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Christine Milne's Feed-in Tariff Bill: Senate Inquiry report tabled

RENEWABLE ENERGY (ELECTRICITY) AMENDMENT (FEED-IN-TARIFF) BILL 2008 - Report of Environment, Communications and the Arts Committee

Senator MILNE (Tasmania) (5:58 PM) -by leave-I move:

That the Senate take note of the report.

I rise to note the report and thank the 129 organisations that provided submissions to this inquiry into the Renewable Energy (Electricity) Amendment (Feed-in-Tariff) Bill 2008that the Greens brought to the Senate. This legislation is for the introduction of a national gross feed-in tariff for Australia to drive the deployment of renewable energy.

It is absolutely imperative that Australia gets a nationally consistent gross feed-in tariff as soon as possible, otherwise we will be left behind in the green energy revolution that is about to sweep the world. I say about to sweep the world but it is already happening in Europe, and president-elect Obama,, in the United States, has undertaken to spend $150 billion on the green energy revolution there in order, as he said, to create an army of green collar workers in all these new technologies, because he recognises that if the United States does not shift rapidly to a green energy base they will no longer be competitive in the manufacturing sector. It is absolutely recognised-in Germany, in Spain-that you have to have a national gross feed-in tariff to see the deployment of renewable energies.

Of the 129 submissions on this bill I am delighted that all but two of them were essentially in favour of a gross feed-in tariff. That is fantastic. Many of them are in business in the renewable energy sector and all agree that this is the way to move forward-to get beyond ad hoc systems of rebates and to get beyond ad hoc nature of the whole system of just trying to encourage people through very limited programs to actually put in place a mechanism that says to people: ‘We will pay you a fixed price for a fixed period of time for the energy that you generate into the grid.' The result is that everyone is enabled to become an electricity generator. It is really exciting. This is a great new story for rural Australia, which is struggling in the drought, because it essentially enables them to farm a new crop-that is, renewable energy.

The Greens have looked at feed-in tariffs around the world. The tragedy for Australia is that because of a lack of leadership from the Commonwealth we have seen states introduce an ad hoc series of feed-in tariffs, and they are overwhelmingly flawed. When you look at these feed-in tariffs around the country you find that in South Australia it is only a net tariff so you only get paid for the energy that you export to the grid above what you use. So you only get a very small amount. In Western Australia they have a feed-in tariff but it is only for small-scale photovoltaics. All around the country there are limits. In New South Wales the government has said that if the Commonwealth does not introduce a national feed-in tariff New South Wales will introduce its own. Queensland has got one but it too is fundamentally flawed because it is not a gross scheme. The best of the state and territory schemes at the moment is in the ACT because it is a gross feed-in tariff and it is also not restricted to just small-scale photovoltaics. So the main problem with the systems as they stand around the country is that they are not gross tariffs necessarily. Secondly, they are only payable on fairly small-scale generation units. Many of them are restricted to rooftop photovoltaics and many of them have an upper cap where they cease to pay once you have achieved a certain level of energy generation.

Of the 129 submissions that came in to the committee, two submissions opposed this tariff. One was from the government of South Australia and the other was from the federal Department of Climate Change. I find it absolutely extraordinary that, when you look around the world and see that in Germany, in Spain and all over the world governments are trying to deploy renewable energy and supporting this, the Commonwealth Department of Climate Change is opposing this and the government of South Australia is also opposing it because they have got their net tariff scheme. I can only assume that the opposition of the Commonwealth Department of Climate Change to it reflects the government's opposition to it, otherwise that bureaucracy would not be opposing it.

You have to ask why the Commonwealth would be standing in the way of a national gross feed-in tariff for Australia. One can only assume that it is because the government does not want a massive deployment of renewable energy and it does not want our rural communities, through joint ventures and leasehold arrangements, bringing on utility-scale energy from solar-thermal and geothermal sources, for example. This is designed to complement the MRET so that you would have those technologies that are already commercially viable, like wind, being helped through the MRET, and then those other technologies, like solar-thermal and geothermal and large solar arrays, being brought on through the feed-in tariff.

