Department of Industry, Science, Energy and Resources

[11:50]

CHAIR: We will recommence. I now welcome the Secretary of the Department of Industry, Science, Energy and Resources, Mr Fredericks, and officers. Mr Fredericks, do you have an opening statement?

Mr Fredericks : I do not have an opening statement, but can I just say one thing about the session that we are about to embark on—the general questions session, just as an alert through you to the committee. Because of the breadth of the potential questions across effectively two groups in the department, we've done our best to have proper representation here for that. I would ask you to bear with us as we locate the appropriate officers. Just to alert, there may be some instances where, because of COVID restrictions, right now we don't have our full complement of officers needed to deal with particular issues. In those instances, it's likely that we may ask for those questions to be moved to the particular outcome in which those questions would otherwise lie. Thirdly, just as an invitation, if we can give any guidance upfront for where questions should go in terms of outcomes, we're very happy to do that at this stage as well if that would assist.

We'll play that by ear and see how we go.

Senator McALLISTER: I wanted to ask about the Energy Efficient Communities Program.

Ms Evans : Senator, that's an outcome 3 question. Do you want to ask about it now or wait until that part of the program later today?

Senator McALLISTER: To be honest, most of the questions that I have are—I might just proceed here. I don't have a lot for this section, so we might go with it and see how we travel. Originally, the Energy Efficient Communities Program—when announced, the indication was that it would deliver $50 million of grants to assist business and community organisations to improve energy efficiency practices and technologies. In April Minister Taylor wrote to parliamentarians saying that the government would launch a grants program as part of a $40 million Energy Efficient Communities Program. What—when was the decision taken to reduce the value of the program from $50 million to $40 million?

Mr Sullivan : Thanks for the question. I think we'll have to come back to you at 5.30 just for the exact details of that. My recollection is there was a reduction of $50 million to $40 million as part of the last budget. But I'll have to go back and check because my information is really about the spending of that $40 million and then the additional funding that's been allocated to energy efficiency in the most recent budget. But, in terms of the Energy Efficient Communities Program, the $40 million is providing grants to community organisations and businesses. There's $10 million of that which is the dairy component of it, but in terms of whether there was a reduction from $50 million to $40 million, can I report back to the committee at 5.30?

Senator McALLISTER: Is the position, Mr Sullivan, that the officers with detailed knowledge of the program will be here at 5.30?

Mr Sullivan : Yes.

Mr Fredericks : Senator, the questions are asked in outcome 3.1. We effectively have our most senior representatives from that group here. But we haven't got all of the relevant officers because of the COVID restrictions on space and on an understanding that those questions would be asked in outcome 3.1. Perhaps a compromise, Senator, is that you might wish to ask your questions and we can take them on notice so that we know what to come back with later in the day.

CHAIR: Senator McAllister, that was agreed as part of managing the movement of people throughout this estimates because of COVID.

Senator McALLISTER: No, I appreciate the difficulty. I'm just trying to make an assessment about what's going to work best. I might proceed, because I am interested in—most of the questions that I'm taking answers to are questions that I think relate to decisions of government and should be things that either the minister or the deputy secretary can deal with. I'll leave the questions about implementation detail until later in the afternoon. So, at some point, a program which was announced as a $50 million program turns into a $40 million program. A decision is made, as I understand it, that there will then be $10 million for dairy farming businesses, $9 million for small businesses and $15 million for high energy using businesses. When was that decision taken, Mr Sullivan?

Mr Sullivan : The $10 million allocation for dairy industries was part of the election commitment, so it wasn't a subsequent decision to the allocation of $50 million. The allocation of the remainder of the $30 million would have been a decision of government through the development of the program around how the $40 million would be spent in terms of process et cetera.

Senator McALLISTER: When was that decision made, Mr Sullivan?

Mr Sullivan : I'd have to take that on notice and get back to you at outcome 3.1 in terms of that time line. That would have been taken—it was after the election, but we can come back to you with the time line. I don't have the time line in front of me. I admire your confidence in me that you think that I would have this detail in my head, but unfortunately, Senator, I don't.

Senator McALLISTER: Yes, but you have a lovely big brief. Okay. Tell me about how the process worked to get to a point where the allocation of the $40 million was able to be made. So, accepting that you don't know when exactly, who was involved? Was it a departmental process or a cross-departmental process? Did it out of the minister's office? How did it work?

Mr Sullivan : In terms of the grants process, on 2 April 2020 a round opened for community organisations for grants of up to $12,500.

Senator McALLISTER: Sorry, can we go before that. At some point, it goes from being a program which would deliver $50 million of grants to businesses and community organisations to one which has a quite specific internal allocation to dairy, which is an election commitment, then $9 million for small business and $15 million for high energy using business. When did that internal allocation get made and how did it get made?

Mr Sullivan : That's the time line I don't have in front of me. That's the one I've agreed to take on notice and report back on at 5.30 in terms of the time line leading up to when grants opened for particular streams of the program.

Senator McALLISTER: Okay. This program was marketed as predominantly for community groups such as—and the materials that were produced at that time and distributed, in this fact sheet, talked about Men's Sheds, community-owned kindergartens, welfare centres, community centres, women's associations, childcare centres, community football and netball. It was a very community-focused marketing decision. In the end only $3.775 million and less than 10 per cent of the funding is being spent on community. What is the policy rationale for that?

Mr Sullivan : Sorry, Senator, the $3.75 million—can I ask what the reference is to that figure?

Senator McALLISTER: Sorry?

Mr Sullivan : The figure you just gave of $3.75 million being allocated to community organisations.

Senator McALLISTER: That was contained in the correspondence from Minister Taylor to parliamentarians. He said that this grant opportunity will deliver up to $3.775 million in grants. He wrote that letter on 1 April to parliamentarians.

Mr Sullivan : In terms of the first round. In terms of the question, I think, Senator, you're asking me when did it shift from just community organisations to community organisations plus the business plus high energy using business plus dairy farms. I think I've given part of that answer in terms of dairy farms being part of the original election commitment in terms of component of money. My recollection is that the original intent of the Energy Efficient Communities Program was to provide grants for both community organisations and businesses to improve energy efficiency practices. So that element of—and we'll take the figure on notice as to how much has gone in terms of funding awarded—

Senator McALLISTER: You don't need to take it on notice, Mr Sullivan. I can table the letter that—

Mr Sullivan : No, I'm not questioning your figure. My colleague has just given me the $3.775 million as a community organisation component and the small business and high energy components of that. In terms of when—I think the question that you're asking, Senator, is when was that split decision made, which we've taken on notice, and what was the rationale for it. We'll come back to you.

Senator McALLISTER: Okay. I think I will table this email from Minister Taylor to parliamentarians if I might, because it just might assist in the conversation. So Minister Taylor, in fact, on 1 April is writing to parliamentarians letting them know that this grant has opened and that just under $4 million will be available to communities. My question is: what is the policy rationale for restricting community access to this grant program to less than 10 per cent of the total program funding when the original marketing of the program was as one that would be focused on communities and community organisations?

Mr Sullivan : In terms of the original rationale for the program, it was both for community organisations and for business. Government has made a decision in terms of the allocation of the $40 million for the program for around $4 million for community organisations, because there were two tranches of that—one was commitments that were made during the election and then, subsequent to that, $10 million was made for dairy farming businesses, which, as I said, was consistent with the election commitment. Then small businesses were then allocated the $24 million. So—

Senator McALLISTER: Yes, I'm conscious—I am aware of the allocation. I'm asking for the policy rationale.

Mr Sullivan : It's a decision for government in terms of—

Senator McALLISTER: Well, it's not a decision for government. Governments are usually inclined to explain their decisions and the policy reasoning that underlie them. We don't just hand out money willy-nilly. Generally, governments are willing to explain the decision-making. You are a senior official in the government. What is your understanding of the basis on which less than 10 per cent of the funding was allocated to community groups?

Mr Sullivan : I can answer that in another way—the only money that's actually been allocated so far and completed is that for community organisations, of which $3.3 million has been allocated under the program. But, in terms of whether high energy using businesses, small business, dairy farmers and community organisations meets the original intent of the program, I think it does because it was for community—

Senator McALLISTER: I'm not asking about that. I'm asking what is the underlying reason for allocating such a small part of the program funding to community and the vast bulk of it to business? Is there a reason or any thinking behind it? Can it be explained?

Mr Sullivan : Can I take that on notice? This is where I—I'd like to go back and look at the rationale. But those commitments in terms of those amounts are consistent with the original intent of the program.

Senator McALLISTER: I'm not asking about consistency. I'm asking for an explanation of the program.

Mr Sullivan : I don't think I need to give you an explanation—

Mr Fredericks : Senator, given that qualification I made at the start and given the specificity of that question—and, in fairness to you, you're right to get an answer to that question—I think, if we could, the better process would be for us to take that on notice and for us to come back with an answer when relevant officials are here in outcome 3.1.

Senator McALLISTER: Okay. Can I—

Senator Birmingham: Senator, I think that's reasonable.

Senator McALLISTER: Can I give you an indication now that when we come to that section of the program at 3.1 I intend to ask detailed questions about this program and the set of decisions. I want to understand time lines, I want to understand who was involved and I want to understand the correspondence that took place between the minister's office in the department, and I expect that officials, having now hours of notice to prepare for that, will be in a position to provide the relative information at half past five.

Mr Sullivan : Senator, I'm sure officials will do their best at the appropriate time scheduled to deal with that. I do—I was just trying to look up some background whilst you were talking and I note that back in February 2019, when the program was announced, in the lead paragraph of The Guardian's news story about the program at that time, it talked about grants for businesses and community organisations. So it was clear at the outset in terms of the fact that it was going to be supporting businesses. But you've asked some detailed questions about the carve-up and the timing of decisions around it and I'm sure officials will do their best to address those at the right point in the program.

Senator HUGHES: I've just got a couple of questions. I was just interested to know if I could get a bit of an overview of what exactly is likely to happen in light of—today, power prices seem to be falling, but what's likely to happen to power prices in New South Wales if the Liddell power station were to close and we weren't able to adequately replace the capacity that it currently provides to the grid?

Senator McALLISTER: Do we normally answer hypotheticals, Chair?

Senator Birmingham: Senator, again, I will be guided by officials as to whether we've got the right people to answer the questions, noting we are still in general questions to the department. We are. I note the point, though, about hypotheticals. Perhaps questions about what modelling or things have been done may be appropriate. But I'll leave Ms Parry to answer what is appropriate.

Senator HUGHES: Well, it is to close and we are without adequate replacement, so—

Mr Sullivan : Senator, thanks for the question. I will throw to Ms Parry, but this was the subject of work that was undertaken, so it's not necessarily a hypothetical. The Liddell Taskforce, which was a combined effort with New South Wales officials, provided its final report to government, and part of that work was modelling that looked at the closure and scenarios around Liddell. The Liddell Taskforce took into account the reliability issues around what was the gap in reliability in terms of when Liddell drops out of the market and how that's going to be replaced but also the impact on price from the closure of Liddell, taking into consideration the lessons learnt from Hazelwood—the closure of the Hazelwood power station. Ms Parry, perhaps you can go into a bit more detail about the price impacts.

Ms Parry : What the task force found, particularly from the lessons learnt after the Hazelwood closure, was that the modelling indicated that under a no-replacement scenario—so if Liddell exited and nothing else or no other dispatchable generation came into the system—annual average New South Wales wholesale prices would remain close to or above $80 per megawatt hour for the remainder of the decade as other plants close as well. So what the modelling indicated was that there was no replacement capacity and that that had the potential to have quite a significant price impact. As Mr Sullivan has indicated, the government, in its response to Liddell closing and, in particular, is looking at not only dispatchable generation to replace capacity but also taking into account AEMO's electricity statement of opportunities and supply potential shortfalls post Liddell closing, looking at the impacts on affordability and ensuring there is enough dispatchable capacity in the market to address system security and strength issues, to address pricing and affordability issues and to ensure adequate supply. That was some of the thinking behind ensuring that incentivising dispatchable capacity to come into the market in a post-Liddell world.

Senator HUGHES: Following on from that, looking at alternative sources, there's been a number of regions that have been suggested as potential locations for regional hydrogen export hubs, including the Hunter region, obviously, where Liddell is. What kinds of things make a location attractive for this sort of hub, do you think? Do you think things like ports and proximity to larger cities and world-class universities would support the development of such a hub?

Ms Parry : I may need to turn to my colleagues to talk a little bit more around hydrogen in particular if your questioning is going more towards hydrogen. We might just do a swap.

Ms Munro : Thank you for your question, noting the recent announcement by the government of the $72.2 million for the regional export hub. You're right—the creation of a hydrogen hub was explored in Australia's National Hydrogen Strategy. It does look at how you make efficient use of infrastructure and supply chains. It is about the clustering of companies that can use hydrogen for industrial uses. So that can be used, as hydrogen, as a feedstock for heating or generation but also, when we are thinking about some of the opportunities into the future, then the export arrangements and some of that storage. It also does actually extend out to regions that may be looking at hydrogen to blend into gas networks as well as how you think about it for some of the heavy vehicle future mobility options. So, again, it's a pretty exciting time to be able to investigate those options and look at international research partners and then also that export, but fundamentally at opportunities to create new jobs in different regions.

Senator HUGHES: Thank you.

Senator McALLISTER: I might follow on with some additional questions about the Liddell Taskforce. I understand that that report was released on 16 September this year. When it was originally announced it was anticipated that it would be delivered in late 2019. Why the delay?

Mr Sullivan : In terms of why the delay, that was the time it took to do the report. As I said, it was done with significant consultation with stakeholders. It involved complex analysis both with AEMO and independent modelling and also working with the New South Wales government to come to a final position with recommendations that both governments could then take away.

Senator McALLISTER: So when the minister put out a release announcing this Commonwealth-led task force—that's correct, it was Commonwealth led?—and said, 'a report and recommendations expected to be delivered by late 2019', had you advised the minister that it should be possible to do it by late 2019?

Mr Sullivan : At that point I wasn't the chair of that task force; my predecessor was. I imagine that advice would have been given that that was possible. Because it was late, you can basically assign that failure to me as the chair for not delivering on time. But it is what it is in terms of the time lines, and we delivered what we think was a quality report that, as I said, was highly complex.

Senator McALLISTER: Did anything change, between the announcement, in the external environment that meant that the original estimation about how long it would take to do the work was out by 12 months?

Ms Parry : It wasn't out by 12 months, Senator. The final report was delivered in the first quarter of 2020 and was released on 24 April 2020. So there were a couple of months of slippage at the beginning of the year. I would also add and just recall that there were significant bushfire events that were happening during that time as well and that did affect some of the consultations. As Mr Sullivan indicated, a lot of complex modelling, consultation and thought went into report. So to have it slip by couple of months probably isn't unusual.

Mr Fredericks : And my recollection too is that the impact of COVID, when it hit hard from February, also had an impact on capacity to do those consultations as well. I think that's right, Ms Parry?

Ms Parry : It was during the first quarter of 2020. As you can appreciate, there was a bushfire event and a machinery-of-government change followed by a pandemic. So the confluence of events, I would say, lent itself to the report being a few months late.

Senator McALLISTER: I think you just said that the report was delivered to the minister in the first quarter of this year. What date was it provided to the minister?

Ms Parry : I'd have to take that question on notice, Senator. I don't have the exact date that it was submitted, keeping in mind that it was submitted to both governments—to the New South Wales and federal governments. I can take that question on notice and come back to you with that level of detail this afternoon.

Senator McALLISTER: But it was the first quarter of this year?

Ms Parry : It was released on 24 April, so it was submitted to the governments prior to that.

Mr Sullivan : My recollection, Senator, is that it was during March, but let's come back to you on that.

Senator McALLISTER: Okay. My advice is that the report was released on 16 September.

Ms Parry : The report was not released on 16 September. The report was released on 24 April 2020.

Mr Sullivan : Sorry; 16 September this year, Senator?

Senator McALLISTER: Yes.

Mr Sullivan : No.

Senator McALLISTER: Okay. I'm looking at the energy.gov.au website. Right—what's been released is the response to the task force in September. Is that correct?

Ms Parry : That I will take on notice as well, Senator. I believe so. It doesn't have a date in terms of the response. So can I take that on notice on the time between when the public report was released and the response?

Senator McALLISTER: Okay. I wanted to ask you about the stakeholder reaction to the report and to the government's response to the report. Have you received any feedback about the report from industry?

Ms Parry : We obviously did a lot of consultation—and I can detail the consultation, if you like—during the duration of the report or during the community and stakeholder consultation phase. Post it being released, we didn't kind of undertake any formal consultations to gauge reaction, but there is nothing in my memory that kind of stands out that says stakeholders reacted strongly one way or another. There was a lot of interest in the report, as you can imagine—it was quite an anticipated report—but there's nothing that stands out in my mind as being a particularly strong reaction one way or another.

