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Tuesday, 29 May 2012
Page: 6061

Mr KELVIN THOMSON (Wills) (19:43): After that performance I think the House could profit from some information about the bills that we are debating. The Clean Energy Finance Corporation Bill 2012 establishes the Clean Energy Finance Corporation. It empowers the corporation to invest directly and indirectly in financial assets for the development of Australian based renewable energy technologies, low-emission technologies and energy efficiency projects. The significant thing about this is that it is a measure designed to support, promote and develop Australian industry and to enable us to take advantage of renewable energy technologies, something we have really failed to do, unfortunately, in the years gone by. We have to a considerable degree missed out on what has been an emerging, growing area of technological development and manufacturing jobs.

The accompanying bills to be passed with the Clean Energy Finance Corporation Bill 2012 by 1 July will provide market certainty around the changes. In April the government released the expert review panel's report on the design of the $10 billion Clean Energy Finance Corporation. The government accepted the recommendations of that report and is implementing them through this bill. Clean energy technologies face a range of obstacles in attracting financing: current global financial conditions, the complex nature of Australia's electricity markets, the cost of renewable energy and preference of investing institutions for listed assets inhibit the financing of the clean energy sector. The corporation will invest in financial assets for the development of Australian based renewable energy technologies, low-emission technologies and businesses that supply the required inputs which are critical areas to the transformation of the Australian economy. It will leverage private sector financing.

The bill requires the corporation to have at least half of its investments in renewable energy technology by 30 June 2018 and thereafter. It is expected that the corporation will apply a commercial filter when making its investment decisions, focusing on projects and technologies at the later stages of development. The filter will not be as stringent as the private sector equivalent, as the corporation has a public policy purpose and values any positive externalities that are generated. By using a commercial filter, it is expected the corporation will invest responsibly and manage risk so it is financially self-sufficient and achieves a target rate of return. The government will provide $2 billion of funding to the corporation per annum for five years, starting in 2013-14, with profits—including any capital and interest earned—available for reinvestment. The corporation will make individual investment decisions independently of the government.

The Clean Energy Finance Corporation is part of a suite of government initiatives designed to transform the Australian economy for a cleaner energy future. The government's $10 billion investment in the Clean Energy Finance Corporation will play a vital role in unlocking significant new private investment in clean energy projects and the supply chain that feeds into these projects. Australia's clean energy market is an early stage market, categorised by incomplete knowledge and limited experience of risk. This means that there are barriers inhibiting the effective allocation of capital.

The expert review chaired by Jillian Broadbent identified a number of common barriers inhibiting financing of the clean energy sector, such as availability and cost of finance. The Clean Energy Finance Corporation will make investments and encourage private sector investment in clean energy technologies, but there may still be market barriers that prevent these projects going ahead—for example, if investors are not familiar with emerging technologies. The Clean Energy Finance Corporation will have tools at its disposal to tailor investments to address market barriers. These tools include a capacity to provide funds, change the allocation of risk amongst participants and offer a concessional cost of funds. The Clean Energy Finance Corporation will act as a catalyst to private investment which is currently not available, and thereby contribute to carbon reduction and cleaner energy. It is not the intention of the Clean Energy Finance Corporation to directly compete with the private sector. Rather, it will seek to leverage more private sector investment.

The introduction of a carbon price is the key to changing the underlying economics of clean energy projects and making them more competitive. A carbon price in conjunction with the Clean Energy Finance Corporation will build on the government's investments in new renewable technologies and better and more efficient ways of using our energy resources. These efforts will create an incentive to reduce emissions, drive investment in renewable and low-emission technologies, create certainty for business investment and begin the adjustment of our economy to a cleaner energy future.

The member for Goldstein queried the purpose of the legislation and of the Clean Energy Finance Corporation. We need to say that this is a measure to boost Australian manufacturing. The carbon pricing mechanism and, in the particular, the Clean Energy Finance Corporation, will generate additional manufacturing opportunities for Australian firms. Australia could become a world leader in creating green industries, generating up to a million green collar jobs by 2030 and multibillion dollar export opportunities in green technology. Australia is well placed to lead an economic renewal based around clean industries and green jobs, but we will need to act quickly to compete with countries such as Germany and Denmark, which are already greening their workforces and dominating the international green market in solar and wind technology.

The good news is that there has been a great deal of work done to kick-start the structural change geared towards renewable energy development. For example, the company Beyond Zero Emissions has produced a report titled Zero carbon Australia stationary energy plan, which is a 10-year road map for 100 per cent renewable energy generation, with baseload energy supplied by renewable sources at a cost of $8 per household per week, a similar electricity price rise to what may be expected in Australia's business-as-usual electricity market. The plan includes concentrating solar thermal power with molten salt storage supplying 60 per cent of electricity demand, wind supplying 40 per cent, and biomass and hydroelectricity being used as contingency backup for up to two per cent of annual demand.

