Bills Digest no. 119 2014–15
PDF version [729KB]
WARNING: This Digest was prepared for debate. It reflects the legislation as introduced and does not canvass subsequent amendments. This Digest does not have any official legal status. Other sources should be consulted to determine the subsequent official status of the Bill.
Sophie Power
Science, Technology, Environment and Resources Section
15 June 2015
Contents
Purpose
of the Bill
Structure of the Bill
Background
Committee consideration
Policy position of non-government parties/independents
Position of major interest groups
Financial implications
Statement of Compatibility with Human Rights
Key issues and provisions
Date introduced: 27
May 2015
House: House of
Representatives
Portfolio: Environment
Commencement: The
day after Royal Assent.
Links: The links to the Bill,
its Explanatory Memorandum and second reading speech can be found on the
Bill’s home page, or through the Australian
Parliament website.
When Bills have been passed and have received Royal Assent, they
become Acts, which can be found at the ComLaw
website.
The purpose of the Renewable Energy (Electricity)
Amendment Bill 2015 (the Bill) is to amend the Commonwealth Renewable Energy
Target (RET) scheme to:
- reduce
the large-scale renewable energy target (LRET) from 41,000 gigawatt-hours (GWh)
by 2020 to 33,300 GWh with this level to be maintained until 2030
- allow
full exemptions to be provided for electricity used in prescribed emissions-intensive
trade-exposed (EITE) activities, so that they do not need to purchase and
surrender large-scale generation certificates
- remove
the requirement for two-yearly reviews of the operation of the RET scheme and
replacing it with annual statements by the Clean Energy Regulator (CER) on the
progress of the RET towards meeting the new targets and the impact it is having
on household electricity bills and
- include
native forest biomass as an eligible renewable energy source under the same
conditions that existed prior to its removal from eligibility in 2011.[1]
The Bill has one Schedule, divided into four parts:
- Part
1 amends the Renewable
Energy (Electricity) Act 2000 (the RET Act)[2]
to reduce the required amount of renewable source electricity (the annual
legislated targets under the large-scale component of the RET scheme) for each
year until 2030
- Part
2 amends the RET Act to allow the Renewable Energy
(Electricity) Regulations 2001 (RET Regulations) to provide full exemptions
from RET liability for electricity used in EITE activities[3]
- Part
3 amends the RET Act and the Climate Change Authority
Act 2011 to repeal the requirement for biennial reviews of the
operation of the RET Act by the Climate Change Authority[4]
and
- Part
4 amends the RET Regulations to extend the current definition of ‘wood
waste’ to include native forest biomass as an eligible renewable energy source.
Overview of the RET
The Commonwealth RET scheme is designed to reduce emissions
of greenhouse gases in the electricity sector and encourage the additional
generation of electricity from sustainable and renewable sources. The RET
scheme is established under the RET Act and is administered by the Clean Energy Regulator.[5]
The objects of the RET Act are:
- to
encourage additional generation of electricity from renewable sources
- to
reduce emissions of greenhouse gases in the electricity sector and
- to
ensure generation of electricity from ecologically sustainable renewable energy
sources.[6]
The RET mandates the proportion of electricity that must be generated
from eligible renewables by electricity retailers on behalf of their customers.
It was designed to support a policy commitment that at least 20 per cent of
Australia’s energy supply would come from renewable sources by 2020.[7]
The policy rationale for the RET is that these more expensive forms of energy
would not be viable market options and so the scheme encourages the use of
current renewable technologies. The RET created a renewable certificate market
where Renewable Energy Certificates (RECs) (a form of renewable energy
currency) are issued to power station generators classified as renewable under
the RET Act. Electricity retailers must purchase RECs to acquit their
liability under the set target, with the REC price passed on through Power
Purchase Agreements via the retail price to electricity consumers in the form
of higher energy tariffs.