Senator McALLISTER: The report says that the government should provide as much certainty as possible and address other non-market barriers to enable replacement projects to be delivered on time. The government has indicated that it supports that recommendation. It goes on to say that the government is giving the market until April 2021 to commit to a final investment decision for new dispatchable capacity. The Australian Energy Council, which represents the major investors in the sector, has issued a public statement saying that the federal government's plan to develop a gas-fired power station in New South Wales if alternative private investments are not made risks deterring the very investments the government is attempting to encourage. The Chief Executive, Sarah McNamara, says, 'The sector is struggling to make final investment decisions in an environment of ongoing policy uncertainty.' Is that pretty much consistent with the advice that you received in general from industry, Ms Parry?

Ms Parry : Senator, there are a couple of things I would note in terms of the government response and particularly the 1,000 megawatt target. I think that's exactly the type of certainty that the government are providing to the sector, indicating that they have set a very firm target by a very firm date in which they are seeking to see final investment decisions come forward in order to fill that gap left in the market that is anticipated on a post-Liddell closure. So being very clear about what the target is, the criteria by which they would agree to that target being met and a very clear date provide that very strong signal.

Senator McALLISTER: I've sat on quite a number of inquiries and had industry come before us to provide evidence about the Australian electricity market. The advice is very consistent, which is that the policy uncertainty is inhibiting investment. Part of that uncertainty is an uncertainty about government's role and the role that the federal government intends to play in the market. Do you accept the AEC's view that the government's plan to intervene in the market and to directly invest risks deterring the very investments that the government is attempting to encourage?

Ms Parry : Senator, I would point to two things. One is that the government has also been very clear that, if the private sector steps up, the government will step back. In the post-Liddell and a New South Wales specific example, they've set a very clear target by a very clear time frame, and the Prime Minister and the minister have indicated that, if the private sector steps up, there would be no need for government intervention. I would also note that there's been no dispatchable capacity that's been brought on in New South Wales since 2009.

Senator McALLISTER: So you reject the Australian Energy Council's position?

Ms Parry : We hear the different views from all sorts of stakeholders, but I would also countenance the fact that, again, the government have set a very clear direction. They're not being unambiguous about the expectation that they're setting for the private sector. They have indicated that they think that the private sector has the capacity to step up and fill that target but that, if they don't, the government is prepared to step in.

Mr Sullivan : This is driven by two things—

Senator McALLISTER: Sorry, Mr Sullivan; I am conscious that the chair will start winding me up soon, so I wouldn't mind just getting through these questions. The Australian Energy Council is a serious participant and a serious representative of the industry. The council represents 21 electricity and downstream natural gas businesses. Shouldn't their view about what creates investment uncertainty in the market be taken seriously?

Mr Fredericks : To be fair, I don't think anything Ms Parry has said would suggest that we wouldn't take the views of the council seriously. As both of the officers have pointed out, there was extensive consultation on the Liddell report over a long period of time, including with a range of stakeholders. So, from a departmental point of view—and here I'm talking about both our department and the New South Wales department—I think we treated very seriously at all times the views of stakeholders, as you would expect us to do. At the end of the day, this department is fully seized of the necessity to give maximum certainty to the market. We are very conscious of that. To reinforce what Ms Parry has said, at the end of the day, our view and the government's view is that the response that's been announced to the task force—and, in particular, the specificity that's been described by Ms Parry—very much gives the market the certainty that they need. So we are very respectful of views. We take them all into account. At the end of the day, as you would expect, we form judgements based on our professional advice and advise government accordingly.

Senator Birmingham: Senator, the task force report found that wholesale prices would rise if the dispatchable capability from Liddell was not adequately replaced. The government, in responding to that report, has set out, as Ms Parry has made clear, a very firm target in terms of what needs to be replaced, a very clear time line in terms of investment decisions and when we need to ensure they are made around replacement of that dispatchable capacity, and, in doing, so has provided real certainty around process leading up to the closure of Liddell. I'm not sure what you're suggesting the alternative path would have been—to simply just let the market run and see what happens? And yes, of course, the consultation process engages with the wholesale providers in this instance and many others, but there has clearly been an equally positive response from energy users and from others to the government's response. I note that AEMO, for example, were quoted as saying they welcome the commitment to ensuring that there is sufficient dispatchable capability if the market is unable to deliver it. So, yes, you can quote one part of concern elsewhere. Energy users like Tomago were very glowing in terms of recognising the certainty that the government's actions are providing.

Senator McALLISTER: So when the council says, 'For more than a decade we've been warning of the dampening effect state and government interventions have on investor confidence', your answer is to threaten more intervention?

Senator Birmingham: Senator McAllister, I don't characterise it as a threat. The government has simply outlined what we believe in terms of ensuring wholesale prices are kept as low as possible and reliability as secure as possible; and what we believe is necessary and the actions the government will take if a market failure occurs that risks those premises of affordability and reliability.

Senator McALLISTER: Can I ask the department to just review their evidence in terms of the timing of the public release of the Liddell report?

Ms Parry : I have, Senator. The report was released publicly on 24 April 2020 and the government response was released on 15 September 2020.

Senator McALLISTER: By what means was it released? Was it published on the website at that time?

Ms Parry : Yes, it would have been.

Senator McALLISTER: When you say, 'it would have been', that's a kind of contingent statement. Was it or wasn't it?

Ms Parry : I can take that on notice, but generally the way that we release reports is to put them on energy.gov.au and it would have been likely on the New South Wales website as well, but that I need to double check.

Senator McALLISTER: Okay. So the industry had it at that time from April?

Ms Parry : It was publicly released on 24 April.

Senator McALLISTER: Okay.

Mr Sullivan : Senator, can we check that? I think I misled you before by saying the report was finalised in March and it was finalised with New South Wales colleagues on 24 April. In terms of its public release, its public release was on 15 September.

Senator McALLISTER: I see.

Mr Sullivan : We were confused around when it was provided—and apologies for that—to ministers and when it was publicly released.

Senator McALLISTER: Okay. I asked a series of questions about delay. You said to me that it only slipped by a couple of months. Let's go back to that sequence of events. So there was a report that was commissioned and was supposed to be finished by December. For a range of reasons, including some of the ones Ms Parry described, including COVID interrupting the operational activities of the department and the consultation process, it wasn't able to be completed on time. But, nonetheless, it was completed within the department by March and then finalised with New South Wales colleagues by April. It was not publicly released until September. What happened between April and September?

Senator Birmingham: The report was delivered to government in April. As is not unusual, the government worked on its response to the report between April and September.

Senator McALLISTER: I bet it did. What were the issues the government was working on in terms of its response to the report, Minister?

Senator Birmingham: The actions and settings the government would implement, which—you were just questioning some of those in terms of the announcements that were made.

Senator McALLISTER: Right. I think we might come back to this. I am interested in further exploring the government's broader approach to interventions in the market, so we might come back to this question. Thank you.

Senator WATERS: I have some questions about the UNGI program. At last estimates you confirmed that you hadn't advised the owner of Delta electricity, Trevor St Baker, that he had won a grant under the UNGI scheme, despite his being reported in the Daily Telegraph as saying that he had received $11 million; you confirmed that you hadn't told him at the time. What investigations have been undertaken to ascertain how Mr Trevor St Baker was in receipt of that information?

Mr Fredericks : Chair, this is where we confront this difficulty with the concept of general questions. That question is fairly and squarely in outcome 3.1.

CHAIR: As per the earlier discussion, the committee agreed that detailed questions would be dealt with when the appropriate officers are here during the outcomes, to manage the COVID risk. Perhaps outline your question, Senator Waters, so that officers will have plenty of time to give you a quick and succinct answer when they come back later.

Mr Fredericks : In fairness to you, Senator, I don't think you were here when I said at the start that, because of the COVID restrictions, we don't have here currently all of the necessary officials in outcome 3.1.

Senator WATERS: You don't have the 3.1 folk here at the moment?

Mr Fredericks : That's right. So we have suggested as a compromise that, if you wish to ask your questions, we will take them on notice to come back to this evening.

Senator WATERS: I will do that, but I have a bulk of questions in 3.1. I had hoped to canvass some of those issues here, and I did genuinely think that they belonged in 'general'. So I will give you a flavour now, and hopefully that will expedite the answers later.

Mr Fredericks : Yes.

Senator WATERS: I am interested in how Mr St Baker knew that he had got money, even though the department hadn't told him. Who else knew, or could have known, of that information who may have then told Mr St Baker? I am interested in how much the grant is. It was in the budget papers last week and there is no breakdown. He said $11 million, initially; how much does the budget allocate?

Mr Fredericks : We will come back to you on that.

Senator WATERS: Thank you. If there's a difference in the figures—and it looks to me that there might be—why is there that difference; how do we explain that? My other questions are: how come this is the only UNGI project with funding locked in, and will the upgrade extend the life of the Vales Point coal plant? A mainstream media report at the time found that the average cost to government of batteries was 20 per cent lower, so why was that not funded instead of this coal plant handout?

Mr Fredericks : Yes.

Senator WATERS: It's reported that they'll still need to submit a grant application. What criteria will be used to assess that grant? Will there be emissions reduction criteria? Will anyone else be able to apply? Also, will the department seek a guarantee from Delta that it will not increase generation or extend the life of the power station, given that both those things would wipe out the emissions reduction impact of any turbine upgrade?

Mr Fredericks : Thank you for that.

Senator WATERS: They are my UNGI questions.

Mr Fredericks : We'll be back at 5.30 pm to deal with that.

Senator WATERS: I have some other questions which belong in 'general' but they're brief. They are about the National Gas Infrastructure Plan. Are there terms of reference for that plan yet?

Ms Parry : Not yet.

Senator WATERS: Not yet. When are they due?

Ms Parry : The National Gas Infrastructure Plan was part of the government's announcement. As you would be aware, $10.9 million was allocated in the budget. In terms of the plan itself, we are currently seeking market advice. We have gone out to tender for some modelling advice to help develop that product. That tender process is currently underway. The National Gas Infrastructure Plan is seeking to achieve a strategic approach to gas-line and infrastructure planning in Australia. Similar to the Integrated system plan for electricity, it is looking to do something similar for gas so that government—and the market, more importantly—can see where investment is needed to ensure that the supply shortfalls in southern Australia are addressed in the short term, because there is an anticipated shortfall in 2024. So the NGIP will look to model various outcomes on what type of infrastructure is needed to address that type of shortfall. Certainly, in the short-term, it is looking in the southern states; it will go more broadly across the whole system in the future. In essence, it is trying to send those market signals properly, do some strategic planning for investment to address those supply shortfalls, increase competition and continue to lower prices for consumers and match between supply and customer base.

Mr Fredericks : To tie up those two conversations, it's a very real endeavour to give that certainty to the gas market about what the likely run of necessary investments are over the short, medium and long term, which is something the market is after.

Senator WATERS: When will the terms of reference for the plan be released?

Ms Parry : There are no terms of reference yet. I am not sure that there will be terms of reference for a model that's being developed. But the strategic outcome that the government is trying to achieve has been addressed through the various announcements of the NGIP and through the tender process. I can take that on notice to see whether there are terms of reference being planned, but there isn't one right now.

Senator WATERS: Thank you. When will the modelling advice be delivered and returned?

Ms Parry : What we are looking for is, again, an initial interim statement to be developed in the first quarter of 2021, but I don't have a specific date within that first quarter.

Senator WATERS: So you are putting that work out to tender, you said?

Ms Parry : Yes.

Senator WATERS: It is not being done internal to government?

Ms Parry : The department is leading this body of work, but in terms of, in essence, building a model that can help us address some of the key questions I have just run through. What type of infrastructure? Where is it required? How would it best be delivered? What are the cost benefits? What is the impact on price? Those are the kinds of questions a model would look to inform.

Senator WATERS: Okay. The development of the model is the thing that is being tendered out?

Ms Parry : That is right.

Senator WATERS: Who will do the work once the model is done?

Ms Parry : The department is leading the work, but clearly we will need some technical support. We will be working very closely with our market bodies on that. We will be working very closely with the ACCC, through its gas inquiry, and through the AER, AEMO and the AMC as technical advisers and doing a lot of stakeholder consultation.

Senator WATERS: So AEMO will be involved?

Ms Parry : Yes, they will.

Senator WATERS: But they're not the lead agency?

Ms Parry : No, they are not.

Senator WATERS: It's a sort of one in, all in arrangement.

Mr Sullivan : It's a Commonwealth process.

Ms Parry : Yes, Commonwealth. AEMO's next Gas statement of opportunities is due in March of 2021. We want to tap into their expertise and ensure that they lend technical support to the project as well.

Mr Sullivan : The states are also key partners in this. Opening up the gas market and transparency and some of the issues we're dealing with at a Commonwealth level under the infrastructure plan will also go to the Energy National Cabinet Reform Committee as the committee that reports to the National Cabinet on energy.

Senator WATERS: Can I clarify that it is about gas infrastructure and not about gas fields per se? It is about pipelines rather than extraction of gas; that is right?

Ms Parry : The National Gas Infrastructure Plan is about infrastructure—so it is about import terminals, it is about pipelines, it is about compression facilities—but clearly the connection between supply and demand is the intent.

Senator WATERS: So will you make assumptions about the availability of supply based on state laws banning fracking, for example?

Ms Parry : As you can appreciate, there will be assumptions made and looking at where the supply is coming from. That ties into, again, the strategic basin plans that the government announced as part of their overall gas package. That is to look at where the supply is coming from currently, where it could come from in the future and how we move gas more efficiently around the country at the most efficient price to the right place.

Senator WATERS: Will those assumptions be made public?

Ms Parry : I will have to take that on notice.

Senator WATERS: Thank you. Will those assumptions be based on prioritising the strategic gas basins that the government has identified?

Ms Parry : The gas supply comes from a number of different locations, as you can appreciate, so it will be looking at current basins, it will be looking at prospective basins, it will be looking at import terminals, it will be looking at efficiency, it will be looking at compression.

Senator WATERS: So it's not going to prioritise just those strategic gas basins?

Ms Parry : It is looking at a variety of sources of gas, including the gas that is targeted within bilateral state deals.

Senator WATERS: What is the time frame for the plan to be completed?

Ms Parry : We are looking to get an initial read—out from the inaugural NGIP by the first quarter of 2021.

Senator WATERS: Will there be something after the initial read-out?

Ms Parry : That will be a decision for government.

Mr Sullivan : In the same way, if I use the analogy of the AMO ISP, they put out a draft. We will basically provide government with an interim report; the idea is the first quarter of next year. From that, government will then make a decision about where we go with the next steps. That will include pathways with the states, as I referred to in terms of the National Cabinet pathway, and also potentially working with AEMO and ACCC and others on other parts of the pathways. To come back to your question about terms of reference, we are in the process of developing those principles of how this ties together. Inevitably, I imagine, terms of reference may be part of the advice we give to government, but that advice is still at a formative stage in terms of its implementation.

Mr Fredericks : Just for abundant caution, in terms of the production of the report, and just to be clear, I don't think it should be expected that we are saying that that report will necessarily be publicly released at that time.

Senator WATERS: That was my next question, but I had a follow-up first.

Mr Fredericks : That's right. Of course, that may well be an input into government decision-making as well as National Cabinet—

Senator WATERS: Yes, no doubt.

Mr Fredericks : Both of them are subject to cabinet-in-confidence. So the time line we have given you is an internal time line for provision to government only.

Senator WATERS: Thank you. Since you have opened up that issue, has the decision been taken to not release the initial read-out?

Mr Fredericks : The decision has not been made either way. Government would make that decision closer to the time, as I have just said, taking into account the criticality of that as an input to ongoing government decision-making, including potentially at National Cabinet level as well.

Senator WATERS: So the likelihood of the document's destination means that it's unlikely to be made public.

Mr Fredericks : I think I have answered that question.

Senator WATERS: You mentioned that there would be a process of developing principles. When will those principles be finalised?

Mr Sullivan : We're in the process now of creating a task force that is focused on implementation, getting to influence that first quarter time frame. The principles are contained within the overall announcement that has already been there. How we translate that into implementation time lines and potentially terms of reference, as you alluded to, will be a matter for government over the coming weeks. As I have said, we are in the process of establishing a dedicated task force whose job will be the implementation of this government plan and the coordination of that. I imagine that one of the first products out of that task force will be building on the work that has already been done on implementation—it is not as though we haven't been doing anything in the last 10 days—in terms of potentially giving more advice to industry and other organisations that are inquisitive and asking when they are going to be involved, who is going to be involved, what consultations are envisaged and how people will be consulted. Will just producers be consulted, or consumers? How are states going to be consulted? I don't want to pre-empt the decision of government about how that is all put together, but that is part of the advice at the moment that is being put together.

