Note: Where available, the PDF/Word icon below is provided to view the complete and fully formatted document
STANDING COMMITTEE ON ECONOMICS
27/03/2009
Exposure drafts of the legislation to implement the Carbon Pollution Reduction Scheme

CHAIR —Thank you for coming in this afternoon. Do you wish to make an opening statement?

Mr Toni —Yes. Perhaps I could tender a two-page summary of the statement I will make.

CHAIR —Thank you.

Mr Toni —Thank you very much for inviting us to address the committee. To reduce emissions at the scale that is required to avoid dangerous climate change will require the transformation of the electricity, energy, industrial and, ultimately, agriculture and forestry sectors. The technology to reduce emissions from the electricity and energy sectors generally by about half is available today; however, to reduce emissions beyond that and to achieve the deep reductions we need by mid-century will require major technical advances, particularly in relation to energy storage and agriculture. In these circumstances it is clearly desirable to minimise the costs of reducing emissions; however, this should not be in terms of favouring immediate costs or short-term costs over the total potential costs associated with sectoral transformation.

An effective carbon pollution reduction scheme will address short-term costs but not total potential costs nor non-cost barriers. Accordingly, it is an essential element, we would say, of the national response to climate change, including of a national carbon pollution reduction scheme, that both the longer term and indeed the medium-term transformations required be addressed at this point in time. In terms of non-cost barriers, regulation is required to address energy efficiency as the barriers to this particular issue are well known to be resistant to prices, and that this has been recently demonstrated yet again by the Energy Efficiency Opportunities Act introduced by the last government. There is also a need to foster the deployment of carbon capture and storage, geothermal, ocean and solar thermal renewable energy in the immediate future.

All of these technologies are viable and available today; however, the process of scaling them up to the level required for commercial application will take at least a decade or two. Typically, technological transformation of industrial plant operates by about a factor of seven. So, for example, a 50-megawatt demonstration plant for perhaps carbon capture and storage or solar thermal will typically only be expanded to about 350 megawatts or so. Say we assume it takes five years to build a carbon capture and storage plant of 50 megawatts—and, as the committee would be only too aware, there are no coal carbon capture and storage plants operating in the world at this point in time. If, being very optimistic, we assume that a demonstration plant could be built in five years, we would assume probably a number of years, perhaps five, of operation and testing. That might be able to be shortened. Then to scale it up will take perhaps another five years of construction. So you would be looking at after 2020 before we got to even a moderate sized carbon capture and storage demonstration plant—350 to 400 megawatts. In other words, the scaling up of these technologies needs to begin now. Neither the Carbon Pollution Reduction Scheme nor the existing Mandatory Renewable Energy Target scheme will foster geothermal, ocean or solar thermal technology in the near future. At this point in time we have no significant investment in agricultural emissions.

Australia has ample energy resources to reduce emissions by 90 per cent by 2050. Towards the end of my presentation, if I may, I will tender a report that supports this claim. However, to achieve those sorts of emissions reductions we need to be developing those industries and developing a series of industries today. The reason for that is similar to the reason that you cannot build more than a certain number of tanks or ships or planes, even in a time of war. No matter how important an issue, there are physical constraints, intellectual constraints and infrastructure constraints to the speed with which you can deploy a new technology. The scale of reductions that are required would mean that 20 per cent growth rates would be quite common year on year. This is an exceptionally high rate of growth for any industry. Except in very rare instances like mobile phones, you simply do not see those high rates of growth. Above 20 per cent is uncommon; above 30 per cent—which, if we delay establishing these industries by a decade will be necessary—in industrial terms is unprecedented.

The present renewable energy target of 20 per cent by 2020 is probably adequate to transform the sector, provided it is banded or other arrangements are made to foster big baseload type renewables like geothermal, ocean and solar thermal. We are in fact in striking distance; it is just that our existing legislative and administrative arrangements do not focus on those industries. I do note, however, that the renewable energy target does band, as it were—as in emphasise—domestic solar, PV. While this is an attractive technology at a small scale, we really need to explore support for the technologies that are likely to provide industrial levels of power.

Finally, one of the key steps in reducing emissions at a very large scale is to reduce industrial emissions. Australia is a very large industrial country. It would be desirable to stay that way, both because we have significant raw materials which can be conveniently processed here, if we can move our industrial plant to a low-emission form. One aspect of that is undoubtedly promoting low-emission forms of electricity. Another is reducing the emissions. At this point in time there are no known ways to dramatically reduce industrial emissions for a number of processes, including cement, and iron and steel. The only known solution is geosequestration. So we have a number of very large industrial complexes, some of them which are suitable for geosequestration and some of which may be, but WWF would submit that this should be accorded a high priority in a carbon pollution reduction scheme. Perhaps I could stop there.