The RET works by allowing both large-scale renewable energy
power stations and the owners of small-scale systems to create certificates for
every megawatt hour of renewable power they generate. ‘Liable entities’[8]
(mainly electricity retailers) have legal obligations to purchase certificates
and then surrender them to the Clean Energy Regulator, in percentages set by
regulation each year. This creates a market which provides financial incentives
to both large‑scale renewable energy power stations and the owners of
small-scale renewable energy systems. If a liable entity does not surrender the
required amount of certificates, it must pay a shortfall charge. Partial
exemptions are available for EITE activities. Generators producing and
consuming their own electricity (self‑generators) are fully exempt.[9]
The Renewable Energy Target has two core components: the
Large-scale Renewable Energy Target (LRET) and the Small-scale Renewable Energy
Scheme (SRES). The LRET supports large-scale renewable energy projects such as
wind and large-scale solar generators, by helping to bridge the cost between
renewable and fossil-fuel generation. It sets annual targets for the amount of
large-scale renewable energy. Currently, these targets rise to 41,000 GWh in
2020 and stay constant until 2030. The annual targets are allocated among
liable parties in proportion to their purchases of wholesale electricity.[10]
The SRES helps households, small businesses and community
groups with the upfront cost of installing small‑scale renewable systems,
such as rooftop solar systems and solar hot water heaters. The SRES has an
uncapped notional target of a total of 4,000 GWh by 2020. Unlike the LRET, the
SRES does not have binding annual targets. Rather, the scheme is uncapped
allowing all eligible installations to receive assistance.[11]
Brief history of the RET
The RET was first legislated in 2000 under the Renewable Energy
(Electricity) Act 2000 as the Mandatory Renewable Energy Target (MRET),
which created an obligation for large electricity purchasers to source an
additional two per cent of their electricity from renewable sources by 2010. This
was expressed in the RET Act as a target of 9,500 GWh by 2010.
Prior to the 2007 election, the Australian Labor Party
(ALP) committed to an expanded target of at least 20 per cent of Australia’s
electricity to be generated from renewable energy sources by 2020.[12]
In 2009, the Council of Australian Governments (COAG) agreed on the design of a
RET scheme to achieve a 20 per cent share of renewables in Australia’s
electricity mix by 2020.[13]
To achieve this, the target was increased from 9,500 GWh by 2010 to 45,000 GWh
by 2020. In addition, provision was made for partial exemptions for
‘emissions-intensive trade-exposed industries’ from their liabilities under the
expanded RET.[14]
In 2010, the RET was split into two separate targets as
outlined above: the LRET with legislated annual targets increasing to 41,000
GWh by 2020, and the SRES, which it was estimated would deliver at least 4,000
GWh by 2020.[15]
Further historical information in relation to the RET
scheme is available in the relevant Bills Digests.[16]
Recent reviews of the RET scheme
Under the RET Act, the Climate Change Authority must
conduct a review every two years examining the operation of the Act, its
associated regulations and the environmental and economic impact of the scheme.[17]
Subsection 162(11) of the RET Act states that the review must make
recommendations which are consistent with the objects of the Act.[18]
The Climate Change Authority has conducted reviews in 2012 and 2014.
The Climate Change Authority’s review in 2012 concluded that
the RET scheme did not require significant changes, and that there was no
compelling evidence to alter the quantity or nature of the target. However, the
Authority did flag that the uncapped nature of the SRES could prove
problematic, and suggested policy measures to alleviate this. The Authority
also noted that biennial reviews were damaging to investor confidence, and
recommended that the RET should be reviewed every four years instead.[19]
In December 2014, the Climate Change Authority finalised its
second review under the RET Act.[20]
That review found that the RET scheme can make significant greenhouse gas
emissions reductions at a reasonable cost, with modest impacts on electricity
consumers.[21]
The review recommended that the 2020 LRET target should not be reduced, but
that the timeframe for achieving the target should be extended by up to three
years. The review made this recommendation in light of the decline in investor
confidence in the renewable energy industry, the resulting slowdown in
investment, as well reductions in projected electricity demand.[22]
Over the longer term (and in particular, after 2020), the Authority recommended
that the Government should consider increasing and extending targets, and
expanding arrangements to cover a wider set of technologies.[23]
A separate, non-statutory review of the RET scheme was also
conducted in 2014, by an ‘Expert Panel’ chaired by Mr Dick Warburton and
supported by a secretariat in the Department of Prime Minister and Cabinet (the
Warburton Review).[24]
The terms of reference for the review were wide-ranging and considered, among
other matters, whether the RET is meeting its objectives and whether the
targets are appropriate and cost‑effective.[25]
The Renewable Energy Target Scheme – Report of the Expert Panel
(Non-Statutory Review) was released in August 2014.[26]
The Warburton review found that the RET has largely met its objectives but ‘is
a high cost approach to reducing emissions because it does not directly target
emissions and it only focuses on electricity generation’.[27]
One of the review’s recommendations was that the RET be amended in light of the
changing circumstances in Australia’s main electricity markets and the
availability of lower cost emission abatement alternatives. The review put
forward several options for reforming both the LRET and the SRES.[28]
The findings of these reviews are discussed in further
detail as relevant in this Digest.