CHAIR: Senator Waters, do you have many more questions?

Senator WATERS: I have one or two final follow-ups on that and then I am done. Is the task force that I have referenced the same thing as when you talked about the various collaboration of agencies or is that like a subset, sort of steering committee?

Mr Sullivan : That is within the department; so within my group, a dedicated task force is being established.

Senator WATERS: How many folk are on that?

Mr Fredericks : We are still considering that.

Ms Parry : We're still forming that.

Mr Sullivan : I don't know what the upper limit is going to be—I think that was the aim of your question about how many people will be working on that.

Senator WATERS: Yes.

Mr Sullivan : At the moment, I would have to take on notice exactly how many people, but it is basically people who have been working on the development of this proposal and then taking it into an implementation stage. We're going to have to second expertise as well as bring in expertise in from around the department. That's what we're in the process of doing.

CHAIR: Thank you, Senator Waters. Senator McAllister, do you have more for this general section?

Senator McALLISTER: Yes, I do.

Senator WATERS: I have one more follow-up on the selection process for those people, both the internal folk—although you said that was expertise based—and the secondment.

CHAIR: This is your act-of-grace question, Senator Waters. This is your follow-up to your second follow-up.

Senator WATERS: Thank you, Chair.

Mr Fredericks : The internal process at the end of the day: it will be for me and the leadership of the organisation to identify people who have the relevant expertise to go into that task force and to focus the department's efforts on this, because it is very important.

CHAIR: Senator McAllister, you have the call.

Senator McALLISTER: Thank you. I want to come back to the Liddell report. The effect of the government's response to that report is to give industry until April 2021 to make final investment decisions on a gas plant; is that correct?

Ms Parry : Senator, I didn't hear the last part of your question. Can I trouble you to repeat that, please?

Senator McALLISTER: The government's response to the report is to give industry until April 2021 to make final investment decisions on a gas plant. Is that correct?

Ms Parry : Not necessarily a gas plant. The government have indicated that they have a 1,000-megawatt target of dispatchable capacity that they are looking for the private sector to fill. They're looking for the private sector to come to a final investment decision by April 2021, in order to meet with dispatchable capacity that could then come online in time for the Liddell exit.

Senator McALLISTER: When we account for the private projects that are in the investment pipeline but not yet at final investment decision stage, both generation and transmission, what is the projected generation shortfall from the Liddell closure?

Mr Sullivan : In terms of the current pipeline, there are at least 1,500 megawatts of gas peakers in the pipeline within New South Wales. They're at varying stages of coming to a final investment decision. Some of those are very close to final investment decision, and that's 1,500 megawatts in terms of the gas sector.

Senator McALLISTER: I'm asking a different question: what is the projected generation shortfall once Liddell closes?

Ms Parry : The gap with respect to the market operator, through their ESOO forecasts, is a 154-megawatt reliability gap needed to meet the interim reliability standard in New South Wales in 2024. This grows to 305 megawatts and 525 megawatts in the following two years. But that is only for a reliability gap, and the government have made it very clear that they are concerned not only with reliability, which is obviously a concern, but also affordability, and ensuring that extra dispatchable capacity in the market would put downward pressure on prices. That's why they want to ensure that there is a dispatchable capacity target, in order to ensure that, when Liddell exits, there is adequate capacity there to service a large C&I sector to continue to put downward pressure on prices and ensure that that reliability gap is met.

Senator McALLISTER: In terms of the government's response, should the market not make all of these decisions by April 2021, can I clarify whether it is the government's intention to build a 1,000-megawatt plant, as was first reported, or a 250 megawatt plant, as later stated by the Prime Minister?

Ms Parry : I think the government signalled its intention that, if the private sector did not step up, as we've indicated, by next year, the government was prepared to step in. With respect to the Prime Minister, if you are referring to his comments in the media, he was referring to the fact that, as Mr Sullivan indicated, there are a number of very active projects in the pipeline which the private sector is hopefully close to coming to a final investment decision on. Hopefully, the gap would not be 1,000 megawatts and it would be something smaller. But, irrespective of the gap, the government have indicated that they are prepared to step in, if the private sector does not step up.

Senator McALLISTER: The Prime Minister appeared on Insiders on 20 September and was asked, 'What's the missing piece?' He said:

There is about 250 megawatts or thereabouts that we believe are going to be necessary to fill that plan out, and we can do that and deliver it on the ground and that's important, David. A lot of people can talk projects, but they've got to get approved…

He went on to say something about a wish list. He said:

It won't be on the wish list, it will be on the done list, and that's what we need to be in place. That will meet the criteria. If there are others who come up with a better plan … great, tremendous!

What is he talking about? What are the 250 megawatts that he refers to there?

Ms Parry : I don't want to verbal the Prime Minister, but my understanding, from watching that interview, is that I believe the Prime Minister was referring to the fact, as Mr Sullivan indicated, that there are a number of projects that are well known and that are close to final investment decision within the government's time frame that would meet that dispatchability target and that, hopefully, if those projects come online, the gap would, in fact, be much smaller. I think the Prime Minister was very clear in his press announcements around the 1,000-megawatt target that that's the target the government has set and that's the target that the government wants to see the private sector step up to.

Senator McALLISTER: He's also been very clear in subsequent statements that he believes there's a 250-megawatt shortfall, and I'm trying to understand whether the department has ever provided any advice to anyone that that was the shortfall—to Minister Taylor, to the Prime Minister or in response to a request from PM&C. Where does this number of 250 come from?

Senator Birmingham: You heard from Mr Sullivan before in terms of some of the prognoses of projects coming through the pipeline. Of course, the government has made it clear that what we want to see are final investment decisions made for 1,000 megawatts.

Senator McALLISTER: It's just a made-up number, isn't it, Minister?

CHAIR: Order, Senator McAllister!

Senator McALLISTER: I have asked—

CHAIR: Senator McAllister, order!

Senator McALLISTER: Chair, I have asked this question, and I am not getting answers from these officials.

CHAIR: Senator McAllister, I am speaking, and you will be silent while I am speaking. I am chairing the meeting. You'll let the minister answer and then you can ask a supplementary question. Minister, you have the call.

Senator Birmingham: Senator McAllister, the government has been very clear. There's a 1,000-megawatt target in relation to final investment decisions on dispatchable generation that needs to be made by April 2021. It's got to be generation that will participate in the wholesale market and it's got to be generation that can be provided on a dispatchable basis as part of a 24/7 electricity system. Beyond that, the government doesn't prejudge the type of generation that is required. The government, of course, will make its decisions, following that deadline, as to what is necessary. Clearly, it is necessary that this generation is able to come online by the summer of 2023-24 to deal with the Liddell closure. The size of what gap may exist is clearly dependent upon the ultimate response of the market. The government hopes that, with this clarity and clear signal that has been sent, the market will respond accordingly in terms of ensuring that we have a system that doesn't just deliver reliability in generation of supply in New South Wales but also guarantees affordability in a circumstance where wholesale prices do not rise, as was projected to be the case without ensuring that extra dispatchable capacity.

Senator McALLISTER: Minister, I asked an entirely different question. I asked you to explain whether anyone in this department has ever provided the number, 250 megawatts, to the Prime Minister, to Minister Taylor or to PM&C in response to a request for information. Yes or no?

Mr Sullivan : The answer to that specifically from me is no. In terms of why 250 megawatts is important, there are two reasons. One is that, if you put together the two most advanced proposals inside the pipeline, you get to about 750 megawatts. A gas peaker proposal for Snowy in the Hunter is modular, so it can start at around 220 to 250 as the normal entry-level size, if you were making an investment, and it can be made larger. As Ms Parry says, we're not trying to put words into the mouth of the PM, nor did I give advice to PM&C. In terms of why that 250 figure has some currency, it is around those two major project proposals in the pipeline, as well as that, if Snowy is going to enter the market, the business planning process will start at around that level.

Senator McALLISTER: Which are the two projects that you're speaking about that add up to 750 megawatts?

Mr Sullivan : In terms of those two, an AGL proposal and an Energy Australia proposal.

Mr Fredericks : I'm pretty sure that those projects were referenced in the task force report as well. So they're publicly identified as projects which have the capacity for an early FID decision.

Senator McALLISTER: Ms Parry, you said that there were 1,000 megawatts worth of projects in the pipeline that potentially could be brought online, depending on decisions—

Ms Parry : I think what I said was that the government have set their target at 1,000 megawatts, for the variety of reasons that I stepped through. In order to ensure reliability, security and affordability, that's the target that the government has set, and that private investment could step forward by April 2021 to fill that gap when Liddell exits the system.

Senator McALLISTER: There are sufficient projects in the pipeline to meet a 1,000-megawatt target?

Ms Parry : As Mr Sullivan indicated, a number of projects were identified throughout the course of the task force work and are known that are in the pipeline, but they've not yet reached final investment decision. Again I reiterate the earlier point that the government have indicated that they want the private sector to step up. The last time that New South Wales provided new dispatchable generation was in 2009. They want to make sure that that dispatchable generation comes online by a certain date to ensure that dispatchable capacity is there when Liddell exits, and that's why they've set this target.

Senator McALLISTER: So we've got—

Senator Birmingham: It's five years—

CHAIR: Order, Minister! Senator McAllister has the call.

Senator McALLISTER: We have a 1,000-megawatt target and some discussion about a 250-megawatt shortfall. So it's either a 1,000-megawatt target or maybe a 250-megawatt target—

Senator Birmingham: No, Senator. It's a 1,000-megawatt target. The officials have been clear.

Senator McALLISTER: Do you understand why industry might be confused?

Senator Birmingham: No, Senator.

Mr Fredericks : I don't, either.

Senator McALLISTER: Well, they are.

Mr Fredericks : Senator, just to be clear, in fact, this conversation proves the necessity for the policy announcement that the government has made. At the moment we are having a hypothetical conversation, in essence, about what is the relevant capacity that could be available in order to deal with the gap that will be left by Liddell. The beauty of the decision that the government has made is that, by the end of April, we, you and everyone in the system will know with precision what capacity is available, allowing government to then make decisions consequently. The market has clarity now and we will then all have clarity for government decision-making purposes at the deadline.

Senator McALLISTER: I can put an alternative interpretation to you, Mr Fredericks, which is: isn't this intervention that you're threatening exactly what the Energy Council was complaining about when it warned that the government's response to the Liddell Taskforce creates rather than removes investment uncertainty? Industry does not know what your target is based on, and what it includes and what it excludes; it is completely unclear.

Mr Fredericks : With the greatest respect, this decision gives the market certainty. It particularly gives the specificity that, at the time of the target, April, the market will be absolutely clear on what dispatchable power can go into the market, it will be absolutely clear on what the gap is and government will then be able to make a decision about how to fill that gap.

Senator Birmingham: Senator McAllister—

Senator McALLISTER: I have a couple more questions and I think we're going to finish at one o'clock, so can I ask them?

Senator Birmingham: Sure, Senator. I just want to stress that it's five years since the announcement around Liddell was made. No final decisions have been brought to bear by AGL in that time; indeed, Ms Parry highlighted the even longer time frame in relation to new dispatchable coming on board. This is about sending a very clear signal to the market—indeed a statement of intention to the market—about what will happen if sufficient dispatchable is not there to guarantee that wholesale prices are maintained, at least. We want to see continued driving down of prices, as we have been able to achieve to a degree so far. We have spelt out the time line and the scale of the task required. I think we have been quite clear in that regard. What the response will be depends on the extent to which the market reacts and responds to the time frame and the target that the government has set. If the market delivers 750 megawatts of dispatchable then there's a 250 shortfall at the end of that for government to consider. If the market delivers nothing then there's a much bigger shortfall for government to consider. If the market delivers 1,050, happy days.

Mr Fredericks : In that case the government has said explicitly that the government will step back.

CHAIR: Senator McAllister, you have the call.

Senator McALLISTER: The government received this report in April, sat on it until September, delayed five months, then gave industry a seven-month time frame to make final investment decisions. Do you think that the government delay made the industry investment response more or less likely in the time frame that you've given them?

Senator Birmingham: I think the industry has had five years since the announcement of Liddell came along and it hasn't progressed, at least in AGL's case, to a final investment decision. A range of projects, as you've heard, are on offer. I think government has provided a clear window, not for the completion of projects by April next year but at least for that final investment decision to be made and then for the projects to be completed by 2023-24.

Senator McALLISTER: Did the government delay make the industry's investment response more or less likely?

Senator Birmingham: I don't accept that there's a government delay.

Senator McALLISTER: You sat on the report for five months.

Senator Birmingham: We got a report in April. The government worked through the implications of the report in the government response and responded in September.

Senator McALLISTER: Your response was to agree with every recommendation and note one of them. It really took five months?

Senator Birmingham: I think the government responded in a timely way and has provided clear indications to market, none of which, in terms of the expectations that there be dispatchable generation to replace Liddell, should have been a surprise to the market either. The need for dispatchable to come on stream by 2023-24, has been very well known and, indeed, the fact that there is a pipeline of projects known and identified, and some of them seen as highly likely, is demonstration of the fact that the market was well aware of that need.

Senator McALLISTER: The investment freeze is demonstration that the market can't cope with your government's totally chaotic approach to energy policy, and that has been the case for the entire period of your government. Those are all my questions.

CHAIR: Senator Hughes, I understand that you have a question.

Senator HUGHES: That's right.

CHAIR: We are more than half an hour into the time allocated for program 2.1 but if you have got one question go ahead.

Senator HUGHES: Just in response to Senator McAllister and just to clarify, last year there was load shedding around the Hunter, including at Tomago smelter, which would suggest that perhaps the reliability and the load is not there currently, even with Liddell, and that, if Tomago smelter goes offline for three hours, that's the end of the smelter; it cannot be restarted. It did load shed for, I believe, 2½ hours last year in a bid to maintain its contribution to the market. Is it not the case that there are still reliability and security issues already with Liddell still in the market?

Ms Parry : That's right. I would have to take on notice the specifics around the load shedding event last year. I don't have that information to hand. I'm happy to come back and respond to that specifically this afternoon. But certainly that's the importance of having dispatchable capacity in the market.

Senator HUGHES: So, regardless of what Liddell's life is, we need increased dispatchable power in that region and, particularly with the development of defence industries and increased manufacturing in that region, there's a requirement for increased dispatchable power to ensure that security?

Ms Parry : Again, to reiterate, that was the thinking behind the 1,000-megawatt dispatchable capacity target. It was to ensure the triumvirate of security, reliability and affordability, to ensure that dispatchable capacity is there, particularly, as you indicate, for the large C&I customers within that region and to continue to put that downward pressure on prices.

Senator Birmingham: I'm sure that those sorts of points are the reasons why not only did Tomago welcome the government's policy decision but, indeed, Senator McAllister's colleague, the member for Hunter, welcomed it as well.

Senator HUGHES: Mr Fitzgibbon and I had a lovely photo taken in front Liddell power plant the other day.

CHAIR: That completes the general section. We are now 35 minutes behind time. But Secretary, if you would like to bring your—

Senator McALLISTER: I have some more questions.

CHAIR: You have more questions for the general section?

Senator McALLISTER: I do.

CHAIR: In that case, Senator McAllister, you do have the call. Can I just remind both officers at the table and senators that we will conduct these proceedings in a civilised manner, which means not talking over each other. If you think that somebody is going for too long or going off point, feel free to raise a point of order and I'll adjudicate. But I won't tolerate people talking over the top of each other. Senator McAllister, you have the call.

Senator McALLISTER: I wanted to ask about another intervention that the government has made in directly funding activity in the market, and that is the grant for a coal plant feasibility study at Collinsville to Shine Energy.

Mr Fredericks : Again, this is where we have this issue where that's fairly and squarely in outcome 3.1. Again, because of COVID restrictions, the relevant officers that have the sort of depth of knowledge that I suspect you are after are not here. Their expectation was that Shine questions would be asked in 3.1, which I think was a legitimate expectation. So again we might reach the same compromise as we did with Senator Waters. If you want to start asking questions you can, but there's every likelihood that the officers will take them on notice and ask to come back at outcome 3.1.

Senator WATERS: I will have the same questions at that outcome—a similar issue to be raised, no doubt, at that time.

Mr Fredericks : It's an important issue, and I feel that it's not fair to senators, because of the circumstances in which we find ourselves, that our full array of officers able to assist you is not here.

