Rowan Ramsey (Grey, Liberal Party) Share this | Hansard source

I rise to speak on the Australian Renewable Energy Agency Bill 2011 and the Australian Renewable Energy Agency (Consequential Amendments and Transitional Provisions) Bill 2011. I welcome the government's move in establishing ARENA. There is no doubt that government expenditure in the area of renewables is in need of better oversight, and it is my hope that the ARENA body will provide this. It is to be given a role of developing a strategy to provide a common purpose for what at best would have to be described as a haphazard approach to the use of taxpayers' money in this area in the recent past.

Emerging technologies are likely to need support even though the government is in the throes of introducing an $8½ billion per year tax which is designed to make conventional energy more expensive in order to enable renewable energies to compete in that space. But the government's record in this area has been pretty poor: the pink batts, the green loans, the ZeroGen investment so colourfully described to the House by the member for Groom—along with his account of the accusations from the former Premier of Queensland, Peter Beattie, that the member for Groom was on drugs when he pronounced it a poor investment by the government—and, in my own electorate, a $7 million solar farm which was announced for Coober Pedy with great fanfare and which has disappeared without a trace with no similar announcement from the government. Trust me: it has disappeared. With that kind of record, I was surprised to hear the member for Fraser just a few moments ago reckoning that the coalition could not handle money. I think he should look to his own government before he starts to criticise others in that area.

In my electorate of Grey there are a number of current investments that the government has made to support the development of renewable energy, and basically they are welcome. There are two hot rocks projects in the north of the state and the SolarOasis project at Whyalla, which at this time is, unfortunately, almost 18 months behind schedule. I remain hopeful that this project will be successful, but delays and cancellations show just how difficult the task of trying to pick winners is. Once again I refer to the member for Fraser, who says that the coalition is in the business of picking winners and that, of course, the Labor government is not. Investment in any of these programs is in fact evidence that this government has tried to pick winners. I hope they have backed some winners, because while not every investment will be a winner, it is clear that we need a winning ratio. I am hopeful that that is what ARENA will deliver. ARENA will administer $3.2 billion worth of projects, and $1.5 billion of that is already committed. Their role is to develop a strategy, and that is what I am interested in.

The government is to put together this expert body called ARENA, which is not to be given the task of administering the $10 billion slush fund which is the Clean Energy Finance Corporation. It is suggested in the legislation that there will be a possibility of cross-membership, but if we are to have cross-membership and an expert body in ARENA the question needs to be asked: why do they not just give the role to the expert body? Perhaps the reason for not doing so comes back to the time when this fund was announced by the Greens. It is likely that the government will cede responsibility to the Greens, and what a disaster that would be.

There are some other matters which I would like to get on the record in relation to the electricity grid in my state of South Australia—some of the ramifications of the shift to renewable energy which I hope ARENA will consider. While the operations of the electricity grid in South Australia may not be the prime purpose of ARENA, almost certainly ARENA will be asked to back projects which will feed into that electricity grid. South Australia has 51 per cent of Australia's installed wind capacity, at 1,018 megawatts. That is about 35 per cent of the state's total installed generation capacity. During the last year for which I have figures, 2009-10, those wind farms actually supplied 18 per cent of all the electricity in the state. That is a pretty good performance for wind farms. The bulk of the baseload electricity comes from the gas fired Torrens Island station, which provides 47 per cent of the state's electricity, and the coal fired stations at Port Augusta in my electorate of Grey deliver about 33 per cent.

This does present a couple of issues which I am not sure our state legislators fully understand. I am not sure our federal legislators fully understand them either, but I hope that the expert body, ARENA, does understand them. First, there is the effect of wind power—opportunistic wind generation; unreliable wind generation—on baseload suppliers. In the last 12 months there have been a number of days, my information is that there have been about five, when the wind has blown strongly and when all generators have been in operation, and the price of electricity has dropped to virtually zero. That leaves the coal fired power stations in a position where the power has already been generated but they cannot sell it, so they jam it through capacitors and dump it as heat. Of course, in this situation, the wind generators can still sell their electricity because the 20 per cent renewable energy target, the MRET, means that electricity suppliers will use the opportunity of cheap energy to purchase that wind power. That provides a problem for the baseload generator.

