Mr RAMSEY (Grey—Government Whip) (18:21): As I begin, I should take the opportunity to inform the member for Gilmore that it was no less than Greg Combet, the minister, that introduced the Clean Energy Finance Corporation in 2012. In his second reading speech he said ‘conventional gas … may technically be eligible for funding as a low-emissions technology’. The CEFC can already invest in gas projects meeting the existing definition and the investments were approved under the previous Labor government, so it’s not monumental news. The member for Gilmore says it should do what it was intended to do, and it’s quite clear from Greg Combet’s comments that it was intended to target low-emissions generation.
There a number of things about this bill that make sense. There’s the billion dollars supporting the government’s push to keep moving down the path of renewable energy. I come from South Australia. I see the member for Hindmarsh sitting there, and he will be aware that South Australia is more than 50 per cent powered now in our electricity grid by renewable energy. And it’s an interesting thing. It has put downward pressure on our prices. We were in a world of pain three or four years ago with a wholesale price that was tipping over $100 a megawatt on a regular basis. We’ve now come down to roughly half that, and those savings are trickling through to the consumer and, as the old contracts expire, I expect those consumer costs to come down lower.
The reason that has happened is that we’ve had a major extra build of renewable energy in South Australia and it comes at a time when the LRET has expired for new projects. If you’re putting in a new solar or wind project at the moment, you cannot expect any taxpayer subsidy. So, it’s interesting that, despite what the member for Gilmore said, projects are under construction in my electorate at the moment. There are another 700 megawatts actually under construction and probably that much again which has already been approved. It’s showing that the market has decided that this is the way to generate electricity.
But of course when renewable energy is built, there is an enabler, and the enablement to go to renewable energy is that you have continuity of supply, that you can provide backup, that you can confirm that generation. That can come from a number of sources. In the eastern states a lot of it comes from coal-fired power stations. In South Australia, that inertia and ability to back up comes from gas. But the further we go along the slide of producing more renewable energy, more intermittent energy—let’s say, predominantly from wind and solar—the more you need the capacity to provide electricity when they are not generating.
There’s been some investment in batteries. There’s going to be an expansion of the Hornsdale battery, which was supported by the Clean Energy Finance Corporation. But those who understand electricity know that batteries are excellent when it comes to frequency modulation but completely unviable if you want to store a whole bus load of energy, when you need to run a power grid for five, six or eight hours because your generators are not working. They’re probably 10 times the competitive price. We are looking at pumped hydro projects in South Australia. There were three proposals. The one that I think probably has the inside running at the moment is at the Beetaloo reservoir, up near Port Pirie. But the most important thing we have at the moment to backfill those dead spots is gas.
There are two types of gas-fired power stations. There is combined cycle. That is the most efficient, but it takes a while to crank up. Then there are peaking stations. Basically they’re jet motors, and you can flick them on in about a minute. If you are to build more renewable energy you need more of something to fill the gaps, and at this stage in Australia the most obvious thing to fill those gaps is gas. It can sit there as long as necessary, until it’s needed, and then be switched on almost instantly. As for those people who think that somehow we’re going to magically move to a 100 per cent renewable world, unless they’ve got some amazing, cheap storage technology tucked in their portfolio that they’re not telling the whole world about, gas is going to play that part for a long, long time into the future. And if we are to expand wind generation and solar generation then gas will play an even more important part. It may not consume more gas overall, but there will need to be more plants built to provide that bolt of electricity when it is needed.
In South Australia we now have over 2,000 megawatts of wind energy nameplate capacity—that probably produces energy at about 35 per cent efficiency—and 1,681 megawatts of that is in Grey. I make the point just to demonstrate the facts that I’ve been giving to you about the ability to back up. AEMO regulates South Australian wind energy to a maximum of 1,200 megawatts. There’s 2,038 megawatts installed, but it is regulated to a maximum of 1,200 megawatts. At an emergency level, the companies can request to go to 1,300. So when we get a windy day I can drive around my electorate and see wind generators that are actually turned off. The reason AEMO stipulate that is that they know that, after that point, the grid lacks inertia and it becomes unstable. That is why you need the gas backup—to firm up that renewable energy. As I said, it could be pumped hydro or it could be a number of things, but it is interesting that AEMO have already recognised the problem. In an economical sense, it surprises me a little that the generation building continues in South Australia. I can only assume it’s on the back of a South Australian government commitment to build a new interconnector through to New South Wales and they anticipate selling energy into that market in the not-too-distant future.
