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Monday, 25 June 2012
Page: 4320

Senator MILNE (TasmaniaLeader of the Australian Greens) (12:11): I support the Clean Energy Finance Corporation Bill 2012. We are living in an era of revolution in energy and, contrary to the remarks of Senator Cormann, those who get ahead of the game are the ones who will profit most. Those who try to lock their economy into the old fossil fuel sector will be the losers. In the Australian context, the Australian Greens have said clearly that global warming is a catastrophic circumstance that will lead to enormous costs to us as we proceed through this century. There will be costs in lives and costs in ecosystems, and we have already witnessed that with extreme weather events around Australia—whether it is the intensity of the fires in Victoria, the intensity of Cyclone Yasi or the intensity of rainfall events and flooding, we have seen extreme weather events costing lives and destroying infrastructure. The cost has been enormous already. Take the flood levy, for example. We never hear anything from the coalition about the documented cost of extreme weather events and drought caused by global warming. When we lived through the extremity of the drought in the Murray-Darling system, everybody was aware of the long-term cost of global warming.

The opportunity is to transform the economy as quickly as possible to sever the link between economic growth and adverse environmental impact and resource depletion. It is time now to look at a future based on an investment in education and training and innovation, at a future which is transformative, that transforms Australia so that we power ourselves with renewable energy. We are one of the luckiest countries on earth when it comes to our ability to power ourselves with renewable energy. We had a German administrator here recently who pointed out that the west coast of Tasmania would probably be the lowest solar opportunity in the nation, and yet it is better than most of Germany, where they have managed to back in an incredible transformation in renewable energy, where they have done a massive U-turn recently on getting a phase-out of nuclear. The German government has invested so heavily in energy transformation that renewables have pushed down the wholesale price of energy to the extent that they now have to subsidise traditional generation in order to provide balance and security in the system until they get to 100 percent renewables. Our aim in Australia ought to be to address the failures of the Howard government administration. They failed to invest in education and training and allowed the manufacturing sector to be hollowed out. They transferred dependence of the economy disproportionately to resource extraction. Now we are suffering the consequences. Now is the opportunity to invest heavily in the brains base in Australia and that is in our universities. Overwhelmingly, there is the huge potential to transform this country as quickly as possible to a country powered by 100 per cent renewables, whether in our homes, our offices, in tourism complexes or in our transport systems.

To do that, we need to roll out renewables not just at residential scale but at utility scale. What we are seeing is a pushback from the vested interests of the old economy. Senator Cormann talked about a so-called slush fund and about billions thrown out of the door. There is $7.2 billion thrown out of the door every year in Australia and Senator Cormann is a big supporter of that. They are fossil fuel subsidies: $7.2 billion a year thrown out the door in order to keep the coal-fired generators and the gas industry and so on operating. There are massive subsidies for oil and gas exploration. Here we have a $10 billion fund to support the establishment of clean energy in Australia, with half of it to go to renewables and the other half to low emissions technologies. Those operating in the renewable energy field can bid for that funding.

Senator Cormann completely misrepresented the authority. This authority will depoliticise it. The Greens are tired of political interference in energy decisions in this country all designed to continue to prop up the old fossil fuel sector, with poor decisions continuing to be made about investments in the grid, for example. We want to depoliticise the provision of commercialisation support for new renewable energy and clean energy technology.

That is why the Clean Energy Finance Corporation will be a statutory authority. It will be independent of government. It will not be directed by any political party. As it clearly says in the legislation, while the Clean Energy Finance Corporation will apply a commercial filter when making its investment decisions, it will also have a public policy objective and will seek to value positive externalities arising from the project. Compared to an ordinary bank, for a given financial return the corporation may take on higher risk and for a given level of risk may accept a lower financial return. The positive externalities include achieving policy objectives like a reduction in greenhouse gas emissions by 80 per cent or more by 2050. The Greens would like to see us get to zero net carbon by 2050. That is the objective.

This is also a massive jobs driver in the Australian economy, especially where those jobs are needed, which is in rural and regional Australia. This massive investment in renewable energy will see the rollout of jobs in the construction phase but also in maintaining the new power stations. This will bring to rural communities a level of dynamism that they desperately need.