Senator McALLISTER: I have some process questions about it, which I think you should be able to answer. The detail questions we'll talk about after five.

Mr Fredericks : Yes.

Senator McALLISTER: The grant was announced days before Shine Energy were asked to apply for the grant. That's not the usual practice, is it, Ms Parry?

Ms Parry : That is entirely normal practice. The government signals its intention to fund a particular proponent and then the Commonwealth grants and rules guidelines dictate then that the guidelines will be presented to the proponent in order that they address those guidelines. So that is entirely within normal practice, as laid out within the Commonwealth grants and rules guidelines.

Senator McALLISTER: The matter has been referred to the Auditor-General, who has agreed to investigate the process regarding the awarding of the grant. Has the department had contact with the Auditor-General about this investigation?

Ms Parry : Yes, we have.

Senator McALLISTER: Could you just tell me what the nature of that contact has been?

Ms Parry : We received a letter notifying that the Auditor-General was undertaking an assurance audit. We have had an inception meeting to discuss the logistics of access to files et cetera. I would have to take on notice if there has been any ongoing communication between ourselves and the ANAO. We're fully cooperating, obviously, with the audit, and that is an ongoing inquiry.

Senator McALLISTER: Who is the key point of contact within the department? Is that in your division, Ms Parry?

Ms Parry : Yes, it is.

Senator McALLISTER: So you'll be the lead on that question?

Ms Parry : Yes, I will.

Senator McALLISTER: It has been reported that the department has already made a payment to Shine Energy for the Collinsville feasibility study—is that correct?

Ms Parry : That's correct.

Senator McALLISTER: How much has been paid as of today?

Ms Parry : $770,000, GST inclusive.

Senator McALLISTER: That payment is authorised by a disallowable instrument that is still facing motions in both the House and the Senate to disallow. Can you explain what will happen if that motion is disallowed by either chamber?

Mr Fredericks : That's a hypothetical question.

Senator McALLISTER: The department must have organisational arrangements to deal with such contingencies. It's often the case that a payment is made on the basis of a disallowable instrument but you have made it before the conclusion of the disallowance period.

Mr Fredericks : We have.

Senator McALLISTER: What are the arrangements that the department has in place?

Mr Fredericks : If and when that event occurs we'll be ready to respond to it.

Senator McALLISTER: What are the protocols for responding to a circumstance of that kind?

Mr Fredericks : As I say, I'm uncomfortable. I think this is a hypothetical. But at the end of the day, of course, we are aware that that is a potentiality and we will ensure that we have a capacity to deal with that when and if that eventuality occurs.

Senator McALLISTER: This is a circumstance that happens in a range of cases; it's not exclusive to Shine. What tools are available to the department to recover money that has already been disbursed if the instrument is subsequently disallowed?

Mr Fredericks : I'm just going to keep repeating myself. I can give an assurance that, of course, we'll be ready to deal with that eventuality if and when that occurs.

Senator McALLISTER: In the past how has the department dealt with such circumstances?

Mr Fredericks : I'd have to take that on notice.

Senator McALLISTER: Is there a formal protocol, a written policy, in the department for how to deal with those circumstances?

Mr Fredericks : I think that would be highly unlikely. I'll take that on notice. Let's face it, every circumstance is different. Of course, as you know and all senators know, until a rule is disallowed, that law is extant and applicable and an expectation is that departments will act faithful to the law, which is what we've done in this instance. Of course, if and when a disallowance motion is successful then we would, as I've said, be ready to deal with that at the time. In terms of precedent for that, every precedent is going to be different because of the nature of the grant and the nature of the disallowance.

Senator McALLISTER: There is no written protocol, so you may or may not be able to recover the money?

Mr Fredericks : As I say, we will be ready to deal with that when the time comes, if the time comes.

Senator McALLISTER: Has money ever been recovered from a grant recipient by this department in the past?

Mr Fredericks : I'd have to take that on notice.

Senator Birmingham: Can you give an example of where a disallowance of a grant may have occurred?

Senator McALLISTER: Normally I'm asking the questions in this environment, Minister.

Senator Birmingham: I know. But in terms of prompting officials, this matter has been subject already to a vote on a disallowance motion, which was unsuccessful in terms of the attempt to disallow. In terms of trying to prompt anybody to be able to identify if there's a precedent to deal with, it would be useful to have an example. I can't think of one.

Senator McALLISTER: Minister, your officials have just explained to the committee that a decision to award grants to companies before they apply for the grant is entirely normal. Is that a view you share?

Senator Birmingham: That certainly occurs on occasion and is consistent in terms of the way in which the Commonwealth grant guidelines work. For the way that this grant is structured it is certainly not without precedent.

Senator McALLISTER: So you're very comfortable with the approach that was taken, Minister?

Senator Birmingham: As I said, it's delivering on a commitment that the government had made and it's not without precedent; it's consistent with the grant guidelines.

Senator McALLISTER: It's an entirely normal approach?

Senator Birmingham: It's entirely within the grant guidelines and the department is cooperating with the ANAO, who I'm sure will find that to be the case too.

Ms Parry : Could I just add that there is a process for ad hoc grants again that is stepped out within the Commonwealth rules and grants guidelines, and that is the process that we are following.

Senator McALLISTER: I'm conscious that some of the detailed questions about the north Queensland energy market might be left until later, but I am curious to know how the company was selected for the grant. How was Shine Energy selected?

Ms Parry : There was a process. First of all—and again I just want to step through the process points—the government announced its sustainability and reliability energy program that was looking at the energy needs of north and central Queensland, both from a generation perspective and a customer perspective. The government announced and took to the election that program that would include looking at a HELE plant within Collinsville but it was not limited to that particular project. So the government undertook to take a strategic study in north Queensland. It did that. It received an interim report which identified that there were system strength, potential system strength and security issues within north and central Queensland that could be addressed through some dispatchable projects. So the government undertook to award some grants to undertake feasibility studies, and that's when Shine was invited to apply under the grant guidelines, after the government took that decision.

Senator McALLISTER: How was Shine identified as a suitable recipient for the grant?

Ms Parry : With granting processes again, the government announces its intention to go into a granting process. The department then draws up the grant guidelines. The proponent is then invited to address those guidelines and the department undertakes an assessment of their application against those guidelines and makes a recommendation to government.

Senator McALLISTER: There's a nice fellow down the road from me who runs a restaurant but nobody asked him to apply for this grant. I'm trying to understand how Shine in particular was the proponent that was invited. Did the department undertake due diligence prior to the invitation that was offered to Shine?

Ms Parry : The department undertook due diligence as part of its grant process.

Senator McALLISTER: After Shine had been invited. Who identified Shine as the recipient of this grant?

Ms Parry : The project was identified as a HELE plant within Collinsville. Shine was the proponent of that plant, so they were invited to undertake a feasibility study.

Senator McALLISTER: Who invited them?

Ms Parry : The government announced that Shine Energy was invited to apply for the grant, and that was a decision of government.

Senator McALLISTER: Did you provide advice to the government about Shine and its capacities prior to that announcement?

Ms Parry : I would have to take it on notice as to whether there was any briefing. We provide advice to government all the time on a whole variety of matters, but I would have to take that specifically on notice.

Senator McALLISTER: When we come back at 5.30, I would appreciate understanding what advice was provided to government and the date of that advice prior to the announcement of Shine as the recipient of this grant.

Ms Parry : I'll do my best.

Senator McALLISTER: Has the company ever delivered an energy project before?

Ms Parry : The company has been involved in the energy field. I remind you, Senator, that Shine Energy has been asked to undertake a feasibility study. That's what the grant is for: it is a feasibility study.

Senator McALLISTER: When you say that they have been involved in the energy field, what do you mean?

Ms Parry : Again, I want to take this on notice because my officials who are not here, but who will be here at 5.30, can provide more detail about the types of energy projects that Shine has been involved with previously.

Senator McALLISTER: Have they ever delivered any project?

Senator Birmingham: Senator, Ms Parry has taken the question on notice, and she'll return when officials relevant to this are at the table, as the secretary has explained on numerous occasions.

Senator McALLISTER: All right. We'll come back at half past five.

Senator Birmingham: Probably later, now.

Senator McALLISTER: Possibly later; let's see how we go. As with my earlier comments in relation to the Energy Efficient Communities Program, I hope that officials will be in a position to answer detailed questions about this grants process when we return.

Ms Parry : We will.

CHAIR: Is that it for general questions?

Senator WATERS: I have Shine questions.

CHAIR: I think we are hearing pretty consistently that they will be for later.

Ms Parry : Are there any questions, Senator, that you would like to raise now that we can ensure we have the answers to at 5.30?

Senator WATERS: I am interested in what consideration was given to the climate emissions and the impact on our international climate commitments from determining whether to build a new coal-fired power station; namely by Shine.

Mr Fredericks : Just to condition that—the same applies to the questions Senator McAllister is asking, and Ms Parry mentioned this—at the end of the day, this is a grant for a feasibility study.

Senator WATERS: Spoiler alert: it is not feasible. I can save you time and money.

Mr Fredericks : Hence the feasibility study.

Senator WATERS: It's a very expensive way to find out that you are not going to build something, isn't it?

Mr Fredericks : But it is a proper way to determine whether a project is feasible; all the various issues are taken into account.

Senator WATERS: I understand the concept of a feasibility study; thank you.

Mr Fredericks : That is right.

Senator McALLISTER: As I have said, there is a perfectly nice man down the road running a restaurant—

Mr Fredericks : Yes.

CHAIR: Order! We have reached the point where we are all in agreement that we need more detail, which will come later this afternoon. Because we only have 10 minutes until the lunch break, we will break now and return with the officers from the department who can answer questions on program 2.1, Reducing Australia's greenhouse gas emissions.

Proceedings suspended from 13 : 18 to 14 : 19

CHAIR: We will now resume with officers from the department in relation to program 2.1, Reducing Australia's greenhouse gas emissions. Senator Green, you have the call.

Senator GREEN: Thank you. Can you confirm the government's 2030 emissions reduction targets?

Ms Evans : The 2030 emissions reduction target is to be 26 to 28 per cent below 2005 levels over the period to 2030. Just for clarification, the target for Australia is expressed as a budget over that time period. It's not a point estimate in 2030; it's about how many emissions over the period from 2020 to 2030 would fit within the envelope that's defined by where we started at the end of the 2020 period and that 2030 target. The starting point is defined by previous targets. If you need a further explanation, we can pick that up a bit later.

Senator GREEN: Okay. Can you confirm for the committee whether the government has adopted the target of net zero emissions by 2050?

Ms Evans : No, the government has not adopted that target. Under the Paris Agreement the target that is relevant is for net zero emissions in the second half of the century at a global level. The government has signed up to that target.

Senator GREEN: But not net zero emissions by 2050. Does the department keep a list of states and territories that have signed up to the net zero emissions target by 2050?

Ms Evans : We do. We keep track of the states and territories that have various targets.

Senator GREEN: The net zero emissions by 2050—that particular target?

Ms Evans : Yes, we do keep track of that.

Ms Bennett : We do keep an eye on those targets. We're aware that most states and territories have committed to net zero, not all of which have been legislated.

Senator GREEN: All states and territories have committed to that target. Does the department keep a list of all of the countries that have signed up to net zero emissions by 2050?

Ms Evans : Again, we do keep track of those things. I'm not sure whether that is within Ms Bennett's scope. Ms Munro might be able to provide some extra detail on the countries.

Senator GREEN: Perhaps just a number. Do you have an idea of how many countries have signed up to that?

Ms Evans : Yes, we do have that information.

Ms Munro : By our estimation, in terms of the number of countries that have put forward a commitment to net zero, it would be 34 countries.

Senator GREEN: Can you give us, on notice, a list of those countries?

Ms Munro : The actual list of countries?

Senator GREEN: Yes. On notice, not right now.

Ms Munro : Yes, we're happy to take that on notice.

Senator GREEN: Does the department keep a list of Australian businesses and organisations that have signed up to net zero emissions by 2050?

Ms Evans : We certainly keep an eye across what different companies are doing, but to my knowledge we don't keep a specific list. I wouldn't be confident that it would be comprehensive. Having said that, we are certainly seeing many companies in Australia taking on those kinds of targets, including many of the larger ones. Quite a number of them under our Climate Active program have taken on a net zero target or a carbon neutral goal for either their whole entity or for a product, a service or an area precinct and so on. There's quite a lot of voluntary action amongst Australian companies and industry to take on the equivalent of net zero targets at various points in time.

Senator GREEN: Rather than whether the list is comprehensive, is there a list of Australian businesses and organisations that have signed up to net zero emissions? Does the department keep a list—there are probably some big companies and organisations on that list—even if it's not completely comprehensive? I'm not expecting you to have every single business in Australia—

Ms Evans : As I said, we do keep—

Senator GREEN: There would certainly be some big providers and big organisations on that list.

Ms Evans : Yes, there are. I'll see whether we have some details; otherwise we can take it on notice and provide that for you. You're definitely right; there are some very recognisable companies in Australia who have taken on those kinds of targets.

Senator GREEN: We have a list of the states and territories, and it is actually all of them. They've all signed up to net zero emissions by 2050. We think we have at least 34 countries—I'd say it's probably more—regarding net zero emissions by 2050. We have some very substantial businesses and organisations that have signed up to net zero emissions by 2050 as well. When will the government set a long-term emissions reduction target?

Senator Birmingham: Senator Green, the government wants to achieve net zero as soon as possible. We have a clear 2030 target—something that I note the opposition does not have. We have a 2030 target consistent with the requirements of the Paris Agreement. The Paris Agreement doesn't state that there needs to be a 2050 target. The Paris Agreement, as Ms Evans indicated, does commit parties to an aspiration of net zero in the second half of the century. Australia, in our commitment to the Paris Agreement, is committed to that.

As I said, our commitment is to achieve that net zero as soon as possible. What we are focused on, in achieving our 2030 targets and those ultimate ambitions, is how to drive down the cost of key technologies to enable achieving lower emissions and ultimately net zero. It will only be through that that we meet that objective—and, frankly, for anybody else, be it a state, territory, another country or a business, to successfully meet it as well.

Senator GREEN: Minister, thanks for that. Obviously, this is an estimates hearing, so I'm keen to understand what the government is doing on the target itself. You said as soon as possible you want to reach that target, but when will a target be set? When will a long-term 2050 emissions target be set?

Senator Birmingham: Senator, we are focused on meeting our 2030 target. There are then iterative processes under the Paris Agreement for subsequent targets to be agreed to. The government, as a committed party to the Paris Agreement, will work through all of those processes.

Senator GREEN: Has the department done an assessment of what the impact is of the government's failure to adopt a long-term emissions reduction target? What impact is that having on investment certainty and planning around addressing climate change?

Ms Evans : The government have recently put out, and have been quite clear, that they are focused on the 2030 targets and, beyond that, as Senator Birmingham said, getting to net zero emissions as soon as possible. The focus and the way that they are approaching that is not by setting an emissions date and target per se; rather, it is about focusing on technological progress and particularly setting stretch goals under the technology roadmap on those key technologies that can really help to drive emissions down, not just in Australia but globally. They've been quite clear that they're not intending to set a date for net zero; they'll get there as soon as possible. What they are focused on is driving the costs down, and they've set those five stretch goals under the tech roadmap for some specific areas where they want to see that happen.

Senator GREEN: My question was actually about whether the department has done any work. Surely, in terms of giving advice, you need to be able to tell the government whether it would be useful for businesses and organisations to have some investment certainty and planning, and whether a net zero emissions target by 2050 would be a good thing to have, for those reasons. The government continue not to go down that road, and that's what you're explaining here—that they have a different method. I think there are arguments about whether it will work or not. I'm interested in whether the department has done an assessment of whether having a long-term target is impacting investment.

Senator Birmingham: The government is providing increased investment certainty as a result of the technology road map, the stretch targets that have been outlined as part of that identifying the priority areas that government investment wants to drive and support to be able to achieve emissions reductions. Importantly, what we've done is, consistent with the Paris Agreement, set a 2030 target that we are committed to meeting. Our focus is on how to meet that, how to exceed that, how to ultimately drive to net zero, consistent with the knowledge that targets themselves don't get you there; technological change is what gets you there.

We as a country continue to see record scale of investment in areas such as renewable energy. Indeed, the Clean Energy Regulator's latest quarterly carbon market report estimates that we will likely deliver a similar record of 6.3 gigawatts of additional renewable capacity as we did last year. We will continue to invest in the new areas outlined as part of the tech road map, giving that certainty and encouragement to the investment community to meet those stretch targets which are all about getting to the ultimate goal.

