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An address to the Sustainable Energy Industry Association Conference

by the
Federal Minister for the Environment and Heritage
Senator the Hon Robert Hill

Melbourne, November 1, 2000

My attention was drawn recently to a headline of an article in the Canberra Times newspaper which read in part; "End is near for cars".

Having been in the job as Federal Environment Minister for more than four years now, I've become used to hearing such dramatic predictions from green groups or opponents of the fossil fuel industry.

But it was the full headline of the article that really struck me. It read;

"End is near for cars, says Ford chairman."

The article reported the contents of a speech given by the Chairman of the Ford Motor Company, Mr Bill Ford, to a conference in London.

Mr Ford was actually doing some crystal ball gazing into the future when he said, "the day will come when the whole notion of car ownership is antiquated."

This was a reference to the line of thinking that one day people may not wish to pay for a car if they could be guaranteed mobility on demand from a hire network.

It is also a reflection of the broader debate on ecological sustainability which has produced such schools of thought as Factor Four and Factor Ten - dramatically expanding productivity while at the same time dramatically reducing our resource use. Such concepts put the proposition that society needs to radically rethink its entire way of producing and consuming.

Mr Ford, as head of the world's most famous motor vehicle manufacturer, made the remarkable admission for someone of his background that the car had had a serious negative impact on the environment.

He predicted the ultimate death of the internal combustion engine which would be replaced hydrogen fuel cell technology - certainly a radical rethink of the way the industry has operated. Car manufacturers are now committing billions of dollars in research to develop the fuel cell technology which will power our cars while creating zero emissions.

He also had some interesting thoughts on global warming admitting his company - a former member Global Climate Coalition - had been wrong to downplay the threat of climate change. In doing so, he committed his company to moving forward on the issue and delivering what he described as an "immediate and comprehensive - but considered - response" to the challenge of global warming.

In some ways, Mr Ford's comments are not surprising as they reflect a growing change of thinking among international industry leaders. As I've noted previously, even major fossil fuel producers such as BP Amoco and Shell International have engaged positively in this environmental challenge by signing up to the Pew Centre for Global Climate Change.

That groundswell of support is timely given that the Intergovernmental Panel on Climate Change - a body drawing on the expertise of more than 600 climate experts from around the world - is circulating the summary of its first full scale review and update of the state of climate science since 1995.

Details leaked to the media suggest the Panel's third assessment report will find that there is now stronger evidence of human influence on the planet's climate system.

The report will confirm that the science of climate change is becoming more certain, not less. This would appear to be supported by two recent workshops hosted by Australia's Bureau of Meteorology - attended by more than 120 international scientists - which found that improvements in computer models used to predict global warming are providing the scientific community with more certainty about how increasing temperatures may affect the world's climate system.

When the IPCC finally publishes its third assessment report next year, there will no doubt be critics among industry who will work to undermine public confidence in the findings in the hope that it will distract attention from the need to make the changes required to deal with this issue. Some will be Australian.

If I could borrow the words of Bill Ford, these critics are simply in denial. They are out of step with the major international industry players who agree that there is already sufficient evidence to demand that action be taken now.

As you are all aware, the international community has agreed to global action through the Kyoto Protocol. Australia has accepted its fair share of the economic burden of reducing global emissions - a target which requires us to reduce our expected greenhouse emissions by 2010 from 43 per cent above 1990 levels down to just 8 per cent.

We have been a positive player in the on-going international negotiations which will determine the final shape of the Kyoto Protocol. Last month I represented Australia at a ministerial level meeting in The Netherlands aimed at laying the groundwork for a successful outcome at the upcoming 6th Conference of the Parties to be held in The Hague later this month. The successful completion of these negotiations will in turn contribute to the Protocol coming into force as soon as possible.

From an Australian perspective, we will be seeking an outcome which provides the widest range of low-cost options for abatement. We believe this will not only be central to the acceptance of the protocol by developed nations but also will be vital to securing the future involvement of developing nations.

Domestically, Australia has moved quickly to put in place the programs and reforms needed to deliver on our target. I realise that here in Australia we get little credit for our efforts but our work has been recognised and applauded internationally. In fact, we are more advanced in our domestic actions than most other Kyoto Protocol signatories.

Our government has committed almost $1 billion to a range of programs to deliver greenhouse gas reductions.

The response to these programs from industry, state and local government, and even householders has indicated we are targeting our support in the right areas. For example, we have committed $400 million to the Greenhouse Gas Abatement Program which aims to encourage competitive bids judged on the maximum abatement per dollar. The first round of applications saw bids for projects worth a total of almost $1.8 billion.