British energy experts have also recognised that this is the best way to go and have recently foreshadowed that Britain will be moving to a feed-in tariff structure. I was in Spain recently and drove from Malaga up to Granada. On the way you see wind farms on all the ridges and solar arrays amongst the citrus orchards because farmers can benefit. In Germany you have got pig farmers with photovoltaics all over their barn rooves-and on winter barns all over Europe-because farmers can get additional income by selling renewable energy. This is the way to go for Australia. This is the way to deploy renewable energy.

I am really disappointed that in spite of the fact that there was overwhelming support for this the committee recommended that it go through the COAG process. The Commonwealth has already taken over the mandatory renewable energy target as a national scheme. The Commonwealth has already taken over the Carbon Pollution Reduction Scheme-the ETS-as a national scheme that will accommodate the New South Wales model. Why would the Commonwealth not bring in a national gross feed-in tariff and bring the states into harmonisation with that national tariff. Saying it should go to COAG is a recipe for making it never happen. Everybody knows that the COAG process decided to look at feed-in tariffs in March this year and was meant to report in October, but it was deferred in October until November and it is now likely to be deferred again in November. It is a recipe for putting it off and off and off, and we already know that South Australia wants to stick to its net tariff regime-it will block. Tasmania has nothing and New South Wales has got to come on board. It is quite clear that the coal producing states will never want to see a national gross feed-in tariff. For those people who say, ‘Oh, but the problem is that if you introduce this generous tariff that rolls out renewable energy, that deals with the climate issue and that gets us significant reductions in emissions and an increase in renewables it will add to the additional cost of energy across the country.' Yes, but you spread the cost across all consumers.

In Germany it amounts to virtually a cup of cappuccino a year. In Queensland they did some modelling which showed that it was a dollar a year. We are talking minimal costs, once you spread it across all consumers, for a massive rollout of renewable energy. If the federal government thinks it is appropriate to have a mandatory renewable energy target to deal with an emissions trading scheme, then it should be Commonwealth legislation that brings in a national gross feed-in tariff and that should be harmonised around the country.

I do not accept the COAG process as the most appropriate, because it is a mechanism for delay and it is a mechanism for the lowest common denominator. We will be standing here next year as the United States zooms ahead on renewable energy-as Europe and China continue to zoom ahead on renewable energy. As all the jobs in this energy revolution are going overseas, we will still be standing here waiting for COAG to get its act together and to agree to anything. We all know that, if COAG is left in charge of this, it will be left at a very small scale. It will not be utility scale; it will be restricted to a very few technologies. It will be a scheme that does not do the job with the urgency of climate change. I remind the government that Britain has gone to a figure of 80 per cent below 1990 by 2050, as has the United States under its new president. Australia needs to catch up, get with it and get with the green new deal or we will be left behind.

Senator McEWEN (South Australia) (6:08 PM) -I wish to address a few comments to this report and to pick up on a few of the points that Senator Milne has made, some of which I think are a bit disingenuous about the government's actual position on feed-in tariff legislation. I will start by saying that the Rudd Labor government is taking Australia to a cleaner and greener future, and renewable energy will play an important role in that progression. We are committed to ensuring that at least 20 per cent of Australia's electricity supply comes from renewable energy by 2020 and we have already made significant inroads to reach that target.

The government's support for the solar industry is at record levels. In the budget the government brought forward an additional $25.6 million in funding, doubling the number of rebates available under the Solar Homes and Communities Plan, this year from 3,000 to 6,000. Funding has been further increased in the light of record demand for the rebate. In fact, in 2008-09 there will be more installations of solar powered systems and more Commonwealth funding for solar power than in any year of Australia's history.

The Renewable Energy (Electricity) Amendment (Feed-in-Tariff) Bill 2008 that the report is about was referred to the Senate Standing Committee on the Environment, Communications and the Arts for inquiry. The committee received a substantial number of submissions-129-from individuals and organisations and held public hearings in Sydney and Melbourne. It was clear from those hearings that there is broad support for the adoption of feed-in tariffs as a mechanism to encourage the uptake of an investment in renewable energy sources. The committee's report describes a feed-in tariff as:

... a policy mechanism used to encourage the use of both small dispersed generating capacity and large ‘utility-scale' generators. A FIT is a rate, usually set by a regulator or government, which electricity retailers or a regulator are required to pay to particular electricity generators who want to feed power into the electricity grid.

