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Wednesday, 19 August 2009
Page: 5354

Senator WONG (Minister for Climate Change and Water) (11:13 AM) —I thank all senators for their contribution to this debate on the two pieces of legislation before the chamber: the Renewable Energy (Electricity) Amendment Bill 2009 and the Renewable Energy (Electricity) (Charge) Amendment Bill 2009, which have come to the Senate after passage through the House. I want to first acknowledge the work of all the officials within the government who have worked so hard to get the bills to this point and also the contribution of the Senate through its consideration of this legislation.

If the Senate passes these bills, it will deliver the largest increase in renewable energy in the country’s history. I want to go through briefly, in summarising this debate, a number of the policy issues that are contained in the legislation before the Senate.

But before I turn to that I want to briefly respond to two points that Senator Abetz made. Firstly, his proposition is that we should be congratulating, supporting or lauding the Howard government’s record on the environment, and he pointed to two issues. One is the establishment of the Australian Greenhouse Office and the second is the introduction of the renewable energy target. I want to talk about those two things because it was a step to establish the Greenhouse Office; unfortunately, it was a step that was followed by the government’s proceeding to ignore the reports and the policy advice of that office—particularly its approach to climate change policy. Senators may recall that I have mentioned in this chamber previously that this year we saw the 10th anniversary of the then Howard government first receiving a report—which I recall was from AGO; if it was not, there were certainly many other reports from there—in relation to the introduction of an emissions trading scheme. So it is one thing to establish an office that has ‘greenhouse’ in the title and it is another thing, in government, to introduce policy that is aimed at tackling climate change. I think that the judgement of history on the Howard government’s approach to climate change issues has not been, and will not be, good.

The second point that Senator Abetz made—and this is correct—is that the Howard government introduced the renewable energy target. My recollection is that it was Minister Hill that did that. It is to be acknowledged that it was the first national market mechanism to drive investment in renewable energy. But again that reform was not followed up in terms of subsequent reforms or subsequent policy decisions to preserve the benefit of that policy. In fact, the figures demonstrate that renewable energy, by the end of the term of the Howard government, had gone backwards as a proportion of our energy use. The then government ignored a range of advice about amendment of the renewable energy target to avoid that policy outcome and to improve policy outcomes. So, on the two issues that Senator Abetz raises I can say that it was not a bad start but that there was no follow-up. And that has been the unfortunate reality of the coalition’s approach to these issues in government.

As I said earlier, if the Senate passes this legislation the bill will deliver the largest increase in renewable energy in the nation’s history. It will be the largest increase in renewable energy in Australia’s history. This target, brought forward by the government, will deliver a more than fourfold increase in renewable energy by 2020. We went to the election with this commitment—a commitment to ensure that 20 per cent of Australia’s electricity comes from renewable sources by 2020, and the bill before the chamber is brought forward in order to implement that election commitment.

The objective we are aiming for is that in 10 years time the amount of electricity coming from sources like solar, wind and geothermal, will be around the same or equivalent to that used by all Australia’s households today. In other words, our objective is that the renewable energy sector will provide around the same as all of Australia’s current electricity use. This is a remarkable transformation—one that is overdue. It should have occurred before but it does demonstrate that we can set a target, we can drive to achieve that target, and we can exploit the enormous range of renewable energy sources with which we are blessed here in Australia.

I am often asked about the future for electricity in Australia and I make this point: we have wind, solar, wave and geothermal resources. We want Australia, at 2020 or before, to be a world leader in these technologies. As the world moves to a global carbon constraint we want Australian businesses—Australian firms—to be placed to take advantage of the technologies that we have developed. To do that we have to drive innovation and investment in that sector today. This is about Australian jobs, Australian know-how and Australian innovation. It is good for the environment but it is also good for Australian business.

I welcome what I think is the coalition’s support for our renewable energy target. I suppose that I am glad, despite the history that I have outlined in terms of their failure to adopt this type of policy in government, that in opposition they appear to be coming around to the view that it is a good thing to support renewable energy. I again remind the Senate that whilst this bill is necessary to increase our investment in renewable energy in Australia, of itself it is not enough, because if we are serious about tackling climate change this nation needs to do much more. Even with this renewable energy target in place and even with one-fifth of our energy coming from renewable sources Australia’s carbon pollution will be 20 per cent higher by the end of the next decade—by 2020—than it was in the year 2000.

