AUSTRALIAN ENERGY MARKET BILL 2004: TRADE PRACTICES AMENDMENT (AUSTRALIAN ENERGY MARKET) BILL 2004

22nd Jun 04

Mr ORGAN (Cunningham) (6.29 p.m.) — I welcome the opportunity to speak on the Australian Energy Market Bill 2004 and the Trade Practices Amendment (Australian Energy Market) Bill 2004. I should say at the outset that the Australian Energy Market Bill might be better titled, `Protecting Big Coal Companies' Profits at the Expense of Future Generations Bill', because that is effectively what it does. In his second reading speech, the Minister for Industry, Tourism and Resources told us:

The arrangements in this legislation pave the way for the establishment of a truly efficient, competitive Australian energy market.

He also told us that these measures put into action the energy white paper, released by the Prime Minister last week. I will speak about some of the issues inherent in that white paper a little later.

First, let me turn to the question of a truly efficient, competitive Australian energy market. The minister's remarks and this legislation are predicated on one form of energy in particular at this stage—and we have just heard that from the previous speaker—and that form of energy is electricity, generated largely, as members will know, by coal-fired power stations. After spouting self-evident truisms about the vital role which energy plays in the Australian economy and industry dependence on secure, reliable and competitively priced energy, the minister told us:

Australia's electricity and gas prices are among the lowest in the developed world.

He went on to say:

It is important to Australia's competitive position in this area that we pursue the required energy market reforms.

So there you have it, Mr Deputy Speaker Adams. We need energy market reforms to establish a truly efficient, competitive energy market because our electricity prices are among the lowest in the developed world. And how are we going to do that? If this legislation puts the Prime Minister's energy white paper into action, the answer would appear to be by continuing to burn coal to generate electricity. I say that because there is nothing in this legislation about renewable energy, nothing at all. And the much vaunted white paper does not have much about renewable energy either. In fact, the spending on fossil fuel options is something in the order of 32 times the amount being invested in renewables. I use the word `invested' advisedly, because spending on renewable energy is an investment—an investment in the future.

Spending on fossil fuels, on the other hand, simply goes into the pockets of the owners of the massive multinational cartels which control the mining and sale of coal and the pumping and refining of oil and natural gas. This government has a blind spot when it comes to the advantages of renewable energy. The government seems not to understand that Australia is the biggest greenhouse gas emitter per capita on the face of this planet. Eighty per cent of our electricity comes from burning coal; indeed, 24 coal-fired power stations pump out around 170 million tonnes of carbon dioxide every year. Coal-fired power stations are the biggest single source of greenhouse gas emissions in this country. It is not a pretty picture, is it? And here we are in the 21st century going for more of the same.

Confronted by information like this, a reasonable person would surely conclude that our government would be pushing hard for renewable energy sources, but it is not. Rather than legislating for an increase in the mandatory renewable energy target—the MRET—like Britain, Germany and even California have done, this government is putting its faith in what the Prime Minister called `geostration', when he launched the energy white paper last week. It beggars understanding: not renewable energy, but geosequestration—a technology which is unproven at this point and which cannot be retrofitted to existing coal-fired power stations, even if it proves to be a practical and cost-competitive technology at some future time.

It may even be a technology which will never be feasible. That is certainly the fear of Lord Oxburgh, the chairman of Shell, one of the world's biggest oil companies. He is reported in Britain's Guardian newspaper as saying:

Sequestration is difficult, but if we don't have sequestration then I see very little hope for the world.

No one can be comfortable at the prospect of continuing to pump out the amounts of carbon dioxide that we are pumping out at present ... with consequences that we really can't predict but are probably not good.

You probably have to put it under the sea but there are other possibilities. You may be able to trap it in solids or something like that.

The timescale might be impossible, in which case I'm really very worried for the planet because I don't see any other approach.

He is not alone. This is what Greg Bourne, the former regional president of BP Australasia, who now chairs Sustainable Energy Authority Victoria, told the ABC's PM last Friday in response to a question about geosequestration from the smoke stacks of coal-burning power stations:

Very much harder, and indeed, basically, to try and capture the gases from the smoke stacks of existing power stations such as we have here in Australia is just far too expensive, it really is far too expensive to try and do that.

Mr Bourne says that there are three things which the government should be doing:

Certainly one is looking at ways to reduce emissions from fossil fuel generation, and part of that will include the transition to combine cycle gas turbines, for example, because gas is so much cleaner.

The second part, without doubt, is stimulating the renewables and the zero emission energy sources.

And the third one is an economy-wide drive on energy productivity.

I would ask honourable members to bear in mind that a 1,000 megawatt coal-fired power station built today would emit around 260 million tonnes of carbon dioxide over a 40-year life. I would also draw the House's attention to the cover story in Chemical and Engineering News of 23 February this year titled `Getting to Clean Coal'. You see, as in so many of this government's initiatives, our continuing reliance on coal-fired power generation treads a path blazed by the Bush administration in the United States. President Bush is a big backer of coal—and why would he not be, with the US sitting on 250 years of coal reserves—and he is also championing geosequestration. His problem, according to Chemical and Engineering News, is that US coal-fired electricity generating companies are powerful and conservative, and the coal they burn is so cheap that even the poor efficiency of that country's ageing power plants does not make much difference.