Much is made of Australia’s commitment to lowering the CO2 levels in the world—to climate change, if you like. I grow very weary of the criticism, because it doesn’t stack up. In the year to March 2020, a total of 528 megatonnes of CO2 was emitted in Australia. That’s down 1.4 per cent on the previous year, or 7.7 million tonnes. That is a decline that has continued over some years. It’s primarily coming from renewable electricity, as I’ve been talking about—7.6 million tonnes—and four million tonnes comes from agriculture. Interestingly enough, there is a rise in the amount of CO2 emissions which are attributed to Australia through our energy export industries.
That is something that I wish to get on to now, but, just before I do, I will make this point. Per capita, we in Australia are now down by 42.9 per cent on our 1990 levels, and in emissions intensity we are down 64.2 per cent on our 1990 levels. I raise that point with interest because, as I read only the other day, when China says, ‘Our emissions intensity is down by a considerable amount,’ the world applauds. But, when we are down by 64.2 per cent, those on the other side of the chamber say that we’re not doing anything! It’s a preposterous argument.
Having said that, I really want to get on to the international accounting mechanisms that apply to carbon emissions. I make the point here that, in my electorate of Grey, I have the biggest uranium mine in the world. When we mine uranium—when BHP mines uranium and converts it into yellowcake and sends it to other countries in the world, because of course we don’t use it for electrical generation—those emissions incurred in extracting and refining it are actually sitting on Australia’s debit sheet. So, when we burn diesel or use electricity to mine and create yellowcake and send it to Japan or to India—well, let’s hope more to India—or to other countries around the world to use for generation, they get perfectly clean, no-CO2-emissions energy out of that deal and we wear the CO2 cost.
Likewise, with gas, it’s even more interesting. We are the world’s biggest gas exporter. But when we turn natural gas into LNG it requires us to use 30 per cent of the energy of the gas to do so, and that 30 per cent of energy that we use is an Australian debit when it comes to CO2 emissions. But the country that receives it is actually given great credit, because they are reducing their CO2 emissions because they’re no longer burning coal.
That is an accounting mechanism which is clearly not honest. If an accounting mechanism were to be properly honest, it would work as the GST works. The CO2 emissions would be embedded in the product to the point where it comes to the consumer. This is a very important point. As long as Australia is a major energy exporter and wears the emissions for other countries, it is distorting policy right around the world. It is the kind of policy that will encourage other countries to keep using gas and keep using coal because the emissions are partially hidden—they’re hidden on Australia’s balance sheet. It is a complete error. If we were to wash out those emissions emitted on other people’s behalf, Australia would not be in that top echelon of emissions per capita. And that’s quite an important point.
I say, about this accounting mechanism, that it was designed by Europeans for Europeans. It’s dishonest. They have used it to export their manufacturing industry to China and to hide their emissions under that mechanism. It is completely dishonest. It is nothing like sophisticated. It is penalising countries around the world that provide energy for others. And there can be nothing more obvious on that than the uranium industry, where we get absolutely no benefit in terms of energy but we wear the debit side, or the gas industry, where we get no benefit out of that gas we export in terms of energy. We get a financial benefit, but we get no benefit in terms of energy. But we wear the debits on behalf of the other countries. Until that is fixed, we are not likely to get sensible policy around the world, as these other countries hide their emissions on other people’s balance sheets. Much of it, at the moment, is hidden in China, where of course they don’t recognise the fact that they will meet global emissions; they are talking about intensity. I told you about intensity before. Our intensity levels dropped by 64 per cent, but no-one pats us on the back; they just say we’re sitters. It’s a crazy place. It needs reform.
But this bill that we are speaking about today is an obvious step for Australia. It will increase the amount of clean energy available to Australia. It’s right that it should expand and include those enabling technologies that will enable us to get to an even higher rate of renewable energy.