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Monday, 19 March 2012
Page: 3283

Mr COMBET (CharltonMinister for Industry and Innovation and Minister for Climate Change and Energy Efficiency) (16:38): This of course is a debate concerning a motion moved by the member for Lyne to disallow the Renewable Energy (Electricity) Amendment Regulations 2011 (No. 5). The government opposes the motion to disallow those regulations. The government and I, in my role as minister, have high regard for the member for Lyne and we have worked very closely with him in relation to the clean energy package that was announced in July last year. However, this is one area where we do take a different approach from the member for Lyne's to this specific issue. In implementing its plans for a clean energy future announced on 10 July last year, the government recognised the importance of ensuring that all of the elements of the plan work together to maximise the combined benefits for our society, our economy and our environment.

We had enormously wide-ranging discussions in the Multi-Party Climate Change Committee over an extended period of time looking at all issues: emissions reductions in our economy, the nature of the renewable energy technologies that are deployed, the operation of renewable energy legislation and regulations in our economy and the incentives that they give, and a whole host of other matters. The regulation that is before the House that is the subject of the disallowance motion by the member for Lyne was a product of all of those considerations. So I emphasise that the government looks at this regulation as part of the overall clean energy package and the way in which the entirety of the package comes to operate. With that in mind, the government is determined to provide support for bioenergy investment while, at the same time, ensuring that native forests are afforded appropriate protection. It is very important when you look at the overall policy settings to try and get that balance right.

A carbon price will encourage the use of woody biomass as an energy source because the combustion of biomass for electricity generation or heat energy will not attract any liability under the carbon price mechanism. Therefore, generators that use biomass, including wood wastes from native forests, will become more cost-competitive relative to generators that use fossil fuels, which will be subject to the carbon price. Of course, this is part of the entire concept of carbon pricing: it is to put a market signal into the economy with respect to the combustion of and emissions from fossil fuels, such that there is a change in the relative position of different fuel sources and energy sources in our economy. That market signal is intended to direct investment towards lower emissions fuel sources, and we believe this regulation sits squarely within that context.

The carbon price will drive a fundamental transformation of our energy sector, with Treasury modelling estimating $100 billion worth of investment in renewable energy in the period to 2050—$100 billion worth. In the government's Clean Energy Future plan, the forestry industry also bears no liability for logging and liquid fuel emissions from forestry operations because they are not covered.

There are also some potential opportunities for the industry in relation to the Carbon Farming Initiative. Indeed, at the recent United Nations Framework Convention on Climate Change negotiations dealing with the treatment of forest management, several months ago in South Africa, the international accounting rules were on a pathway to be altered in a way that would strengthen the incentives for opportunities under the Carbon Farming Initiative with respect to forest management.

Also, as part of our clean energy future plan, and giving effect to the agreement reached within the Multi-Party Climate Change Committee, the government has amended the Renewable Energy Target regulations to exclude biomass—a subject of this debate, obviously—from native forests as an eligible renewable energy resource. This exclusion encompasses, to be clear, products, by-products and waste associated with or produced from clearing or harvesting of native forests. Native forests are important for biodiversity and store large amounts of carbon. Excluding electricity that is generated from native forest biomass from eligibility under the Renewable Energy Target scheme removes the potential for the Renewable Energy Target scheme to provide an incentive for the additional burning of native forest biomass for bioenergy, even where this burning is a secondary use. In the context of the benefits of bioenergy from the carbon price, the additional incentive from the renewable energy target could increase both the primary and the secondary purpose use of native forest wood, which could lead to unintended outcomes for biodiversity and the destruction of intact carbon stores.

The government recognises, of course, that investments may have been made in the past on the basis of the renewable energy target rules which previously did allow the eligibility of wood waste derived from native forests and has put in place transitional arrangements to preserve the previous rules for existing power stations that are already accredited to use native forest biomass as an energy source. In doing so, my department has consulted very extensively with industry to get those transitional arrangements right. To make that clear again: those power stations accredited for the use of this material under the Renewable Energy Target scheme have transitional arrangements put in place that continue to allow them to earn benefit from the investments they have historically made. The explanatory memoranda I published as minister in relation to these particular regulations contain, in regulation No. 4, in detail, those transitional arrangements. They are very important in respect of a number of the accredited generators under this scheme, and that is a very important point to note in the context of some of the contributions that have been made.

It is also important to recognise that renewable energy certificates can continue to be created from electricity generated from other wood waste and energy crops, such as oil mallee, woody weeds, agricultural wastes and wood from certain timber plantations. So there are products that can continue to generate renewable energy certificates. Nothing in relation to the regulations subject to the disallowance motion prohibits the use of biomass for the purposes for which it has been applied and has, under the standing situation, also generated renewable energy certificates. It can still be used, and incentives are changed by the carbon price coming into effect from 1 July.

While biomass derived from native forests is no longer recognised under this regulation as an eligible renewable energy source under the Renewable Energy Target scheme, those changes do not—as I made the point a moment ago—prohibit the use of this biomass for bioenergy. I would not want anyone to gain the impression from listening to the debate that that was not the case. This wood waste can continue to be used for the purposes for which it has previously applied. However, it would not, under these regulations, any longer generate renewable energy certificates. Bear in mind, once again, that there are quite important transitional arrangements put in place for generators that are accredited under the scheme.

The government considers that in its totality the clean energy future plan, including the Renewable Energy (Electricity) Amendment Regulations 2011 (No. 5) that are the subject of this debate, achieves the right balance for our nation and for renewable energy providers to continue to move towards a cleaner energy future. We therefore do not support the motion that has been moved by the member for Lyne.