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Tuesday, 4 November 2003
Page: 21951

Mr BARRESI (5:30 PM) —I rise to speak in this cognate debate on the Ozone Protection and Synthetic Greenhouse Gas Legislation Amendment Bill 2003, the Ozone Protection (Licence Fees—Imports) Amendment Bill 2000 and the Ozone Protection (Licence Fees—Manufacture) Amendment Bill 2003. Let us get one fact out of the way: these bills, which amend the Ozone Protection Act 1989, are good for the environment. They target responsible handling of hazardous materials and build on Australia's commitment to the Montreal protocol, which has worked to reduce the proliferation of chlorofluorocarbons, or CFCs as they are better known. Through these initiatives, we take one step closer to phasing out the ozone-depleting substance hydrochlorofluorocarbons—HCFCs—from our planet. We all welcome that development, and it is certainly one which the world community as a whole is right behind.

I wish to firstly address the key intention of these bills and then look at an annexure to this issue—that being the further transition in the natural refrigerant industry towards alternatives to ozone-depleting refrigerants. Because of the broad parameters of the bills, I will restrict my comments to one sector that is affected by these changes—that is, the domestic market, including cars, refrigerators and split system airconditioners.

These bills are necessary to ensure that Australia is consistent with international moves to reduce the potential harm caused by ozone-depleting substances. It is estimated by Environment Australia that a structured phase-out of HCFCs will take around 20 years to complete. The agent commonly known as HCFC R22 has been recognised as extremely harmful to the environment because of its global warming potential. As HCFCs are phased out there will be a greater demand for alternative refrigerants. At present that demand, caused by a shortage of supply, will be met by the hydrofluorocarbon industry. However, there is no legislation to regulate the way in which HFCs are sold, handled or manufactured. The core issue contained in these bills is the need to regulate the supply and end use of HFCs. As opposed to the current situation, importers, exporters, manufacturers or any handlers will be required to hold a controlled substances licence. In addition to being required to hold such a licence, the licensees will need to periodically report on the volumes of HFCs. Also, the sale of HFCs will be restricted to those who hold accreditation under the new arrangements. This is a move which the industry in general is totally supportive of.

It is proposed that the regulation be undertaken and administered by an industry board. I will address the issue of the board's composition a little later in my contribution. However, the framework for regulation needs to be provided for in a clear and concise way. That is why this legislation is welcomed by the industry, particularly by the representatives from my electorate whom I have spoken with on this issue. The need for control in this industry is particularly important when you look at the impact of HFCs on our daily lives. Given our climate, most new cars in Australia now have airconditioning as a standard as opposed to an optional extra. All office blocks, commercial buildings and increasingly new homes or renovations involve at least some part of the building being airconditioned. It makes sense, given the soaring temperatures in summer. But the way our airconditioners are assembled and the gas that is used to keep us cool are rarely thought about by consumers. I doubt whether many consumers when turning on their airconditioners consider the impact it has on global warming. The same may be said when a driver turns on their car's climate control.

In the case of the auto industry, HFC is the most commonly used gas to charge the airconditioners' cylinders. This may be done locally or offshore, depending on the make of the car. These bills will ensure compliance. For example, vehicle manufacturers will have to comply with regulations that ensure refrigerant gases are being handled in a safe manner and, furthermore, that all precautions are taken when it comes to the assembly line. The same duties are borne by importers of vehicles with precharged airconditioners. So the scope is very broad.

Whilst the focus is on what is regulated there is some consideration given to what is not regulated. I think it is important to note this distinction, because it highlights some of the fine work being done by one organisation which has premises in the outer eastern suburbs of Melbourne and which has been a leader in the industry over the last 10 years.

The proposed legislation by implication is expected to encourage the use of alternative methods of refrigeration—primarily natural refrigerants. There are five official natural refrigerants. We do not need to be physicists or chemists to understand that they are air, water, carbon dioxide, ammonia and hydrocarbons. It is the last of that group—hydrocarbons or HCs—that I wish to focus on in the context of natural refrigerants and in the context of this debate. This is not a debate or an argument which the HFC industry, dominated by one or two global business powers, is willing to have. It is not a debate which the current HFC industry even wants us to engage in, because there is a monopoly that is taking place out there by this industry.

Interestingly, Australia does not produce any HFCs at home. We import all of the HFCs required to service the refrigerant industry. On the flip side, hydrocarbons, or HCs, are the only natural refrigerants that we export at the moment. One firm alone, HyChill, based in Kilsyth, Victoria, exported 100 tonnes last year, and the company is currently gearing up for 1,000 tonnes next year. The founder and managing director of HyChill, Mr Colin Spencer, has been a long-time proponent of the natural refrigerant industry. Obstacle upon obstacle has been placed in his path—originally by fraudulent advertising campaigns supported by then New South Wales Minister for Consumer Affairs Faye Lo Po', when we saw TV footage of cars exploding.

Other obstacles have also been placed in his path by the fluorocarbon industry, and allegations have been directed to the ACCC of misleading advertising. As well, there has been domination—in shutting down any other alternatives—by the big player. We know that the industry is highly dominated by one player that is monopolising the imports into this country. When you consider that, obviously there is a vested interest because there is no domestic manufacturing of HFCs in this country. To his credit, Colin Spencer, through HyChill, has nevertheless gone on and grown his business. He now exports to India, China, Turkey, Thailand and Taiwan. Interest has been expressed by a number of other countries, and the figures speak for themselves in terms of the environmental impact.

