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Thursday, 13 November 2008
Page: 73

Senator BIRMINGHAM (4:04 PM) —It is my pleasure to speak on the Renewable Energy Amendment (Feed-in-Tariff for Electricity) Bill 2008. I note, as I did earlier in the week in my contribution to the committee inquiry into the earlier, related bill on this matter, the initiative of Senator Milne and the Greens in introducing this bill and in pursuing this issue in such a detailed and persuasive way. I note that Senator Milne has since withdrawn the initial bill that was under consideration by the Senate Standing Committee on Environment, Communications and the Arts and has introduced this new bill reflecting some of the findings from that committee inquiry and a range of the evidence that had been heard during the inquiry. I recognise that Senator Milne has at every step attempted to produce the most workable piece of legislation possible.

The coalition, however, has concerns about imposing a national feed-in tariff scheme at this point in time. Those concerns are, firstly, as Senator Milne recognises, that we have a range of state initiatives around feed-in tariff schemes that have been developed over some period of time. We believe that a nationally consistent approach to the operation of feed-in tariffs would be worthwhile and is certainly worth pursuing. We recognise that the government has attempted to start that process. We would like to see that process move along at much greater speed than has been the case to date. We also believe that there is some justification for some further, clear modelling on exactly how feed-in tariffs should work, how they should work in conjunction with other renewable energy and climate change related policies such as mandatory renewable energy targets and the emissions trading scheme, and how to ensure that, perhaps through a Productivity Commission assessment, we get the right mix of approaches to encourage the renewable energy sector in Australia.

We on this side of the chamber certainly believe that the renewable energy sector is an important and worthwhile one to support. We have a record, from our time in government, of encouraging the development of this sector, particularly through the solar rebates program, which was much debated in this place, and through the initial introduction of the mandatory renewable energy target and other grants and measures to foster development in a range of different renewable energy technologies. I would like to acknowledge and recognise the fact that there is widespread community support for renewable energy. It is worth noting that throughout the community we have thousands of Australian families who choose to support renewable energy development either through their electricity provider or by taking direct action, such as the installation of a solar hot water unit or a solar PV to directly generate power in their homes. This type of enthusiastic embrace of renewable energy is to be commended. It shows the passion and support that Australians have for policies and measures that grow this sector.

And it is of course a very wide sector. The range of zero- or low-emission technologies that can be applied is vast. I recognise that this bill, as introduced by Senator Milne, attempts to cover a very broad range of technologies. It attempts to ensure that it is not limited to solar, solar PV or wind but includes the opportunities presented by tidal power, wave power, hot rocks and geothermal technology and a range of other opportunities for truly renewable zero-emissions energy technologies to be applied in Australia. We support all measures that can be done responsibly and economically feasibly to grow those energy sectors, and a feed-in tariff is potentially one such measure. I note that the government has said that it will pursue feed-in tariffs. Indeed, it was discussed at the COAG meeting on 28 March this year, and the communique issued from that meeting stated that COAG agreed to consider options for a harmonised approach to renewable energy feed-in tariffs in October 2008. Sadly, the October 2008 COAG meeting has come and gone and feed-in tariffs did not rate a mention in the communique for that meeting.

The opposition is very disappointed by the government’s decision not to have the discussion at that COAG meeting. We hope that they will take the earliest opportunity to discuss with the states how a nationally consistent feed-in tariff regime could be implemented in cooperation with all of the state and territory governments. As Senator Milne has acknowledged, most states have sought to implement some type of feed-in tariff regime. Most of them are net tariffs, although here in the ACT a gross tariff applies, and it is certainly generating strong interest in the renewable energy sector. I am very pleased to note that the new Western Australian Liberal government has committed to introducing a feed-in tariff regime in the west too. Bringing the states together to ensure we get something that is nationally consistent will certainly be of benefit to electricity retailers and suppliers and to those who sell renewable energy products to individual households. We urge the government to make sure that occurs at the next COAG meeting and that there are no further delays in the consideration of this important measure.

The Senate inquiry highlighted evidence of an Ernst & Young report that looked at Germany’s feed-in tariff model. The German model is held up as one of the best models in the world if one is to apply a feed-in tariff regime. I know it is the model on which Senator Milne has based much of the evidence for this bill. That inquiry led to the interesting conclusion that feed-in tariffs produced a lower-cost option to consumers for the generation of renewable energy than other policies such as Britain’s equivalent of our renewable targets—or RECs, as we have renewable certificates that are traded here in Australia. That is why the coalition believes that a Productivity Commission assessment of these policies would be worth while. It has highlighted the fact that feed-in tariffs could be a more cost-effective way to stimulate further growth in the renewable energy sector than further expansion of MRETs. I note that the Greens believe that both should occur and that they are complementary. They may well be complementary but, equally, it may be that one is a more effective and efficient means to deliver it than the other. So, rather than embracing every policy option, a responsible approach would be for us to get a very quick and sound economic assessment of the range of options and make sure that they are fully considered and that we choose the best path—be it one, some or all of the available encouragements for the renewable energy sector.

