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Thursday, 12 December 2002
Page: 8075


Senator O'BRIEN (2:45 AM) —I move opposition amendment (1) on sheet 2797:

(1) Schedule 1, item 68, page 19 (lines 22 and 23), omit the item, substitute:

68 Section 40

Omit the section, substitute:

Required GWh of renewable source electricity

Year

Required additional GWh

2001

300

2002

1100

2003

1800

2004

4200

2005

6600

2006

9000

2007

11400

2008

13800

2009

16200

2010 and later years

18700

A report released recently by Origin Energy in our view discredited claims that cutting greenhouse gas emissions would lead to substantial increases in electricity costs. That report was done, as the minister is well aware, by McLennan Magasanik Associates. They assessed the impact on electricity prices of renewable energy and gas-fired generation. They concluded that the increase in electricity prices as a result of increasing the renewable energy target would be very small, that it would have a minimal impact on the cost competitiveness of Australian industries that are energy intensive and that Australia would remain amongst the countries with the lowest electricity prices. That research backed up modelling by the New South Wales Treasury which suggested that Australia could indeed meet its Kyoto target—that is, an eight per cent greenhouse gas emission increase between 1990 and 2008— without a significant rise in electricity prices for industrial consumers. We have also seen work done by the Tariff Network of Experts, who also concluded that an increase in the MRET target would have a very minor impact on electricity prices.

Development of the renewable energy industry means both reduced greenhouse gas emissions and, in our view, more jobs. Australia is uniquely placed, with ample supplies of renewable energy sources such as wind and solar, to lead the world. I also make the point that many of the jobs created from harnessing this clean energy can occur in regional Australia, and I believe that renewable energy projects should be developed as a matter of priority in regional Australia and that that is where the scope for these projects most successfully lies. Such an approach would give us a smooth transition to an energy mix that has an increased market share of renewables and, as the above examples demonstrate, would provide more jobs overall for regional Australia.

Labor announced earlier this week its proposal for a minimum five per cent MRET—a significant increase on the government's target of two per cent. Labor's position demonstrates our commitment to the renewable energy sector. This time Labor believes that a five per cent mandated renewable energy target is both balanced and achievable, but Labor has not shut the door on support for a higher mandated renewable energy target in the future. The forthcoming renewable energy target review should examine whether the target should be five per cent or a higher figure. Labor will consider raising the target if the evidence coming from the government's review or from our own policy development work warrants this and in particular if we are satisfied on the issue of electricity prices.

In terms of the form of our amendment, there are differences between the section 40 table that we propose and that proposed in, I think, the Democrat amendment, which also goes to a five per cent target. There are a number of models that have been used to calculate the figure which would be associated with a five per cent additional renewable energy target. Labor has chosen the Origin Energy modelling as we believe it is credible and represents a middle ground. The Greenpeace-Next Energy modelling contains two different scenarios for energy demand growth, one which may never eventuate. That is contained on page 10 of the publication Putting renewables on target, the Greenpeace study prepared by Next Energy. Those two models are based on electricity demand growth rates of 2.2 per cent per year or 3.5 per cent per year, yielding targets of 18,400 gigawatt hours and 23,200 gigawatt hours, respectively. The Origin Energy modelling comes in at 18,700 gigawatt hours, in between these two figures, and Labor therefore believes that this is the most appropriate modelling to determine the target gigawatt hours per year of new renewable energy in 2010.