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Monday, 21 June 2010
Page: 3801


Senator WONG (Minister for Climate Change, Energy Efficiency and Water) (5:13 PM) —I rise to sum up the second reading debate on the Renewable Energy (Electricity) Amendment Bill 2010, the Renewable Energy (Electricity) (Charge) Amendment Bill 2010 and the Renewable Energy (Electricity) (Small-scale Technology Shortfall Charge) Bill 2010. I thank all senators for their contributions to the debate. These bills will implement the enhanced renewable energy target. They deal with the dual policy objective of the renewable energy targets legislation, which is to support both small-scale household renewable energy technologies and large-scale renewable energy investment to deliver a greater amount of renewable energy to be utilised by Australia. The bills implement an enhanced renewable energy target, separating the existing scheme into two parts: the Small-scale Renewable Energy Scheme and the large-scale renewable energy target to take effect from 1 January 2011.

The renewable energy target is a key measure in this government’s climate change policy. It will deliver our commitment to ensuring that the equivalent of at least 20 per cent of Australia’s electricity will come from renewable sources by 2020. The enhancements provide greater certainty for large-scale renewable energy projects as well as for installers of small-scale renewable energy systems, such as solar panels and solar water heaters. We are keen to, and have been, working with different senators and different parties represented in this chamber in order to facilitate passage of this legislation this week. I want to briefly address some of the key comments that have been made, which I anticipate will be dealt with in more detail in the committee stage of the debate on this bill.

First, there have been some who have made contributions noting risks for the uncapped Small-scale Renewable Energy Scheme. It is important to understand that the rationale behind the design of the SRES is to ensure that households, businesses and community groups that install small-scale systems can access support from the RET. For this reason the bills before the chamber do not seek to impose or limit the overall number of renewable energy certificates that could be created from installations of small-scale technologies. The difficulty with putting a limit on the number of renewable energy certificates from small-scale systems is that installations beyond this limit would miss out on the support from the renewable energy target, including the solar credit scheme.

In relation to the impact on electricity prices, it is important to recognise that this is a modest impact. The current renewable energy target is expected to increase retail electricity prices by around 4.2 per cent in the period to 2015. The enhanced RET is expected to increase prices by a further 0.2 per cent in the same period, bringing the expected electricity price impact of the enhanced RET to around 4.4 per cent.

In implementing this regime, the government’s intention is to preserve the effective rate of assistance in respect of emissions-intensive trade-exposed activities provided for under the current RET rather than to expand assistance to industry. It is important to recognise that assistance was not provided for the previous mandatory renewable energy target, implemented under the Howard government, of 9,500 gigawatt hours. Assistance under the renewable energy target is provided in respect of 90 per cent of the expanded RET liability above the former MRET of 9,500 gigawatt hours in relation to activities defined as ‘highly emissions intensive’ and 60 per cent of the expanded renewable energy target above the same threshold that applies to electricity used in activities defined as ‘moderately emissions intensive’. Consistent with the existing policy, assistance for a renewable energy certificate price above $40 on the liability of 9,500 gigawatt hours is dependent on there being a carbon pollution reduction scheme. This recognises that with a CPRS there would be a cumulative cost impact of both the CPRS and the renewable energy target on these activities.

I want to address briefly waste coalmine gas, because there was a contribution previously in which Senator Milne, I think, may have misunderstood the government’s amendments. The existing waste coalmine gas generation was included in the renewable energy target as a transitional assistance measure in the context of the cessation of the New South Wales Greenhouse Gas Reduction Scheme—known as GGAS. We know waste coalmine gas is not a renewable energy source, so the government increased the RET’s annual targets to ensure it could not crowd out renewables nor impact on achievement of the 20 per cent renewable energy target by 2020. It was not the government’s intention to allow waste coalmine gas projects to receive assistance from the renewable energy target whilst GGAS was still operating. The GGAS legislation indicates that the scheme is to continue until 2020 or terminate sooner in the event of the introduction of the CPRS or another national emissions trading scheme. The renewable energy bill before the chamber therefore allows the eligibility of the waste coalmine gas to be postponed until such time as GGAS ceases.

There have also been some concerns raised about possible delays in receiving funds through the clearing house. The bill requires liable parties to regularly surrender small-scale renewable energy certificates four times a year. However, in most cases householders will choose to get the value of their renewable energy certificates immediately as an agreed upfront discount on the cost of installing their solar water heater or solar PV system as they do under current arrangements. There are four surrender periods throughout the year: 28 days after the end of each quarter for the first three quarters and then up to 14 February of the following year. So there will typically be a period of around six weeks from system sale to the need for a liable entity to surrender the renewable energy certificate.

There have been some comments in relation to the growth in demand for solar panels. This reflects a number of factors, including the very high levels of support offered by some of the states as well as a reduction in the price of solar panels. At the time that the solar credits multiplier was put in place, some—including some in this chamber—criticised the government for reducing levels then in place through the Solar Homes and Communities Plan. There is evidence that some panels are being offered at a very low cost, although evidence of free panels remains less clear. Obviously, low-cost panels mean that households are able to take up the opportunity to make a contribution to reducing greenhouse gas emissions, and a number of firms made submissions to the inquiry of the Senate Environment, Communications and the Arts Legislation Committee in support of the current solar credits multiplier.

In relation to safety issues, I want to make it clear that this government takes safety issues very seriously. We are introducing a range of measures to further strengthen safety and compliance in relation to solar panels supported by the renewable energy target. I have today released regulations made on 15 June which require installers to comply with state and territory regulations in relation to siting panels and building codes, including for panel mountings and connections.

In addition, the Office of the Renewable Energy Regulator is working with the Clean Energy Council to deliver an enhanced program of compliance and performance inspections. These inspections represent the first element of a broader and longer term enhanced compliance and performance strategy for the renewable energy target. My department will be consulting with industry and other stakeholders on this strategy, including on postinstallation checks.

In addition, the amendments to the Renewable Energy (Electricity) Act introduced on 12 May 2010 include new and enhanced compliance measures, such as civil penalties, tougher financial penalties and more stringent compliance documentation requirements. So the bills before the chamber implement enhancements to the renewable energy target and have provided a timely opportunity to strengthen the compliance and performance framework.

In relation to Senator Milne’s call for a national feed-in tariff, I have said previously in this chamber that the position of the government is that we see, consistent with international practice, a renewable energy target scheme and a feed-in tariff as alternative policy mechanisms for promoting renewable energy uptake. A renewable energy target sets the quantity of renewable energy and allows for a range of cost-effective technologies to be deployed. In contrast, a feed-in tariff provides a certain amount of support for specified technologies set in advance for a future period of time. The government went to the election with a commitment to increase the renewable energy target and that is the policy mechanism that we remain committed to. I also note that Senator Milne has made some comments about biomass and I intend to deal with those in the committee debate when she moves her amendments.

In conclusion, the amendment bills before the chamber today will encourage the deployment of both major renewable energy projects and household-scale renewable energy systems. The renewable energy target is a key measure in Australia’s climate change policy. These changes will deliver significant and timely enhancements that will help reduce Australia’s emissions. The enhanced renewable energy target will drive significant investment, accelerating the deployment of a broad range of renewable energy technologies like wind, solar and thermal. These are changes which will ensure that 20 per cent of our electricity supply comes from renewable sources by 2020. These bills represent a major step towards the transformation of our economy and the building of Australia’s low-pollution future. I commend the bills to the chamber.

Question put:

That the amendment (Senator Milne’s) be agreed to.