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ECONOMICS LEGISLATION COMMITTEE
06/08/2009
Renewable Energy (Electricity) Amendment Bill 2009

ACTING CHAIR —Welcome to these proceedings. Would you like to make an opening statement, after which the senators will ask questions?

Mr Vincent —Thank you. I will make an opening statement. Firstly, I would like to express my thanks for your efforts in looking into this policy and obviously for the opportunity to present today, and my apologies for not being there in person. I do not know if you have caught wind of the news that Greenpeace have been pretty busy in Queensland with the Pacific Islands Forum over the past two days. I will make a quick point about who we are. Essentially, Greenpeace are an environmental campaigning organisation. The most important thing for you to know is that we are independent and only accept donations from individuals, which I hope you find very important in how you receive my testimony.

Our interest in this issue is obvious. Australia and the rest of the world urgently need to reduce greenhouse gas emissions. We are only going to cut those emissions sufficiently if we make a large-scale transformation in how we use and produce energy. I am sure we will delve into the economic detail of renewable energy policy in this hearing, but it is worth grounding this discussion with the fact that with climate change we are facing the most monumental environmental, social, political, cultural and economic disaster. In regard to energy policymaking, we generally advocate adopting the principle of shifting to an entirely renewable energy based energy supply as soon as is possible—as soon as technically and humanly possible—and letting that principle decide policy making. The most important impact this would have would be to ensure decisions and actions in the next critical few years really lay the groundwork for such a transformation to take place. Obviously, we are talking about a massive upscaling of employment and manufacturing capacity and so on in this field.

You can probably tell from having read our submission that we are becoming quite frustrated with the process of introducing renewable energy policy as well as the state in which it remains, which I am sure we can unpack further in this session. Since the last election we have seen the process of implementing this policy largely held up in bureaucracy. We are still yet to see the target come into play and in that time Australia has ceased to manufacture solar panels. We have had several renewable energy support mechanisms suddenly removed ahead of time which has reportedly cost the industry millions, gigawatts worth of projects are banked up waiting for the policy signal green light and jobs have been lost in solar and wind. Just last week the Adelaide based company Solar Shop said it was looking at possibly cutting another 100 jobs and put that down to the vacuum in renewable energy support.

The bottom line here is that we need this policy to come through. We do need to implement this policy because there are so many renewable energy projects waiting in the wings. We do not think it is the perfect policy by any means. We do have a series of recommendations as to how it can be amended. We have alternatives to suggest that would much more effectively bring renewable energy online at a large scale. But the reality is that, right now, the renewable energy industry is desperate for this policy. I will leave it there. I am sure there is plenty to kick off with.

ACTING CHAIR (Senator Cameron) —Senator Eggleston has just had to leave for a few minutes. Senator Boswell do you have any questions?

Senator BOSWELL —I have no questions at the moment.

ACTING CHAIR —Senator Bishop?

Senator MARK BISHOP —No.

ACTING CHAIR —Basically, as I read your submission there are issues that you have with RET—

Senator JOYCE —If you run out, just give us a yell, Senator Cameron.

ACTING CHAIR —Sorry, do you want to go now?

Senator JOYCE —Okay. What is the ultimate goal of Greenpeace in regard to what you would like carbon emissions to be reduced by?

Mr Vincent —I guess it is a matter of reducing them as fast as is humanly and technically possible. We are talking in the public debate about what sort of increase in temperature is avoidable and should be avoided. I am sure you are familiar with wanting to prevent passing tipping points and that sort of thing. You have a situation at the moment where with 0.8 of a degree of warming I think it is fair to say that the impacts that we are seeing right now are unacceptable. The World Health Organization for example has reported that we already have hundreds of thousands of people additionally per year dying around the world because of climate change impacts.

Senator JOYCE —How much do you want to reduce carbon emissions by?

Mr Vincent —The target that we are putting out there for Australia is around halving our emissions in the next decade.

Senator JOYCE —So 50 per cent.