CHAIR —Thank you. In terms of making a high priority of things like geosequestration and carbon capture and storage, and also the bringing on of new technology for non-renewables, you have addressed it in some senses, but how specifically would the government most efficiently target the growth of those new technologies?

Mr Toni —Renewable technologies?

CHAIR —Yes.

Mr Toni —We think that the existing 20 per cent target is likely to be sufficient, but in fact measures have to be adopted inside that to specifically foster geothermal, ocean and solar thermal. I am just naming those because they are the sources of technology likely to provide very, very large-scale baseload, continuous power.

Mr Toni —So you would straight out pick those industries, the leaders in them, and give them some sort of financial assistance?

Mr Toni —Yes. The UK government has recently proposed to do this with its renewable energy scheme—that is, to band it so you have a market scheme. The technology itself is not really picked; what is chosen and favoured is the resource, whether it is solar, ocean or geological—geothermal. You are saying: ‘This is a resource that we know is huge,’ and in this country we know that all of those sources are huge—virtually without limit, in fact. ‘We will find a way to tap those energy resources and we will create a system the favours the group or organisation who has the best technology to tap it by creating, as it were, a hybrid market scheme that focuses on particular resources.’

Senator JOYCE —Thank you, Mr Toni and Mr Trujillo. You talked about carbon sequestration. Do you know of any commercially viable carbon sequestration projects that are going forward anywhere in the world at the moment?

Mr Toni —Commercially viable as in paying for themselves?

Senator JOYCE —Yes.

Mr Toni —I am not sure about Sleipner or the gas reinjection sequestration projects. They may pay for themselves, but I am not sure. But I do not know of any coal one, that is for certain.

Senator JOYCE —What do you deem the price of carbon permits to be before geosequestration will become viable?

Mr Toni —I am afraid the short answer is that we really do not know. Our information base is so slender that we just do not know. We know that we have three major technologies contesting for the gas separation technology. After that the cost will be driven partly by the distance that you have to pump it to reach a sequestration field and then the cost of pumping. So we just do not know.

Senator JOYCE —From the outset, doesn’t it seem a little bit dangerous for us to engage in a process of going down a CPRS before these technologies are proven? Aren’t we just foisting a tax for which there is no remedial outcome, no way to offset it? The only way you could offset in Australia is to move the industry, such as aluminium, someone else.

Mr Toni —No. There will be a cost in dealing with this, there is no question about it. There are measures we can adopt to reduce—not eliminate, but reduce—the impact on the aluminium sector. There is one option, which is to try to develop sectoral agreements, because in fact the number of countries that are players in the aluminium world is actually quite small.

Senator JOYCE —Is there any prospect of getting sectoral agreements within the aluminium industry?

Mr Toni —It is not something I can express an opinion on. All I can say is that there are a relatively small number of countries that would have to be part of it.

Senator JOYCE —You are probably aware of the report that the New South Wales government did that talked about a 20 per cent reduction on 2007 levels in the GDP of regional and certain regional areas over the next 40 years.

Mr Toni —Yes.

Senator JOYCE —Looking from the other side, how do we explain that to the people who live in those areas?

Mr Toni —Part of our submission is that we should actively manage the process. We should not just rely on a CPRS; we should be doing two other things. One, in the case of industrial centres—

Senator JOYCE —Say, Gladstone, for instance.

Mr Toni —for Gladstone we should be exploring geosequestration opportunities today and we should be getting in place the easements that are necessary to transport industrial waste, which is what we are talking about, to a place where it can be safely sequestered, and we should be accelerating major baseload forms of energy.

Senator JOYCE —Would there be any potential or alternate baseload form of energy that would have the capacity to support the industrial city of Gladstone away from coal?

Mr Toni —I am not sure about how close geothermal sites are to there. They would be some distance, I would think.

Senator JOYCE —You have to go to Central Queensland, inland—Alpha, someone like that—300 or 400 kilometres.

Mr Toni —That is considerably less than the New South Wales grid, which extends well into the country. That would be, I suppose, the one that would spring to mind, just because of its scale.

Senator JOYCE —We know the requirements. Is the technology out there for us to produce a geothermal baseline technology that would be able to supply an industrial city—and, if there is, how long would it take us to build it?