Current proposal
Following the Warburton Review, there have been many months
of negotiations and speculation as to the future of the RET Scheme. On 8 May
2015, the Minister for Industry and Science and the Minister for the
Environment announced that the Government had agreed with the ALP to set the
LRET at 33,000 GWh by the year 2020.[29]
As the Explanatory Memorandum states:
Following its consideration of the expert panel’s [Warburton
review] report and subsequent negotiations with the Opposition and cross bench
senators, the Government has decided to make changes to the RET scheme to
better reflect market conditions and to ensure renewable energy continues to
play a significant role in Australia’s energy mix and in achieving Australia’s
2020 emissions target.[30]
Selection of Bills Committee
At the time of writing, the Selection of Bills Committee
has not considered the Bill.
Senate Standing Committee for the
Scrutiny of Bills
At the time of writing, the Committee has not commented on
the Bill.
The ALP has indicated its support for the Bill, except the
amendments to the definition of wood waste. The Shadow Minister for the
Environment indicated that the ALP would support the Bill in order to restore
investor confidence in the LRET.[31]
In particular, the ALP supports the revised target of 33,000 GWh by 2020, the
full exemption for EITE activities and the removal of the two-yearly reviews of
the RET scheme.[32]
However, the ALP (unsuccessfully) moved amendments in the House of
Representatives which would have removed the Bill’s amendments to the
definition of ‘wood waste’ in the RET Regulations to include native forest wood
waste. They also attempted to add provisions preventing any future regulations
being made to include biomass derived from native forests in the definition of
wood waste.[33]
The Australian Greens have indicated that they do not
support the Bill, particularly its reduction in the LRET, and the amendments to
the definition of wood waste.[34]
At the time of writing, most minor parties and
independents do not appear to have publicly stated a position in relation to
the Bill itself, but have given some indication of their level of support for
changes to the RET scheme.
Senator Lambie, Independent for Tasmania, has indicated
her support for a reduction in the RET, as well the inclusion of biomass and
wood waste as a renewable energy source.[35]
Senator Lazarus is opposed to a cut in the RET, and has
called for a future target of 50 per cent of Australia’s energy generated by
renewables by 2030.[36]
Senator Madigan is reported as supporting a reduction in
the RET to reflect a ‘true 20 per cent’ target.[37]
Senators Leyonhjelm, Day and Madigan also reportedly support the provisions
relating to wood waste, but ‘could seek conditions that would reserve part of
the 33,000 gigawatt-hour target for solar and hydro power only’.[38]
Senator Day has also reportedly suggested that the Bill be delayed until the
conclusion of the Senate
Select Committee on Wind Turbines, which is currently scheduled to report
on 3 August 2015.[39]
Senator Muir, of the Australian Motoring Enthusiast Party,
has urged bipartisan support for the RET and indicated that he ‘will stand firm
to protect the current legislated RET’. However, he does support ‘minor
amendments’, such as extending the exemption for EITE activities to 100 per
cent and ‘recognising wood waste sourced from sustainably managed forests as an
eligible source of renewable energy within the RET’.[40]
Palmer United Party Senator Wang supports the current
target of 41,000 GWh but has reportedly said he would consider backing a lower
figure if it had bipartisan support, given the industry's need for certainty.[41]
Independent Senator Xenophon is reportedly concerned that
solar and hydro projects could be ‘crowded out’ of the renewable energy scheme
by wind power. He also reportedly supports the inclusion of native forest wood
waste, but with safeguards and conditions to ensure it is genuine wood waste
and incorporates protections for native habitat.[42]
Environmental groups
Environmental groups have expressed disappointment at the
reduction in the RET, as well as opposition to the proposals to exempt EITE
industries and to include native forest biomass.[43]
Environmental groups consider that the RET is an important mechanism to reduce
Australia’s greenhouse gas emissions and to modernise and ‘decarbonise’
Australia’s power sector. For example, the Australian Conservation Foundation
suggests that a reduction in the RET will ‘allow more electricity to be
generated at old, inefficient coal-fired power stations’ and has pointed to
modelling which shows that prices to consumers are likely to increase under most
scenarios if the RET is reduced.[44]
The Wilderness Society has expressed particular concern about the inclusion of
native forest biomass, suggesting that ‘including a new incentive for logging
high conservation value forests and important wildlife habitat is never going
to be worthy of the tag ‘renewable’’.[45]
Many environmental groups have expressed support for the
current RET to be maintained and increased beyond 2020. For example, the
Australian Conservation Foundation has called for the renewable energy target
to be increased to 50 per cent by 2030.[46]
Industry groups
Many industry groups have been calling for a resolution to
RET negotiations following the release of the Warburton Review. In March 2015, a