Mr Vincent —A 50 per cent reduction from 1990 levels I should say.

Senator JOYCE —That is more than halving them on where we are now.

Mr Vincent —That is correct.

Senator JOYCE —A 50 per cent reduction on 1990 levels would be about a 60 or 70 per cent reduction on where we are now.

Mr Vincent —Not quite, probably around 55 per cent I would say.

Senator JOYCE —A 55 per cent reduction on where we are now.

Mr Vincent —Yes.

Senator JOYCE —What do you perceive the industry of Australia will look like when that happens?

Mr Vincent —Obviously, we are talking about a very large reduction in greenhouse gas emissions, there are no illusions about that. What would need to happen is that you would have to spend especially the first couple of years making that change, laying the groundwork and ensuring that our manufacturing bases build up, the amount of business and industries are built up and ensuring that the idea of basically moving to a low-carbon society is built into policy making across a variety of portfolios. In terms of the where industry is at we would need to see an incredibly aggressive and vibrant renewable energy industry for a start because as we are all aware—

Senator JOYCE —I am being completely practical. Obviously, that would bring about the demise of the coal industry because you are not going to get carbon sequestration in that period of time. The price of electricity would go through the roof so that is the end of your manufacturing industry. I imagine you want agriculture in?

Mr Vincent —Can I just go back because I am not sure what you mean by the price of electricity having to go through the roof?

Senator JOYCE —Could you just answer me, do you want agriculture in or not?

Mr Vincent —Agriculture will need to come in. We will need to make reductions in agriculture.

Senator JOYCE —Agriculture is in. Okay. Where exactly are we going to generate this power from when we no longer have coal-fired power stations?

Mr Vincent —Essentially, you build up the renewable energy capacity and, as you do so, you build up the capacity to replace—

Senator JOYCE —Give me examples, numbers and where these things are going to be that replace coal-fired power stations.

Mr Vincent —We produced a report last year called the Energy [r]evolution. That tells you how you can shift—it is a moderate one—to 40 per cent renewable energy by—

Senator JOYCE —Just precis it for us. Where exactly is this electricity going to come from? Do not say renewable sources. Say from whatever mechanisms are involved, where these things will be positioned and how many of them there will be.

Mr Vincent —You do not need to be that prescriptive.

Senator JOYCE —I am not.

Mr Vincent —You can be that prescriptive, but I certainly do not need to be. The fact is that we have an incredible amount of choice. We have renewable energy resources coming out of our ears. We have technologists working across eight different renewable energy technologies that could do the job.

Senator JOYCE —You have been very prescriptive about how much we need to reduce it by. I just want you to tell me where the replacement is going to come from.

Mr Vincent —If we are going to worry about being prescriptive about the targets that are set and not necessarily about how they are met, that is something that the government could be criticised for with the CPRS.

Senator JOYCE —So you do not think it is important to say how the targets are going to be met?

Mr Vincent —If you are talking about where the renewable energy comes from, you do have an incredible amount of choice. For me to actually say where you have to have a particular solar power base—

Senator JOYCE —You are far more across it than any of us. Just tell me where it is going to come from.

Mr Vincent —It is going to come from wherever we choose it to come from.

Senator JOYCE —Where?

Mr Vincent —You could build, for example, a few gigawatts of solar thermal in Queensland and feed that into the northern end of the Queensland electricity grid, which is obviously connected to the rest. You could put gigawatt after gigawatt along the southern coast.

Senator JOYCE —A few gigawatts of solar energy in Queensland. Is that what you said?

Mr Vincent —Yes. But if you want me to explain this out to the extent to which you would have a complete renewable energy based economy, I would probably spend the rest of my testimony here explaining it.

Senator JOYCE —I just want you to give me a rough idea. What does a few gigawatts involve? We have been talking about 17,000 gigawatt hours required of wind power, and no-one seems to be able to explain how on earth we are going to do that. You have told me about a few gigawatts of solar energy coming from Queensland. Where do you have in mind to do that? Whereabouts is that going to be?