Mr Toni —At this point in time there isn’t. I think that is part of our argument—that, in fact, we know that to scale these technologies up we have to start today.

Senator JOYCE —Do you apply your mind to any other alternate forms or policy that in the interim would actually start to move us towards this position without inducing a tax? Because, obviously, the effect of the tax is immediate—the immediate response is to get a certain return on your income. If you believe in a global market, global resources move. Could you suggest a way that Australia could actually move towards this position without bringing about the impetus of the tax immediately?

Mr Toni —WWF supports the CPRS—or, at least, an effective CPRS. I think it does form the essential underpinning for long-term emission reductions. The way to ameliorate its impact is to try to induce the step changes we need. With Gladstone, for example, there seems to be a good likelihood that CCS will be available there, if it works. Therefore, it is imperative that we test it.

Senator JOYCE —There are a lot of ifs, though, there, Mr Toni, aren’t there?

Mr Toni —There are.

Senator JOYCE —‘If it works’, ‘if it’s there’—if, if, if. But the introduction of this scheme is not an if; it is a certainty, if this legislation goes through.

Mr Toni —Yes.

Senator JOYCE —How do we balance those two off: the certainty of an impost on costs and the effect that it will have in the middle of a recession and the potential that, if we had more time, we would possibly be able to produce a technology that would somehow ameliorate the concerns of the people who are going to lose their jobs? The Labor Party report says they are going to lose their jobs.

Mr Toni —We are very conscious of trying to minimise the impact of this scheme. But if we accept that we must reduce emissions, pollution, from this source, there is really no alternative in the longer term—it will not impact probably within the next 5, 6, 10 years possibly even—other than to find step changes to the technology.

Senator JOYCE —My colleague has pointed out to me that you say that we have the potential to reduce emissions by 90 per cent by 2050. Is that your belief?

Mr Toni —Yes—from the power sector.

Senator JOYCE —What sort of effect will that have on our economy?

Mr Toni —It turns largely on the speed with which you transition to new forms of energy. If CCS or ocean technology work—and it appears likely they will—you would be able to hold on to much of the existing industrial base.

Senator JOYCE —Can you tell me, from your knowledge of the system, as we try to develop these technologies, which you say are obviously crucial in ameliorating the effects, what policies are currently out there at the moment that encourage me to invest, prior to the CPRS, in developing these technologies?

Mr Toni —There was a system of grants under the former government which encouraged companies to invest.

Senator JOYCE —Are those grants still there?

Mr Toni —Most of them are. They have been replaced by a new program, but in substance there is a grant system there. The difficulty with grant systems is that the cost of administration is very high and it is very uncertain for companies. All of the companies that I have spoken to would much prefer a market based system. So the renewable energy and target system does have tremendous potential, provided it fosters the technologies that we need to transform the country.

Senator JOYCE —Do you believe that fugitive emissions, especially from coal, are a major problem?

Mr Toni —They are a major problem, but it is an issue that can be managed over time.

Senator JOYCE —We have received evidence and we have gone through the graphs of the seaborne coal and noticed that, although we believe we are a big player, when you take all the other countries into account, Australia is not a big player. Four per cent of the coal that is used in the world is Australian coal; the other 96 per cent comes from somewhere else. If we remove the coal industry or put the impetus for the further development of alternative sites than where this coal is accessed from, what industry do you have in mind to take coal’s place?

Mr Toni —Could I answer that in two stages. Firstly, we are not suggesting that we do for a long period of time—probably mid century—because we would like to see CCS fostered in this country and fostered very quickly. If CCS works—and the probability is that it will; after all, these are existing technologies—we will see emissions in the power sector decline by something like 70 per cent.

Senator JOYCE —What is going to take the place of our export coal industry?

Mr Toni —For the foreseeable future, I think there will be an export coal industry. The coking coal industry is unlikely to be affected in the foreseeable future because we will still need steel.

Senator JOYCE —But the ultimate goal is to replace it. But what will we replace it with? We have to keep the capacity of the Australian economy to obtain an external source of money, because we live predominantly on imports. Our terms of trade demand a capacity to export a major product.

Mr Toni —Yes.

Senator JOYCE —If we take coal, which is our major export product, out of the mix and then everybody continues to wish to drive imported cars, read imported books, watch imported television shows on imported television sets and walk around in imported clothes, what are we going to put on a boat and send in the other direction?

Mr Toni —For some time I would expect it to remain coal.

Senator JOYCE —And after coal?

Mr Toni —After coal, the sky is the limit. Originally we exported whales. Then we exported seal skins.

