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Federal Minister for the Environment and Heritage
The Hon Dr David Kemp, MP
National Conference of the Australian Business Council for Sustainable Energy
Wednesday 9 April 2003
I am delighted to have been asked to speak to you at this first national conference of the Australian Business Council for Sustainable Energy, and disappointed not to be with you due to Cabinet committee proceedings.
I am happy to have my very capable parliamentary secretary represent me. I know that Sharman Stone takes a keen interest in your issues, as they are highly important to Australia's future and will be very much a part of the Howard Government's thinking in future policy design.
Last year's merger of two separate industry bodies to form this single national peak body for sustainable energy was a landmark step for the energy industry in Australia and is an indicator of the sector's emerging identity and growing maturity.
I congratulate you on this amalgamation, I welcome the industry consolidation that it signifies, and I look forward to doing business with you.
The Howard Government has worked in close partnership with you for some years now. We recognise the important role that renewable and other sustainable energy sources have played and will play in improving the sustainability and security of Australia's energy mix.
Equally, we recognise the significant part that renewable energy, cogeneration, gas-fired power and energy efficiency have to play in contributing to reducing Australia's greenhouse gas emissions.
Reducing Greenhouse Gas Emissions
Australia's approach to climate change is based upon the reality that climate change is occurring. The question is not "Will the climate change?" but rather "How will it change?" and "What can we collectively do to reduce the threat?"
Four elements underpin the development of Australia's forward climate change strategy:
Reducing global greenhouse gas emissions is one of the foremost environmental challenges facing us today. It is a vital but complex policy issue, and one that needs to be tackled with equal vigour domestically and internationally.
At home we need to ensure appropriate action to play our part in emissions reduction.
To this end we have committed nearly $1 billion to provide incentives for greenhouse gas reduction, and to encourage development of low emission technologies.
Of particular relevance is the $10 million grant we provided to the Australian Eco-Generation Association in 2001 under the Greenhouse Gas Abatement Program, for developing a series of cogeneration plants that will bring about large-scale abatement during the Kyoto Protocol commitment period. In addition, we provided funding to the Business Council to prepare a landmark guide to embedded generation in the National Electricity Market.
Internationally, Australia's top priority is to have in place a global framework for greenhouse gas reduction that includes all major emitters.
The weakness of the Kyoto Protocol is that seventy-five percent of global emissions are not covered by Kyoto, and estimates are that at its "use-by" date of 2012, Kyoto will have brought about only a modest 1% reduction in overall emissions.
Compare this with the need, underscored by the current science, for the need to reduce global emissions by around 60% by the end of this century. Clearly this, rather than Kyoto ratification, is the important issue.
Add to that the fact that if Australia were to ratify Kyoto at the present time, it would create obligations for Australia that are not imposed on many of our regional competitors for major long term investment. This could not only economically disadvantage Australia, but also actually increase global greenhouse gas emissions by driving offshore our high-emitting economic sectors to countries that, unlike Australia, have made no commitment at all to achieving emissions reduction.
Australia is strongly of the view that future global action needs to reflect the different circumstances, the different economic and social needs, and the different priorities of countries. That was the position Australia successfully pioneered in Kyoto---and it remains our position today.
Many products are produced in Australia with more attention to environmental impacts than they frequently are overseas. From a global point of view, it is better that they be produced in Australia than somewhere else. The recent $25 billion LNG contract with China illustrates the point nicely. The contract will add around one million tones of CO2 annually to Australia's emissions, but by replacing coal fired power in China it will reduce China's emissions by around 7 million tones a year---a substantial net gain for global emissions.
There is no doubt that as our technology improves Australia's greenhouse gas intensity will reduce. On present measures we will see a reduction by 2010 of some 39per cent of 1990 levels---this in a 20 year growth period that will probably exceed any other in our history.
I know that some Australian business leaders are concerned that their companies might suffer discriminatory treatment in some overseas markets if Australia is not a party to Kyoto. However, the Government knows of no intention by any other government to take any such action against Australian companies and we know of no legal basis for doing so. Nor are there any grounds for such action: Australia will meet the target agreed at Kyoto. We will continue to do our part in the global task, and to work with other countries to develop an effective and robust global regime that involves all major greenhouse gas emitters.
Climate Change Forward Strategy
The Howard Government is, however, committed to meeting Australia's Kyoto target and committed to making a responsible contribution to greenhouse gas reduction.
Australia's action will go well beyond the limited horizon that Kyoto offers. We are in the process of developing a long-term Climate Change Forward Strategy to lower Australia's greenhouse signature, consulting widely with state and territory governments, and with industry and community.
This strategy will not only cover just the next few years, as Kyoto does, but will be a key component of the longer term energy strategy that will emerge from the Prime Minister's Ministerial Committee on Energy. The Government is very conscious that many of the investment decisions needed for our energy future are long term decisions and that a long term framework is necessary to provide that investment security.