Currently, as has been noted, there is some form of feed-in tariff in the Australian Capital Territory, Queensland, Victoria, my state of South Australia and others proposed for other states. Feed-in tariff has also been piloted in the Alice Springs Solar Cities program. Those schemes all differ in different ways from design to eligibility restrictions. While they are different, it has been very encouraging-and this came out through the inquiry-to see states and territories, which have responsibility for energy supply to their populace, implementing innovative schemes to encourage renewable energy uptake. Certainly the federal government wishes to encourage that innovation and that ongoing uptake.

The differences between the systems include things like, in South Australia, the limits of the size of customers and systems eligible to participate. Its eligibility criteria are that the system must be operated by a small customer, that is a customer who fits into the small customer category defined as ‘consuming less than 160 megawatt hours of electricity per annum', must be grid connected to a distribution network which supplies electricity to 10,000 or more domestic customers, must be connected to the grid by a bidirectional or import-export meter and must comply with Australian standard AS40007. That is in contrast to the ACT which has very few eligibility limits. Large generators receive a less generous feed-in tariff and on household size installations, there is no size limits on individual generators.

One of the reasons the government believes, and the committee agreed, that COAG is the appropriate venue for progressing a national feed-in tariff framework is that state and territory governments are at different stages of implementation. It is possible through that process to reach a harmonised approach to renewable energy feed-in tariff. The government has given clear commitments to that and is working very hard to achieve that goal by the end of 2008. It is simply wrong of Senator Milne to say that that will not be achieved in the time frame prescribed.

The recommendations in the report are strongly supportive of a national feed-in tariff framework that is consistent and uniform as far as possible. Indeed, the first recommendation says:

Noting strong industry, consumer and government support for FIT schemes, the committee recommends that the Commonwealth government, through COAG, work as quickly as practicable to implement a FIT framework that is as far as possible nationally uniform and consistent.

It is became evident through this inquiry that, while it is relatively easy to put a piece of legislation into this parliament, as was Senator Milne's private member's bill, the actual practical implementation of feed-in tariff legislation needs to be very, very carefully thought out. The second recommendation in the report is that all governments, whether state or federal, should consider carefully the evidence received by the Senate inquiry regarding things like metering, as well as the track record of existing FIT schemes overseas, in designing a nationally consistent FIT framework for Australia.

The committee has also made recommendations regarding payments to generators-the degression rates-and those recommendations are considered more fully in the report. I urge people to not accept the simplistic arguments that we have heard from some people in this chamber but to read the report and understand the complexities of a feed-in tariff scheme. We heard about those complexities from Mr Hans-Josef Fell, a member of the German Bundestag, who very kindly gave his time to assist the committee in its deliberations on this matter. He certainly gave the committee a deeper understanding of feed-in tariffs, and he was adamant that much care needs to be taken when writing and implementing such legislation-so it is appropriate that the COAG considers all aspects of feed-in tariff schemes. Some of the things that also need to be considered include: eligibility of different renewable energy sources; tariff values available for different sizes of generators; the parameters within which FIT payments will decrease over time-or degression-whether and how FIT payments will be indexed; and information management for the administration of the scheme.

So those are not insignificant issues that have to be worked through and, while it may be frustrating for some that some time needs to be taken to get this right, it is appropriate that the government considers responsibly all of those aspects of feed-in tariff schemes and considers the legislation and national framework that it is committed to developing through the COAG. While, obviously, some people are disappointed that the final recommendation of the report is to not support the bill that was introduced by Senator Milne, I believe that much progress is being made in this important area of ensuring uptake of, and investment in, renewable energy targets.

In conclusion, as chair of the committee I would sincerely like to thank everybody who participated in the inquiry. I also note that in the report of the bill we acknowledged that the introduction of the private member's bill into the Senate has been a very useful way for senators and other interested parties to hear more about the complexities that are involved in feed-in tariff legislation, and the position of states and territories-and, indeed, the position of other countries in the world-in that regard.