So, even with this massive fourfold increase in investment in solar, wind, geothermal, wave and other renewable sources, Australia’s contribution to climate change will be 20 per cent higher in 2020 than it was in the year 2000. So, you cannot tackle climate change only by investment in renewable energy. That is an important and key part of the equation—we need to drive that investment in our energy sector—but it will not be enough. The only way we are going to be able to turn around the growth in our carbon pollution that is causing, or contributing to, climate change is with a carbon pollution reduction scheme. The only way we are going to turn around the growth that is causing and worsening climate change is to put a firm legislated limit on the amount of carbon that we produce and make those who create the pollution pay for it. So I urge those opposite, who appear to have become supporters of renewable energy in recent times, also to join the bigger fight—

Senator Brandis —We were there before you were, Minister.

Senator WONG —I will take that interjection, Senator Brandis. He says they were there before we were. I have acknowledged, Senator, that you introduced the first renewable energy target—you then failed to follow it up. You may have missed my introduction, but it is not enough to simply start a policy and then fail to take advice that is very clear about the need to adjust that policy to achieve the outcomes. What occurred eventually under you is that renewables as a proportion of total energy usage went backwards.

I urge those opposite who have become supporters of renewable energy in recent times to join this bigger fight, the fight against climate change, and, when the government next presents the Carbon Pollution Reduction Scheme, I urge them to support that bill. I want to make this commitment again in this place: if the opposition come forward with serious and credible amendments—

Senator Boswell —We have.

Senator WONG —that reflect their party’s position, we will negotiate, and we have been doing so.

Senator Boswell —What do you think we’ve done?

Senator WONG —I will make the point, Senator Boswell, that you have put forward amendments and that your representatives in your shadow ministry and I, as the relevant minister, have been negotiating, just as we said we would. What a difference between the way in which the coalition has sought to engage with this legislation and the coalition’s abject, complete, refusal to engage with the Carbon Pollution Reduction Scheme.

We have delivered on our commitment to negotiate in relation to the renewable energy target, as Senator Abetz said. I thank those shadow ministers with whom I have been dealing and I hope that we can resolve these issues through the committee process. I also thank Senator Milne, acting on behalf of the Greens, and Senator Xenophon for the discussions with me and my office on their views. This is the way we could have approached the Carbon Pollution Reduction Scheme. I again remind those opposite that, unlike in relation to this renewable energy legislation, they did not come forward with a consolidated position. The opposition did not come forward with any amendments that had the support of the party room; in fact, the opposition did not come forward with any amendments whatsoever.

I want to briefly address some of the issues which have been raised in this debate. I know a range of amendments have been moved and I suspect we will discuss those issues in the context of the committee stage. The first is the relationship between the renewable energy target and the Carbon Pollution Reduction Scheme and the assistance available to industries. I want to make this point very clear as the relevant minister: the reason we put forward assistance to industry through the renewable energy target in a way that reflected the assistance under the Carbon Pollution Reduction Scheme was that we thought that was the best policy.

There have been a lot of allegations in this place and, I note, in the Senate committee report from a number of parties, including the Greens, about intention—sometimes governments actually do things because they think they are the right policy. That may come as a surprise to cynical people, but that is what governments do seek to do. We reflected in the design that we put forward in this legislation the reality that a range of firms in different industries said to us, ‘We need you to consider the cumulative cost of the carbon price as well as the additional electricity cost as a result of the renewable energy target.’ It was with that in mind that we took to COAG the proposition: ‘Let’s use the broader base and the architecture of assistance that we have put out under the Carbon Pollution Reduction Scheme and in the white paper after long consultation with industry. Let’s use those thresholds and that architecture and on that build exemptions or partial exemptions and assistance for the renewable energy target.’ Those opposite may recall that that agreement was taken to COAG in April 2009 and that is what was announced then. I note that there was no outcry from any of the parties in this chamber when that was announced in the COAG communique.

The government is in discussions with other parties in relation to this issue. We announced last weekend an interim de-linking arrangement that provides some assistance to industry until the Carbon Pollution Reduction Scheme comes into place. I make it very clear that that is a less than perfect way of tackling climate change and a less than perfect way of delivering assistance to industry. We still believe the best policy approach is to reflect the CPRS architecture for assistance because that gives industry a very clear understanding of the cumulative cost and the cumulative level of assistance. That is why we initially proposed that, and we remain of the view that the best way of providing assistance is to build on that which was set out in the government’s decision on the Carbon Pollution Reduction Scheme.