Senator JOYCE —Do you suggest we go back to whales?

Mr Toni —No. I do not think that would work somehow!

Senator JOYCE —That would be an interesting suggestion from the WWF! They are environmentally sustainable.

CHAIR —I do not think you can lead them into that, Senator Joyce.

Senator JOYCE —I know. I just could not help myself!

Mr Toni —The point I am trying to make is that, over 200 years, we have had exports change—often dramatically—and the economy has stayed healthy and got bigger and healthier in fact.

Senator JOYCE —The manufacturing industry is precluded because of the baseline impacts of electricity. The coal industry is precluded because of fugitive emissions of coal. The agricultural industry is precluded because of methane emissions of ruminant animals. I am fascinated to know what 21 million people will do. We cannot just all take in one another’s washing.

Mr Toni —I am afraid I cannot answer that question, other than to say that the issue is the emissions. If you find a way to address the emissions, there is no reason to believe that you cannot have these industries.

Senator CAMERON —Mr Toni, you have obviously had a look at the government’s white paper and the drafts that are out there. Have you seen anywhere where the coal industry is designated as disappearing?

Mr Toni —No.

Senator CAMERON —What is your organisation’s view about timing to move to a CPRS? Do you believe we should do it earlier rather than later?

Mr Toni —We would support a 2010 start date.

Senator CAMERON —Should we take into account the current recession in a short-term approach or should we look longer term?

Mr Toni —We would submit that you should look longer term.

Senator CAMERON —All the discussion from Senator Joyce this morning has been about job losses and assertions that are not based on any factual position in the CPRS. What is your organisation’s view about the potential to grow jobs in the economy as a result of the CPRS and other initiatives?

Mr Toni —This will require the transformation of our economy. It will be done over a period of time, but it will be a transformation. Just as after World War II we had a particular profile in the country and that has changed over time, I would expect that by 2050 we would have a country that was in many cases based on similar sorts of industries because our comparative advantages will not go away. We are a very energy rich country. We have very large amounts of raw materials and we are operating in a particular part of the world where those raw materials are in demand and will continue for many years to be in demand. I think people will have different job descriptions, but in many cases it will be an evolution of their existing job. Metalworkers will work on the blades of turbines that are used to gather wind or ocean energy, as opposed to perhaps working inside a fossil-fuel-burning plant.

Senator CAMERON —So you broadly accept the analysis that has been made by Treasury that the economy can continue to grow even with the CPRS?

Mr Toni —Yes, and I think that the Treasury modelling is outstanding in world terms. There is no similar detailed modelling anywhere that I am aware of—possibly the UK, but not many places outside of that.

Senator JOYCE —That contradicts with the modelling of the New South Wales government.

Mr Toni —No, they are not inconsistent because one is looking at the impact on a particular area, which is important to try to manage, and the other is looking at national, or at least very large-scale, impacts.

Senator CAMERON —We have evidence this morning that the New South Wales report does not demonstrate declines in jobs per se. There might be a decline in jobs that may have been created without a CPRS but the alternative to that is to allow the earth to continue to warm up and have greater problems. Is that your understanding?

Mr Toni —That is correct.

Senator BUSHBY —You noted this afternoon and in the short submission that you provided that we need to address the non-cost barriers such as energy efficiency. You would be aware that the way the proposed draft legislation is set up with its cap and trade has the effect, which I would suggest is perverse, whereby if consumers or households voluntarily reduce emissions it means that there is more flexibility for the large emitters to then emit a little bit more and still fall under the cap. Is anything about the CPRS that you think could be changed to address that issue.

Mr Toni —We would certainly support it being changed to address that issue. I am not sure what mechanism might be adopted but cancelling the number of emissions units would seem to be one way to do it.

Senator BUSHBY —To repeat what we heard this morning, the suggestion from the Climate Institute was greater targets, which would have the same effect. If the target is bigger it is harder to meet and if people are reducing it then there still needs to be work done to meet it. It would be a perverse consequence if people were voluntarily reducing their emissions under this current proposal and it meant that other emitters could increase their emissions as a result of that.

Mr Toni —Yes, it would be a very unfortunate result.

Senator BUSHBY —Following on from Senator Joyce’s questions, you mentioned possible measures to protect the existing major industrial centres. What sort of measures do you think could be employed to protect them?

Mr Toni —Aggressively pursuing low-emission forms of energy is the main way.

