THE HON GARY GRAY AO MP

SHADOW MINISTER FOR RESOURCES

SHADOW MINISTER FOR NORTHERN AUSTRALIA
SHADOW SPECIAL MINISTER OF STATE
MEMBER FOR BRAND
SPEECH
CLEAN ENERGY COUNCIL CEO FORUM, OLD PARLIAMENT HOUSE
Tuesday, 24 Jue 2!"4
Thank you for inviting me to address the Clean Energy Council CEO Forum today.
I pay my respects to the traditional custodians of the land on which we meet, the
Ngunawal eople, and to their elders past and present.
!enewa"le energy is front and centre of the national de"ate at the moment, and I
am very pleased "e here today to "e part of your discussions.
I want to start "y reassuring you that the #a"or arty is committed to !enewa"le
Energy.
$e are not committed to the industry simply "ecause we know renewa"le energy is
"etter for the environment, and it will help us lower car"on emissions.
$e are committed to the industry "ecause it makes economic sense to shift our
focus to the vast solar, wind, wave and thermal resources we have at our disposal,
and to "e open to whatever is ne%t.
This industry & given the appropriate initial support to "uild a foundation & will prove to
"e "oth environmentally and economically sustaina"le.
's the !enewa"le Energy Target modelling undertaken for the Clean Energy
Council "y !O'( Consulting has demonstrated, the current !ET will shift from
"eing ) in the *argon of economics ) a +positive cost, to consumers, and will we hope
"e a +negative cost,, that is, something that avoids even higher costs in future.
's -ass .traight and (oom"a gas fields mature and gas prices increase, the
internationalisation of gas prices through #N/ has created a scenario where the
!ET can act as a hedge against the rising wholesale price of gas translating into
higher wholesale prices in the electricity market.
That,s a welcome, although unintended, conse0uence of the !ET.
's the de"ate continues, it is timely to remem"er that for around ten years a
!enewa"le Energy Target has "een a "ipartisan policy position.
Not contentious. .ettled and agreed.
' target mandating the purchase of new renewa"le energy generation "y retailers
has "een in operation in some form or another since 1223.
The !ET scheme "egan with the 4oward /overnment5s (andatory !enewa"le
Energy Target 6(!ET7, which aimed to generate 8,922 /$h of e%tra renewa"le
electricity per year "y 1232.
The (!ET commenced on 3 'pril 1223 with the enactment of the !enewa"le
Energy 6Electricity7 'ct 1222 6the 'ct7.
In 1228, #a"or amended the 'ct and replaced the (!ET with the !ET. This altered
the target from 8922 /$h "y 1232 to :9 222 /$h "y 1212 and introduced the .olar
Credits scheme.
The current !ET !eview is controversial, due in large part to the composition of the
review panel.
I have known ;ick $ar"urton for around 19 years and have a lot of respect for him
and his contri"ution to 'ustralian "usiness, including his outstanding ethics and
integrity.
That "eing said, I "elieve, and the #a"or arty "elieve, that the !eview of the !ET
should have "een undertaken "y the appropriate /overnment "ody.
's I have said, I know ;ick, and I do not think that he would want to s0uander the
enduring "ipartisanship that has underpinned the !ET for nearly 39 years, and the
"usiness certainty that has "een created "y that "ipartisan position.
-ut let me make this point ) "ipartisanship in and of itself does not make the !ET
sacrosanct.
-usiness cases have "een "uilt upon and depend on the certainty it has created,
and removing the !ET would have a devastating impact on industry.
I know many of you will want to know where #a"or will land following the release of
the $ar"urton review of the !ET, which is due to "e presented to the /overnment in
the coming months.
$hat I can tell you is that we5re not announcing policy this week in the a"sence of
the review. I don,t think anyone would "e surprised a"out that.
4owever, we are in the parliament this week arguing very strongly for an Emissions
Trading .cheme "ecause that,s the "est way to drive down car"on pollution.
The renewa"le energy industry can "e very confident that our policy in 123< will "e
guided "y the same principles that have framed arty policy in this area for many
years now.
There must "e an enforcea"le cap on car"on pollution that reduces over time and is
underpinned "y a market mechanism or a market price, and there must also "e
strong support for renewa"le energy.
There is no 0uestion that an ET. is the "est way to "ring down pollution, that5s why
our position at the election remains our position now.
$e should terminate the car"on ta%, and we should move as 0uickly as possi"le to
an Emissions Trading .cheme that has that cap on pollution and then lets "usiness
work out the "est, the cheapest, the most effective way to operate.
That is the scheme "eing adopted in most *urisdictions around the world. It is #a"or,s
position.
$e are not going to get into the position of announcing the 123< policy, e%cept to
say that it will "e framed "y core principles that #a"or has held for many years in
climate change policy.