Climate Action Partnership
The Climate Action Partnership between the USA and Australia was launched early last year, and much work has been done since then to develop a program of strong bilateral co-operation.
The Howard Government is strongly committed to the success of this partnership, with 19 projects being implemented under the inaugural work program. Key among these will be a specific stream covering renewable energy, with immediate emphasis on remote power.
The success of the US/Australia Partnership has led to discussions with a number of other countries or country groupings on bilateral co-operation.
Export development is likely to flow from these partnerships, and I encourage industry to engage with this process and position itself to take advantage of the benefits.
Renewables Have a Key Role to Play in Australia's Energy Future
I have been pleased with the way industry has engaged with the Government-Business Climate Change Dialogue. This has provided a real opportunity for industry to contribute directly to the Commonwealth's policy process. I am pleased to acknowledge the active involvement of the Business Council for Sustainable Energy in this process.
Ultimately, the size and shape of the role renewable and sustainable energy plays over the longer term will depend on a number of things. It will depend on the industry's ability to provide reliable and cost-effective energy. It will also depend on how well the industry is positioned to contribute to Australia's ability to adapt to the impacts of climate change.
Given our ample supply of natural elements such as wind and the sun, renewable energy has immense potential in Australia and it will continue to be a key feature of the Commonwealth Government's climate change policy design.
The Howard Government is firmly committed to the development of renewable energy sources, support for sustainable energy, and increased uptake of energy efficiency. I would recommend any who seek additional confirmation of this to turn to the Prime Minister's message to you all in the program for this conference.
As the Government reviews progress and develops future directions in its climate change and energy policies, I believe that it is also appropriate for industry to do the same - to take stock and make some key decisions about its future directions.
Today I would like to focus in particular on the renewable energy industry. I believe that this sector is at a critical point in its evolution and that some hard work needs to be done by the industry itself to assess progress and lay firm foundations for the future. There will be many challenges, but there are some areas where I think particular attention will be needed.
While there will always be differences among sectors of the industry, it is important that you focus on the issues you have in common, and that your messages to Government are delivered with a united voice.
Commonwealth Support for Renewables
This Government has made a strong commitment to the development of renewables in Australia.
Commonwealth greenhouse policy, complemented by measures like the Renewable Energy Commercialisation Program, the Renewable Remote Power Generation Program and the Mandatory Renewable Energy Target, has been the key driver of a veritable explosion of activity in the domestic renewable energy sector.
Over the past five years, we have allocated over $300 million to programs that have encouraged deployment of existing renewable technology, commercialisation of innovative new technology, and industry capacity building.
The results speak for themselves. Wind power, for example has seen unprecedented growth in Australia - from a base of just a few megawatts four years ago, there are now over 100 MW of wind power installed and running in Australia, with that capacity projected by some to skyrocket to over 2,000 MW in the near future.
Solar power has also made rapid progress. At the end of February this year over 4,000 households and community buildings across Australia were generating their own solar electricity. Over 1,000 of these are grid connected and are able to sell any excess electricity they produce back to the main grid.
The Photovoltaic Rebate Program (known as PVRP) has been a strong catalyst for this industry growth. In fact, it has been such a runaway success that, as many of you will be aware, earlier this year we had to put an interim brake on program expenditure.
I am pleased to say that this has been a good example of industry working constructively with Government. Following the decision to cap monthly PVRP approvals, industry came forward with some concrete proposals for moving ahead. We are keen to find ways to continue to assist this industry.
In March, Industry Minister Ian Macfarlane and I announced a further $1 million in backing for nine major renewable energy projects under Round 7 of the Government's Renewable Energy Industry Development program. These projects range from assessing the impacts of wind turbines on wildlife to converting pig waste to electricity. Grants have also been provided for resource assessment, training and accreditation programs, standards and best practice guidelines, which will help lift the quality and reliability of renewable energy installations.
Under the Renewable Remote Power Generation Program, isolated households and remote communities have installed 1,880 kilowatts of photovoltaic power, 415 kilowatts of wind turbines, and 23 kilowatts of micro-hydro and associated enabling equipment, reducing greenhouse gas emissions by approximately 7,000 tonnes per year.
In tandem with this we have made available an additional $7.5 million for major projects leading to the installation of 4.2 megawatts of wind turbines at Esperance and Rottnest Island in WA; and 280 kilowatts of photovoltaic generation at Bulman and Kings Canyon in the NT.
I am pleased to take the occasion of this gathering of industry representatives to announce that Ian Macfarlane and I have just approved three more major projects under the Renewable Remote Power Generation Program.
In the Northern Territory, the Commonwealth will be providing nearly $3.5 million to Solar Systems NT to install 30 concentrating dish photovoltaic generators for three indigenous communities. We expect this to reduce diesel fuel consumption in these communities by about 400,000 litres per year, with a projected annual greenhouse saving of over 1,000 tonnes.
In Tasmania nearly $2 million will go to Hydro Tasmania to install 1.7 MW of wind turbines on King Island. When these are operational, 30% of the power used by the island's 1800 residents will be coming from a renewable energy source, displacing 1.065 million litres of diesel fuel per year. The annual greenhouse gas saving will be around 2,800 tonnes.