When it comes to emissions reduction targets, the next requirement under the Paris Agreement is to set a 2035 target. Now that's some way off yet. It's not required until 2025 to do that. But that is the next requirement under the Paris Agreement which, as a committed party to that agreement, the government will, of course, work towards.

Senator GREEN: Minister, one of the things that the government has said in discussing these issues is that the government won't adopt a 2050 target without a plan to get there. That's one of the justifications. Is the department working on developing a plan to get there?

Senator Birmingham: I would start by saying that the technology road map and the investment and drive towards achieving lower emissions across the various areas of the economy that have been outlined in recent announcements is absolutely the plan to get to 2030, to get to 2035, to ultimately get to net zero. But Ms Evans or others may wish to add further to that.

Ms Evans : The only thing to add is that we are working, as is a requirement under the Paris Agreement, on a long-term emissions reduction strategy which we will have finished for the government well before the Glasgow COP which is now at the end of 2021. So the cornerstone of that will be the technology road map material that we've worked on but we will also consider other areas of emissions reduction. But it's about how can we reduce our emissions. It's not going to be about a particular date. It's a sense of how can we reduce our emissions as fast as possible, as soon as possible, and taking that technology approach at its core.

So it's a slightly different approach to the way you are asking your question. Your question seems to be implying more about whether it will be a plan to get to a particular target by a particular date. And this is more saying no, it's just going to be a long-term strategy about reducing Australia's emissions as soon as it can be done.

Senator GREEN: But without a target to get there?

Ms Evans : The targets are there in the form of the technology stretch goals because our assessment and our analysis has said that if you can achieve those stretch goals you will get very substantial emissions reductions not just in Australia but also globally. So the nature of the target is embodied in the technology stretch goals rather than in an emissions number.

CHAIR: Senator Green, that's your 15-minute block. If you only have a couple more questions, I'll let you finish up. If not, I'll come back to you after I've gone to a couple of others.

Senator GREEN: Can I just ask if you can take on notice the amount of countries that have signed up to net emissions by 2050. That would be helpful. I think I've got a few more on my list here. We can probably come back to some of the technology road map questions a little later, I think.

CHAIR: Senator Patrick, we'll come to you first and then to Senator Waters for the Greens.

Senator PATRICK: I've really just got one question. In the 2018-19 budget there was $210 million allocated in contingency reserve to secure the delivery of a solar thermal power generation facility at Port Augusta in South Australia. The proponent of that particular proposal I think went into receivership. So I'm just wondering what has happened to that money. Is there some way in which that can still be drawn on to achieve the objectives of the project, noting it wasn't necessarily designed for any particular company?

Ms Evans : The amount was $110 million. I think you said $210 million.

Senator PATRICK: Sorry, I meant $110 million.

Ms Evans : And it is still sitting in the contingency reserve. In the way it was appropriated it was not specific to that project; it was more broadly the concept of a solar thermal plant for Australia.

Senator PATRICK: So if someone comes up with a proposal that fits the description of that appropriation then they could make application to the department?

Ms Evans : They could be considered by the government as to whether or not they wanted to use that contingency money for that purpose.

Senator PATRICK: What is the process for that? Just a letter to the department or a letter to the minister?

Ms Evans : I might have to take that on notice. I don't think we have a formal process already mapped out because, as you say, when it first came up there was a clearer idea about what was likely to happen to that funding. But at this stage it's just sitting as an amount that's allocated. We haven't got a particular process.

Senator PATRICK: I'm hoping you'll turn it into something, that's all.

CHAIR: Senator Waters, you have the call.

Senator WATERS: Thanks for being here all day to answer our questions. I've got some detailed questions about methane global warming potential and what that does to our calculations. So bear with me because they're quite specific and hopefully we've got the right people here to address that. The most recent quarterly greenhouse gas update states that we will review the way we're calculating methane emissions in order to comply with the switch from Kyoto to Paris. And my understanding is that it says that from the period starting with the 2020-21 financial year the department will adopt the global warming potentials sourced from the fifth assessment report in accordance with the terms of the Paris Agreement.

So can I just firstly confirm that the 100-year global warming potential of methane is going to change—namely, it's increasing from 25 to 28 times?

Mr Sturgiss : Yes, for reporting internationally under the Paris Agreement, so for the first year of the Paris Agreement which will be the reporting year for 2020-21, the national inventory report will apply updated global warming potentials that come from the fifth assessment report, the IPCC Fifth Assessment Report. So currently the factor that's applied to methane is a value of 25, which means that every tonne of methane is equivalent to 25 tonnes of carbon dioxide. And that value will change to 28 for our international reporting. So the first time that we would report internationally using those values would be in April 2023.

Senator WATERS: And what period would that cover? If the reporting is April 2023, what's the period that that report pertains to?

Mr Sturgiss : Under the Paris Agreement we would still report emissions for the national inventory for the period all the way back to 1990. So it's important that time series consistency is maintained for that whole time series. So the new global warming potential would be applied to the entire time series all the way back to 1990.

Senator WATERS: Noting that, I'm going to step through some of this detail in any event. Leaving aside fugitives, currently our annual anthropogenic methane emissions are approximately five million tonnes per annum, according to the greenhouse gas emissions information system. That's correct? Yes, thank you. Just for the Hansard that was a yes. And so 25 times that as the CO2 equivalent comes out to about 125 CO2 emissions equivalent per annum, yes?

Mr Sturgiss : That sounds about right, yes.

Senator WATERS: But if we're lifting that to 28 as the new methane figure, that comes out to about 140 CO2equivalents per annum?

Mr Sturgiss : Yes, effectively three times five million tonnes would be about 15 million tonnes of CO2 equivalent increase pretty much along the entire time series because our methane emissions have been pretty constant over that time series.

Senator WATERS: So it's about a 15 million tonne per year increase. If we're taking that from 2020-21 out to 2030, for example, that would be approximately an additional 150 million tonnes, would that be right? If we're doing 15 million tonnes per year and we're taking that over the coming decade and they're relatively stable, as you've just said?

Mr Sturgiss : Yes, that would affect the calculation of the emissions budget for the Paris commitment period and also the emissions inventory that we submit over the course of the period. So both the emissions inventory side and the emissions budget side would be treated equally, yes.

Ms Evans : Just a clarification there, it's an accounting adjustment rather than—

Senator WATERS: Sorry, could you speak a little louder?

Ms Evans : Sorry, I was just saying it's really an accounting adjustment. It's not that there's been any actual change in the emissions.

Senator WATERS: Yes, I do understand that, thank you. According to the 2009 emissions projections we've set a 2021-2030 emissions budget of 4,777 million tonnes, which is meant to be a reflection of the 26 per cent reduction on 2005 levels by 2030 under Paris. I'll just confirm that's all correct?

Ms Evans : I've got in the 2019 projections the emissions budget for 2021-30 at 26 per cent is 4,777.

Senator WATERS: Yes, that's what I've got here, too. Thank you very much.

Ms Evans : And at 28 per cent, 4,710.

Senator WATERS: Sorry, say that again.

Ms Evans : If it were at the 28 per cent level it would be 4,710. That's all in the publication.

Senator WATERS: Sorry, that's once the methane—

Ms Evans : No, sorry, our target is expressed as a range from 26 to 28 per cent.

Senator WATERS: Thank you, of course.

Ms Evans : So I just gave you the top and bottom of the range.

Senator WATERS: Yes, I should not expect so little of our government's targets. I should remember there's a two per cent increase. Thank you. According to that same document we're on track for cumulative emissions of 5,169 million tonnes of CO2 equivalent between 2021 and 2030. Again, can you just confirm that I've read that correctly?

Ms Evans : Yes, that's correct.

Senator WATERS: So if we've got 5,169 million tonnes of CO2 equivalent projections between 2021 and 2030 that's currently based on the old global warming potential of methane, yes? Okay. And if we use the new—there is one more step before I get to that point. If it's based on the old figure and you're combining our cumulative emissions with our carryover credits—not that we concede that we should be carrying those carryover credits over because no other country is; leaving that to the side—using the assumptions, you are saying that we would beat that budget by about 16 million tonnes, is that correct?

Ms Evans : Yes. In the projections for 2019 that was the estimate we had at the time.

Senator WATERS: If we've got that increase of 150 million tonnes, given the accounting change for methane, and we were only ahead by 16 million tonnes on those 2019 figures, does this accounting change to increase the destructive power of methane or to acknowledge that it's more destructive than we realised, are we still meeting our Paris commitment in a canter or are we, in fact, not on track to meet that 26 per cent target?

Ms Evans : Mr Sturgiss was explaining before that both the budget and the measurement of our emissions each year will be affected by the accounting change. So the budget here, which we both agreed from the paper is 4,777, would go up by the amount that changes with the new global warming potential. Then so would our cumulative emissions, by the same amount. So it would put us back in exactly the same position.

Senator WATERS: Are you saying we're increasing our baseline?

Ms Evans : It is not increasing our baseline; it's just an accounting change. It is like, instead of it being denominated in Australian dollars, it's being denominated in US dollars. It is that kind of a change. You have to change all the units to be consistent.

Senator WATERS: I can see how that might flow logically from an accounting perspective, but we have just been advised that methane is more damaging to the climate than we realised. Are you really saying that the response is that we should be able to pollute more, rather than doing the opposite and realising that we need to take stronger action?

Mr Sturgiss : It is about making sure that we are comparing apples and apples. So when we say that the target is to reduce emissions by 26 per cent, you can see that in the inventory—that inventory emissions have fallen by 26 per cent. The accounting change, as Ms Evans pointed out, is just about ensuring that we have a time series consistency throughout the whole time series so that when the target at best is a reduction of 26 per cent, we know it's about a reduction of 26 per cent in carbon dioxide equivalent emissions.

Senator WATERS: On an altered baseline.

Mr Sturgiss : And you are right; with the new GWPs, methane will have a higher weighting. So a reduction in methane going forward will have greater value than it has currently. You will have a value of 28 tonnes of carbon dioxide equivalent in the future, whereas now it is only 25.

Senator WATERS: Are you projecting a reduction in methane?

Ms Evans : We have not yet factored this change into the projections. I think that's the answer for now: we haven't factored it in yet. We will do some more thinking about whether the fact that it has more potential would change the way we have been addressing methane into the future. We already have some programs that address soil carbon and methane. Some funding announced in this budget goes to exactly those areas, so there's already a focus there.

Senator WATERS: For clarity, what was the projection for methane emissions under the old measure for 2021-30?

Mr Sturgiss : That's a good question; I might need to take that on notice.

Senator WATERS: Okay. I don't understand why those assumptions would change just because the global warming potential has changed, which is what I thought you were alluding to.

Ms Evans : No, our projections as they stand would not change. Again, it's just an accounting treatment.

Senator WATERS: But the policy response might; is that what you were saying?

Ms Evans : The policy response might change with the new information about the science.

Senator WATERS: Let's hope they do, because they need to.

Ms Evans : As we move forward through the Paris processes, all the discussions about what else we have learned and so on could affect the way countries might start to respond to the new information.

Senator WATERS: Yes. Does anyone know whether other countries are similarly increasing their baseline figures, given the methane global warming potential adjustment?

Mr Sturgiss : Yes; all parties would do that.

Senator WATERS: They would? Or do we know for sure they are?

Mr Sturgiss : We are the first one. The reason why you're asking these questions is because we flagged that we would make this change in a reply to the reporting by companies under the National Greenhouse and Energy Reporting scheme. That is why this topic has come up. Internationally we would not be applying the new GWP until April 2023. That is when you would see other countries submitting reports to the UN with the new—

Senator WATERS: I understand that. But my question is: are they similarly increasing their baseline?

Mr Sturgiss : Yes, they would.

Ms Evans : Yes.

Senator WATERS: They would, or they have announced that they will because it's a political decision to do so?

Ms Evans : It's just the accounting rules of expressing the targets and baselines as they stand. All countries would simply adjust to the new accounting rules.

Senator WATERS: It seems incredible to me that, when you're told something is even worse, you increase your baseline rather than tightening your belt. I hope that other nations take a science-based approach.

Senator Birmingham: Senator, the accounting rules apply ultimately evenly to everybody. As you heard from officials, the adjustments in relation to methane will be backdated, in a sense, to provide a consistent time series. In terms of what it means for the baseline in 2005, that is adjusted—

Senator WATERS: Yes, I understand that; thank you.

Senator Birmingham: Outcomes for 2030 are adjusted, and the impact in that sense washes through. Officials will take it on notice to try to get some breakdown in terms of methane emissions—both how they have tracked to date as well as assumptions and projections around their forward movement and the impacts on that. I don't think you should prejudge that there is a diminishing of ambition or the like as a result of these accounting changes that Australia is applying in a manner that we anticipate all parties to apply consistently.

Senator WATERS: That's what I was asking: is it just us or is it all parties? It sounds like it will be all parties, but I guess we'll find out for sure. What will our new 2021-30 emissions budget be? It was 4,777. What will it be now that the GWP has changed?

Ms Evans : We might have to take that on notice to get it right. If we were just adjusting the 2019 projections for that amount? I can check—I don't know whether we have the answer. We refresh the projections each year. We would expect there to be an update to the projections later this year. I'm not sure whether the new global warming potential is already in that, not yet. We're just catching up.

CHAIR: Senator Waters.

Senator WATERS: I have one more question after this. I am wrapping up, Chair.

Mr Sturgiss : If I could explain the last point, from next February will be the first time we report any data relating to the Paris Agreement commitment period. That will be for the quarterly update of the inventory for the September quarter 2020, which will be the first time we officially report any inventory products for the Paris commitment period using the new GWPs. So that's the first time we report the inventory. That's next February. The logic is that we will update the way we do projections subsequent to that first inventory report. That's the logic of how we plan about how to update for the new GWPs.

Senator WATERS: Will we need to resubmit our 2030 INDC COP26 to increase our emissions budget and, ergo, decrease our climate ambition?

Ms Evans : Are you asking that in the context of this methane global warming potential?

Senator WATERS: Yes.

Ms Evans : No. There's no impact on our nationally determined contribution and the way it's expressed due to this change.

Senator WATERS: Okay. There's a possibility that we might revise it in any event, but not as a result of this change?

Ms Evans : Our targets are set, but we will be looking at recommunicating our Nationally Determined Contribution. A lot has happened in Australia. We've had the new Technology Investment Roadmap and so on; there may be something in that which we want to express in the Nationally Determined Contribution. The targets themselves are set.

Senator WATERS: Thank you. Did you have something to add?

Ms Munro : In relation to the global warming potential, those rules were set as part of what we called 'the rulebook'. These were the decisions taken in Katowice, Poland. Those global warming potentials apply to all countries. I wanted to make that clear.

Senator WATERS: I understand that; thank you. That's it for me.

Senator McMAHON: I understand that the Paris Agreement requires developed countries like Australia to have a 2030 target. Is that the only target the treaty requires?

Ms Munro : Under the Paris Agreement, countries set their own nationally determined contributions or, as we call them, NDCs, which include the emissions reduction targets. Most countries, including Australia, put forward a 2030 target. Some countries, such as the US and Brazil, only put forward a 2025 target. Under the Paris Agreement, countries whose NDCs include a 2025 target are required to submit a new NDC in 2020 with either a 2030 or a 2025 target. Again, countries like Australia, whose NDC includes a 2030 target, are requested to communicate or update their target this year. But going ahead—this has probably come up earlier today—under the Paris Agreement there is the agreed process to update targets every five years. That target-setting process involves a global stocktake of collective progress to the long-term Paris Agreement goals in 2023. After this process, countries are required to submit an updated NDC in 2025.

Again, under the Paris Agreement there is the collective goal to reach net zero emissions in the second half of the century. There is no requirement to set national 2050 or net zero targets. So if we were to continue through the five-year Paris Agreement target-setting cycle, developed countries like Australia would, in theory, set national 2050 targets which could or could not include a net zero target in 2035 or 2040. They are the sorts of target-setting requirements under the Paris Agreement. The other thing that was requested, so it's not compulsory, was to submit long-term emissions reduction strategies. Some countries have included 2050 targets as part of that. As Ms Evans explained, our government has committed to a long-term emissions reduction strategy and we'll be submitting that ahead of the Glasgow COP.

Senator McMAHON: Thanks. During a visit to a cement factory in Darwin on Saturday with Minister Taylor I learned that cement makes up approximately seven per cent of global emissions. Is carbon capture and storage a good option for reducing emissions in this sector?

Ms Munro : You're right; a significant amount of global emissions come from cement; around seven per cent. Given the process of making cement, it is recognised as a very difficult product or sector to decarbonise. Bodies such as the IEA—there have been many studies into this—see that the large-scale deployment of CCS would provide that potential decarbonisation pathway in those hard-to-abate sectors, such as cement. So, yes, you are right, Senator.