I reject the assertion in Senator Milne’s second reading speech that the opposition’s support for the COAG process is a deliberate action to delay the implementation of feed-in tariffs. We will continue to pressure the government to make sure that this is dealt with at the first available opportunity. We expect that the government, having stuffed around parts of the renewable energy sector—in particular, installers of solar PV—through the constant changing of rules on the solar grants, must provide certainty to that sector as soon as possible. This is a critically important issue for that sector. They do not know how long the current solar rebates are going to last. They do not know how long the government will keep funding them. They want to know what the long-term, secure option is.

As Senator Milne rightly points out, many of them are asking for a national feed-in tariff regime as that answer. Whether it is rebates, feed-in tariffs or whatever the answer may be, they need some security to make the investment decisions that are necessary to grow their businesses and, in doing so, grow this very important sector of the Australian economy. It is a sector that has enormous scope and opportunity, if we can get it right, to contribute to our economy in the future. There is no doubt that cost-effective renewable energy will be a vastly popular and embraced technology of the future if it can be delivered at the right price, with the right certainty of delivery, into households, businesses and elsewhere.

That, again, is one of the positive aspects of this bill, as Senator Milne has highlighted: the opportunity to encourage and stimulate development of renewable energies, not just in the household sector. Encouraging larger plants to be installed on commercial premises, in farms and elsewhere by providing an economic stimulus and a financial return to those people who chose to install them would be a very positive step.

At present, the rebate based schemes limit funding to individual households. They have had the effect of encouraging smaller systems to be installed. The means testing of the solar rebate has had the impact of systems shrinking even more. It is not rocket science: the cost-effectiveness of these systems will only be enhanced if larger systems are installed—be they on homes, on businesses or on a purely commercial scale—for the renewable energy that is generated. That should be the ultimate goal of installing the most cost-effective systems, which would most certainly be larger than they are currently under the means tested solar rebate scheme. Driving the desire for installing bigger systems across the economy would be one of the very positive effects of this scheme.

As I have indicated, it would support more than just solar PV, and that is something that future government policy decisions need to take account of. Indeed, solar PV, though attractive and widely embraced across the Australian community, may not prove to be the most cost-effective of renewable energies for us to drive home. We need a system that will encourage the development of the renewable energy sector on fair basis that ensures that whichever technology can most efficiently and effectively deliver baseload or surplus load power gets the necessary support to develop as fast as it possibly can, to turn into a true champion industry within Australia and one that we can highlight to the rest of the world. Be it wave, tidal, geothermal or hot rocks, wind, solar or solar PV—there are a range of options that should be pursued and encouraged.

The bill allows the feed-in tariff to be applied at different rates for different technologies. This gives the potential, applied correctly, for appropriate market mechanisms to be put in place to encourage development of the technologies that seem to have the greatest potential to become self-sustaining industries in Australia. The long-term aim for renewable energy has to be a sector that is not widely subsidised, ideally, but can deliver power for Australia and the world while standing on its own two feet. That needs to be the ultimate goal. Feed-in tariffs, when considered against all of the other policy options, have the potential to get Australia to that stage.

I note the enthusiasm of many submitters to the Senate’s inquiry into this proposal. BP Solar, one of Australia’s and the world’s largest solar energy companies, highlighted that this has the potential to address some of the market failures that hurt the development of renewable energy sectors. They said:

… if the objective is to create innovation to overcome the market failure that prevents long term carbon saving potential like solar from developing, then there is a justification for targeted intervention to differentiate between technologies - otherwise the cheapest, wind will predominate.

They have highlighted, importantly, innovation, the fact that these measures are about doing everything possible to innovate and grow these sectors as fast as possible, whilst equally highlighting that there are cost differentials in terms of the different expenses that it takes to produce electricity in these ways.

I note that the bill has been set up with a large degree of flexibility, something else that the government in its COAG discussions may wish to consider—flexibility to set different rates for different technologies, flexibility to reduce those rates as technologies become more efficient and cost-effective, and even flexibility for the minister to choose, as Senator Milne highlighted, to have a zero rate ultimately applied to some technologies.

In closing, I urge the government, as I did when addressing the Senate inquiry report, to act on these matters swiftly. The coalition is, in good faith, encouraging the government to pursue the COAG process. We do so because we believe that with the right encouragement the states should be able to apply a nationally consistent, coherent framework for the delivery of feed-in tariffs. We do not need this overarching Commonwealth legislation to mandate it; we should be able, with the willingness and cooperation of all, to get action, and swift action. But it requires Minister Wong, Minister Garrett and the Prime Minister to honour the commitment they made earlier this year that it would be addressed by COAG. Having already breached the time line that they set, they should have it addressed by COAG at the first available opportunity.

The coalition will not let go of this issue. We recognise the potential for feed-in tariffs, we are committed to the growth of the renewable energy sector and we want to make sure that the right policies are delivered as soon as possible for this sector. I know for sure that the Greens will not let go of this topic either. Should the government not fulfil its promise to address the introduction of feed-in tariffs swiftly, I am sure we will see this issue back before the Senate in no time. So the ball is in the government’s court, as they say, to make sure they deliver on this and deliver an outcome that will benefit not just the Australian environment into the future but, if we get it right, the Australian economy through the growth of a key sector, the renewable energy sector and all of the different parts that make that up.