Senator BIRMINGHAM (South Australia) (6:17 PM) -At the outset of my very brief remarks on the Renewable Energy (Electricity) Amendment (Feed-in-Tariff) Bill 2008 inquiry, I would like to echo Senator McEwen's comments about Senator Milne, and to commend Senator Milne for the introduction of the bill. It has stimulated very worthy debate-debate that has flowed on in a very complementary manner from the inquiry that was undertaken by the Senate Standing Committee on Environment, Communications, Information Technology and the Arts into the Save our Solar bill. I have no doubt that it has built the knowledge of the senators, and hopefully the Senate-as well as more broadly-on the important issue of feed-in tariffs and the key role that they can play in how we address and encourage renewable energy into the future.

The coalition firmly believes that the growth of our renewable energy sector is critical to Australia's future energy security and to the way in which we tackle climate change. However, we also believe that, along the way, it is important that we get every aspect of that right. Just as, in the development of their emissions trading scheme, we have urged the government to ensure that the details are correct and that it is does not unduly harm Australia's interests or Australian industry, equally, in looking at options such as a feed-in tariff scheme, we wish to ensure that it is considered in the holistic manner of climate change policies and the encouragement of renewable energies. We wish to ensure that it is considered in terms of how it will interact with mandatory renewable energy targets and the MRET scheme, and to make sure that, should we pursue a feed-in tariff program, it is consistent with, and complimentary to, that MRET scheme that the government is increasing its targets for as well.

These are complex issues and they should not be oversimplified or rushed through with a consequent risk of getting them wrong. Equally, however, we recognise that there is a level of urgency about them. We have, in good faith, supported the government in acknowledging that the COAG process should be pursued to try to get a nationally consistent feed-in tariff regime in place. We note that states have taken various steps, from the ACT with a gross feed-in tariff regime to various other states with net systems, and I am very pleased to note the commitment of the new Western Australian Liberal government to the introduction of a feed-in tariff regime in Western Australia as part of their election commitments. We think that there is much benefit to be had in a system that has the flexibility, which I note that part of Senator Milne's bill tried to achieve, of being able to deal with different renewable energy sources in different ways, in acknowledging, indeed, that potentially there needs to be different rates applied even in different jurisdictions and places. We think that can potentially be achieved through the COAG process, but I note that the recommendations of the inquiry report do not rule out the potential for this to be a nationally implemented scheme. We call for it to be nationally consistent. We leave it in the hands of the government, at this stage, as to whether it is nationally consistent across a state-by-state basis or, indeed, implemented at the national level.

The coalition has further encouraged the government to potentially look at engaging the Productivity Commission-in a very quick manner, we would hope-to look at some of the broader issues around the interrelationships between MRET, feed-in tariffs and the ETS. We need to look at just how we go about most effectively building the renewable energy sector in Australia and how we do so in a manner that is simultaneously the most environmentally and most economically responsible. We are disappointed that the COAG process has not proceeded as rapidly as we would have hoped. We note that the COAG communique from March 2008 indicated that COAG would consider options for a harmonised approach to renewable energy feed-in tariffs in October 2008, and note with disappointment that the October COAG meeting came and went without that consideration having taken place. We, of course, understand that there were other issues that came up onto the agenda for that meeting, but we would urge the government to move swiftly to provide security and certainty to the renewable energy sector. This is particularly needed in the solar PV sector. It has faced a great deal of uncertainty-as I have canvassed in this place many times before-in its treatment in relation to solar rebates. Indeed, it still faces a level of uncertainty as to how long that rebate program will remain in place for. That is why it is critical that the industry receives the type of certainty that potentially a feed-in tariff program and regime could deliver. I know that the industry is working hard to try to achieve this.

This morning I met with Andrea Gaffney, from the Clean Energy Council. She has been undertaking a great deal of work on how to encourage the development of solar PV in particular but potentially all renewable energy sources. This morning she presented some modelling by Access Economics on the potential implications of introducing feed-in tariff models. That will further add to the debate that will no doubt ensue subsequent to the tabling of this report.

In closing, I genuinely urge the government to make sure that they address this issue swiftly. As I said, we have in good faith supported the government in suggesting that at this stage the COAG process proceed. We urge the government to make sure that that is the case and that it is done rapidly.

Question agreed to.


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