As to the suggestion that the coalition were critical of ZeroGen, that may well be the case now, Senator Cormann, but I remind you that it was John Howard, the former Prime Minister, who stood up with George Bush and enthusiastically welcomed FutureGen in the United States. FutureGen was going to lead the way in carbon capture and storage; it was going to be marvellous. John Howard stood there and made a fool of himself in relation to FutureGen. I totally agree on ZeroGen. The Greens were out there saying that ZeroGen would be equally as stupid as FutureGen was and it has been.

The fact of the matter is that, if the coal industry was so confident about carbon capture and storage, it would be investing its own money in that. As it is, we have a flagship with $500 million sitting there for carbon capture and storage while the industry is not matching any dollars because it knows that it is a technology that has not rolled out to date and renewables are running over the top of it. The fact is that it is going to come down to what is economically viable into the future and the renewables are getting cheaper by the day as carbon capture and storage makes no progress. Treasury modelling demonstrates that carbon capture and storage is very unlikely ever to be commercially viable. People will give up on it as they see appropriate investment in clean energy technology, distributed system and demand side management winning out. We will see an abandonment of those technologies because they are too expensive.

Let me get to why we need to have a Clean Energy Finance Corporation. The Greens would have liked to have seen a nationally consistent feed-in tariff regime where you have a number of different feed-in tariffs for different technologies with the most generous being for those technologies that are the furthest away. We would have done that for solar thermal, for example. However, neither the government nor the coalition want to back the most effective financial mechanism in the world for rolling out renewables. Everywhere you go in Europe where the roll out of renewables has been successful, that has happened on the basis of feed-in tariffs. We see from the German experience that, as you get to critical mass, the feed-in tariff gets scaled back and there are tremendous benefits to the economy.

However, in the absence of a nationally consistent feed-in tariff, we have had all sorts of poor public policy initiatives that have been badly implemented, such as by being changed along the way. These initiatives have caused a level of distress across the renewable energy industry such that we want to do the exact opposite of what Senator Cormann was suggesting. We want an independent statutory authority to depoliticise the industry to stop governments interfering by, for example, changing rebates overnight, changing programs, ending them at different times and so on. The wind industry is booming globally but it has now stalled in Australia. The PV industry has been through countless utterly unnecessary and damaging boom and bust cycles. It is now growing in confidence because it is reaching the point where its reliance on government support is coming to an end. All it needs is a fair price for the electricity it produces, and the Commonwealth refuses to grapple even with that. As yet we have no utility scale PV in Australia, despite being the sunniest industrialised nation on Earth. Yes, it is coming, but there is only one major project, and the design of the Solar Flagships Program was fundamentally flawed and delayed the rollout.

So we desperately need to show in Australia that we can do solar thermal at scale. We now have the ability to store heat and continue to generate electricity into the evening with the molten salt. I look forward to seeing the day when the Clean Energy Finance Corporation will, I hope, get behind solar thermal. We also have geothermal and ocean energy in Australia. Technology is brilliant; technology is the area in which people are still looking at going overseas because they cannot get support at home. When you do go overseas and look at renewable energy facilities around the world you see that they are headed up by graduates from Australian universities. The questions people always ask are: 'Why are they leaving the country? Why aren't they at home?' The reason is that we have not had consistent support for innovation and for this transformation in Australia that would make us one of the leading nations on the planet in the case of renewables, instead of constantly throwing money at fossil fuel subsidies. You only have to look at Zhengrong Shi, for example, who is now a billionaire several times over. He was a graduate of the University of New South Wales and went to China to make that investment because of the lack of support here in Australia.

So why do we need a Clean Energy Finance Corporation? It will address several financial barriers related to both the availability and the cost of finance, including constraints due to the lingering impacts of the global financial crisis; constraints on the availability of debt capital, heightened by the withdrawal of many foreign banks from the Australian market; the fact that commercial banks facing look-through, or aggregation exposure, to some counter parties to power purchase agreements with renewable energy generators; and a general lack of demand within commercial banks for clean energy projects that have resource risks or technology risks. There are also scale constraints, whereby many projects may be too small or too large to secure funding on suitable terms and may have forecast return outcomes on investment projects that are not considered by equity and debt investors to provide adequate compensation for the risks inherent in these projects.