Senator BUSHBY —The intention of the scheme, which I think everybody understands and probably most people support, is to introduce a market mechanism that will encourage a shift from a high-carbon based economy to a low-carbon based economy and that necessarily involves structural change and in the process there will be winners and losers. A lot of the argument about this revolves around how you deal with the transition and ensure that people are appropriately protected during that transitional phase. What you are saying here is that for political reasons, if nothing else, there should be measures put in place. But if the measures you are talking about putting in place are aggressively pursuing alternative low-carbon technologies, that does not necessarily protect the people in those areas because they may well work better in other areas or develop in other areas or in major metropolitan areas.

Mr Toni —That is certainly the case.

Senator BUSHBY —Do you think measures should be specifically applied to those areas most affected or do you think that the aggressive pursuit of low emissions technology will solve that?

Mr Toni —In many cases, it will solve it.

Senator BUSHBY —And if it doesn’t?

Mr Toni —There is a very high chance that it will. The existing scheme proposes transitional measures for seriously affected—

Senator BUSHBY —And you think that they are adequate?

Mr Toni —Yes. What we would say is that we should try and use those measures to get an environmental outcome at the same time—and indeed an economic one.

Senator BUSHBY —You mentioned under ‘solutions’ a CPRS with support for ET limited to 20 to 30 per cent as proposed by Garnaut. We had Professor Garnaut before us on Monday in Perth. He was talking about his principled approach to compensate for emissions in intensive trade exposed industries. With your 20 to 30 per cent, are you referring to his principled approach to compensation?

Mr Toni —Yes.

Senator BUSHBY —Okay. That is interesting. That figure is not necessarily how I understood his explanation of that.

Mr Toni —Perhaps I am using the word ‘principled’ in a different way.

Senator BUSHBY —‘Principled approach’ is a term that he uses for basing the compensation on principles that he outlines, as opposed to basing it on an ad hoc basic, which is how he describes the government’s approach.

Mr Toni —I thought that there was an intersection of two elements to his scheme. One was the principled distribution of the pool of money that you have decided to set aside to compensate or assist big emitters through the transitional process. But there was an additional element, which was that the figure of 20 per cent was a policy decision. I may be wrong, but I do not think that I am.

Senator BUSHBY —I asked him to explain the principled approach. To the best of my memory, as I understood it he was saying that if you are an exposed industry then the government compensates you by giving you an amount which is equal to the difference between what you achieve for your sales and what you would have achieved if your major competitors also faced a similar scheme. It is a margin type of thing. You are compensated for that difference. It might be the other way round, but it is the difference between what you are losing because we have a scheme here and what you would have received if other people also had the scheme. You do not get the full benefit, but you get a partial thing, which puts you back into a competitive position, basically.

Mr Toni —In our submissions on the green paper we supported Professor Garnaut’s approach on that issue.

CHAIR —You want the emissions trading reduction target to be up to 25 per cent. Currently, it is five to 15. Do you think it might be a reasonable proposition to put the bill through but leave the target open until after Copenhagen later this year?

Mr Toni —That would be one option. Australia is a small emitter, but it does have quite a loud voice in international affairs for a medium-sized country. The WWF is hoping to see a strong leadership position from Australia.

CHAIR —Before Copenhagen?

Mr Toni —Before. If a deal is not struck at Copenhagen, it will be many years before we get another shot at it, being realistic.

Senator FURNER —Just on that subject, in Melbourne’s hearing we heard from Mr Pascoe from the ACF. He made a statement that every year of slowing action locks in a worse future for dangerous climate change. Surely on that basis alone we should not delay this legislation if there is a need to be in a strong position on the global stage to deliver at Copenhagen. If down the track there needs to be some amendments made to it or changes, it would be possible to do that.

Mr Toni —Yes, an effective emissions trading scheme is very desirable, and this scheme has good bones to commence operation in 2010. However, it is just as desirable that the national response to climate change be as comprehensive as possible at this point in time and addresses the transformations we need, not just the relatively minor steps that are presently proposed.

Senator FURNER —Having no scheme is worse than having any scheme, is it?

Mr Toni —It just depends whether it affects the transformation, Senator. Ultimately that is the objective. That is the key issue in a sense.

Senator FURNER —Thank you.

Senator XENOPHON —Can I just raise the issue of biosequestration and also biochar: is that something that you have considered in the scheme of things as to the impact it could have on reducing emissions?

Senator JOYCE —Biosequestration or geosequestration?

Senator XENOPHON —Geosequestration.

Senator BUSHBY —We have already talked about geosequestration.

