Government Members' Dissenting Report
[The EWP is] a very skilled paper,
and I’m sure the government has sweated long and hard over it, because of the
difficulty of the issues. But I think there’s a very clever piece of wording
when the Prime Minister commented on Kyoto, he says that human-induced climate
change is one of the major challenges confronting the world this century, and
he goes on to say the potential for climate change is real.[237]
As the Prime Minister notes in
his foreword to the Energy White Paper, quoted at the head of Chapter 2 of this
Report, the Government's approach to energy policy for Australia
to meet the challenges posed by human-induced climate change has been
underpinned by three themes – prosperity, security and sustainability. The EWP
is the outcome of a comprehensive review to provide a long-term framework to
ensure that Australia's
energy policy will achieve the balance of Australia
meeting all its international obligations in ameliorating the effects of global
climate change and utilising our energy advantage for the benefit of all
Australians.
The emphasis of the EWP is
therefore that of action over the long term, in a timeframe that is appropriate
for the consideration of both the processes and the effects of climate change.
As the Committee heard from Ms Kathleen
Mackie of DEH:
The time
horizon that we focused on was 20 to 30 years, but it was also to try to
establish Australia's energy policy position so as to go beyond
that as well. [238]
Nevertheless, the Committee's Report
appears to have deliberately misunderstood or ignored this important focus of
the EWP, and persistently frames its recommendations in terms of the limited
ability of existing and developed technologies to deal with climate change
issues. Government Members of the Committee believe that this is a clear
indication that this inquiry into EWP was a cynical exercise which sought to
promote a particular political agenda while brushing aside opportunities that
might be available to Australia.
A reasonable reading of the text of this Report would confirm our view of the
predetermined nature of this Inquiry – for example, although Chapter 2 of the
Report provides a comprehensive and concise overview of the EWP, including in
paragraph 2.28 a reference to the Government's rejection of the recommendation
of the 2003 Tambling Report to extend the MRET, because "[it] would impose
significant economic costs", paragraph 3.26 of the Report then claims
"the EWP fails to heed (our
italic) the advice from its own review panel ... to increase the MRET"!
The Government Members of the
Committee agree with the Government's long-held position that human-induced
climate change is one of the major challenges confronting the world this
century (see, for example, David Kemp's speech to Royal Institute of
International Affairs, 15 July 2002, [239]) and the EWP is a significant step
forward for Australia in addressing these challenges. The EWP takes into
account the energy needs for Australia's
future, at the same time ensuring that Australia
will not contribute to global warming.
Government Members of the
Committee believe that the EWP is a well-considered blueprint for the future of
Australia's
energy needs. It will ensure that, as time goes by, the energy sector will
reduce greenhouse gas emissions while maintaining affordable energy outputs to
meet the needs of Australian industry and domestic markets. There is real
incentive in the EWP for the development of alternate renewable energies as
well as scope to continue using fossil fuels for our energy requirements
without causing environmental, economic or social disruption.
In particular, we note the
Prime Minister's comment that:
The framework [of the EWP] is
backed up by substantial new initiatives, including additional incentives to
encourage petroleum exploration in frontier areas; a comprehensive reform of
fuel taxation to reduce the cost of fuel in business use; innovative trials of
solar technology teamed with leading edge efficiency technologies to
demonstrate “solar cities” of the future; a fund to generate at least $1.5
billion in investment to demonstrate low-emission technologies to reduce
greenhouse gas emissions from our energy sector; extra effort to back up our
world first Renewable Energy Target with new commercialisation assistance for emerging
renewable technologies; and a wide ranging effort to ensure the careful, prudent
use of our valuable energy resources by industry and the community.[240]
Government Members recognise
the concerns expressed in the submissions and by the witnesses to the inquiry
about global warming and CO2 emissions. However, we believe that the EWP more
than adequately addresses these concerns, therefore we do not support the
recommendations contain in this Report.