This comes at a time when the world is currently experiencing a boom in clean energy investment that I think is the beginning of a new industrial revolution. Last year, a record-breaking $260 billion was invested in new renewable energy projects across the globe. In fact, clean energy investment has hit new records in seven of the last eight years, and even the oil giant BP predicts that renewables will be the fastest growing energy sector every year until at least 2030. More staggeringly, the global clean energy and environment sector is now valued at $4.7 trillion, which is three times Australia's annual gross domestic product. Last year was also the first year when clean energy investment exceeded investment in fossil fuels, led by skyrocketing investments in countries like America, China, India and Brazil. These investments now underpin between 2.3 to three million jobs in clean energy industries worldwide. Globally, more renewable energy was built last year than fossil fuel energy. The Chinese solar industry is leading the way, and it is claimed that solar will be cheaper than coal within a decade.

Australia has what it takes to be leading this race: world-class renewable energy resources, a skilled workforce and a proud history of innovation. However, of that $260 billion which I mentioned was being invested last year, only $4.7 billion of it was in Australia. So we have been missing out and I think it is an excellent time for us to be investing in clean energy. Australians overwhelmingly support a renewable energy future for Australia. Close to 90 per cent support greater investment in clean energy and 80 per cent of Australians believe that clean energy investment is good for jobs.

A recently released report by 100% Renewable Energy shows the results of a poll conducted through the first half of this year of 12,000 Australians on their attitudes to solar energy. Ninety-four per cent of the respondents said they wanted to see big solar projects built in Australia and 95 per cent wanted to see governments investing in big solar projects. While respondents understand that the private sector will do the heavy lifting, they do expect governments to lead. Governments in many of the major economies of the world are moving strongly to create jobs in solar industries of the future and to safeguard their environments and energy grids with safe, clean solar power. A number of themes emerged through the comments that were made in this poll, which included the risk of Australia getting left behind, falling costs of solar, the need to move away from coal and gas, the opportunities in jobs and regional development, and the desire for political leadership. The results of this poll show that Australia is ready for its leaders, of all political parties, to embrace the huge opportunities that are out there in renewable energy such as solar power. The community is calling for it, business is ready to invest and we have the resources.

Australia is one of the sunniest countries on earth and yet our largest solar power station is a mere 1.2 megawatts. With the sun drenched landscape so much a part of Australia's identity, it makes sense for us to be using this valuable resource to supply energy for our nation. We are embracing solar panels on our rooftops—and I think that is terrific—but we have so far not grasped the opportunity of large-scale solar power to generate electricity, employment and energy stability into the future. Solar thermal power plants that store the sun's energy after the sun goes down can provide baseload power for our industries, while solar PV at utility scale is expected to be cheaper than coal or gas by the middle of this decade. In combination with other renewable technologies such as wind, solar power can make our power supply cheaper and cleaner and just as reliable as that which we enjoy now. Investment in large-scale solar will also set Australia up to benefit from stable electricity prices for decades to come in a way that coal and gas, with their exposure to volatile international energy markets, can no longer guarantee.

The high level of community support for investment in new solar technology demonstrates the importance of bodies like the Clean Energy Finance Corporation. Communities are seeking bipartisan support for this kind of investment. The Clean Energy Finance Corporation could deliver five gigawatts of solar PV and two gigawatts of solar thermal by 2020, which is the equivalent of seven large coal fired power stations. I think it comes at exactly the right time to give Australia the leg-up that we need to enter the global renewable energy race. It will overcome the barriers which have stymied our clean energy sector for too long, and unlock significant new investment and jobs in Australia. Despite the uncertain global economy, this sector is set to become one of the biggest industries of tomorrow. In conjunction with our 20 per cent renewable energy target, it will deliver diversity in our mix of energy as 'insurance to Australia securing the lowest cost of energy in a carbon constrained world', and it will create tens of thousands of jobs to underpin a strong future economy. It equips Australia with a suite of policies that can pull emerging clean energy technologies right through the innovation chain, helping turn great Australian innovation into real clean energy projects.

Australians are great innovators. We live in a country endowed with some of the best renewable energy resources of any country in the world: sun, wind, oceans and hot rocks. However, as a nation we have been stumbling along in the global race to take advantage of the global boom in renewable energy. As I mentioned before, it was a $243 billion industry in 2010, and it is expected to attract $5.7 trillion of investment globally over the next 25 years. Countries like China, South Korea, Germany and the US, frankly, have been leaving us for dead, often using technologies that were developed here. We should be winning this race. We have what it takes to lead the world into a renewable energy future. Instead we have allowed other nations with less technological innovation and fewer natural resources to get ahead. Our universities have consistently delivered world-leading innovation in renewable energy, but, when it comes time for commercialising these technologies, a pattern has emerged that sees the innovations going offshore. We can and should put a stop to this. These have been missed opportunities for our manufacturing industries and a failure to capitalise on and maximise our job creation.

The Clean Energy Finance Corporation is designed to take our best renewable energy innovation to full-scale commercial operation. In conjunction with putting a price on pollution and building on the 20 per cent renewable energy target, the corporation is a critical policy that will deliver Australians clean energy cheaper and sooner. I commend the bills to the House.