Senator McMAHON: Thank you. Finally, what are Australia's emissions as a percentage of global emissions?

Ms Munro : Our full emissions at the moment are usually around 1.3 per cent. It varies a little depending on exactly which envelope you are counting, what's in and out. It's a small number.

CHAIR: Senator Green, you have the call.

Senator GREEN: What is the government's target for emissions reduction in the transport sector, and is there a target for emissions reduction in the transport sector by 2030?

Ms Evans : The government hasn't set targets for any of the individual sectors below the aggregate. The target is just there for the whole of the economy at 26 to 28 per cent below 2005 levels by 2030. If there are contributions from the various sectors towards that, that's all working towards that one target. There are no individual targets for specific sectors.

Senator GREEN: Given you've answered no to that question, I assume there is no target for emissions reduction in the transport sector post 2030, either?

Ms Evans : That's right, although many of the stretch goals that are in the technology road map would go towards quite significant reductions in emissions in the transport sector. Hydrogen, for example, if it becomes a widely adopted technology, and it's an option for vehicles, particularly heavier vehicles, is one of the few technology options that is there for us to be able to tackle that part of our emissions profile. Similarly, as the electricity grid becomes more and more based on renewable energy and dispatchable renewable energy, and it allows electrification of quite a number of other sectors in the economy, that allows for further emissions reductions as well, and transport is one of those. You can get some electrification happening there, too.

Senator GREEN: When you say stretch goals, and I'm actually asking about targets, I think what you're doing is try to compare what I'm asking for around targets with something that isn't a target. I appreciate that there is some other slogan called 'stretch goals' that is about some values thing when it comes to technology, but if I'm asking about targets, that's what I'm actually asking about. That's been the answer a few times when I've asked. On the transport sector—

Senator Birmingham: Senator Green, the stretch goals are an important part of the way in which the government is committed to meeting its emissions reduction targets. Those stretch goals are integral not only to how we will meet emissions reduction targets but also to how other countries will meet emissions reduction targets.

Senator GREEN: When I'm asking if you have a 2050 target and you say you don't have one, it's not the same thing as having a 2050 net zero emissions target, is it?

Senator Birmingham: It actually puts you on a path towards net zero emissions, Senator Green, rather than just having a target. That's the fundamental difference—not that your party has a 2030 target, either, at present.

Senator GREEN: Sure, but it's not a target. I'm asking you what your government's position is. The Prime Minister announced that the government would produce a national electric vehicle strategy. When was that announcement made?

Ms Evans : We'll see if we can find the date for when that announcement was made.

Ms Munro : The date of that announcement was 25 February 2019.

Senator GREEN: When that announcement was made, did the Prime Minister say when the strategy would be finalised?

Ms Munro : I wasn't responsible for it at that time. I don't have that information in front of me.

Ms Evans : Senator, I can't recall what the PM announced; certainly, with respect to our expectation, when we went through the budget that followed that announcement, we were operating on the basis of having that strategy done by June of this year. Obviously, a number of things have happened that have caused some delays to our being able to finalise that in that time frame. We are continuing to work on that.

Senator GREEN: The Prime Minister didn't set an end date or a finalisation point. Did the department start working on it straightaway or when you saw the budget?

Ms Evans : I think we had done a little bit of preliminary work, but the funding that supported our ability to really start work on it came through in the budget that year.

Senator GREEN: In May 2019?

Ms Evans : Yes.

Ms Munro : There was a budget of $0.4 million; that came in the budget.

Senator GREEN: Did the former Minister for the Environment, Minister Price, have a date for when it would be finalised? You said that you were working towards mid—this year. Is that the same date that Minister Price suggested?

Ms Evans : Yes. When we embarked on it at that point through the budget, we had anticipated being able to finish it by June of this year. We have not, in the end, been able to deliver that, but we are continuing to work on it. You would have seen in the current budget that there's been a significant allocation of funding—$74 million-odd; I'll get my colleague to find the correct number.

Ms Munro : It is $74.5 million.

Ms Evans : It is $74.5 million towards the future fuels package, which includes not just electric vehicles but other future fuel applications—biofuels and other things as well. There's certainly an allocation there that goes in the direction that we had already been working on for the government with the electric vehicles strategy, and we'll be continuing to refine that in that context of future fuels over the coming months.

Senator GREEN: Has Minister Taylor set out a time line for the strategy to be released?

Ms Evans : Not to my knowledge; not in the public domain, no.

Senator GREEN: Would you like to tell us what it is?

Ms Evans : The minister has asked us to work on it and to have it finalised as soon as we can. We're doing that, and we'll present it to him when we've been able to do that.

Senator GREEN: But we don't know when—

Senator Birmingham: I understand, Senator Green, that the intention is for an electric vehicle consultation paper to be out this year, informing the future fuels strategy. I highlight that in the budget the government included $74½ million related to electric vehicles, hydrogen and other transport issues.

Senator GREEN: Minister, did you say by the end of this year?

Senator Birmingham: That's right.

Senator GREEN: As I understand it, the strategy is a consultation paper, as you described it. That's what we're waiting on—a document?

Senator Birmingham: As I said, I understand there will be a consultation paper in relation to EVs by the end of this year, which will be part of the process of finalising the future fuels strategy.

Senator GREEN: Everyone appreciates the difficulties that have arisen this year with certain months of the year. But by the time we actually get the strategy, the piece of paper, if I count that up, it's about 22 months since the Prime Minister announced that it would get done. Why did the Prime Minister make an announcement in February that isn't being delivered on until the end of this year?

Senator Birmingham: Senator Green, I'm sure work is underway, particularly in relation to that consultation element. Of course, as I said, it hasn't impeded the concurrent work around funding of different parts of support for electric vehicles and related transport and future fuels matters, which, of course, were also highlighted as part of the tech road map.

Ms Munro : Senator, the department has engaged with more than 80 stakeholders, and that did guide the development of the future fuels package. In relation to the work that has already been undertaken, it is with car makers, charging infrastructure providers and industry bodies. There are a number of corporate stakeholders, fuel companies, manufacturers, the energy supply industry and a number of government agencies. There are discussions with state governments, and they are also continuing under the government's approach under the state deals. I refer also to local governments, fleet managers, a whole host of universities and others.

A lot of work has gone into developing the discussion paper, as the minister referred to. Probably also more importantly, it has helped to inform the future fuels package, which will see funding being delivered by ARENA in this financial year. Again that is actually quite significant investment and development.

Senator GREEN: Lots of work but no strategy?

Ms Munro : It will culminate, as we were saying, in the forthcoming electric vehicles discussion paper and the strategic approach on future fuels that the government is taking.

Senator GREEN: It sounds like you've done the work. Is the discussion paper ready to go but we're waiting for someone to sign off on it? Is it a controversial document? If I were the Prime Minister and I made an announcement back in February 2019 and I knew that the work had been done, I'd be asking where the document was and why we couldn't get it finalised. What is the reason?

Ms Munro : As Ms Evans explained, a number of re-prioritisations have had to happen within the department with COVID-19. A number of public servants were seconded to a number of different areas. The work has continued, as it can do. The discussion paper is not yet finalised. The fact that there has already been such extensive engagement has helped to inform the good policy and investment package as part of the future fuels package.

Senator GREEN: Twenty-two months for an electric vehicles strategy and five months to decide that the minister supports his own Liddell Taskforce recommendations. It's taking a long time to get some things done, isn't it?

Senator Birmingham: Senator, I think that's your commentary. You can choose to run commentary or you can choose to ask questions during estimates. Officials are here to deal with questions.

CHAIR: Senator Green, that completes your block. I'd like to go to Senator Rice for five minutes. We also need to move on at some point to program 2.2.

Senator RICE: I want to continue on the topic of electric vehicles and the very delayed strategy. What you're telling us is that we're going to have a discussion paper by the end of the year; so we won't have a strategy by the end of the year?

Senator Birmingham: Senator, I've answered those questions, and also highlighted some of the budget investments that have been committed in relation to related activities.

Senator RICE: I want to clarify that what we now have a commitment to is a discussion paper by the end of the year. Do we actually have a time line on when we will have a strategy?

Senator Birmingham: I'll take that on notice.

Senator RICE: Having initially announced the strategy in February 2019, Minister Taylor noted, at the bottom of a media release regarding a CEFC investment, that the strategy would be finalised by the end of the year. So it's even blown out beyond that. In the Technology Investment Roadmap electric vehicles arise as a watching brief technology, which the government defines as technologies which are at a very early stage of development. Given the take-up of electric vehicles around the world—which Australia is an absolute laggard in, and Australia is now a car taker, not a car maker—why are electric vehicles being classified as being at an early stage of development and a watching brief technology?

Ms Evans : Senator, watching brief technologies aren't all, as you characterise them, at an early stage. Some of them are very prospective, with huge transformation potential. I guess those are the characteristics you'd put on electric vehicles. It is where the developments are currently primarily driven overseas. That's the reason for that characterisation of them.

The technology road map also places some of the infrastructure issues—charging infrastructure and the like—into the category of emerging and enabling technologies and also encourages ARENA and the CEFC to continue their work which they are already doing in those areas. It appears in a couple of places in the tech road map, and it's not because there's any sense of the electric vehicles themselves being at a very early stage of development. They are already there. They will need to come down in cost, but the work to drive that cost down is unlikely to occur in Australia.

Senator RICE: I was using the definition in the Technology Investment Roadmap.

Ms Evans : I read that from the Technology Investment Roadmap as well.

Senator RICE: With regard to the consultation on the electric vehicle strategy, I had a question on notice that was about the consultation. Has there been any further consultation since you answered that question on notice?

Ms Evans : Not in a formal way on the discussion paper or the strategy per se, but we do have an ongoing engagement with a range of players in the electric vehicle space. So we're constantly talking to people, but not formal consultation, which is what we said in our answer to your question on notice about where we listed those ones we had formally engaged in the development of the paper.

Senator RICE: Could you take on notice the list of people whom you are informally having ongoing consultation with?

Ms Evans : Yes, we are happy to do that.

Senator RICE: I'm just confirming that there hasn't been a public consultation process, has there? There hasn't been an opportunity for the general public to make any input into the strategy?

Ms Evans : No. That's right. So far we took a more targeted approach to the consultation specifically when it came to thinking about the future fuels electric vehicles work. Of course in the context of thinking about those things in the technology road map there was a very extensive public consultation process which we can go into later if you want.

Senator RICE: In the meantime, while it's taking us so long to actually make any progress on this electric vehicle strategy and tackle reducing our ballooning transport emissions, can you point to a single national policy that is cutting transport emissions that now make up almost 20 per cent of our greenhouse gas emissions?

Ms Evans : We've got the kinds of policies that affect the transport sector. I think we've already got methods under the emissions reduction fund. Transport is also covered by the safeguard mechanism under the government's emissions reduction mechanism safeguard. There are a range of other things that states and territories are also doing. So there are a number of policies in place that tackle the transport industry.

Senator RICE: I am asking particularly about the Commonwealth. Perhaps you'd like to take that on notice. That's not a very convincing answer. But you might have a list of particular measures that are acting to reduce transport emissions. Certainly I can't see them. Just in my limited time—

CHAIR: Your last question, please, Senator Rice.

Senator RICE: In terms of the Future Fuels Fund, what's the process going to be? How is the funding being dispersed? Is there going to be a process for organisations to be able to seek funding? Will it be open and competitive application? Have you written up guidelines for the fund?

Ms Evans : We haven't yet written the guidelines but we are working with ARENA on those. The Future Fuels Package has got three components to it, but the main one is the Future Fuels Fund which will be administered by ARENA. So they will use the techniques that they're very good at to do consultation and co-development of guidelines, including with ourselves, but to make sure that they have a program that will get the best results from the funding that they have.

We do expect that there will be some co-investment in there. So you would imagine there will be a call for proposals in some manner, but the exact way in which that will work hasn't yet been designed. And once we have designed it we'll be putting it into the public domain.

Senator RICE: But you do intend there to be guidelines in place in this process?

Ms Evans : That's typically the way ARENA works. They've had the advancing renewables fund open for many years now and that's public and anyone can apply and so on. So that's a typical approach by ARENA. We need to keep talking to them about whether that's the same approach they need to use for this one to make it as effective as it can be, but that's the sort of approach they take.

Senator RICE: And do you have a time line as to when that will then be available and completed and people will be able to apply to the fund?

Ms Munro : Yes. We are still developing the program guidelines. But we are hoping that the program will commence in early 2021.

Senator RICE: When hopefully it won't stretch out like everything else to do with electric vehicles has so far.

CHAIR: I am just looking for guidance here. I'd like to move on to 2.2. We'll take a short suspension if you need to change officers for outcome 2.2.

Ms Evans : We're pretty much the same.

[15:19]

CHAIR: In that case we'll move on to outcome 2.2. Who's looking for the call from the opposition? Senator McAllister, you have the call.

Senator McALLISTER: I think unsurprisingly most of my questions relate to the technology road map. Can I start by asking about the funding that is identified in the road map. I think on page 39 there's an indication that $18 billion will be spent by government. Can I get a breakdown of how that $18 billion is calculated?

Ms Evans : Yes. I think there's an explanation there in the road map itself. But I will let Ms Munro take us through the calculations.

Senator McALLISTER: There sort of it is. It doesn't really add up to me in an obvious way how all those numbers come to $18 billion, so I was just hoping you could help out with that.

Ms Munro : Yes, I'm happy to step you through that $18 billion figure. As is stated in the Technology Investment Roadmap—this is set out in footnote 17 on page 41.

Senator McALLISTER: Which is sort of funny in itself that $18 billion is a footnote, but yes, take me through it.

Ms Munro : There's a headline figure and it does actually step it through. This does include the projected spending by ARENA. So that includes the $1.4 billion in the refunding of ARENA and it also includes the projected spending under the emissions reductions fund and the climate solutions fund by the CER. So that's $2.9 billion.

The other way that we looked at this, again, was including potential spending by the Clean Energy Finance Corporation and also where we had figures that related to CSIRO, CRCs and funding grants under the Australian Research Council. So it was based on extrapolation over the next decade which was based on the historical levels of spending. For example, the CEFC invested $1.3 billion per year over 2014-15 to 2019-20, as was done. If you extrapolate this forward we anticipate the CEFC could invest $13 billion over the coming decade.

Senator McALLISTER: So what's the decade were talking about?

Ms Munro : So that's from this current year to 2030.

Senator McALLISTER: So 2020-21 through to—

Ms Munro : 2030-31. So that would be a decade. And, again, the assumptions were made that in this area of technologies that are the focus of the low emissions technology statement and the Tech Investment Roadmap, CSIRO, various CRCs and ARC funding had a combined historical funding of around $1 million.

Senator McALLISTER: Annually?

Ms Munro : No, combined historically over that last decade.

Senator McALLISTER: So the CSIRO, the CRCs and the ARC spent—I'm just having trouble hearing.

Ms Munro : Sorry.

Senator McALLISTER: A million?

Ms Munro : Yes, we had around a million dollars. So it was a very conservative estimate based on the actual technologies that we had identified.

Ms Evans : So focusing very much on those stretch goals rather than trying to sort of claim all of the funding that they might have spent on climate change, for example. We didn't try to count that.

Ms Munro : Yes.

Senator McALLISTER: In the calculation you've got a million dollars over a decade from those three institutions?

Ms Munro : That's right. Again, the footnote did state that the actual levels of investment could be higher or lower depending on the pace of both the technology development and broader economic factors.

Ms Evans : Sorry, we do have just a typing error in one of our briefing documents.

Ms Munro : My apologies, it is a billion from CSIRO, CRCs and ARC over the decade. So that's why you were looking askance at us, because we were referring to an order of magnitude incorrectly. I'm sorry about that. It's correct in the road map footnote.

Senator McALLISTER: So we think a billion from the ARC, the CRCs and CSIRO, the $13 billion from the CEFC?

Ms Evans : That's right.

Senator McALLISTER: $14 billion from ARENA?

Ms Evans : $1.4 billion.

Senator McALLISTER: Over the decade?

Ms Evans : Yes.

Senator McALLISTER: So that's a decadal figure. But the CEFC is expressed as an annual figure in the footnote, but actually you're saying it's $13 billion over the decade?

Ms Evans : That's right, $13 billion—

Senator McALLISTER: Perhaps if you gave each of them to me in the version of the decade. This is the problem with the way it's articulated in the footnote. It's a little hard to tell.

Ms Evans : So the CEFC over the decade is about $13 billion—$1.4 billion from ARENA; $2.9 billion from the emissions reduction fund, which I think has already got you over your $18 billion; and then we just are saying there as well as that we know that CSIRO, CRCs and ARC have a combined total of a billion over the decade as well. So it's conservative to say that there would be about $18 billion over the decade invested by the Commonwealth in these types of technologies.