Comments to Committee Recommendations
Recommendation 1
The Committee recommends that the
Government, in consultation with energy interest groups and the energy
industry, develops a detailed long-term strategy that includes specific CO2
emissions reduction targets for 2010, 2020 and 2030, with the ultimate goal of
reducing greenhouse emissions by at least 60% by 2050. [para. 4.10]
The EWP makes it clear that the new technologies can be
developed through government incentives which will ensure that a broader range
of renewables are available on the open market to effect the reduction of
greenhouse gases. By increasing the range and lowering the cost of low-emission
technologies long-term emission reductions will be brought within reach.[241]
Recommendation 2
The Committee recommends that the
Government sets abatement timeframes and raises the abatement targets for
projects seeking funding through the Low-Emissions Technology Development Fund.
[para. 4.15]
Government members agree in principle to making the
Low-Emissions Technology Development Fund as efficient and economically
responsible as possible, and agree that review of the abatement timeframes and
targets may be appropriate if it proves likely to be effective.
Recommendation 3
The Committee recommends that the
Government:
- recognises that geosequestration is one of many
options for reducing Australia's CO2 emissions; and
ensures that the greater proportion of the Low Emissions Technology Fund is
made available to technologies which can provide emission reductions in the
short term;
-
fund only cost and abatement effective research
and development on the basis of the
principle that the polluter pays; and
- extend the life of the Low Emissions Technology
Fund to cover the timeframe set out for emissions reductions targets, namely a
reduction of at least 60% by 2050. [para. 4.24]
Government Members consider the EWP has addressed the first
point - the establishment of the Low-Emissions Technology Development Fund is
designed specifically to develop and demonstrate technologies which can provide
emission reductions.
Government Members consider simplistic the recommendation
that the polluter pays for research and development. Companies involved in the
delivery of Australia's
energy who were required to pay for research and development without support
from Government would pass these costs on to the consumer. The EWP, through its
excise reduction program and support of the development of renewables, aims at
reducing energy costs, not increasing them.
The Low Emissions Technology
Fund is expected to provide support for demonstrations in the period to 2020,
with possibilities for commercial uptake starting in 2020–2030.[242] The Government Members consider that
it would be premature to further extend the fund at this time before the
results of the scheme are known.
Recommendation 4
The Committee recommends that the
Government provide incentives to encourage the uptake of current energy
efficiencies, such as by adopting the NSW
BASIX energy efficiency scheme on a national
basis. [para. 4.28]
Government Members agree that the EWP addresses energy
efficiencies, and encourages uptake by:
- improving market
signals through reform of Australia's energy markets,
- continuing to
develop and update minimum energy performance requirements
- providing
information to consumers and businesses about the energy performance of
appliances and buildings
- encouraging firms
to identify and report on energy use and energy efficiency opportunities.
- requiring large
energy resource project proponents and businesses receiving fuel excise credits
of over $3 million per annum to join the Greenhouse Challenge
- working with state and territory governments to
improve the delivery of existing programs.[243]
Government members therefore believe that the EWP's approach
to the uptake of energy efficiencies will achieve results in accordance with
the need to reduce CO2 emissions.
Recommendation 5
The Committee recommends that the
Government continue to fund the Photovoltaic Rebate Programme (PVRP), and set
targets for the installation of stand alone (RAPS) Photovoltaic (PV) energy
systems and for grid-connected PV energy systems. [para. 4.36]
Government Members consider
this recommendation superfluous as the Government already supports the
development of photovoltaics and has placed photovoltaics in the Market
Leadership category, recognising that the technology deserves high government
support.[244] The Government has
recognised that the demand for this technology in the Asia Pacific region is
potentially large,[245] and the Solar
Cities trials will address current lack of rewards for the unique
characteristics of photovoltaics, and market barriers to energy efficiency.[246]
Recommendation 6
The Committee recommends that the
Government re-examine the projected costs of increasing the MRET to at least 5%
by 2010, to 10% by 2020, and 50% by 2050, and if it is not prepared to do this,
provide infrastructure grants for renewable energy developments. [para. 4.37]
Government Members believe this recommendation is also
superfluous. The EWP is clear about the Government's position on the MRET – it
will remain at current levels. As stated in the EWP,[247] the Government believes that the
cost of increasing the MRET cannot be justified.
