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Wednesday, 12 May 2010
Page: 3209


Mr GRAY (Parliamentary Secretary for Western and Northern Australia) (10:10 AM) —I move:

That this bill be now read a second time.

The Renewable Energy (Electricity) Amendment Bill 2010 will implement significant changes to enhance the government’s ambitious 20 per cent Renewable Energy Target. The enhanced Renewable Energy Target will help fight climate change, it will allow Australia to harness its vast renewable energy resources, and it will drive the deployment of renewable energy technologies, industries and jobs.

This bill is at the core of the government’s clean energy agenda. The Renewable Energy Target is a major climate change initiative implemented by this government to begin to build the low-carbon economy of Australia’s future. Scientists and experts have told us that clean, efficient energy systems will underpin our economic prosperity in the future, and drive our climate change response today. Through the RET, the government is delivering responsible and strong action on climate change—in our homes, our schools, our workplaces and throughout the grid. The enhancements to the RET contained in this bill form a key part of the government’s comprehensive strategy to save energy, cut waste and make the most of our rich renewable resources.

From the power plant to the power point this government is supporting action, large and small, to reduce our carbon pollution. We are delivering small- and large-scale clean energy through targeted funding and a strong 20 per cent Renewable Energy Target. We are helping Australians save energy by modernising the grid, promoting energy efficiency, and improving the design and use of our buildings, appliances and cars.

As announced in the budget the government will commit a further $652.5 million over four years for the establishment of a renewable energy future fund to support Australia’s response to climate change. The fund will provide additional support for the development and deployment of large- and small-scale renewable energy projects, and to enhance the take-up of industrial, commercial and residential energy efficiency.

Through a range of actions and initiatives, the government is giving Australians the tools to do their bit to conserve energy, and creating new clean industries and jobs. At the same time, the government recognises that it is important to build the foundations now that will enable our energy sector to take advantage of opportunities in a carbon constrained world.

Electricity consumption in Australia accounts for more than one-third of national emissions. At the same time, Australia has a wealth of renewable resources. We have some of the world’s best wind resources, and the highest average solar radiation per square metre of any continent. We also have huge potential in geothermal and wave energy. The development of renewable electricity is therefore a crucial part of these low carbon foundations for our future.

The bill I am introducing today, and the government’s coordinated efforts on conservation and efficiency, will deliver for our environment, for our economy, and for Australia’s clean energy future.

The current expanded national Renewable Energy Target scheme

The government remains committed to ensuring that the equivalent of 20 per cent of our electricity supply comes from renewable sources by 2020.

In August 2009, the parliament passed legislation to implement the expanded national Renewable Energy Target, which brought the former Mandatory Renewable Energy Target and previously existing and proposed state and territory schemes into one national scheme. It expanded the previous Mandatory Renewable Energy Target by more than four times from 9,500 gigawatt-hours to 45,000 gigawatt-hours by 2020. The RET creates a guaranteed market for additional renewable energy deployment using a mechanism of tradeable renewable energy certificates that are created by renewable energy generators and owners of small-scale renewable systems.

The enhanced Renewable Energy Target

The Renewable Energy (Electricity) Amendment Bill 2010 amends the Renewable Energy (Electricity) Act 2000 to separate the existing scheme into two parts—the Small-scale Renewable Energy Scheme and the Large-scale Renewable Energy Target, from 1 January 2011.

These changes recognise the challenges that different parts of the renewable energy industry are facing. These changes will continue to support the full range of renewable technologies in both the large-scale and small-scale sectors.

The Large-scale Renewable Energy Target will encourage the deployment of large-scale power generation using energy sources such as wind, solar, biomass and geothermal, while the Small-scale Renewable Energy Scheme will provide clear and continuing support to households, businesses and community groups looking to play their part in Australia’s low pollution future by installing renewable energy systems like rooftop solar panels and solar hot-water systems.

The changes are expected to deliver more renewable energy than the original 45,000 gigawatt-hour target, which will help transform the electricity sector and support investment in both large- and small-scale renewable energy projects.

Key design features of the enhanced Renewable Energy Target

The Large-scale Renewable Energy Target

The Large-scale Renewable Energy Target will operate in a similar way to the current scheme. It will apply to accredited power stations using eligible renewable energy sources such as wind, solar, biomass, hydro and geothermal energy.

The profile of annual targets under the Large-scale Renewable Energy Target will be 4,000 gigawatt-hours per year less than the current annual targets. This is to take account of the small-scale component, which will provide a separate mechanism for small-scale technologies that will also contribute to the government’s overall target.

To minimise the impact of these changes on the renewable energy market, existing banked renewable energy certificates will only be eligible for use in the Large-scale Renewable Energy Target.

The Large-scale Renewable Energy Target will provide increased certainty for the development of large-scale renewable energy projects by allowing them to grow free from any uncertainty that may have been caused by strong demand for small-scale renewable technologies.