Senator McALLISTER: That helps and provides a helpful baseline for the rest of the discussion. I'm interested in how these funding commitments are going to work. So does it mean that these organisations are now directed to focus their support on the five priority technologies? And I'm thinking particularly of ARENA, the emissions reduction fund and the CEFC.

Ms Evans : Certainly for the CEFC and ARENA the government's been quite clear that its expectation is that they will orient themselves to support the road map, not limited to the five stretch goals, the five priorities, also to looking at the enabling and emerging technologies. So it's broader than the stretch goals. But nonetheless, they are expected to orient themselves to support the technology road map.

Then the Clean Energy Regulator would still be administering that funding through the emissions reduction fund. The expectation is that as the technologies come down the cost curves you'll be able to create methods that are going to be able to compete through the Clean Energy Regulator's auctions as well. So they'll start to contribute to that.

Senator McALLISTER: So the $2.9 billion—

Ms Evans : That is the whole funding for the emissions reduction fund. So it does cover all of the things that are already being supported by that as well as the new things that will come through the road map.

Senator McALLISTER: So is there an anticipation then that the things which the Clean Energy Regulator presently funds through established methods or methodologies that are not aligned with the technology road map will cease to be funded?

Ms Evans : No, that's not the case. It is an estimate and, as I said, once you pull in also some of that CSIRO funding then the total number here is bigger than $18 billion. So there's a bit of room there for some of the funding from the Clean Energy Regulator to continue to be used in some of the areas that it is already used.

Senator McALLISTER: Do you have an estimate of how much of the $18 billion would go to the five priority technologies?

Ms Evans : No, I don't think we do. We could take it on notice to see whether there's something we can do to break that down. But I don't think we have tried to do that.

Senator McALLISTER: Minister, when you said the government is providing increased investment as part of the energy technology road map, I'm struggling to understand what you mean by 'increased', because it sounds like the investment that's promised is just the existing money repackaged.

Ms Evans : The $1.4 billion to ARENA in particular is new funding announced through this budget process.

Senator McALLISTER: Yes but is it an increase on ARENA's operating arrangements?

Ms Evans : ARENA's funding as it stood prior to this would have finished under their act in 2022. This funding will give them funding right out till 2030.

Senator McALLISTER: So it's really a continuation of existing practice?

Senator Birmingham: It's $1.4 billion for ARENA that had not previously been budgeted. So it is real additional funding in that regard for ARENA. There's some $95 million associated with the technology co-investment fund. There's $5.2 million associated with the low emissions technology statements as part of the road map. There's some $74.5 million associated with the Future Fuels Package that I referenced before. There's $70 million associated with the regional hydrogen export hub and there's $50 million associated with the carbon capture use and storage development fund. There's $52 million associated with energy productivity homes and businesses broken down between some $28.2 million related to energy performance of residential and commercial buildings; $12 million for grants programs supporting hotels' equipment, facilities et cetera; $13½ million for WA-based micro grid programs in remote communities; $4.8 million for other abatement work spread across this department and Geoscience Australia; $54 million associated with the regional and remote communities reliability fund and pilot studies also related to micro grids; $25 million associated with better emissions and energy data management reporting; $3.7 million for state energy and emissions reduction deals; $4½ million—that's a variation, sorry—in relation to some of the legislative changes associated with CEFC; some funding associated with cybersecurity that relates to supply reliability and security—

CHAIR: I suggest that you table it. I think you've made your point, but we are running out of time to ask questions.

Senator Birmingham: Sure.

CHAIR: Thank you. Senator McAllister.

Senator McALLISTER: How might the CRC or ARC resourcing in projects be affected by the new approach? I understand the explanation you have provided around a conservative projection against existing commitments into the future. Is there an intention to change the criteria by which CRC or ARC funding is provided?

Ms Evans : Not to my knowledge, but the expected impact of the road map itself is by being there, by being clear about what the priorities are for the government by setting out the clear statement of the direction. We would expect the private sector and some of the research organisations to take account of that as they think about their priorities and that would have some impact on the way that they are organising themselves. So it's not a formal change but we expect that, as a result of the leadership that is being shown there, there will be an effective change at some point.

Mr Fredericks : There is a currently lived example of that with the CSIRO. You probably recall that the CEO of the CSIRO announced a couple of months ago their new commitment to a series of challenges. Those challenges are, to some extent, reflective of some of these technologies. Hydrogen is the one that comes to mind. There is a real endeavour here, by a range of means, to align as much of the research capacity of the CSIRO and others hearing the signal and following on to these technologies. The CSIRO is a good example of that.

Senator McALLISTER: Ms Evans said there is no intention to establish a formal change of arrangements in relation to the CRC or ARC processes. Can the same be said about the CSIRO priorities?

Mr Fredericks : CSIRO, in a sense, has acted in its own endeavour; it determined those challenges itself. But the sorts of technologies we are discussing here in the tech road map—

Senator McALLISTER: That's okay. I am trying to ask a process question. Is there a process within government to try to align these other programs that sit within the industry portfolio? Or are you, as has been expressed by Ms Evans in relation to the CRC, just going to let things take their course?

Mr Fredericks : I'll answer that in anticipation of industry estimates as well. The implications of the Modern Manufacturing Initiative are that consideration will indeed be given to some guidance to these programs, CRC and CSIRO, which are in our portfolio, and to the priorities that the government has identified, both in the Modern Manufacturing Initiative and otherwise.

CHAIR: Senator McAllister, is this a good time to go to clean, or have you only a couple of questions left in this process?

Senator McALLISTER: It's a good time.

CHAIR: It's useful to hear what Ms Evans was going to say.

Ms Evans : I was just saying that clean energy is one of the five priorities that is identified under the Manufacturing Modernisation Fund. That is deliberately aligned with the new technology road map, so you can see them starting to influence each other in that way.

Mr Fredericks : It is also reflected in one of the CSIRO challenges.

Senator McALLISTER: The only thing I am asking for is whether there is any departmental government mechanism to generate this alignment or whether it is happening—

Ms Evans : CEFC—and it is just an example—have an investment mandate. We also write statements of direction. Those sorts of tools exist for all those organisations. It is not clear yet whether it is going to be necessary to express any direction through those to force an alignment, because we think the effect of having a clear statement of priorities is in some ways going to be enough for those organisations to align themselves in any case.

Mr Fredericks : That has been a lived example thus far for CSIRO, for example.

Ms Evans : But the tools exist down the track. If there were a need to exercise more effort to ask for that alignment, that would be there, and it would be a choice for the government to use those tools or not.

Senator WATERS: Sticking with the tech road map, for the five technology stretch goals there is obviously a price. What is the time frame in which you are seeking to meet those stretch goals?

Ms Evans : They have not been given a time frame. The tech road map does not set any particular dates as targets, but we are working through. One of the next stages of the road map is to look at deployment pathways. We have already done some analytical work to look at what might be possible by 2030, by 2040, by 2050. Some of that has informed, for example, our estimates of some of the abatement potential in the road map. When we say we can get to 250 million tonnes globally through these technologies by 2040, some of that has been informed by some of our early work on what those deployment-type pathways would look like, but we do not have a specific target. What we do know is that, as soon as we can get to those kinds of levels of cost for those technologies, then we will see rapid deployment, because it becomes so commercial to do it. In some ways, our work on the deployment pathways will be scenarios about how quickly we can get there, rather than having a specific target date.

Senator WATERS: So with those deployment pathway scenarios, what is the earliest year that you are thinking we might have a scenario, and what is the latest scenario that your pathway is in?

Ms Evans : It depends on the technologies. Some of them have the prospect of coming on earlier. Some of the storage goals we could see quite early. When I say 'early', the road map has always been at a slightly longer term—say a 2030 time frame. Hydrogen—maybe by 2030 we will see some; we think we will see much more by 2040 and 2050. For some of the others it really does depend, but it is that sort of time frame that we were looking at between 2030 and 2050; that is the sort of range.

Senator WATERS: Thank you.

Ms Munro : One of the core features of this is that it is an adaptive approach. So built into this and continued resourcing for the department is to monitor its impact on how we are going along these pathways.

Senator WATERS: I have some questions about the measurement of effectiveness of the strategy. I might come back to those. I will stick with the technical stuff first. Have you got goals for the amount of deployment you want to see in each of the five different technologies?

Ms Evans : Not goals for the deployment. But, again, each one has been set as that dollar stretch goal, stretch target.

Senator WATERS: Okay, so you have a dollar measurement. Do you have, for example, a megawatt amount?

Ms Evans : Not at this stage. Again, what we are working on with the deployment targets is to say: 'If you get to this kind of a cost, what could you expect to see in terms of deployment?' That answer will come out or fall out as an answer rather than being a target.

Senator WATERS: You just referred to a 'deployment target'.

Ms Evans : Yes.

Senator WATERS: I'm sorry; there is so much terminology here I'm getting confused.

Ms Evans : It's alright. We are working on the costs of the technology. So that is the objective.

Senator WATERS: You're calling the costs the 'deployment target'?

Ms Evans : I may have misspoken; I can't remember exactly how I expressed it just before. The way we are working on this is to say that if you can force the costs down, if you can bring them down to a particular level, you will see deployment expand. That is what we are trying to achieve. So we are focused very much on the dollars, the cost aspects that are set out in the road map. Then the deployment effect of that is what we will try to estimate over the coming few months while we work on these deployment pathways—so what you can do to bring those technologies in as early as you can. In some applications you can bring them in at higher cost points; at others you need the lower cost points to bring them in.

Senator WATERS: Is that for private as well as public investment, presumably?

Ms Evans : The concept behind the road map is for this to be very much a joint private-public partnership, and not just with the Commonwealth government, or the departments of state, but bringing in all the parts of the Commonwealth and then working with the private sector, in particular, and the state governments as well through the state deals.

Senator WATERS: When you say you are working on those deployment pathways over the next little while, is there anything further that you can provide me on notice regarding the work that you have done so far on that?

Ms Evans : I am happy to take it on notice and we will look at doing some kind of a summary of the work we have done to date.

Senator WATERS: Yes, thank you; that would be helpful—including any assumptions that you are basing your pathways on.

Ms Evans : Yes, because there are a lot of assumptions and it starts to become a really large piece of work. But we will look at what we can provide you that is reasonable.

Senator WATERS: Thank you.

Ms Evans : The whole process with the road map, again, is supposed to be very engaged. We did a lot of public consultation along the way. It is our intent to continue that. We are trying to be very open about what we are doing and how we are doing it. When the time is right we will be able to put all of those assumptions into the public domain.

Senator WATERS: Okay. When do you anticipate that might be?

Ms Evans : I don't know. Some of that work is not yet done. We will have to do it and then we will be making it public. We will be looking to make as much public as we can as we go forward.

Senator WATERS: Great. Is there a definition yet of 'clean' or 'low emissions'?

Ms Evans : It's a good question. We debated this in the process of working on the road map. At the end of the day, the sense is that we are shooting for very low emissions. The question was—it was always—does it have to be zero? In the end, the way we were coming at that is that, if it is very low and close to zero, then you are essentially clean.

Senator WATERS: Okay. So, for example, for hydrogen, how low would it need to be to be considered clean hydrogen or green hydrogen as opposed to grey hydrogen?

Ms Evans : You obviously have choices about how you produce hydrogen, whether it is from renewable resources, in which case it is considered to be zero emissions, or whether it is blue hydrogen. So fossil fuel based hydrogen using carbon capture and storage can still reduce the emissions to a very low number; it may not be zero because you cannot get necessarily 100 per cent of the carbon captured and stored. But because of the way hydrogen is produced you can get that to a very high percentage. I am probably going to the end of my technical knowledge to be able to tell you here what that percentage is, but I know a very high percentage can be captured.

Senator WATERS: I am less interested in the success or otherwise of CCS because that is a whole other debate, and more interested in precisely what you are defining 'very low' to be in the context of hydrogen.

Ms Munro : Maybe if I just take one step back, because the tech road map states that it does cover technology in the broadest sense. That is the deployment of existing new and emerging scientific and engineering applications to include methods, systems and devices that reduce emissions or improve energy, reliability, security and affordability while reducing emissions. So it is a broad approach.

Senator WATERS: I understand that sort of general approach, but I'm after what you're defining to be 'clean' or 'low emissions'. You have said, 'very low'. But is there anything clearer on what that means?

Ms Evans : No, there isn't. That was exactly the discussion we had: can you put a number on it? Essentially the sense was no. As long as it is genuinely getting to the point where you could not reduce it any further, then that is low. I am not trying to create any ambiguity there because I do not want you to say that you can't reduce gas emissions further than what they are when you burn it. That's not what I meant.

Senator WATERS: I was going to say that with blue versus green; you can reduce blue by making it green.

Ms Evans : Yes. But all of the technology was saying, 'Let's look at anything that can genuinely get to a very low level and let's not rule out things just because they can't get absolutely to zero.'

Senator WATERS: It sounds like very low is as far as we'll progress at this point.

Ms Evans : That's as far as we could get, in the group of quite eminent minds who put themselves towards thinking about how you could talk about this in a sensible way.

Ms Munro : It is completely consistent with the National Hydrogen Strategy which, as you know, was agreed by all of the states and territories with the Commonwealth. That definition or approach to clean hydrogen is one which is both in the low emissions technology statement and in the National Hydrogen Strategy.

Senator WATERS: How will you track what role the Commonwealth plays in bringing down the prices, given that, as you alluded to before, there are other factors at play, including global markets? How are you approaching measuring the success of the government's intervention in reducing prices?

Ms Evans : It's another good question, Senator. The answer right now is that we don't know exactly, but we know that we have to come up with a manner of doing that. With the tech roadmap, the statement that we put out this year said that that kind of approach—figuring out the monitoring and evaluation approach—will be a key part of the statement that we will work on over the next 12 months, in the iterative, adaptable approach that Ms Munro referred to before.

Senator WATERS: Okay, so over the next 12 months.

Ms Evans : These are challenges. ARENA has had the same issue in looking at how effective it has been in some of the work that it does. There's a constant sense of thinking, 'What is it that the Commonwealth has done?' or 'What is it that ARENA has done?' These are questions that have been around for a while, and they are quite difficult to tackle, but we are quite determined to work with the government to come up with a framework that can work.

Senator WATERS: On the figure of the reduction of 250 million tonnes per annum by 2040, can I clarify whether that is your goal for the Commonwealth's investment in the technology or that is your goal for the technologies themselves for investment by both government and private to reduce overall? Is that the bit that you want to try and claim and take credit for?

Ms Evans : No.

Senator WATERS: Or is that what you hope those globo technologies will be able to achieve?

Ms Evans : That's where we think there is a combined effort. One of the measures of success will be exactly this sense of leveraging private sector funding. The tech roadmap sets out that there is an expectation there that we will get $3 to $5 for every dollar that the Commonwealth invests. That ambition is definitely there. That will be a key measure of success. The 250 million tonnes is an estimate of what the overall impact would be of that mobilised investment from everybody in these technologies.

Senator WATERS: Yes, I understand.

Senator Birmingham: Private investment is relevant because, of course, the ambition is to get ultimately to commercially sustainable outcomes. Just as we have seen in areas of household solar, for example, households now drive demand because of the change in commerciality as much as their desire to make a contribution to emissions reduction. The ambition of these stretch goals is to create circumstances where the technologies are such that households, businesses and other countries adapt them because they are commercially viable.

Senator WATERS: Thanks, Minister. What is the modelling of that amount?

Ms Evans : The modelling of the 250 million tonnes?

Senator WATERS: Yes, the 250 million tonnes per annum reduction; is there some, and can you provide that to me on notice?

Ms Evans : I would describe it more as analytical work rather than modelling. I would call it analytical work looking at each of those technologies and what potential it might have if it was deployed both in Australia and—

Senator WATERS: Is that internal departmental work?

Ms Evans : Done by the department; yes, that's right.

Senator WATERS: Can that be provided on notice?

Ms Evans : We can take that on notice and see what we can—

Senator WATERS: Thanks very much. With the jobs figure—the 130,000 jobs—is that a figure that you're saying just the public investment would create, or once again is that what these technologies could create with both private and public investment?

Ms Evans : It ends up being a combined effort—

Senator WATERS: The latter; okay.

Ms Evans : For every dollar that the Commonwealth spends, we think that a certain number of jobs will be created through that, including through the leveraging of private sector capital.

Senator WATERS: Yes, I understand. Again is that based on modelling or analytical work?

Ms Evans : I would call it analytical work. We use a bunch of information that helps us to make good judgements about what we can do.