Mr Vincent —It is really where you choose it to go. You just asked me about where it should go, and one example that I have given you of where you could install renewable energy is solar thermal, in Queensland. It is a very good opportunity. It is a very good strong resource out there.

Senator JOYCE —Whereabouts is that?

Mr Vincent —Like I said, Senator Joyce, I could spend the rest of this testimony giving you examples—

Senator JOYCE —I am asking for a very brief analysis of just one.

ACTING CHAIR —Senator Joyce, just one moment please. This is becoming a bit like machine gun fire between you and Mr Vincent. It must be very difficult to get this transcribed, so I ask that people slow down a little bit.

Senator JOYCE —Let us move on to agriculture. What is your view on methane emitting bovine ruminants, such as cattle, and ovine ruminants, such as sheep? Do you believe that they should be mechanisms of agricultural production or not?

Mr Vincent —Is this a question in relation to the renewable energy target legislation?

Senator JOYCE —It is a question in regard to Greenpeace’s position.

Mr Vincent —I am sorry. Obviously, there are many aspects that are relevant to the issue of climate change, but I am here to talk about the renewable target.

Senator JOYCE —This is an inquiry. I am allowed to ask questions that involve the body that you represent. I just want to know what your position is on that, unless you do not wish to give that position.

Mr Vincent —We do see agriculture as an area in which we need to make reductions in emissions. That would most likely need to include a shift to more sustainable or organic farming and probably a reduction or a moving away from a meat based diet towards a more vegetarian based diet and also, wherever possible, more sustainable farming practices. Obviously, there are a lot of complications with the agricultural sector right now, which is why its introduction to the CPRS as proposed has been delayed.

Senator BOSWELL —No more cows.

Senator JOYCE —You look forward to it being introduced in 2015?

Mr Vincent —We are actually opposed to the introduction of this particular CPRS because we think it is an unworkable scheme. Within the context of that, it is a bit moot. Certainly we do need to include reductions in agricultural emissions.

Senator JOYCE —Because we will not have the capacity to meet the power requirements on a 55 per cent reduction, what do you envisage for capital cities—a rationing of power? How would that work?

Mr Vincent —Why are you assuming that we will not have the power production?

Senator JOYCE —Because you cannot explain to me where it is going to be.

Mr Vincent —As I think Senator Cameron said before, this element of the discussion really is not going that far. I could spend the rest of this hearing telling you where various projects of renewable energy could go.

Senator JOYCE —I just asked you where three gigawatts of solar power in Queensland would go and you could not tell me that. I have not asked you for chapter and verse; I just asked you for one to try to show competency or otherwise in your understanding of the facts.

Mr Vincent —The way that is coming across sounds a tad unfair because you could go to some of the materials that we have already produced. We have had some modelling done by external agents that says you can easily get 82,000 gigawatt hours per year of renewable energy, and that was quite a conservative scenario. We did not prescribe where that needed to go because, as I said before, you have a wealth of resources in this country and you can pick and choose where you put them. There are a huge amount of factors to consider when deciding where you might put a solar thermal plant, a wind farm or an ocean energy farm.

Senator JOYCE —Without this though it is just plucking figures out of the air. If you cannot say where it is going to be, it is going to be irrelevant. You cannot, and me saying you cannot is as relevant as you saying you can if you cannot describe exactly where it is going to be.

Mr Vincent —If we were to build another coal or gas fired power station, where would it be?

Senator JOYCE —It would be in the Galilee Basin or in the Hunter, where there is capacity.

ACTING CHAIR —I am getting a bit confused because this is a bit like the Godwin Grech stuff. Who is coaching whom and where are we going with this?

Senator JOYCE —I have to put on the record that I have, to the best of my knowledge, no knowledge of Mr Julien Vincent. My first encounter with Mr Julien Vincent is happening right before your ears.

Mr Vincent —I am happy to confirm that. The point you are making is that you build the fossil fuel power station close to where the resource is and that is exactly the point I was trying to make.

