Government Senators' Report
These bills implement the Government’s mandatory renewable
energy target. In his Second Reading Speech, the Minister noted that the measure
incorporated in these bills has the multiple objectives of:
- Accelerating the uptake of renewable energy in grid-based
applications, so as to reduce greenhouse gas emissions;
- Providing an on-going base for the development of commercially
competitive renewable anergy, as part of the broader strategic package to
stimulate renewables; and
- Contributing to the development of internationally competitive
industries which could participate effectively in overseas energy markets.
The Government members of the Committee note that the
Committee’s report as a whole endorses the Government’s measure and its
objectives, and we note that the majority of the report’s recommendations
reinforce and reiterate actions already provided for in the bills either by
regulations, or by future review. However, the report also contains a small
number of recommendations requiring changes to specific provisions of the
bills. The Government members do not agree with two such changes in particular
– the recommendation under 1.41 that native forest waste should not be regarded
as biomass; and the recommendation under 1.72 that the $40 per MWh certificate
charge should be changed to an unspecified level.
The Government members are of the view that the exclusion of
forest wastes from the description of eligible biomass is contrary to the
objectives of the renewable energy measure and if included would damage its
integrity. As to the value of the certificate charge, any arbitrary change at
this late stage would negate the comprehensive and painstaking consultation
process that all stakeholders have gone through to develop this measure. And
to leave the value of the certificate in abeyance as this recommendation
appears to suggest will certainly destroy any certainty the renewable energy
industry and the liable entities representing the existing industries both
demand.
In the course of this Inquiry, the Committee heard evidence
from the Australian Greenhouse Office that the only other example of mandatory
renewable energy target extant is in a limited number of states in the United
States where the target is voluntary at the national level. These bills when
brought into force will therefore put Australia in the forefront in the
world-wide effort to reduce greenhouse gas emission systematically.
It is therefore encouraging to find an underlying mood of
agreement throughout this Inquiry, as noted in the Committee’s report.
However, this same mood may have led the Committee into a false sense of
optimism when assessing the evidence presented to it, to give greater weight in
the balance of consideration to quantity rather than quality, to volume rather
than precision, and to preference and inclination rather than rational
analysis. This gives rise to a real concern that the issues identified as of
significance may not be of real importance, so that the recommendations that
follow do not serve to facilitate the purpose of this legislation, or indeed
may impede it.
For example, the Committee report demonstrates considerable
doubt as to whether biomass, in particular forest waste, should be counted as a
renewable energy source. A number of witnesses including the Australian
Conservation Foundation pressed the argument that this in combination with the
existence of a target floor price “could potentially drive and really support
existing woodchipping operations”, and provide an economic reason to “actually
drive the burning of native forest woodchips”. The research that enabled this
assertion was described by a witness as follows:
“.... of the research I did in asking various
environment groups and also in looking through newspaper articles at the cost
of woodchips, the lowest cost woodchips that I could find were $30 per tonne, a
medium cost was about $50 per tonne and, generally, from what I saw reported in
the papers and from some other sources, it was between $70 and $100 per tonne.
On that basis I made the classification of low, medium and high cost.”
On the other hand, Professor Hamilton, representing the
Australia Institute and who was by no means an uncritical witness, stated that:
“... if you have wood
waste lying on the forest floor after logging, it will release its carbon
dioxide either by being burnt on the forest floor or by rotting, or you can
chip it and put into a coal fire power plant or a bespoke energy facility. It
is better to turn it into energy rather than see the carbon just emitted into
the atmosphere for no beneficial purpose.”
And
further,
“... the environmental problems associated with
logging should be tackled not through ... renewables (sic) bill but through the
other processes in place, particularly the RFA processes.”
Nevertheless, in the face of such
contrary evidence, the Committee then goes on to reject the RFA process as a
safeguard without a reasoned argument, and recommend native forest wood
products and wood wastes be specifically excluded from the list of eligible
renewable energy sources. It is this display of leap of logic that puts the
Committee’s recommendation in doubt. The Government members do not support the
Committee’s recommendation 1.41 with reference to the Renewable Energy
(Electricity) Bill 2000.
The Committee also seems to have entertained an assumption –
without justification - that the objectives of the measure will be and must be prioritised,
that a balanced approach should not be attempted.
The issue of the appropriate
level of penalty at $40 per MWh was challenged by a number of witnesses
representing environmental groups and some windpower generators. Australian
Greenhouse Office in substantive evidence went to considerable details to
explain that this penalty, or certificate charge as it is correctly termed, has
a dual function, as an incentive for compliance and to meet a need to limit the
exposure of liable parties to much higher than expected costs. The $40 per MWh
level was a “carefully modelled outcome” which has been workshopped, peer
reviewed and publicly released during the two-year consultation process that
has resulted in these bills. For the Committee to ignore this evidence, and to
recommend that this consultation process should be revisited, will serve no
other purpose than to delay the realisation of Australia’s Kyoto commitment.
In view of the enthusiastic
support given to this measure by the majority of submissions received the
Committee with, as noted in the Committee’s report, with even those suggesting
amendments urging that its implement should not be delayed, the Government
members believe that the Committee has erred to recommend changes to the
certificate charge provided in the Renewable Energy (Electricity)(Charge) Bill
2000.
Senator John Tierney
Senator for NSW |
Senator Tsebin Tchen
Senator for VIC |
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