The benefits of the RET and the recent changes are already being realised. For example, within a few days of the government’s announcement to enhance the RET, AGL announced that it had entered into conditional arrangements for the construction of the 365 megawatt capacity Macarthur Wind Farm in south-west Victoria.

The Small-scale Renewable Energy Scheme

The new Small-scale Renewable Energy Scheme has been designed to work within existing deeming arrangements and the solar credits mechanism to provide clear and stable support to those installing small-scale systems such as solar panels and solar water heaters. The Renewable Energy (Electricity) Amendment Bill 2010 will allow for the creation of fixed price renewable energy certificates through the deployment of a range of eligible technologies.

In addition to their obligations to support generation-scale renewables projects under the Large-scale Renewable Energy Target, liable entities will have a concurrent obligation to surrender small-scale certificates and thereby support Australians taking action on climate change on their own properties.

The clearing house

In implementing the Small-scale Renewable Energy Scheme, the changes draw as much as possible on the existing renewable energy target legislative framework in order to minimise compliance costs. Small-scale certificates will be created as per the current processes administered by the regulator, and their creation, transfer and surrender will be recorded on the REC registry as is currently the case.

The Renewable Energy (Electricity) Amendment Bill 2010 allows for the establishment of a clearing house that will act as a central point for the transfer of small-scale certificates at $40. Stakeholder feedback indicated that many liable entities and suppliers of small-scale systems wanted the flexibility to trade small-scale certificates on the market, without going through the clearing house, at a price set by agreement between the relevant parties.

In practice, it is expected that many stakeholders will choose to receive an up-front discount on the cost of installation of a small-scale system from their supplier, as they do under the current arrangements, rather than trade the certificate themselves. However, while the clearing house will be optional, it will stand ready to transfer small-scale certificates at the $40 price.

While there will be no overall limit on the creation of small-scale certificates, in order to maximise certainty for liable entities, the bill requires the regulator to estimate and publish for the information of liable entities the total number of certificates expected to be created at the start of each year. The annual targets will be adjusted each year to account for actual small-scale certificate creation in the previous year. Similar to the renewable power percentage in the Large-scale Renewable Energy Target, this will be expressed as a percentage of the liable entity’s relevant wholesale electricity acquisitions.

To facilitate a more regular flow of small-scale certificates from suppliers to liable entities, liable entities will be required to acquit their obligations on a quarterly basis, but with annual assessment by the regulator.

Assistance to Emissions Intensive Trade Exposed Industries

The government recognises that the Renewable Energy Target will have a cost impact on those undertaking certain emissions-intensive trade-exposed (EITE) activities. Partial exemptions are applied to all activities that would have qualified for assistance under the Carbon Pollution Reduction Scheme to account for this impact.

Enhancing enforcement provisions

The bill also presents a timely opportunity to further strengthen the compliance regime relating to the creation of renewable energy certificates through certain civil penalty provisions. This is an important step to maintain confidence in the regulatory framework and the operation of the renewable energy certificate market.

Government support for renewable energy

The renewable energy target is part of a suite of government policies encouraging the switch to cleaner energy. To complement the renewable energy target, the government is making significant investment in generation-scale renewables through the $4.5 billion Clean Energy Initiative.

This initiative includes the $1.5 billion Solar Flagships program to support the construction of large-scale grid-connected solar power stations operating within the energy market. This program will help position Australia as a world leader in solar technology.

The Australian Centre for Renewable Energy is a key plank in Australia’s commitment to clean energy technologies and deploying these technologies around Australia. It draws together more than $560 million in order to accelerate the development, commercialisation and demonstration of renewable energy technologies. It will thus complement the government’s investment in generation-scale demonstration projects under the Solar Flagships program and the sustained commitment to household- and community-scale renewables through initiatives such as the Solar Cities program and the National Solar Schools Program.

In addition, the Australian Solar Institute will provide support for the Australian solar community, helping to retain Australian solar expertise and develop the next generation of Australian solar researchers. The institute will foster greater collaboration between researchers in universities, research institutions and industry and forge strong links with peak overseas research organisations. The first round of solar grants funding program has been completed. Five projects receiving funding of $11.1 million—funding which underpins total project values of $30.9 million—have been supported, two of which are projects that are researching thin-film solar PV technology.

And the government has now committed more than $200 million to accelerate geothermal energy technology development, demonstration and deployment in Australia, leveraging a total investment in excess of $720 million. Funding for several geothermal projects has already been announced.

Conclusion

This bill will encourage the deployment of both major renewable energy projects and household-scale renewable energy systems. The government will work with industry, the parliament and the community to pass these enhancements to the act and ensure a smooth transition to the new arrangements. The legislation before the House will deliver significant and timely sets of enhancements that will reduce Australia’s emissions while driving new investment and creating new jobs.

This bill represents a major step toward the transformation of the Australian economy and the building of Australia’s low pollution future. I commend it to the House.

Debate (on motion by Mrs Gash) adjourned.