A health study in the United States has estimated that 20,000 premature deaths a year could be avoided if all coal-fired power plants reduced their emissions by a technically achievable 75 per cent. The Bush administration's Clean Skies Initiative, which goes a long way to meeting that goal, has stalled in the Congress, and that, according to analysis by Chemical and Engineering News has prompted President Bush to rejuvenate a federal research and development program for clean coal. Sounds familiar, does it not? Perhaps it is a bit like Securing Australia's energy future.

It is not as though there are not other energy generating technologies available to us. The University of New South Wales and the ANU have taken solar cell technology to efficiencies undreamed of 10 years ago. In my own electorate of Cunningham, Energetech is developing a generator powered by wave action. The wave energy optimisation project has won a $1.2 million research and development grant from the government's AusIndustry R&D Start grant scheme. The prototype, which will generate enough power for 500 homes, is already under construction.

There are already current proposals to generate electricity from air currents caused by the sun's warming. The EnviroMission proposal for a solar tower at Buronga in Wentworth Shire in New South Wales has already won major project facilitation status from this government for a 200 megawatt generator which relies solely on the effects of solar warming. Honourable members should have a look at the EnviroMission web site at www.enviromission.com.au and perhaps familiarise themselves with this remarkable $800 million project, which is estimated to provide 2,700 jobs in the construction phase and to provide clean power for 200,000 households.

These emerging technologies do not come cheap, but once the capital cost is met, the energy they produce is free and clean, and the Australian people already have an investment in them. But let's go back to geosequestration for a moment. Keith Tarlo from the University of Technology Sydney's Institute for Sustainable Futures delivered a paper to the Towards Zero Emissions conference in Brisbane in July last year which compared the roles of coal and sustainable energy in reducing greenhouse gas emissions. This is what he concluded:

Overall, coal with geo-sequestration faces identifiable risks that:

Energy from coal with geo-sequestration will be more expensive than sustainable energy;

Emission reduction from coal with geo-sequestration will be more expensive than the prevailing price of permits to emit carbon dioxide;

Projects using advanced coal technologies will have higher carbon dioxide emissions than a conventional coal plant, and so will have higher carbon-related costs, if geo-sequestration is not viable;

Advanced coal technologies like Integrated Gasification Combined Cycle will continue to have operational and reliability problems;

The new environmental risks that geo-sequestration creates will have unacceptable likelihoods or consequences; and

Geo-sequestration will have limited effectiveness in reducing the growth in greenhouse gas emissions due to its limited sectoral application and poor source to sink matching.

A prudent response to these identifiable risks is to diversify. From the perspective of the investor in long-lived energy assets, the prudent response would be to diversify investments to include sustainable energy investments. From the point of view of the policy maker with the aim of long-term mitigation of climate change, the prudent response would be avoid picking coal with geo-sequestration as a winner and to diversify the government's policies, research and development and commercialisation priorities and international collaborations to give renewed priority to sustainable energy.

I repeat:

... the prudent response would be avoid picking coal with geo-sequestration as a winner and to diversify the government's policies, research and development and commercialisation priorities and international collaborations to give renewed priority to sustainable energy.

Giving renewed priority to sustainable energy is a view which the Greens obviously endorse. That is why we will be moving to increase the mandatory renewable energy target. The government's energy white paper is a deeply flawed document. Some of those flaws have been imported into the legislation now before us, but they are not the only troubling issues with the Australian Energy Market Bill. The mechanism of recognising a South Australian act in Commonwealth law rather than introducing it as a Commonwealth act is constitutionally dubious. The Commonwealth parliament is effectively ceding power to the South Australian parliament. Regulations introduced in the South Australian parliament cannot be disallowed by the Commonwealth parliament; only the government, not the parliament, can change the law—through the Ministerial Council on Energy.

The legislation before us is deeply flawed and must not be passed in its current form. As I have shown, the rationale for its introduction is dubious. The government is again acting with unseemly haste for reasons which it is clearly unwilling to disclose. I have therefore no option but to reject the legislation in its present form and to urge other honourable members to do likewise.

In closing, I would like to briefly comment on some of the comments made by the previous speaker, the member for Forrest. He mentioned `fossil fuels, which Australia has in abundance'. I would caution all members of this House that fossil fuels are not going to last forever. Oil, natural gas and coal are not going to last forever. In Cunningham we have rich coal reserves. I know, as I said, that they are not going to last forever. We need to look at alternatives, not only because of the so-called dirty aspects of fossil fuels—greenhouse gas emissions and other problems with them—but because they are going to run out sooner rather than later. It is in the national interest to look towards renewable energies.

The member for Forrest also stated that geosequestration would permanently trap gases underground. That is yet to be proven. I have read reports expressing real fears that material pumped underground could leak and cause damage to the environment and to people, for example. The statement that geosequestration is going to permanently trap all of those gases cannot be given as definitive in this place.

The member for Forrest also talked about using fossil fuels in the foreseeable future. I would have liked to have seen some sort of precise figure put on that. How long is the foreseeable future? We should be really concerned with how long our fossil fuel reserves are going to last in this country. They are not going to last forever. I remember when I did geology at the University of Wollongong back in the early eighties. The professor of geology there had made calculations about the long-term viability of our coal industry and how long some of the reserves are going to last. I am sure if the government carried out a bit of research they would be able to find that some of those predictions are out there. Foreseeable does not equate to forever. There is no doubt that the government's direction in supporting the coal and fossil fuel industry above renewable industries is not in this country's national interest. It is short-sighted. They need to reject legislation such as this and turn towards renewable energy sources for the long-term future of this country.