#a"or remains committed to renewa"le energy, and targets seem reasona"le.
There is some de"ate in the /overnment a"out this, "ut the evidence suggests that
this is an area of policy success.
The !ET is putting downward pressure on wholesale power prices, it is allowing
literally hundreds of thousands of households to get out of the power system, to
install rooftop solar panels that "ring down their own power "ills, it,s tripled the
num"er of *o"s in the sector, and last year we were & along with China, /ermany and
the =. & one of the four most attractive places in the world to invest in clean energy.
ersonally, I am open to sensi"le changes in the !ET framework, provided they are
in consumers and the national interest and are consistent with the direction of the
past 3: years.
-ut any proposed changes cannot and should not "e at the e%pense of the o"*ective
of the program ) and that o"*ective is to provide a diverse renewa"le energy industry
with an appropriate level of certainty to reach a sustaina"le commercial threshold,
and thus to contri"ute to reduced greenhouse gas emissions.
's you would all "e aware, at the (ay -udget the /overnment announced an
intention to a"olish the 'ustralian !enewa"le Energy 'gency, '!EN'.
'lthough less than two years old, '!EN' has "een effective in managing a range of
comple% matters growing from decisions of past governments on "oth sides with a
focus on renewa"les and climate change.
'!EN' was an initiative stemming from the agreement "etween the /illard
/overnment and cross "enches in 1232.
It was esta"lished as an independent agency designed to improve the
competitiveness of renewa"le energy technologies in, and to increase the supply of
renewa"le energy.
'!EN' incorporates the earlier 'ustralian Centre for !enewa"le Energy, which itself
incorporated legacy programs from earlier initiatives, such as the>
3. !enewa"le Energy ;emonstration rogram 612287,
1. /eothermal ;rilling rogram 6122?7, and
@. #ow Emissions Technology ;emonstration Fund 612297
In addition, '!EN' took over <9 pro*ects managed "y the 'ustralian .olar Institute
and pro*ects managed "y the ;epartment of !esources, which included the Energy
and Tourism .econd /eneration -iofuels !esearch and ;evelopment 6/en 17
rogram 6122?7 and the .olar Flagships rogram 612287.
It is one of the few remaining dedicated government "odies that promotes and
supports renewa"le energy development.
's of .eptem"er 123@ '!EN' was funding 3?3 pro*ects across 'ustralia to a total
of A?98 million. The ma*ority of pro*ects are early&stage, some are research and
development and cover a wide range of renewa"le energy forms, such as solar,
wind, hydro, wave, geothermal, "ioli0uids and "iogas.
The ma*ority of '!EN'5s funding, however, is in a few large, near&commercial
demonstration pro*ects, such as '/#5s flagship solar pro*ect in -roken 4ill. '!EN'
also supports 8< researchers through h; scholarships, research fellowships and
work programs.
Fully a"olishing and defunding '!EN' will re0uire legislation, and as such the
'gency is continuing to perform its functions under the '!EN' 'ct, including
accepting and assessing applications until its future is determined "y the arliament.
The '!EN' !epeal legislation was introduced into the 4ouse on the 38th of Bune,
and the .enate simultaneously referred the -ill to the .enate Economic #egislation
Committee for review and report "y : .eptem"er 123:.
This of course means that providing the Economic #egislation Committee does not
report until .eptem"er, that the .enate will not consider and potentially pass the
legislation until at least the spring sittings.
In the meantime though, the term of the current -oard is due to e%pire ne%t month
and their functions will "e rolled into the ;epartment of Industry, so there is little
chance that new pro*ects will receive funding despite legislation not yet "eing
passed.
The /overnment has said '!EN',s e%isting funding agreements will "e honoured,
such as '!EN'5s A3<< million support of '/#5s two solar power stations in N.$,
and managed "y the ;epartment.
I do note that the ;epartment itself is su"*ect to su"stantial staff cuts.
It is now a priority for #a"or to ensure that the su"stantial investments already made
through the 'gency are given appropriate support to continue to a successful
outcome for the renewa"le energy industry despite the reduction in dedicated staff to
support their carriage.
's I conclude my comments today I want to reiterate that the important consideration
when it comes to energy policy is cost. Cost to the environment and the cost to
consumers ) "oth households and industry.
#a"or is of that opinion that the !ET is a sensi"le mechanism for "alancing that cost,
and *ust importantly it,s a mechanism that provides certainty to the valua"le
renewa"le energy industry.
Thank you all for "eing in cold Can"erra today, engaging in an important pu"lic
policy de"ate and discussion.
There are many vested interests in this de"ate, stepping through the minefield of
rent seekers and Cealots is not easy, "ut through your participation in the pu"lic
policy de"ate we will "e strengthened in our understanding.
Thank you.
WEDNESDAY, 24 JUNE 2!"4