We think the Clean Energy Finance Corporation will address some of those barriers, but it will also address non-financial barriers that are constraining the development of a low-carbon industry in Australia, including things like the technology risks, grid constraints and challenges associated with deploying new transmission lines, particularly across state borders and into remote areas. It will also address the lack of availability of long-term power purchase agreements—and this is an issue I raised with the ACCC. Again, it is this issue of the old vested interests not wanting to sign power purchase agreements with the renewables because many of those vested interests have the majority of their investments in old fossil fuel generation, particularly gas, and they are not prepared to bring on the technologies that will undermine the current asset value of their particular investments. Scale is also an issue, as I mentioned before. When we have talked to people about why the Solar Flagships Program did not roll out as we would have liked it to, the problem was that the scale they were being asked to build at was such that they were not able to persuade investors that they could go from a pilot stage right up to a large scale without having demonstrated an ability to scale up anywhere in between.

The Clean Energy Finance Corporation is going to provide the ability to leverage private sector finance and to make a substantial contribution. One area I am concerned about is the connection with the renewable energy target. I am concerned—but rather pleased—to hear that Senator Cormann is also concerned about that. Clearly, if he is committed to reducing greenhouse gas emissions, if he is committed to new jobs in Australia, then he would support us in increasing the renewable energy target and overcoming the problem. We have argued, and I still argue, that it should be a matter of choice between the Clean Energy Finance Corporation and receiving renewable energy certificates. One of the problems is the possibility that these large projects will achieve renewable energy certificates and that will crowd out the renewable energy target. The best way of fixing that is to increase the ambition of the renewable energy target. What a perfect outcome. Now that I have heard that the coalition is concerned about that, I am looking forward to the review of the RET in the second half of this year, when I would fully expect that the coalition will support a massive increase in the renewable energy target so that we will see a much more efficient interaction, if you like, between the Clean Energy Finance Corporation projects and the renewable energy target.

The Australian Greens have worked very hard to deliver a comprehensive package in Australia: the Clean Energy Finance Corporation, the carbon farming initiative, the Biodiversity Fund and an emission trading scheme. This is the most comprehensive package we have ever put before the parliament to address greenhouse gas reduction in Australia. It is something the nation can build on. Every aspect of the package is a platform that lends itself to greater levels of ambition. The overwhelming imperative is to reach net zero carbon emissions as quickly as possible, to reach 100 per cent renewables as quickly as possible, because we are facing a catastrophic future with accelerating global warming if we fail to do so. In addressing the challenge in front of us we can either pretend it is not happening and condemn our future generations to shocking dislocation, both economic and personal, and to shocking loss, or we can do the best we can to put them on a footing that will grow new jobs, new innovation and a new economy in Australia. That is clearly the path the Greens want to take.

This Clean Energy Finance Corporation is a major achievement of the Greens through the Clean Energy package. Of course, it is going to go out there and talk to project providers—and you would expect it to do so—to work out the best way to support each individual project, and in every case it is likely to be different. But the exciting thing, from my point of view, is that it will be an independent statutory authority, with the finance available to finally bring to fruition in Australia some large-scale renewable energy projects which demonstrate to Australians the kind of future we can expect in this country.

This energy revolution is going to be disruptive. The worst thing that could happen in Australia is that we lock in support for the old economy, spend massively on carbon capture and storage, maintain $7.2 billion in fossil fuel subsidies and pretend we can somehow stay stuck in the past in order to protect the investment in the old economy. The fact of the matter is that the old economy is losing every day to the new renewable powered economy, the low-carbon economy, and we need to get onto it—we need to get behind it; we need to grow the jobs; we need to keep our best and brightest at home; and we need to invest in education, training, innovation and excitement. That is what will provide confidence in Australia. That is what will make us proud as a nation about the contribution we can make, regionally and globally, to addressing global warming. That can be a major contribution of ours; it ought to be one that a sunny nation like Australia, with so many renewable energy sources can make. We have been constrained in Australia by the lack of imagination and by being stuck in the past, particularly by the coalition, and I would like to think that we will now get the recognition around the world that we ought to be getting for this investment. (Time expired)