Senator XENOPHON —I will stand corrected by my colleagues, but I think that biochar is part of biosequestration.

Senator BUSHBY —That is my understanding.

Mr Toni —WWF supports any measure that can be adopted to reduce emissions.

Senator JOYCE —Is it biosequestration or geosequestration?

Mr Toni —Geosequestration is, essentially, pumping industrial pollution underground such as the CO2 from the power sector or from the industrial sector.

Senator JOYCE —What is biosequestration?

Mr Toni —Growing trees really, but also enhancing soil carbon I think would be encompassed by the term.

Senator XENOPHON —In relation to Copenhagen, one of the criticisms that has been made by Richard Denniss of the Australia Institute the other day in giving evidence to this committee was that, if we lock ourselves into a five to 15 per cent target and Copenhagen comes out with an agreement at, say, 25 per cent, then there is a taxpayer risk for that difference between the 15 and 25 per cent. Do you have a particular view on that?

Mr Toni —That is true. If we have to meet the target that was set for the nation or accepted by the nation, then that would mean that the government, who is required to meet it, would have to purchase additional credits.

Senator XENOPHON —Finally, the destination that WWF wants is to have a significant cut in emissions to get to 400 parts per million?

Mr Toni —Ultimately 400.

Senator XENOPHON —Four hundred because 450 may not prevent that tipping point in terms of climate change. Is that the concern? Are you confident that 400 is an adequate or safe figure? Others have said 300 or 350.

Mr Toni —At this point in time we would be over the moon to get to 400. It may well be that as the science develops and the impacts emerge it may rise.

Senator XENOPHON —The ETS, whilst very important, is just one of several paths to get to the same destination. There is no reason why you could not have a number of parallel paths in terms of energy abatement and biochar.

Mr Toni —Absolutely not.

Senator XENOPHON —You are not particularly wedded to the scheme; you are interested in results and getting the best possible environmental result as quickly as possible?

Mr Toni —That is correct. It is going to be horses for courses. There is huge potential to reduce emissions through energy efficiency, enormous, we know that.

Senator XENOPHON —What do you say they are in terms of Australia’s emissions? By way of background, Westpac gave evidence today that in the last 12 years they have reduced their energy use by 40 per cent and they are planning to reduce by another 30 per cent in the next few years.

Mr Toni —That is very impressive. WWF internationally has a program, called Climate Savers, which is major corporations who agree to voluntary emission reductions. Without exception all of them have achieved enormous reductions and in some cases more than 50 per cent over a 10-year period; in other cases, 12 or six per cent, but always significant. The International Energy Agency has estimated that energy efficiency could contribute up to one-third of emission reductions to 2050. Australia is not a very energy efficient country. I would not be able to hazard a guess as to how much of that would be applicable in Australia.

Senator XENOPHON —Does that prediction of one-third by 2050 take into account new technology? I was reading an article, I think in the Economist the other day, that says that LED technology is now rapidly improving. They are doing some research overseas which, if it is perfected in the next couple of years, could mean huge energy savings in public lighting and lighting in buildings. Are technological advances factored into these predictions?

Mr Toni —Yes. It is using existing power and wasting it less. To give you an example, households are attributed with about 20 per cent of Australia’s emissions. Fridges create about 20 per cent of household emissions, so probably about four per cent of emissions are attributable to fridges alone. There are 900,000 fridges sold per year in Australia, believe it or not, so the turnover of fridges would not take long if you legislated to require very efficient fridges. A six-star fridge uses about 50 per cent less power than a three-star fridge, which is more efficient than the standard anyway. That is a very long and elaborate series of figures, but fridges alone could get you nearly half of the proposed emissions reduction.

Senator XENOPHON —If it is four per cent? Is that right?

Mr Toni —Four per cent of Australia’s emissions.

Senator XENOPHON —So you could reduce it by two per cent overall.

Mr Toni —You could reduce it by two per cent by 2020. You would have a very large turnover of fridges.

Senator XENOPHON —In terms of the government’s target of five per cent?

Mr Toni —Yes, if you legislated for only six-star fridges.

Senator XENOPHON —And that would do it?

Mr Toni —It would get you a long way, wouldn’t it?

Senator XENOPHON —Yes.

CHAIR —Thank you for coming in this afternoon and giving evidence.

Mr Toni —May I tender this report? This is the report that supports the statements I made about the need to foster a series of industries at the same time otherwise the material resources and the personnel simply will not be available as and when they are needed.

CHAIR —Thank you very much. I ask the Australian Industry Group to come to the table.

[2.14 pm]