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Monday, 17 August 2009
Page: 8058


Mr COMBET (Minister for Defence Personnel, Materiel and Science and Minister Assisting the Minister for Climate Change) (8:55 PM) —I continue my remarks in responding to the amendments that have been moved by the shadow minister, and appreciate the observations that he has made about the efforts on behalf of the government in trying to address the issues that have been raised. However, regrettably, I must report that the government do not support any of the amendments that have been proposed by the opposition. I seek to make some further comments in relation to the food-processing industry, which is also the subject of one of the amendments advanced by the shadow minister. As I said, the government do not support this specific amendment and, as I think I mentioned earlier in the second reading summation, there is currently no emissions-intensive trade-exposed category for food processing.

This issue in this industry has been identified, I imagine, for particular reasons by the opposition, but it does not appear to be supported on some evidentiary basis that distinguishes the industry in respect of the potential cost of meeting the expanded renewable energy target. Indeed, food processing itself is a very diverse activity within the economy and can include anything from the processing of dairy products to canned foods, and a whole host of other fast-food processing activities. It would be very difficult to define for the purposes of prosecuting an amendment as advanced by the opposition. There are, as a consequence of the diversity of the manufacturing processes engaged across the food-processing industry generally, some things in relation to which I have had some exposure in some of my previous work over the years, significantly different levels of exposure within the sector to electricity prices—that is, due to the different levels of consumption there are quite significantly varying levels of sensitivities to movements in electricity prices.

The impact of the renewable energy target on entities carrying out food-processing activities such as dairy processing is expected to be quite modest, in the government’s view and on the basis of the work that has been done. It would be inappropriate in the government’s view for renewable energy targeted assistance to be provided to businesses in the food-processing sector where there are other activities markedly more exposed to electricity prices. In approaching an issue such as this, consistency of application of the arrangements is absolutely critical to ensure that all industries and businesses are dealt with in an equitable way under the legislation. Food-processing businesses may qualify for transitional assistance, as I indicated earlier, under the Climate Change Action Fund in their implementation of new low-emission technologies. Of course, that is the avenue for entities within the food-processing sector, if they are substantial consumers of electricity, to look to once the legislation becomes operative.

The opposition also advanced an amendment, which the government also does not support, which suggests that the renewable energy target should be banded to ensure the deployment of less mature renewable technologies. The RET scheme encourages the deployment of renewable energy without, as I said before, picking winners within the mandated part of the electricity market that this legislation would entail.

As I said before, the expanded bounded renewable energy target is quite significant. It increases the current MRET scheme target by over four times, from 9,500 gigawatt hours to 45,000 gigawatt hours, by the year 2020. Modelling indicates that, due to the large size of the target, the RET will pull through a range of technologies including wind, biomass, solar and geothermal energy. In the area of geothermal energy, one of the barriers to investment has been the assumed distance of the potential resources for geothermal power generation from existing electricity grid infrastructure. Just recently in the region in which I reside, and where my electorate is located, a potentially significant geothermal field has been progressively discovered within the Hunter Valley, which is in the approximate location of the New South Wales electricity grid. That may well of itself change the investment calculus for geothermal energy. (Time expired)