Senator JOYCE —That is why I cannot understand why you do not know.

Mr Vincent —You were giving a load of options; you were not saying where it would go.

Senator JOYCE —You are here representing Greenpeace saying we can reduce it and when we ask for the details you cannot actually provide them. The main game is you want to reduce carbon emissions. That is basically it, isn’t it?

Mr Vincent —That is the reason we exist.

Senator JOYCE —You acknowledge that nuclear power would reduce carbon emissions, or do you think that is not the case?

Mr Vincent —The Switkowski report that came out in I think late 2006 said that 25 nuclear power stations around the country would reduce emissions by between six and 18 per cent. Obviously they would take a long time to build as well. As far as we are concerned that would be too little too late. That money could be invested right now in solutions in renewables that can be rolled out in the next couple of years.

Senator JOYCE —So you are not fervently against nuclear power?

Mr Vincent —Yes, we are.

Senator JOYCE —Why?

Mr Vincent —It would be too little too late.

Senator JOYCE —That is the premise of why you do not like nuclear power?

Mr Vincent —That is one of the reasons, but, certainly for climate change, that is the overriding one.

Senator JOYCE —So something that produces too little or takes too long to bring online should be ruled out?

Mr Vincent —If it is not going to make a meaningful contribution to reduce emissions in the time frame we have then we should invest our efforts elsewhere.

Senator JOYCE —In your program for meaningful reduction what is priority No. 1? Where are you going to get the power from?

Mr Vincent —You would get it from a range of renewable technologies. I can run through the list if you like.

Senator JOYCE —You just ruled out one because it would be too little too late. I want to know what is your No. 1 for renewable power.

Mr Vincent —This is good fun.

ACTING CHAIR —Not if you are sitting here. I propose another couple of questions. I can tell you that the fun is not shared down here.

Senator JOYCE —What is No. 1 on your renewable power shopping list?

Mr Vincent —The technology with the most potential to provide baseload energy in Australia given the resources we have is solar thermal, but that of course is in the context of it being one in the array of many renewable energy technologies that we have available.

Senator JOYCE —When you are talking about thermal, are you talking about hot rocks?

Mr Vincent —No. I will clarify that. It is concentrating solar power. It is reflecting solar energy with mirrors onto a point source and creating superheated water, which creates steam and drives a turbine. It is essentially a way of generating steam for a turbine using solar energy.

Senator JOYCE —Where is there a plant that does that in that manner?

Mr Vincent —There is a very good example in Spain. The Andasol power station is over 200 megawatts. The thing to look out for with that is that it has about 7½ hours worth of thermal storage installed, which means it can produce electricity day and night.

Senator JOYCE —What is the actual cost of power per megawatt in Spain?

Mr Vincent —I do not have that figure to hand, I am afraid.

Senator JOYCE —How long did it take to build that solar power plant?

Mr Vincent —They are looking to build about 3,000 megawatts and have them online—

Senator JOYCE —Are you referring to one that is running now or one that is on the drawing board?

Mr Vincent —I can only answer your question about time frames for construction about the ones that are in the pipeline. There are about three gigawatts worth in the pipeline for the next few years.

Senator JOYCE —Are any of these built at the moment?

Mr Vincent —The ones that are in the pipeline, by definition of being in the pipeline, are not built.

Senator JOYCE —Tell me about one that is actually built. Is there one actually built there?

Mr Vincent —Yes, the first one I referred to.

Senator JOYCE —How long did it take to build it?

Mr Vincent —I cannot tell you how long it took to build that power station. I do not have that figure to hand.

Senator JOYCE —What would be too long a time to build these things in? We need to know whether we should be ruling them out. How quickly do you need to build these?

Mr Vincent —That is a good question. The thing you want to look out for is basically if it can make a substantial reduction in emissions in the next, say, 10 or 15 years. Of course, that is the time frame that I quoted earlier—

Senator JOYCE —More than 10 or 15 years is too long.