The Government's position on
infrastructure grants for developing renewables is also clear. In the Solar
Cities trial program pricing mechanisms will be developed to ensure that
consumers will not be worse off during the trial period. Getting these signals
right in the market can have important economic and environmental benefits.
Delaying the need for new generation infrastructure will reduce costs and allow
more time for development of low-emission generation options.[248]
Recommendation 7
The Committee recommends that the
Government not proceed with the proposed reductions in excise on diesel and
petrol in the EWP, unless the decision to impose excise on biofuels and gaseous
fuels by 2012 is reversed. [para. 4.42]
Government Members do not support this recommendation. The
excise reduction on diesel is part of the Government's overhaul of the excise
tax regime. The advent of cleaner diesel fuel and more efficient and cleaner
engines will ensure that CO2 emissions will decline.[249] Excise on biofuels and gaseous fuels
is not, in the view of the Government, likely to reduce their use in country
areas. Fuel excise has been demonstrated not to be the driver of fuel usage.[250]
Recommendation 8
The Committee recommends that the
Government develop a more comprehensive policy framework that will set stronger
market incentives to invest in energy efficiencies and mandate standards for
CO2 abatement with specific, quantifiable and meaningful targets. [para. 4.45]
Government Senators note that this recommendation is
unnecessary as:
...Government incentives will ensure that a broader range of
renewables are available on the open market, thereby lowering the cost of
low-emission technologies and bringing about long-term emission reductions.[251]
Recommendation 9
The Committee recommends that the
Government move to review its own operations in order to achieve maximum energy
efficiencies and CO2 abatement prior to 2010. [para. 4.46]
Government Members consider that the EWP clearly outlines
the Government's plans to attain achievable efficiencies in CO2 abatement, and
shows that the current reduction in CO2 emissions is on track to meet the Kyoto
target by 2010.
Recommendation 10
The Committee recommends that the
Government introduce a carbon trading scheme, or at least provide support for
the States' carbon trading scheme, and mandate maximum levels of carbon
emissions for Australia,
according to diminishing benchmarks towards the goal of 60% by 2050. [para.
4.49]
Government members of the
Committee believe a carbon trading scheme is unlikely to achieve carbon
emissions reductions; the EWP's proposals to assist in the development and
demonstration of renewables is a better approach to achieving emission
reductions.
Moreover, we note that a carbon
trading scheme allowing transfer of carbon credits would work fundamentally to
maintain the real level of carbon emission in the developed economies without
restraining emission in the developing economies involved in the transfer. In
other words such a scheme would more likely work to retard rather than advance
the reduction of global emission level.
However, we do note that there
may be potential economic benefits in emissions trading, but only when
supported by complementary measures and when consistent with the national
interest.[252]
Recommendation 11
The Committee recommends the
Government reconsider the benefits of a carbon tax as a tool to reduce carbon
emissions in the industrial sector. [para. 4.50]
Government Members believe that
there is no evidence a carbon tax would be an effective response to climate
change. Furthermore:
- the introduction of a carbon tax is unnecessary
given Australia is on track to meet its Kyoto target,
- a carbon tax would be premature in the absence
of effective longer-term global action on climate change,
- a carbon tax would increase costs for Australian
homeowners and businesses and would be an attack on Australia's economic
growth,
-
business would move offshore to avoid a carbon
tax, taking Australian jobs with them.
Senator the Hon. Judith Troeth
Liberal Party of Australia
Senator Tsebin Tchen
Liberal Party of Australia
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