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Monday, 17 August 2009
Page: 8013

Mr RAMSEY (5:44 PM) —It is inevitable if man is to survive on this planet that we will have to wean ourselves off fossil fuel not only because of the imperative of reducing carbon emissions but because fossil fuels are finite and the oil shortages of last year underline just how this has become of increasing importance. I make the point from the outset that this Renewable Energy (Electricity) Amendment Bill 2009 will receive my support, even though I believe there are a number of unintended consequences, and I fully support the amendments foreshadowed earlier today by the shadow minister. I will come to that later.

Investment in the renewable energy sector promises to pay dividends in the longer term. This bill is designed to support what otherwise would be unlikely investment in these industries. It is of great importance that the shifts in the emphasis of the economy like this are orderly and steady and not placing our industries at competitive disadvantage. It is of immediate concern that this legislation be passed, as the renewable energy industry has been making decisions based on the publicly stated intent of the major parties. That is why the moves of last week by the government to link the RET bill to the CPRS were reprehensible and just a shot at short-term political advantage and overturned after pressure from the opposition and the electorate at large.

South Australia—and my electorate of Grey—is almost uniquely placed to take advantage of a new low-carbon world. Vast spaces with cloud-free skies offer an abundance of opportunity for solar energy electricity generation, and I am aware of at least two companies considering projects as we speak, including the innovative solar storage project by Wizard Power at Whyalla. South Australia currently has nine wind farms operating and it is anticipated that by 2014 it will have 20 per cent of its electricity generated by wind energy. Many of these developments are in my electorate. I know the current government would like to claim credit for all these developments, but in fact all of the investment decisions of the plants currently operating were made under the Howard government and its policy framework, which included the MRET. MRET was the first step and the renewable energy target is the next. New developments are being based on current policy, which in this case are broadly endorsed by the coalition, and there is much on offer.

Some of the most exciting areas of interest involve new technologies such as wave generation. Currently Wave Rider Energy are assessing possibilities on the Western Eyre Peninsula, where there is an almost unlimited resource. The Grey electorate encompasses 70 per cent of the South Australia coastline, and it should come as no surprise that I have great hopes for the establishment of this industry.

Perhaps some of the most exciting prospects are in geothermal electricity production. Last year I visited the Geodynamics site at Innaminka in the state’s far north where I was more than impressed by the prospects but, more importantly, by the vision of those who are driving the drilling and testing program and investing in this new industry, which is very close to bringing its first one-kilowatt generator on stream. Two weeks ago, I inspected Petratherm’s new drilling rig near Beverley in the northern Flinders where they are developing another hot rocks venture. It is a fascinating and exciting prospect: pumping water nearly five kilometres underground through fissures in hot granite and bringing it back to the surface at temperatures approaching 200 degrees Celsius is a technological marvel. This renewable energy represents the Holy Grail of clean energy as it is baseload. It is estimated that just one per cent of the thermal energy in Australia’s foundations could supply all of our energy needs for the next 300 years.

One of the great criticisms of renewable energy is its ability to supply baseload, that is, the wind does not blow all the time and the sun does not shine on one side of the earth all the time and even wave and tidal energy has lulls; thus, we need fallback power generation systems, which inevitably lead to higher total costs. There are a number of technologies being explored at this stage, including thermal carbon block and the ammonia battery process being developed by the Australian National University and Wizard Power at Whyalla, whom I mentioned earlier.

It is worth noting that, even though one may think from listening to the government’s rhetoric nothing had been done in Australia to stimulate investment in renewable energy before their election, in reality the previous government established the Australian Greenhouse Office and the mandatory renewable energy target, introduced solar rebates and supported numerous developments in the renewable industry. In my electorate alone, there was significant government support for both Geodynamics and Wizard Power in the development of their projects.

The legislation will help a number of these industries, but it also has some dangers in that the support may be soaked up fully by mature technologies which can quickly meet the targets when the aim should be to encourage new technologies to be able to come of age and compete in the marketplace. That is why the opposition will move an amendment stipulating that 25 per cent of the renewable energy target should be reserved for new and emerging industries, and I urge the government to support this amendment. The renewable energy credits or RECs will be most valuable at the start of the program and will deteriorate in value as 2020 and the 25 per cent target near. This 25 per cent will give protection to those industries through to that period and give the new industries the opportunity to start up and come on stream.

If we look at the possibilities of technologies such as solar or wave energy, there are likely to be quantum leaps in the efficiency or cost-competitiveness in these areas over the next 5, 10 and 20 years. It will be necessary to watch this space and make sure they do not miss out on the encouragement they need to advance their cause while the dollars run to industries which are fully mature but may be surpassed in efficiency in the longer term. It is all about balance. It is always dangerous for an economy to place all its eggs in one basket. This means we will almost certainly have to revisit the incentives to ensure we are developing balanced industries. It will be a threat to the competitive generation system, which must supply our industries and homes, if we have investment in too few of those industries.

This bill is about supporting and hastening that change. It should be remembered by all that this will come at a cost. After all, there would be no need for a renewable energy target if this were not the case. Certainly, the policy will make electricity more expensive in the short to medium term. However, the greater good should be served by providing a more favourable environment for new technologies to come on stream. Steady, predictable policy is good government. The recent move to, once again, make a sudden attack on the $8,000 solar rebate program, resulting in its premature termination despite its making a commitment to a seamless transition, was not good government by the government.

Its earlier attack, which introduced a means test, caused problems which took time to adjust to. Things had just settled down and business was brisk, only for the government to reintroduce chaos by cutting the program before the new renewable energy target could be introduced, despite its commitment. While it was true that there was a backlog in installation of panels, this unpredictable policy has created a complete stop in the sales system, leaving staff sitting around with very little to do.

In closing, I say renewable energies offer great opportunities for Australia and the world, and more will have to be done to support these fledgling industries. But the renewable energy target is a good piece of legislation, and I offer it my support.