Senator WATERS: If you are able to provide any of that on notice, that is also a request.

Ms Evans : Can do.

Senator WATERS: Will there be an attempt to quantify this roadmap into emissions reductions as part of the next set of emissions projections in December?

Ms Evans : Yes, some components of it will be included in the projections in December—not necessarily all of it.

Senator WATERS: Do you know which bits will be?

Ms Evans : No. We will make a determination, as we always do with the projections, about what we have enough concrete commitments around to include. For example, the funding here for ARENA might have some impact, although it's quite long term, in terms of when the emissions reductions might come. We will include what we definitely can. Some of the roadmap areas are still at a level where it would be harder to do that. For example, with the soil carbon measurement stretch goal, how much that would contribute by 2030 is probably something that's a little bit more difficult for us to put a measure on right now. Some of it will be in but some of it won't.

Senator WATERS: With the clean hydrogen stretch goal of $2 a kilo, what's your assessment of the current cost of CCS hydrogen versus the current cost of renewable hydrogen? What figures are you working on at the moment for those two things?

Ms Evans : I might have to take that on notice, unless my colleagues—

Ms Munro : I don't have that with me.

Senator WATERS: Okay. There's a statement on page 18 of the roadmap which doesn't have a footnote, so I'm asking on what evidence the statement is based. The statement says:

Clean hydrogen from off-grid gas with CCS, and coal gasification with CCS might be the lowest cost clean production methods in the short-term, although renewable production methods will come down in cost as clean hydrogen demand grows.

On what evidence was that based?

Ms Evans : I'll take it on notice. Certainly, we had Dr Finkel and a number of other experts in gas and hydrogen. Ben Wilson from AGIG is the other name that I was trying to recall. We had a lot of expertise to help us frame some of the elements of the roadmap. I will take it on notice and come back with a specific answer.

Senator WATERS: Thank you. Are you familiar with the Asian Renewable Energy Hub project?

Ms Evans : Yes.

Senator WATERS: There was a reference in the Guardian on 3 October that they could create green hydrogen for less than the government's benchmark of $2 a kilo already.

Ms Evans : Fantastic.

Senator WATERS: Yes. How do you explain the discrepancy between yours being a stretch goal and what this mob say they can already deliver?

Senator Birmingham: If they can deliver it and they are looking for financing, they should get their application in to the CEFC.

Ms Evans : We would be very excited if they could deliver it at this stage. Our sense is that it will still take quite a bit of work to bring the cost of some of the elements—electrolysers in particular—down to the kind of level that we need to get to $2 a tonne. But if they think they can do it already, we would love to hear from them.

Senator WATERS: I have no association with them, for the record.

Senator Birmingham: For the record I think I have met with them at one stage.

Senator WATERS: Have you? On notice, please tell me more.

Senator Birmingham: I think it was a little bit earlier in the process.

Senator McMAHON: I have just one question. What have the IPCC and IEA said about carbon capture and storage? Do they see a role for this technology if we are to meet the goals of the Paris Agreement?

Ms Munro : Both the Intergovernmental Panel on Climate Change, the IPCC, and the International Energy Agency have concluded that the Paris goals can't be achieved without carbon sequestration deployed at scale. A recent report by the IEA noted that CCUS technologies presented the only solution, as we were discussing earlier, for some of the hard-to-abate sectors, including cement, provided a cost-effective pathway to clean hydrogen and underpinned critical negative emissions approaches that will be needed to underpin a net zero energy system.

In relation to the IPCC—this was in their 1.5-degree report—over 90 per cent of IPCC scenarios consistent with a 66 per cent chance of avoiding a two-degree Celsius temperature rise rely on negative emissions technologies. All scenarios which were consistent with a 50 per cent chance of keeping temperatures to 1.5-degree Celsius require negative emissions in addition to deep emissions cuts. Both the IPCC and the IEA have pointed to a role for CCUS if there is aspiration to meet the goals of the Paris Agreement.

Senator McALLISTER: I wanted to ask, as Senator Waters did, about the 250 megatonnes of abatement that is annually expected by 2040. Can you provide the annual abatement that is expected for 2030?

Ms Evans : Senator, to make sure that I understand your question, with the 250 million tonnes that's in the roadmap by 2040, do you want to know how much of that would have occurred by 2030?

Senator McALLISTER: Yes. I am trying to understand whether you have a profile. I assume that we don't start next week and we've got 250 million tonnes—

Ms Evans : No, that's right. It grows over time.

Senator McALLISTER: It grows over time.

Ms Evans : It would have to.

Senator McALLISTER: Do we have a pathway? Is that an outcome of the analysis that you've done?

Ms Evans : I'd have to take it on notice and look at what we've got. We did think about it. With most of these technologies, as we were speaking about before, the time frame in which they might start to be deployed is more 2030 to 2050. I think that most of the abatement is starting to occur, and 250 million tonnes isn't the final amount. I'm not sure by how much, looking at 2030, we will see the shifts because the technologies take a longer time than that to start coming on.

Senator McALLISTER: Ms Evans, I am not asking you to do new work based on the resources at your disposal. I am asking whether you have done analysis that provides a profile of the abatement that we would expect over time, or whether you've just done a point-in-time analysis for 2040.

Ms Evans : No, we definitely looked at the timing in which the technologies would be deployed, and that gives us the abatement. That's an over-time number. When we put it together, we thought that by 2040 those were the sorts of numbers, and 250 million tonnes is the number that we have. I can take it on notice and see whether we can bring that down, in any kind of a time line, earlier than that.

Senator McALLISTER: Could I ask you to table any documentation that exists within the department today that shows that kind of analysis, where there is a profile established over—

Ms Evans : Senator, I don't think we can do that today because it exists in a number of different places. We would need to bring it together. I'll take it on notice and provide it later.

Senator McALLISTER: It doesn't exist at the moment?

Ms Evans : No, we have done analysis. I don't know if we did it in a profile. As I was explaining before, we're talking about deployment pathways for the different technologies. They differ as you go along.

Mr De Silva : I was part of the task force that dealt with this roadmap. That analysis exists, and it is in spreadsheets. We have included the 2040 numbers, but we would need to do a little bit more work to get to 2030, because having regard to the way that the assumptions operate, we would need to check them against 2030, if we were coming up with a different set of numbers. However, all of that analysis exists and, yes, we can go through the full-time series.

Senator McALLISTER: Mr De Silva, you mentioned assumptions. Can I ask about the assumptions in terms of the specific technologies deployed? Does this analysis rely just on the five priority technologies or on a broader range of technologies than that?

Mr De Silva : It relies on the energy storage stretch goal, the steel and aluminium, and the soil carbon. I can explain why CCS is not included in that. There is a lot of variability with it; so, in order to be conservative, we left that out. Those are the stretch goals to which it relates, as well as the hydrogen, of course.

Senator McALLISTER: Four of the five stretch goals are included?

Mr De Silva : Yes, that's right.

Senator McALLISTER: Are any other technologies included in addition to the ones you've named?

Mr De Silva : No. The statement makes it clear that it's in relation to the deployment of the priority technologies that that figure arises.

Senator McALLISTER: You must have also made assumptions about the cost of tech deployment to hit that 250 abatement target. What was the total investment required to meet that?

Ms Evans : I think the way we approached it was more by saying, 'If you've achieved the stretch goal how much deployment will have occurred by 2040?' So we haven't necessarily backed that out to imply how much investment that was going to take.

Senator McALLISTER: Are you saying that this 250 million tonnes does not come with a cost estimate in terms of the economic cost of delivering this?

Ms Evans : Because the nature of stretch goal is saying, 'If you get this technology down to this cost it is economic to deploy it,' there isn't—

Senator McALLISTER: It is still an economic cost though. This is an argument we've gone over and over, isn't it, in the public debate? I am asking you whether an economic cost for this road map has been prepared by the department.

Senator Birmingham: What is the cost of a technological breakthrough being achieved by a certain point in time? That, obviously, is highly dependent upon what breakthroughs occur in the iterative steps towards achieving those technological outcomes. And the range and the drive of how much private sector is incentivised to invest in that space versus how much government investment is required are all considerably variable. So the government has outlined initial scaling up of investment in terms of supporting these types of activations. But I think to try to put the type of figure you're seeking in relation to such a long time frame of quite variable steps to get there is not a particularly practical objective to seek at this point in time. It is something that will require constant re-evaluation and renewal as the road map itself envisages over time.

Senator McALLISTER: Minister, do you recognise this quote:

I don't sign up to anything when I can't look Australians in the eye and tell them what it costs.

Do you know who said that?

Senator Birmingham: Senator—

Senator McALLISTER: You do know who said it, don't you?

Senator Birmingham: I am assuming it was the Prime Minister that you are quoting.

Senator McALLISTER: It was the Prime Minister.

Senator Birmingham: And the Prime Minister, indeed, was talking about—we had this discussion already today—emissions targets of a long-term nature without there being clear plans of how you were going to achieve them. The tech road map is about developing the plans of how you achieve emissions reductions.

Senator McALLISTER: The thing is that you have just told me that you expect to deliver 250 million tonnes of abatement by 2040 and that you've got no cost and, as far as I can tell, no means by which any other branch of government will be engaged to deliver on the actions outlined here, which is exactly definitionally like the circumstances that you just described to me that are totally off limits for your Prime Minister. And I am trying to understand how this can possibly be consistent with the previous arguments made by your government.

Senator Birmingham: I don't accept the characterisation you've made in a number of ways there. Officials have outlined how a number of the strands of work under the tech road map are joined together with other areas of government investment and activity, and that will continue right through the deployment of the technology road map. The initial investments have been clearly outlined in relation to the technology road map. And the overall point of the focus on technology as the driver of emissions reduction and the vehicle to achieve emissions reduction outcomes is to get to a stage where stepped changes can ultimately be achieved because you've got new technologies that are commercial and don't by that point necessarily require government intervention or government cost or support.

Senator McALLISTER: I'm not interested in the cost to government. We know the cost to government because it has been provided in the road map. It's $18 billion. I'm interested in the economic cost. And the question I am asking officials is: has the department calculated the cost of deployment of these technologies to 2040 to achieve 250 million tonnes of abatement—yes or no?

Ms Evans : I think these answers are always more complicated than yes or no. The deployment pathways for these technologies are going to be not just affected by what happens in Australia, they'll be affected by what's happening globally. And the point—

Senator McALLISTER: Yes, and it requires a range of assumptions. But have you made those assumptions and made a calculation based on reasonable assumptions?

Ms Evans : The assumption that we're driving off is that once you achieve one of these economic stretch goals there isn't an economic cost of deploying the technology because they are already competitive. In fact, they become the natural choice for deployment. So at that stage there isn't an economic cost.

How much is it going to cost us to get to the stretch goal? That's another question. In the first instance we know through the road map—we've talked about the $18 billion—that we will be able to invest and the leverage that that will bring from the private sector. But the motivation behind the way the technology road map is written is to say, 'How do you find the things that can lead to substantial emissions reductions without imposing an economic cost?' That is the philosophy that is there behind it. And the stretch goals are set precisely on that basis. How do you find the cost level at which these technologies become the natural choice of very rational economic actors to pick up without imposing any extra cost on them?

Senator McALLISTER: The stretch goal for carbon catchment storage is $20 a tonne, right?

Ms Evans : Yes.

Senator McALLISTER: Are you saying that it is then, once it reaches that price, free, that there is no economic cost?

Ms Evans : No. To be fair, you have chosen the one of the five where the characteristic of that goal is a little different, because for carbon capture and storage, unlike all of the other things, for hydrogen—that's a genuine fuel choice, no matter whatever the situation is—for carbon capture and storage you would need to be doing it explicitly to do an emissions reduction activity. And we say in the road map that that might need some specific interventions to have that particular technology moved forward. But for the others, they are definitely in this realm: if you get the technology down to a particular cost they will simply become the natural choice.

Senator McALLISTER: I am absolutely intrigued that this is the argument the government now chooses to run, that we don't need to do an economic cost assessment because once things are cheap enough they are effectively free. This is absolutely incredible—

Ms Evans : I didn't say they are effectively free. I didn't say they were free.

Senator Birmingham: Once—

Senator McALLISTER: You have a free pass, a leave pass, on economic costings now. You can have a plan that runs to 2040 that you don't have to cost. Will that same standard be applied to other participants in the political debate in the future, do you think, Minister?

Senator Birmingham: Sure. You're the party that has committed to a 2050 target without any consideration as to how you're going to get there. We have committed—

Senator McALLISTER: You are now a party—

Senator Birmingham: No. I didn't interrupt you, even though you interrupted me before. So we are the party that is committed to a 2030 target with a clean plan, clearly costed and outlined, as to how we will achieve it. These stretch targets and the technology road map take us beyond the 2030 target. And what we have indicated we will do is consistent with our commitment to the Paris accord. We will then commit, under the Paris accord, to a 2035 target that will be informed by the progress we make on the technology road map that demonstrates, indeed, how it can be done, how it can be done in a way that doesn't undermine the competitiveness of the Australian economy and how it gets us there.

You don't have a 2030 target. You don't have any idea how you are going to reach a 2050 target. So don't come in here and lecture us about the economics or the costings or the otherwise. We have been very clear about the steps we are taking to deal with this in a responsible way.

Senator McALLISTER: You have tabled a document that states that you are going to reach a certain amount of abatement by 2040. You have made assumptions about the technologies that you will deploy to reach that abatement, which as yet have not been public. Those are secret and exist in a spreadsheet administered by Mr de Silva. I think it is reasonable for the assumptions and the associated economic cost associated with this plan to be made public. It is perfectly possible to do it based on the analysis that has been undertaken in the department. I am absolutely mystified why your Prime Minister, who has made a series of very robust public statements about the importance of costing, about the fact that he will not sign up to anything unless he knows the cost, has signed on to this. Why hasn't this analysis been done?

Senator Birmingham: What we have in this tech road map are projections, projections based indeed on a series of assumptions, and the officials have taken some questions on notice about that. But they are projections. What we have made in relation to 2030 is a commitment to a target, a commitment to achieve it, just as this country has achieved its first Kyoto target, achieved its second Kyoto target and is committed to achieving its Paris 2030 target. They are commitments. Don't confuse commitments with projections that are in documents underpinned by a series of assumptions there.

Senator McALLISTER: So this is not a commitment; this is just a projection?

Senator Birmingham: The technology road map—

Senator McALLISTER: That is the distinction that you seek to draw?

Senator Birmingham: The technology road map involves a whole series of commitments and investments that have been made by government to seek to achieve outcomes. We don't sit here and pretend that we can, with a crystal ball, decades into the future, know exactly at what point hydrogen is going to become the competitive fuel of choice for the future. But we do believe it can reach that stage, which is why we are investing in it, and it is in Australia's competitive advantage for us to invest in that because it can help us economically in a trade sense and to meet our emissions targets. And, indeed, assumptions have been made to inform the tech road map and the outcomes that could be achieved from it. But don't conflate the differences between the commitments we have made under 2030 as part of the Paris Agreement that we have modelled and demonstrated how we will achieve versus then projections as to where we think the technology road map can go, which will be updated as the tech road map makes very clear as we continue our different stages of investment in it.

CHAIR: Senator McAllister, can you wrap up in the next couple of minutes, please.

Senator McALLISTER: This is a new and intriguing distinction from a government that loves announcements. So when you make an announcement that is accompanied by a glossy booklet—mine's in black and white—and you say that you are going to over-achieve on your Paris Agreement commitments, you are going to support 130,000 jobs and you are going to avoid in the order of 250 million tonnes of emissions per year by 2040, and you put all that down on paper in a big announcement, that's no longer a commitment, that's merely a projection; it doesn't need to be costed and we shouldn't expect anything from it. Is that your evidence, seriously, to this committee this afternoon?

Senator Birmingham: I stand by every word I've said. I won't have you put words in my mouth or seek to translate it. Our plan is about increasing investment, delivering on the investment that we've outlined in the budget. Our plan is there very clearly around the aspirations we also have in the tech road map. And we are committed to the investments we've made in trying to realise those aspirations, absolutely. You can't even tell me your 2030 target. You can't tell me your 2030 target. You can't tell me your policy on anything. Your party is not agreed in terms of how it handles matters like Liddell. All you've got is a 2050 target without the faintest idea of how you are going to get there.

Senator McALLISTER: I'm done, Chair.

CHAIR: Thank you very much. In that case, as we discussed earlier, I plan now to move on to ARENA who have been lined up to appear at 4.15.

Mr Fredericks : Can I confirm that the officials for outcomes 2.1 and 2.2 can be excused, please?

CHAIR: Correct.

Mr Fredericks : Thank you.