Senator Milne has suggested, amongst other things, an increase in the renewable energy target to 30 per cent. Obviously, the government is delivering on a commitment we took to the Australian people at the last election which will deliver a fourfold increase by 2020. This is a challenge but it is achievable and affordable and, as I said, it will drive investment in Australia’s renewable energy sources, such as wind, solar and geothermal.

There has also been a suggestion that the RET, the renewable energy target, should be banded to ensure the deployment of less mature renewable energy technologies. I suspect this will be a live issue in the context of the committee debate. The way the government has approached this is to recognise that the scheme should encourage the deployment of renewable energy without picking winners within the target. The government’s modelling indicates that, due to the large size of the renewable energy target, it will in fact pull through a range of technologies, including wind, biomass, solar and geothermal. It is also the case—and this is important—that over time the carbon price will be the primary driver of renewable energy and will provide significant support over the next two decades in addition to the renewable energy target.

Our view is that there is a case, in terms of emerging renewable technologies, for other forms of assistance. We believe the best policy is to provide that assistance not via what is a market mechanism but via other policy mechanisms. I would refer those in this chamber to the 2009-10 budget initiatives, which include the Clean Energy Initiative, which includes about $1.5 billion to support R&D, research and development, in solar technologies and $465 million to establish the Australian Centre for Renewable Energy. This is on top of the previous election commitment that we made in relation to the Renewable Energy Fund. In combination with support under the renewable energy target, these policies will promote a diverse portfolio of renewable energy technologies.

There has also been discussion about a national feed-in tariff. I have had quite a number of discussions with Senator Milne on this issue. I recognise that it is the Greens policy. As I previously indicated, we believe that these are alternative policy mechanisms for promoting a renewable energy uptake. Obviously a renewable energy target sets a quantity of renewable energy as the target. A feed-in tariff provides a certain amount of support for specified technologies. We took a renewable energy target as our preferred policy option to the election and, of course, the Council of Australian Governments also decided in November 2008 not to implement a national feed-in tariff but to agree that jurisdictions could implement such schemes. A range of principles were agreed by COAG in relation to that, including whether or not such schemes would be funded on or off budget was a matter for those jurisdictions.

There has also been some discussion of the government’s decision to include waste coalmine gas in the RET. I emphasise this is intended as a transitional measure and is intended to underpin the viability of projects that have already been committed whilst maintaining the integrity of the renewable energy generation target by including higher annual targets to ensure no renewable energy is displaced. The government agrees waste coalmine gas is not a renewable energy source. We do not intend it to contribute to the 20 per cent renewable energy target by 2020. The amendments proposed by the government in this legislation will increase the annual targets under the RET for the years 2011 to 2020 inclusive to ensure the inclusion of this gas does not displace renewable energy generation. To clearly differentiate waste coalmine gas from renewable energy sources, the amendment creates a new concept of eligible energy source that comprises the current list of eligible renewable energy sources and separately eligible waste coalmine gas. Again, I emphasise, this eligibility will be limited. It will be limited to waste coalmine gas fuelled power stations currently in operation. Annual limits will be placed on these power stations’ ability to create renewable energy certificates based on their 2008 output levels.

To ensure the inclusion of waste coalmine gas under the renewable energy target does not crowd out renewable energy generation, the amendment will increase annual targets under the expanded RET Scheme for the years 2011-20. The target in 2011 will be increased by 425 gigawatt hours to account for the half-year of eligible generation and the annual targets for 2012-2020 will be increased by 850 gigawatt hours. Total eligible waste coalmine gas generation will be capped at 425 gigawatt hours in 2011 and 850 gigawatt hours for the years 2012-2020, equal to the amount by which the annual targets are increased under the renewable energy target.

In conclusion, the renewable energy target is part of the government’s economically responsible approach to tackling climate change and to moving Australia to a low-pollution future. It will drive significant investment, accelerating the deployment of a broad range of renewable energy technologies like wind, solar and geothermal. Through a single national scheme this renewable energy target will transform our electricity sector and ensure that 20 per cent of our electricity supply comes from renewable sources by 2020. But I again remind senators that, whilst this bill is worthwhile and whilst this bill is necessary to increase renewable energy in Australia, it is not enough and if we are to tackle climate change we need to do much more. I look forward to the Senate’s cooperation in that task.

Question agreed to.

Bills read a second time.