandatory renewable energy target, MRET, which was a token effort to address greenhouse gas abatement.

The amendment is designed to improve the administrative integrity, effectiveness and efficiency of the Renewable Energy Act 2000. It removes the MRET, which has only been in place for two years. Many of the larger enterprises have used it to develop the baseline for their expansion into renewable energy power sources.

Tasmania, of course, is the home of renewable energy, starting before the Snowy scheme. Our first hydro scheme was at Duck Reach on the South Esk River in the late 1890s. Tasmania has used hydro power to build its economy since then and it has produced 60 per cent of Australia's renewable energy. Hydro Tasmania and its various business units—Transcend and Aurora—still employ a considerable number of people in Tasmania; not as many as they used to, but they are still a major employment source. They also have the ability to develop new technology and use their expertise to help other countries to develop their renewable energy capacity through their consultancy arm.

With any energy source, it is important to seek new ideas and develop ways to upgrade existing schemes. But unless there is an incentive to do so and the people to use the output, then the status quo will remain and little will change. When MRET hit the deck, Hydro incorporated into its future planning to look at ways that it could improve its alternative renewable energy. It started with what it could improve in its existing infrastructure, which will include one major upgrade and 11 minor ones other than the normal maintenance round.

Wind power has been discussed for some time and when the MRET became an incentive, there was serious interest in looking at using wind as a good, clean method of power development. But it cannot be developed in isolation. Other power sources are needed to ensure that the spikes that are inevitably there with wind can be ironed out and boosted when needed. We have just heard my colleague from the Northern Territory, the member for Lingiari, speak about a major breakthrough in this regard by a person in his area.

Hydro power is an ideal joint partner because water can be adjusted quickly and cheaply to regulate the power generation. So it seems to be the right direction in which to be moving. But the development of wind energy is not as economically feasible as the development of hydro power. It needs more of a push to get it into the mainstream. When the MRET was established it became feasible to consider including wind power in the renewable energy grid. The criticisms of the system were that baselines for existing generators had been incorrectly set, which was stopping investment in new renewable energy developments, and that it would fail to substantially increase Australia's uptake of renewable energy, thus having a significant impact on greenhouse gas emissions. It is argued that the existing target of 9,500 gigawatts by 2010 is too low and that the design of the MRET scheme does too little to encourage investment in new renewable energy businesses.

It seems that Hydro Tasmania have been criticised for taking advantage of gains that have been made by existing hydro-electricity generation. Critics of the current scheme say that the use of the 1997 baseline data means that Hydro generators can supply all mandated RECs until 2007 without investing in new capacity and can enjoy a significant share of the REC market thereafter. However, that is not what Hydro did. They have worked hard to comply with and develop the MRET scheme. They do not believe it is perfect—they feel the baselines are too low and the target needs to be increased by 2010 by at least a true two per cent additional renewable energy. The program has been useful in pushing the direction of renewable energy. Five hundred and sixty-eight megawatts of wind farms have obtained planning approval for construction. One hundred megawatts have been constructed and 158 megawatts are under construction. This far exceeds earlier government predictions about how MRET will stimulate new renewable energy projects.

This program is made commercially feasible by the MRET scheme. Investment in the upgrade program has increased from $16 million per annum pre-MRET to $66 million per annum. That is a considerable amount of investment in the state of Tasmania. Having inspected the wind farms and seen some of the potential upgrading under way in the older hydro generators—that is, using water more efficiently and effectively—it seems that this has indeed encouraged a greater intensity into improving Tasmania's capacity for power production. With the Basslink about to come into being in the next few years, this extra power will be a welcome addition to the mainland and may well encourage subsidiary industries to be attracted to the island. One such is the building of a Vestas factory on the north-west coast and the other is the Hydro's ability to continue to research and develop new directions for wind generation.

I think the original objectives of the bill are being met. The uptake of renewable energy in grid based applications to reduce greenhouse emissions is under way. Renewables are being stimulated, which is providing a base for further development of commercially competitive renewable energy. It will lead to the Hydro and many private companies contributing to the development of internationally competitive industries which could participate effectively in our part of the world. Development of new technologies is expensive for both existing and new companies. I believe MRET gives opportunities for small companies to piggyback on the infrastructure and expertise of the bigger companies to develop new directions.

Continuing with the amendments in this act will effectively prevent the continuation of much of the development work already under way and it has enormous budget implications as companies cannot just stop what they have been planning over the last two or three years. It seems to me that it is ludicrous to introduce legislation at this stage to change the interpretation of the act. Some individual accreditor might rule that a new power generation scheme is not eligible because the system in the application effectively represents an expansion or modification to an already accredited power station rather than a new, separate power station. Any sort of power station takes an enormous amount of capital to bring up to standard to attach to our electricity grid. Fledgling companies do not have that capacity. However, small companies working with an established electricity generator could develop significant differences. Should we not gear the MRET to help existing companies become mentors and have partnerships with new technology rather than throw the baby out with the bathwater, so to speak? I think some changes can be made to MRET to answer some of the concerns raised, but to develop the sorts of directions that are being suggested in the amendments frankly adds police state dimensions to something which really could be a useful technology development tool.

Renewable energy certificates should simply be gained by any company involved in energy and power development, providing there is substantial proof they are contributing to the demolition of greenhouse gases. Australia is a bit of a joke anyway in this area after refusing to adopt the Kyoto protocol. To deny existing clean power generators to continue to research new directions seems to be a contradiction in Australia's position. I suppose nothing is really new under the Liberal government. They are so full of contradictions, it is not surprising that big and small business finds this confusing. The cutting of the CRC on renewable energy and the taking away of funds last week proves that this government is heading in a nonsensical direction when it comes to renewable energy. The big argument is lower prices, although I do not see a lower price for power for consumers. I believe the industry should gain some additional incentives to keep the price of power within the reach of ordinary Australians. Nowhere in any of the discussions have I seen any interest in this; it is more about how our environment has to be saved from us. There is always a social dilemma to that argument which needs consideration.

Biomass fuel production is another source of argument in this place. The CSIRO report on environmental matters relating to biomass fuel states that the environmental concerns can be adequately managed and biomass fuel production can make a very significant contribution to the reduction of Australia's greenhouse gas production. If someone wants to put in the investment and make it work, it seems that once again we are throwing away opportunities by placing barriers, which are being suggested, in the path of investors. Sensible and sensitive development is a plus, not a minus, for our society.

We need to encourage people to develop new ideas using international guidelines. We should ratify Kyoto and get on with developing ways in which we can meet those targets. Time and again, we hear arguments about how to stop various activities from occurring without any base knowledge of what they have contributed in the past and what potential they have. We should build on the expertise, guide the investment into sustainable areas and encourage change by example and incentive. Bans and restrictions only serve to persuade people to find ways around them. We want to use their inventiveness more productively. The forestry and energy industries—two of Tasmania's vital industries—can be influenced by people working with them.

The Senate report which came down a week or two ago vindicates what I have said. There is a need to continue with the MRET scheme and encourage its positive review in the new year. The Parer report and its recommendations do little to encourage business to take up new directions. It is negative. It seems to want to change everything before it has been properly tried and tested. We can certainly do better and we need to better in the future.