Mr Vincent —Pardon me?

Senator JOYCE —If you can build it in the next 10 or 15 years, that is what you are looking for?

Mr Vincent —If you can roll out significant quantities of it in the next 10 or 15 years then it is worth looking at and investing in.

Senator JOYCE —We can certainly build nuclear power plants in 10 or 15 years.

Mr Vincent —It is a question of how many and at what cost.

Senator JOYCE —For 10 or 15 years that is going to be the same question for everything. It will have capacity to get a high amount of carbon efficient power onto the grid. We can certainly do that within 10 or 15 years.

Mr Vincent —You are partly addressing the point I raised before about it being too late. I see where you are coming from. I would still contest that you can roll out a large amount. The too little is also quite substantial there. You are talking about billions of dollars being invested in nuclear power stations. For the $5 billion it costs to build a nuclear power station—and I am just plucking a number here—you could easily get two or three times worth of renewable energy generated.

Senator JOYCE —So what was the cost of the plant in Spain?

Mr Vincent —I do not know the costs of that power plant. I just know how big it is and how much energy it is putting out.

Senator JOYCE —How can you say it is not comparable to nuclear if you do not have the costs of it?

Mr Vincent —Comparing one power station is probably not a suitable comparison to make.

Senator JOYCE —Which one do you want to compare that thermal power plant to?

Mr Vincent —I just said that comparing one power station on its own to a particular industry is probably not a suitable comparison to make.

Senator JOYCE —You said a nuclear power plant cost $5 billion to build. Where did you get that figure from?

Mr Vincent —As I said that I did say I was just plucking a figure for an example.

Senator JOYCE —If we can build nuclear power plants quickly, efficiently and get them online, would you support them?

Mr Vincent —The too little too late issue is one of the many issues that we have with nuclear power.

Senator JOYCE —But we have just proved that there is far more than too little too late. You cannot provide any examples of the alternatives you are presenting that have the capacity to come online in a manner that meets your target of a 55 per cent reduction of carbon emissions.

Mr Vincent —That is certainly not what I have said or what I have supported.

Senator JOYCE —The Australian people need to know your vision of what you are going to build—something more than just an idealistic notion.

Mr Vincent —Do we want to go back and get a bigger picture of what the energy makeup will look like in 10 years?

Senator JOYCE —A basic run-down just for the purpose of this inquiry. You have ruled out nuclear because it does not produce enough. You have given one example of a thermal solar power plant in Spain, but you do not actually know how much it cost.

Mr Vincent —I have also said that they are building three gigawatt of it. You could build about nine gigawatts of that particular technology in this country by 2020 if you wanted to.

Senator JOYCE —And you are saying that we could not do that with nuclear?

Mr Vincent —I would very much doubt that you could do that with nuclear. And there are a whole load of other social—

Senator JOYCE —If I can prove that we could, would you be happy with that if we did it?

Mr Vincent —You would need to cover a lot of criteria to be able to get support from Greenpeace on nuclear-power.

Senator JOYCE —But you would consider it?

Mr Vincent —You would need to cover a lot of criteria. There are social, sociopolitical, geopolitical and environmental issues that we have not touched upon here.

Senator JOYCE —But you would consider it?

Mr Vincent —You would need to cover off on a lot of these other issues as well.

Senator JOYCE —Would you consider it or not?

Senator CAMERON —Do you want to take that on notice!

Senator JOYCE —You guys complain about politicians not answering questions. Goodness gracious me, you can give a straight answer can’t you, Mr Vincent?

Mr Vincent —I am quite happy to tell you that we are happy to rule out nuclear power as an option.

Senator JOYCE —You are going to rule out nuclear power now as an option?

Mr Vincent —I am very happy to do that. I did that a while ago.

Senator JOYCE —You are happy to rule it out?

Mr Vincent —Yes.

Senator CAMERON —Good on you, Mr Vincent, I am with you on that.

