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Monday, 17 August 2009
Page: 7952

Mr IAN MACFARLANE (1:25 PM) —It is with some pleasure that I take the opportunity to speak on the Renewable Energy (Electricity) Amendment Bill 2009 and the related bill, and particularly to speak in support of the increase in the renewable energy target to 20 per cent. Those who have followed the renewable energy debate would be aware that it was the Howard government who introduced the original MRET of some 9½ thousand gigawatt hours. That was introduced with the specific goal of lowering Australia’s emissions and introducing and supporting new technologies in relation to renewable energy. There is absolutely no doubt that that legislation was an outstanding success. That legislation saw a growth in renewable energy in Australia unlike any we have seen since the introduction of the Snowy Mountains scheme. Of course, there were concerns towards the end of that scheme—which is still running—that the renewable energy credits were being taken up. So successful was that scheme that it was likely that there would not be enough renewable energy credits within the MRET. So this legislation was proposed and comes on the back of an election commitment that the Howard government made to introduce a 15 per cent clean energy target.

We saw then, as we do now, that clean coal in particular is part of the long-term solution to Australia’s energy needs. When you have an electricity industry of which 80 per cent is coal, to ignore the technology to take clean coal forward is a reckless step indeed. Our target during the election campaign was then increased to 20 per cent. Even though this legislation does not include clean energy sources other than renewables, give or take a few minor technicalities, we still support this legislation. Unfortunately, though, we have seen a political process attached to this, which has done no-one any favours, least of all the renewable energy industry. We have seen the legislation delayed. This debate in this House should have taken place six months ago. It should have taken place on the basis that there was ample time to debate the issue, which is one of the more important issues if we are going to lower greenhouse gas emissions. There should have been time during the last sitting period, even the one prior to that in the autumn session, to debate this legislation and to ensure that industry was not left hanging, as is the case with the photovoltaic industry. That is part of the politicisation that this government inevitably embarks on every time it brings forward legislation. We have also seen the legislation not only delayed but also tied to the passage of the Carbon Pollution Reduction Scheme legislation. That legislation was defeated last week, and we would assume will be debated again some time in the future. But in the meantime it is imperative that this legislation gains passage.

There are, despite our support for this legislation, a number of failings within it. In particular, the introduction of an emissions trading scheme—a pricing of carbon—combined with a renewable energy target increase to 20 per cent, or 45,000 gigawatt hours, has an enormous cost impost on the aluminium industry. In accepting that there would be a price on carbon, the aluminium industry has to also ensure that Australian smelters remain competitive against other smelters around the world, even those owned by the same company. So, if you have a situation where a company owns a smelter in, say, Canada, one in Australia, perhaps one in Europe and perhaps smelters in some of the places where it has access to electricity at a reasonable price and our smelter is the most expensive to run of those four smelters, our smelter will be the one that is switched off. We need to see what the member for Flynn is going to say in this debate. We need to see what the member for Bass is going to say in this debate. We need to see what the member for Hunter is going to say in this debate. We need to see what the member for Corangamite is going to say in this debate. All of those members have smelters in their electorates which are threatened by this legislation in its current form. Provision needs to be made within this legislation that, in the event of an emissions trading scheme and a RET, added compensation is made available to the aluminium sector. The coalition will be moving amendments to that effect.

The food industry will also have to compete in the event of an ETS and a RET against a New Zealand food industry which has a complete exemption on the basis of what is euphemistically known as the Fonterra bill. A large dairy processor in New Zealand can gain complete exemption from New Zealand’s emissions trading scheme for its export products. We do not need to see food-processing plants in Australia closed as a result of this legislation combined with the ETS. Again, we will be moving amendments in that regard.

Though it pains me to say it, the last government allowed a loophole to develop within the MRET legislation that has seen nothing short of rorting go on in the installation of heat pumps. Heat pumps are an extraordinarily efficient but electric way of heating water. They draw the sun’s energy, which has been transformed into ambient temperature in the air—that is, the energy is now in the air—into the unit through what is basically a reverse cycle air-conditioner and turn that heat into hot water. It is very efficient but not as efficient as gas. It certainly emits CO2 in the production of electricity to drive that compressor. As an alternative to an element hot water system, it is a much better option. Where you do not have mains gas or you do not have a large use of LPG and are able to buy at good rates, a heat pump is definitely a better option.

We made provision for heat pumps to receive RECs, but what we have seen is the manifolding or the connecting together of a whole series of these heat pumps which multiplies the RECs so you can actually get a set of heat pumps for absolutely nothing. Even in a residential situation, because of the added assistance from state schemes, you can get a heat pump instead of a more efficient gas hot water system in a city like Toowoomba or Canberra for $395—a quarter of the price of any competition—and it has completely put out of business gas boosted solar power, which is far and away the most efficient way to make hot water without emitting CO2. That anomaly needs to be fixed, and heat pumps need to be restricted to one unit where it is producing hot water for households or for commercial installations. The taxpayer should not be subsidising large-scale commercial operations to install heat pumps instead of other, less emissions intensive methods of heating water. Again, we will be moving legislation in that regard.

There are some other areas which I know the shadow minister before me has already outlined. We are keen to see this legislation pass the House as soon as possible. We are keen to see all sectors of the industry that are affected by this legislation dealt with fairly. There is one other sector which has been generating electricity at zero net emissions, and that has been the electricity industry which uses waste coalmine gas to drive generators. Again, as the shadow minister for the environment has mentioned, we will be ensuring that that industry does not hit the wall as result of this legislation.

This legislation is crucial to the future of the renewable energy industry in Australia. As a previous minister responsible for energy, I got a great deal of satisfaction from working with the industry to ensure that we developed other options. Other options are not just bringing European technology, sticking it on top of a tower and adding some blades to it and saying that this is the answer for renewable energy in Australia. The wind energy industry has done well from the MRET and will do very well from the RET—or the NRET, as it is referred to—but we do not want to put all our eggs in one basket. We need to see renewable energy developed right across the spectrum. We need to see wave energy, we need to see tidal energy, we need to see obviously both solar photovoltaic and solar thermal energy and we need to see geothermal energy, which probably holds the most promise to ensure that we have baseload renewable energy, because that Holy Grail of renewable energy remains 24 hours a day, seven days a week.

We must have renewable energy sources that ensure that the electricity comes out regardless of whether the sun is shining or whether the wind is blowing. We need to develop those alternative technologies. There is promise in those technologies. We are seeing them make progress. It will be difficult for them in the next five years to take a large slice of the RECs that are on offer. But we do see it as important that these technologies are advanced. We do see it as important that we generate 20 per cent of our electricity from renewable sources. We do see it as very important that we lower our emissions per megawatt hour and therefore lower our emissions overall as a country.