And in Western Australia, we propose to allocate $5.5 million over four years to assist with establishing a renewable energy industry development centre, which will be jointly hosted by Murdoch and Curtin Universities.
Long-term Policy Framework
As I mentioned earlier, in terms of this Government's commitment to sustainable energy, our goal is to provide a long-term policy framework. This will be based on a competitive energy market with clear signals provided to investors.
In co-operation with industry, the Government has launched a Renewable Energy Action Agenda to provide a strategic policy framework for the development of a sustainable and competitive renewable energy industry in Australia. This Action Agenda aims to grow annual industry sales to $4 billion by 2010. Industry will play a key role, as the Business Council for Sustainable Energy has primary responsibility for implementing this Agenda.
A Renewable Energy Technology Roadmap has followed on from the Action Agenda, with active collaboration from groups, again including the Business Council. The Roadmap outlines a long-term research and development plan that defines the industry's collective future and establishes clear pathways forward.
In May this year, Australia will host an international conference in Broome, Western Australia on future challenges and strategies for a Hydrogen Economy.
There has never been a more dynamic focus by Government on the renewables sector, and the opportunity has never been a better for related industries to have their views taken into account.
Mandatory Renewable Energy Target
The Mandatory Renewable Energy Target, known as MRET, is a cornerstone of the Commonwealth's strategy for growing the Australian renewable energy industry.
It is a world first in creating a national renewable energy market that is backed by legislation, using an innovative market-based system of tradeable certificates.
The MRET measure has performed strongly since coming into force in April 2001. It has generated a high level of renewable energy project planning and development activity, especially in the wind sector.
Around 170 power stations run on renewable energy are being accredited across Australia, covering a wide range of technologies.
The interim targets for the first two years have been met comfortably, and inroads are already being made into the third year target.
As you will be aware, the MRET legislation prescribes that an independent review of its operation take place in 2003.
Last month Minister Macfarlane and I announced the membership of the Review Panel under the chairmanship of the Hon Grant Tambling, along with broadly scoped terms of reference. The Review Panel has taken up its task with vigour, and is holding its first meeting here in Brisbane to coincide with this conference.
I welcome the valuable contribution of renewable energy industry stakeholders towards the MRET review. Your ongoing engagement is important to ensure the review's success and I encourage you to submit your views. It is important of course that these views are backed up as much as possible by hard evidence and analysis.
The Mandatory Renewable Energy Target is a cutting edge program for supporting renewable energy. Indeed, other countries are now replicating the program because it is seen as an effective mechanism to deliver industry development for the renewable energy sector.
MRET is building industry capability and capacity that will deliver low cost greenhouse emission abatement in the longer term. For this reason, and for reasons of industry certainty, it was designed as a 20-year program.
The Howard Government is excited by the way industry has taken up the challenge of delivering new renewable energy projects. MRET is just over two years old but is already delivering significant investment and jobs - a situation that we hope to see continue.
The review of MRET was mandated in the enabling legislation. Despite the success of the scheme, I know that many of you take issue with some of its features. The Review is an excellent opportunity for all of your concerns to be aired. Just as with the Parer Report, the MRET Panel will not be making government policy, merely making recommendations that will be considered as part of the Howard Government's larger energy and greenhouse forward strategies later in the year.
Where to From Here?
The Prime Minister recently said that Australia's energy policy must continue to support economic growth and development, while also contributing to reduced air pollution and greenhouse gases, and developing new technologies.
He emphasised that the delivery of competitively priced and secure energy sources was an issue for all Australians.
The Government has made this a high priority, and industry has a critical part to play as well. We are at an important point on energy and climate change-related issues, and we must continue to engage on these and work closely together.
It must not be forgotten that we are a market economy, and, for economic health and survival, ultimately any industry in our economy must work towards self-sufficiency.
The Government recognizes that commercialisation is an ongoing challenge, particularly for an industry such as yours, dealing with innovative and nascent technology, and we have demonstrated amply that we are prepared to help. This help cannot, however be open-ended.
We are looking to industry to take up the challenge and to take a leadership role. We want to see it move forward to a point where it can stand on its own feet and contribute actively to Australia's greenhouse and energy goals.
The Business Council for Sustainable Energy has a pivotal role to play in this, particularly in facilitating the engagement between Government and industry, and also in ensuring that the renewable energy industry works together and speaks with a strong united voice.
We are committed to working with you to achieve this, and I am pleased to announce today that the Government has approved a grant of $250,000 to the Business Council on for Sustainable Energy to strengthen its ability to progress activities under the Renewable Energy Action Agenda, and to help focus and consolidate industry development activities. This funding will enable it to employ an Industry Development Manager for two and half years.
The Commonwealth Government is standing firmly behind this industry, and we are prepared to play our part. We look forward to hearing your ideas and to working with you to find the best way forward.