Senator JOYCE —We have gone to a lot of options—to ruling it out, to a thermal nuclear plant that we do not know the cost of, to a 55 per cent reduction in carbon emissions levels, but we do not know how we are going to do it. We have a three gigawatt idea in Queensland, but we cannot tell you where it is. This is not very convincing, Mr Vincent.

Mr Vincent —The words that you have just used solar thermal nuclear power station and three gigawatts in Queensland, I cannot wait to go and look at the Hansard.

Senator JOYCE —I will let someone else have some fun with you.

Senator CAMERON —I really do not think this is about fun. I think the issues are serious and I do support the proposition from Mr Vincent that nuclear power should not be an option for us. Mr Vincent, can I draw your attention to a report by the Institute of Public Affairs? Did you by any chance read the submission to this inquiry from the Institute of Public Affairs?

Mr Vincent —No, I am sorry, I did not.

Senator CAMERON —Can I take you to some of the propositions that are put there and get your view?

Mr Vincent —Certainly.

Senator CAMERON —The IPA indicate that the cost of renewable energy would impose a direct cost on the economy of $1.8 billion annually. They then go on to say that this would increase consumer costs and reduce industries’ competitiveness and it would cause far more jobs to be lost than there would be subsidised jobs created. Do you have any views on those three propositions?

Mr Vincent —I just want to clarify their first proposition which was that there would be an increase of $1.8 billion annually—the cost of energy in total, is that what they are saying?

Senator CAMERON —The cost of RET

Mr Vincent —There is a price impost of course with RET because of the renewable energy certificates that are produced. I think that what is often forgotten is that what RET does is produce a lot of electricity at a very low cost once it has been installed. I have seen modelling done from the National Generators Forum and the Business Council of Australia, for example, that suggests that the reduction in pool price in wholesale electricity more than compensates for that and the actual cost of producing electricity falls as a result of the RET, so I find that curious to start with.

Senator CAMERON —The author of the report, Dr Alan Moran, also talks about the imposition of a hidden tax on the consumer, the revenues from which are given to the suppliers of what he describes as ‘intrinsically uncompetitive renewable energy sources’. What is your response to that?

Mr Vincent —I guess that any new energy source trying to find a place in the marketplace and become part of our energy supply is not going to be competitive until it is given the support mechanisms that currently favour our current mode of energy production. The idea that supporting other modes is uncompetitive or economically marginal, for example, is often the case because we are not giving them the appropriate policy support.

Senator CAMERON —In this submission the IPA draws the committee’s attention to what they call the ‘Spanish experiment with renewables’ and basically say that the crisis in the Spanish economy is due to their increased use of renewables. That is a report by a researcher called Alvarez. You aware of that report?

Mr Vincent —Yes, I have seen some analysis of that report but I have not seen the report itself. If you are happy for me to take it on notice, I can provide you with some of the critique of that report.

Senator CAMERON —That would be good. The other critique concerns jobs. The IPA do say that any jobs created will be swamped by jobs lost. What is your estimate of the creation of green jobs if we adopt an ETS and the CPRS?

Mr Vincent —Are you talking about the renewable energy target or the carbon emissions—

Senator CAMERON —The renewable energy target, which is what we are dealing with now: has it got the potential to create jobs?

Mr Vincent —Yes, of course, because the plants are not going to build themselves and they are not going to run themselves. One thing that is worth mentioning is that the renewable energy target does not actually threaten any additional power generation from fossil fuels, which is obviously something that I am not happy with. But if you look at the ABARE figures for projected electricity growth, there is still more room in the amount of electricity that they are forecasting for 2020 to continue to build more fossil fuel-fired plants. So I would be quite amazed to think that they expected net losses in the fossil fuel sector as a result of the renewable energy target. And of course there are many more jobs to be had in producing renewable energy than in fossil fuels.

ACTING CHAIR —As there are no further questions, thank you very much for your evidence today.

Proceedings suspended from 3.08 pm to 3.40 pm