On a smaller scale, but in a similar vein, we committed $31 million to a Household Photovoltaic Rebate Scheme to provide homeowners with a subsidy to install a household photovoltaic power system. Again the response so greatly exceeded our expectations that we have had to modify the program to ensure that funds allocated to this scheme are not exhausted before significant industry-building outcomes are realised

We, of course, have also provided significant funding for programs to support the development, commercialisation and uptake of renewable energy technology.

We have engaged our industries in the effort to reduce emissions through the voluntary Greenhouse Challenge program which has already seen commitments from industry to slash 20 million tonnes of carbon off business as usual growth projections.

We are working with the building industry to improve energy efficiency through changes to the Building Code of Australia. We are also working with the motor vehicle industry to improve the fuel consumption performance of our cars and with our fuel producers to improve the quality of the fuels we use to power them.

Through our promotion of sustainable development and concepts such as eco-efficiency across the whole range of industry sectors, we are helping to create a culture where pursuit of energy efficiency gains is central to industries' economic planning and decision making.

We also recognised very early in the debate that Australia's sustainable energy industry is absolutely fundamental to the achievement of our Kyoto commitment.

Domestically, the Australian sustainable energy industry was worth $1.2 billion in 1998 and is growing at a very fast rate. It is expected to be worth $1.7 billion this year. It provides diverse employment opportunities in both high and low technology manufacturing and installation and provides many jobs in regional areas.

In recognising the growth potential of this industry and its ability to contribute to our Kyoto target, we made a commitment to legislate to require Australia's electricity suppliers to source an additional two per cent of their power from renewable sources.

This will take the amount of electricity generated from renewable sources in Australia from 11 to 13 per cent - comparable with world's best practice.

While at first glance an increase of two per cent may not appear to be overly significant to the general public, the facts of the matter prove otherwise.

The additional amount of electricity generated by this measure equates to the annual residential electricity consumption of a city of around 4 million people.

Perhaps a more dramatic illustration is that it represents more than twice the output of the Snowy Mountains Hydro Electric Scheme - and that took 25 years to complete. Implementation of the target is also expected to generate around $2 billion in new investment in renewable energy technology in the period up to 2010.

As I've referred to briefly, our government's $1 billion worth of greenhouse programs will also play a role in supporting the growth of this industry. We have committed to a total direct investment of $387 million to support industry to develop renewable energy in programs managed by the Australian Greenhouse. The renewable energy legislation would complement this direct investment.

It represents a remarkable opportunity to deliver better environmental outcomes through reduced reliance on carbon-intensive power sources and better economic outcomes through dramatically increased investment in a growing, sustainable industry with the resultant flow on to job creation.

So it was with complete amazement and a great deal of disappointment that we watched the legislation which will deliver these outcomes become bogged down by ideological obsessions and political point scoring by the non-government parties in the Senate.

I am at a loss to understand how Senators purporting to represent environmental interests could stand in the way of a piece of legislation that will deliver the greatest single investment boost to the Australian renewable energy industry in its history. Furthermore, legislation which will make a significant contribution to Australia meeting its greenhouse target.

Despite our frustration at the Senate roadblock, I can assure your industry that we remain totally committed to the passage of this legislation.

In parallel, we will continue to work with your industry in areas such as the development of the Renewable Energy Action Agenda

The Action Agenda addresses impediments and opportunities for growth and identifies the responsibilities of both industry and government in developing the renewable energy sector. The objective is to achieve a sustainable and internationally competitive renewable energy industry which will have annual sales of $4 billion by 2010.

But as exciting as the prospects for renewable energy are in Australia's future, the tool most likely to deliver low-cost greenhouse reduction in the short term is energy efficiency. The support of your industry for improved energy efficiency is recognised.

As I've already mentioned, the Commonwealth is supporting improvements to energy efficiency through a wide range of measures covering energy efficiency in buildings, motor vehicles, and appliances.

The potential is enormous. I note that the Electricity Supply Association of Australia recently stated that at least 30 Mt per annum of greenhouse emissions can be saved through improvements to energy efficiency.

Other experts contend that there is possibly twice that available through cost effective energy efficiency that also improves business performance and competitiveness.

That win-win outcome - companies realising that good environmental practice actually delivers a benefit to their bottom line profits - is really what is driving Australian industry toward sustainable development.

And that again is a reflection of the thinking of Bill Ford who rates sustainability as the most important issue facing the automotive industry and industry in general in the 21st Century.

In his words;

"I look at it not just as a requirement, but as an incredible opportunity. I want my company to be a leader in driving the transition, and to be in a position to benefit from it. I believe it will be a great way to please my customers and reward my shareholders."

Your industry is uniquely placed to help Australian companies who are committed to sustainable development realise their goal. At the same time you will be growing your industry and your profits - and that dual benefit of better environmental and economic performance is a good outcome for Australia.

Commonwealth of Australia