The key comparative is global warming potential. Three thousand tonnes of HFCs yields a global warming potential of 3.9 million tonnes. Yet, for the same output, you can use 1,000 tonnes of hydrocarbons, which have a global warming potential of 3,000 million tonnes—so a third of the weight and a third of the global warming harm. In addition, I am told that there is a 20 per cent increase in efficiency when hydrocarbons are used, as compared with other refrigerants. In another context, it takes approximately 750 grams to charge a standard passenger vehicle's airconditioner using hydrofluorocarbons, but it takes just 250 grams to charge an average car's airconditioner using hydrocarbons—once again, one-third of the weight required of HFCs but 20 per cent greater efficiency. This is good news for a locally manufactured product that is being exported right around the world, with increasing interest by the Chinese, Indonesian, Thai and Indian governments. Furthermore, I am advised by HyChill that, in one trial, the use of hydrocarbons in a Ford passenger vehicle led to a 15 per cent reduction in exhaust emissions.

There are other issues at play in this debate which get more into specifics, such as the way the components of compressors are assembled and the way that seals and hoses respond to hydrocarbons versus hydrofluorocarbons with one particular oil compared to another. This is quite important to note because there have been a number of trials by HyChill that quite clearly indicate the benefits of taking the time to fully explore options in this sector. HyChill developed a synthetic oil that effectively lubricates the seals within an airconditioning system that help to avoid leakage and a disruption to the system. Not only does this lead to an overall increase in efficiency; it also reduces the waste and pollution associated with the leaking of ozone-depleting substances into the atmosphere. The various compositions of the oil and its mechanics can become quite complex. Needless to say, there is plenty of support for a move away from the mind-set of the status quo for the sake of the status quo, regardless of how persuasive the Australian Flurocarbon Council may be in this debate.

I think it is also worth noting that the push towards natural refrigerants is not isolated to Australia. I note the member for Prospect referred to the US being a leader in banning CFCs and ozone-depleting substances over 20 years ago. Yes, they have banned CFCs, but so have most of the other developed nations in the world through the Montreal protocol. But the United States, in particular, has been very slow off the mark in accepting natural refrigerant gases. That is because of the dominance of the HFC industry in the US, led by the DuPont organisation.

There has been a conscientious effort throughout Japan and Europe to opt for HCs rather than HFCs for refrigeration purposes, particularly in the domestic industry. Countries such as Japan, Sweden, Holland, Norway, Denmark and Germany are at the cusp of this process. They are all introducing phase-out dates for HFCs. So the global trend is towards one of sustainability and efficiency—attempting to strike the balance of less harm to the environment and cost minimisation for business. We are moving part of the way there, but a lot of nations in Europe have stepped even further ahead by moving to HCs in commercial and domestic refrigerant applications, in particular, and also in the automotive sector. In other industries, DeLonghi have moved to using HCs as a natural alternative to HFCs. Similarly, Toshiba and Hitachi have adopted hydrocarbons for 94 per cent of their refrigerant products.

Briefly, in other contexts, Nestle have successfully tried the use of ammonia and carbon dioxide in food processing; Coca-Cola has vowed that its automated drink dispenser technology will be HCFC- and HFC-free by the Athens Olympic Games next year; and Toyota has been investigating the possibility of using a carbon dioxide heat pump for its passenger vehicles' airconditioning. They are some of the developments at the global level. However, as is abundantly clear, we have to crawl before we can walk. I trust that we too in Australia will one day move to phase out HFCs and move towards a natural refrigerant which is a domestically manufactured product.

This proposed legislation before the House also provides for the creation of an industry board which will have the coordinating authority to grant and basically administer the licences. In terms of how that board is composed, I would hope that all segments of the industry are represented in some way to ensure equity and full representation. It has been suggested to me that there is a need for training institutions, various associations and councils to join with the Australian Fluorocarbon Council to form the industry board rather than being shut out of the council and being dominated by the fluorocarbon industry on its own.

I am unaware of where the government sits with the composition of the board, but I trust that will be something that will be addressed and thoroughly considered in due course by the minister. I would propose that progressive policy dominates the board's composition so that the industry is broadly represented. I would hope that, in addition to the Australian Fluorocarbon Council, we would have organisations like the Refrigeration and Air Conditioning Contractors Association, the Institute of Refrigeration Airconditioning Service Engineers, the Air Conditioning and Mechanical Contractors Association, the National Refrigeration and Air Conditioning Council, TAFE institutes, heating and cooling associations of Australia, perhaps a representative of a national environmental organisation and a consumer representative to ensure a fully representative body overseeing the registration and administration of these important licences.

I agree with the remarks from the member for Cunningham that there are alternatives that may be better for the environment. However, contrary to the member for Cunningham's claims, this bill does have a direct impact on the natural refrigerant industry. As Milton Catelin, the Director of Ozone Protection for Environment Australia, said around 12 months ago, `If it doesn't deplete the ozone layer, and if it is not a global warmer, the Commonwealth won't be regulating it.' Therefore, the message for large multinational companies is: if you want to avoid regulation imposed by this legislation, investigate the viability of natural refrigerants. The passage of this legislation will ensure that Australia is taking a step in the right direction and will possibly encourage manufacturers and big business to opt for natural refrigerants.