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Monday, 2 March 2015
Page: 1721


Mr GOODENOUGH (Moore) (20:43): The Appropriation Bill (No. 3) 2014-2015 and cognate bills collectively seek to authorise approximately $1.74 billion in additional expenditure since the 2014-15 budget to provide for the ordinary annual services of the government; capital works and services; payments in respect of the states, territories, and local government authorities; and to fund the services of parliamentary departments.

A particular government program that I would like take this opportunity to highlight is the Emissions Reduction Fund, which will support Australian businesses and households to take practical and direct action to reduce emissions and improve the environment. The objective of the Emissions Reduction Fund is to help achieve Australia's emissions reduction target of five per cent below the year 2000 levels by 2020. The government has provided $2.55 billion to establish the Emissions Reduction Fund, with further funding to be considered in future budgets. The Emissions Reduction Fund implements a long-term framework for stable and sustainable climate change policy. It provides incentives to seek out innovations that reduce both costs and emissions.

I cite a practical example of industrial innovation within my electorate. Engas Australasia Pty Ltd is a company based in the Neerabup Industrial Area which specialises in the distribution of blended hydrocarbon refrigerants used in air-conditioning and commercial chiller applications. These environmentally-friendly refrigerant gases have both zero ozone depletion impact and negligible global warming potential when compared with conventional hydrofluorocarbon chemical-based refrigerants, which are widely used in industry. Furthermore the hydrocarbon refrigerants are more energy efficient with tests indicating that air conditioning and refrigeration compressor units using the new gases can save up to 50 per cent in power consumption costs.

Currently, the environmental performance of Australian buildings is measured by the National Australian Built Environment Rating System, which is a national, industry-recognised rating system that measures the energy efficiency, water usage, waste management and indoor environment quality of a building and its impact on the environment. It does this by using measured and verified operational performance information, such as utility bills, that is adjusted for the size and use of the building and converted into a star rating scale ranging from one star to six stars, representing market leading performance.

The heating, ventilation, air conditioning and refrigeration industry in Australia is a $6 billion a year industry which employs 170,000 individuals. There are approximately 45 million installations of vapour compression-type refrigeration and air conditioning units in Australia. These units consume 22 per cent of the total amount of electrical energy generated in this country and are responsible for 12 per cent of national carbon dioxide emissions, amounting to 64.5 million tonnes of carbon dioxide per annum. The safe use of refrigerants is specified by regulations and industry standards. Australian Standard AS1677-1998 includes comprehensive procedures for the safe use of all refrigerants including hydrocarbons. The Hon. Bob Baldwin, Parliamentary Secretary to the Minister for the Environment, has visited the Engas Australasia factory and showroom in Neerabup to view the operations and testing facilities first hand. The directors of the company, Messrs Brian Foster and Selwyn Wallace, have invested a considerable amount of resources to raise awareness and promote the use of hydrocarbon refrigerants as an alternative to the conventional hydrofluorocarbon chemical-based refrigerants which are widely in use. They have been met with considerable opposition from larger competitors, and have experienced bureaucratic obstacles in having their product accredited in Australia.

The introduction of more energy efficient and environmentally friendly refrigerants represents an innovative direct action that will achieve measurable benefits in emissions reduction based on the evidence provided. It is likely to have a major impact, with approximately 45 million vapour compression-type refrigeration and air-conditioning units in Australia. Internationally, most major economies are committed to meeting emissions reduction targets. On 12 March 2014 the European Union Parliament voted overwhelmingly in favour of legislation to phase down the use of hydrofluorocarbon chemical refrigerants. Presidents Obama of the United States and Xi of China reached agreement in principle at their San Francisco summit in early June 2014 to use the institution of the Montreal protocol and its proven methods to phase down the use of hydrofluorocarbon chemical refrigerants by 2030. Similarly, the G20 nations, representing 85 per cent of global economic output, signed an agreement in September 2014 to phase down the use of hydrofluorocarbon refrigerants by two-thirds below present levels by 2030.

Last year, the government introduced the Carbon Farming Initiative Amendment Bill 2014, which established the Emissions Reduction Fund. The Emissions Reduction Fund expands on the Carbon Farming Initiative by extending the scope of eligible emissions reduction activities and by streamlining existing processes. The ERF has three elements: crediting emissions reductions, purchasing emissions reductions, and safeguarding emissions reductions. Engas Australasia is in the early stages of participating in the Emissions Reduction Fund compliance process. Subsection 106(1) of the act empowers the minister to make, by legislative instrument, a methodology determination. The purpose of a methodology determination is to establish procedures for estimating emissions abatement from eligible projects—setting rules for monitoring, record keeping and reporting. These methodologies will ensure that the emissions reductions are genuine.

The Emissions Reduction Assurance Committee is an independent expert panel that will advise the minister on proposals for methodology determinations. The minister will also consider any adverse environmental, economic or social impacts likely to arise as a result of projects to which the determination applies. The ERAC must include in its advice to the minister the committee's opinion on whether the proposed determination complies with the proposed offsets integrity standards to be set out in section 133 of the act. The offsets integrity standards require that an eligible project should result in carbon abatement and that the amounts are measurable and capable of being verified; the methods used are supported by clear and convincing evidence; material emissions which are a direct consequence of the project are deducted; and estimates, assumptions or projections used in the determination should be conservative.

Offsets projects that are undertaken in accordance with the methodology determination and approved by the Clean Energy Regulator can generate Australian carbon credit units, representing emissions reductions from the project. Project proponents such as Engas Australasia can receive funding from the ERF by submitting their projects to a competitive auction run by the Clean Energy Regulator. The government will enter into contracts with the successful proponents which will guarantee the price and payment for future delivery of emissions reductions. The Emissions Reduction Fund will support a wide range of energy efficiency projects in industrial facilities, such as upgrading boilers, improving control systems and processes, installing co-generation facilities, and increasing the efficiency of compressed air systems. These projects will improve business productivity while also cleaning up the environment. Project proponents wishing to implement projects such as the introduction of blended hydrocarbon refrigerants are required make an application to the regulator under section 22 of the act. They must also meet the general eligibility requirements for an offsets project, set out in subsection 27(4), which include compliance with the requirements set out in the draft determination, and the additional requirements in subsection 27(4A) of the act.

The Emissions Reduction Fund will support Australian businesses to take practical, direct action to improve their energy efficiency. The benefits of lower energy consumption include lower operating costs and improved competitiveness for businesses. Similarly, commercial building owners will be able to generate emissions reductions from energy efficiency projects for large offices, large shopping centres, hotels, and data centres. These projects will allow businesses to reduce their operating costs. To date, Engas Australasia has undertaken a number of hydrocarbon refrigeration demonstration projects, including the re-gassing of commercial coolrooms and freezer units in suburban supermarkets, and air-conditioning in office buildings and in motor vehicles. Considerable interest in the technology has been generated from potential overseas export markets. The proprietors of Engas are entrepreneurs who have invested significant resources in developing and marketing this innovative new product. During this time, they have encountered opposition from large industry competitors and have battled red tape from bureaucracy. The economic development and export market potential arising from the successful testing and accreditation of the technology is significant. All that is required is an accessible and equitable assessment process.

In conclusion, the passage of this bill, the Appropriation Bill (No. 3) 2014-2015, and related appropriations bills will ensure the continuity of the government's programs and the Commonwealth's ability to meet its estimated expenditure obligations for the current financial year, including for existing and new programs in 2014-15. In particular, the Emissions Reduction Fund is an example of a program which will support Australian businesses—such as Engas Australasia—to take practical, direct action to reduce emissions and to improve our environment.