There is a second problem that has happened in that time space, and I will use 31 January of this year as an example. It was a high-demand day, and high-demand days in South Australia are always in summer. The state was becalmed. We had 60 megawatts of electricity generated from the total capacity of 1,018 megawatts of wind generation. That is just six per cent of its capacity, and that is all that the wind generation network was able to deliver on that day. So, until we conquer the quest for an economic storage of electricity, we need to retain the capacity in the network to be able to generate the state's full load, virtually 100 per cent, on demand—and that means baseload generators. Until we nut out the issue of being able to efficiently store renewable energy, we must retain that capacity.

Of course, the first scenario I outlined, where the price of power dropped to virtually zero on a number of days, actually threatens to produce the second scenario, where we do not have enough baseload electricity. If the baseload electricity generator has too many days within the year when the baseload generator cannot operate economically, it will not be there anymore. If wind power in South Australia is to expand by 50 per cent—that was the aim and proposition put by the now former Premier, Mike Rann—it seems certain that there will be more days when the power is essentially worthless and will be dumped. If four or five days a year becomes 40 or 50 days a year, then the ability of the baseload generator to survive will be severely threatened. That is when the sustainability of the grid comes into question. Over-reliance on fluctuating and low-reliability power threatens the grid's ability to deliver power 365 days a year.

I am not forecasting doom; I am just advising caution. I hope that ARENA has a role in developing a strategy which will avert these problems. I raise the issue in the hope that those who are making the decisions in shaping our future will take all these factors into consideration. This is important. A state that cannot supply power on a regular and fully predictable basis will be in grave economic circumstances and, of course, the chance that the regulator will have to operate brownouts across the metropolitan area is likely to go down very poorly with voters. In that same time space over the next five to eight years, the power demands of Roxby Downs are predicted to go from around about 125 megawatts to, from memory, about five times that—that is, about 650. There will be an increasing demand as well, and that will also require baseload electricity. While all this is happening at one level, at another level the government is attempting to bludgeon Australian industry into renewable energy with the most punitive CO2 tax in the world. We debated the CO2bills in this House only two weeks ago.

There have been some recent developments which I would like to report to the House. The Canadian Foreign Minister has come out and said that there is no way Canada will be adopting a carbon tax. The news from Japan in the wake of the Fukushima disaster is that it is likely to miss its CO2 reduction targets by 16 per cent. The US is clearly not proceeding down the tax path, because President Obama has said as much. I guess we will look forward to the next two weeks when the President will be visiting Australia, and perhaps he might have a discussion with our Prime Minister about what the US is doing in that space.

The Europeans, of course, are held up by the government as exemplars in this space, so it is interesting to know what is happening there. I have an article by Alessandro Torello from the Wall Street Journal. I will not read the whole article, but I think it is worth highlighting a few paragraphs. It says:

The European Union is for the first time clearly questioning whether it should press ahead with long-term plans to cut greenhouse-gas emissions if other countries don't follow suit …

It goes on:

'If coordinated action on climate among the main global players fails to strengthen in the next few years, the question arises how far the EU should continue with an energy-system transition oriented to decarbonization,' the commission says in a draft of its Energy Roadmap 2050.

These are exactly the same issues the opposition raised in this place two weeks ago. It says further:

The EU's doubts come ahead of a climate-change summit in Durban, South Africa, which is thought to be unlikely to deliver a significant global climate-change deal.

Finally it says:

'It has to be seen clearly that there are risks associated to unilateral EU action,' the commission says in its draft. 'There is a trade-off between climate-change policies and competitiveness. Europe cannot act alone in an effort to achieve global decarbonization,' the paper says.

Of course that is so. They are not acting alone, are they? We are showing them the way! If the government's rhetoric is to be believed, when we arrive in Durban towards the end of this year the Europeans will be over this crisis of confidence because they will not be worried that the rest of the world is not accompanying them on the same course, and they will be greatly reassured that Australia is out in front of them. This will be a wake-up call for the government, because then they will realise that we are a country of 23 million people on the other side of the globe from Europe, and that we are responsible for just 1½ per cent of the world's emissions. For the government it will be: welcome to reality. Before the CO2 tax is even passed through the Senate, it seems as good as certain that we are trying to lead the world to a place where they clearly have no intention of following.

In closing, I will come back to the ARENA bill and say that I hope that ARENA will supply rigour to government's decisions and that it will give them the ability to pick the winners; because, in the end, when you give out public funds you do have to make a value judgment on which technologies are likely to succeed and which technologies are likely to fail. I hope this expert body will address that and that it will be given a lot of responsibility for dealing with the larger $10 billion fund as well.

Debate adjourned.

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