coalition of peak business associations released an ‘open letter’ calling for
an urgent resolution on the RET by both major political parties. The letter
noted that the uncertainty of the unresolved Warburton Review was having a ‘material
and detrimental impact on the renewable energy sector, energy users, the
traditional energy sector and the broader business community’.[47]
Some of these peak business groups, joined by others,
reiterated this call in May 2015. They expressed concern that failure to agree
on the RET ‘will continue to block investment in renewable energy generation
and in electricity supply. It will also impose significant unnecessary costs on
industry that relies on electricity’.[48]
The Australian Aluminium Council, which was a signatory to
the open letter mentioned above, has noted that ‘the future of Australia's four
aluminium smelters is closely tied to the resolution of the target’.[49]
Following the release of the Warburton Review, the Australian Aluminium Council
welcomed the review’s acknowledgement that ‘the RET impacts electricity prices for
trade exposed businesses such as aluminium smelting and alumina refining – and
that significant adjustments to the scheme are required to reduce its cost
burden’. The Council also stated that it would be ‘pursuing a full exemption
from the burden of the RET for aluminium smelting and reduced RET costs for
alumina refining’.[50]
The Clean Energy Council has expressed disappointment with
the reduction in the RET,[51]
but has nevertheless called for the Bill to be ‘passed quickly’, suggesting
that:
Approximately 6,500 jobs and $10 billion worth of investment
are set to be created by the large-scale renewable energy sector alone. With
household renewables included, this takes the total up to 15,200 jobs and $40.4
billion worth of investment over the life of the scheme.
It is essential that the new legislation is passed quickly,
without perverse political outcomes caused by a messy negotiation with
cross-bench senators in search of an agreement on native wood waste.[52]
The Australian Forest Products Association has welcomed
the Bill, particularly the provisions for fully exempting EITE industries and
the proposed inclusion of native forest biomass in the definition of wood waste
as an eligible renewable energy source.[53]
Further comment from major interest groups
is canvassed under the Key
issues and provisions section below.
The Explanatory Memorandum states that the financial
impacts of the reforms to the RET scheme have ‘not yet been finalised, but are
expected to be minor’.[54]
As required under Part 3 of the Human Rights
(Parliamentary Scrutiny) Act 2011 (Cth), the Government has assessed the
Bill’s compatibility with the human rights and freedoms recognised or declared
in the international instruments listed in section 3 of that Act. The
Government considers that the Bill is compatible.[55]
Parliamentary Joint Committee on
Human Rights
At the time of writing, the Committee has not commented on
the Bill.
Reduction of the Large-Scale Renewable
Energy Target
Part 1 of Schedule 1 of the Bill contains provisions
to reduce the LRET.[56]
Subsection 40(1) of the RET Act contains a table
setting out the annual targets for the production of electricity generated from
renewable sources from 2001. Currently, the LRET target for 2020 and subsequent
years is 41,000 GWh. Item 2 of the Bill proposes to amend this table to
reduce the LRET target for 2020 to 33,000 GWh.[57]
This level is maintained until 2030. Reductions proportionate to this reduced
target are proposed for the years 2012 to 2019.
Item 3 of the Bill repeals subsections 40(1A) to (5),
which were inserted into the RET Act in 2010 as a transitional measure
to adjust the target to deal with surplus renewable energy certificates due to
the commencement of the separate LRET and SRES in 2011 and to account for the
850 GWh annual allocation of non‑renewable generation using waste coal
mine gas (see below).[58]
These provisions are now redundant, particularly due to the adjustments to
future targets made by the Bill.[59]
Subsections 40(2) to 40(5) are also being repealed by item
3. These subsections were inserted into the RET Act in 2010 and established
an additional target allocation able to be met by generation using waste coal
mine gas. They were part of a transitional measure which included 850GWh annual
allocation of non-renewable generation using waste coal mine gas as an eligible
source in the RET as a result of the cessation of the NSW Greenhouse Gas
Abatement Scheme. The annual targets were able to be increased by 850GWh per
year until 2020 to accommodate certificates created by existing waste coal mine
gas generators to ensure they did not ‘crowd out renewable energy generation’.[60]
The Explanatory Memorandum states that these subsections:
... are redundant as the adjustments they make to the
legislated targets from 2012 to 2020 to include the waste coal mine gas
allocation have now been incorporated into the table in subsection 40(1). For
example, the amended target for 2020 in the table is 33,850 GWh, including 850
GWh for generation using waste coal mine gas.[61]
Why is the LRET being reduced?
The Explanatory Memorandum states that the LRET is being
reduced to ‘better reflect electricity market conditions, while continuing to
support the uptake of large-scale renewable electricity’.[62]
The Minister for the Environment suggests that the target of 33,000 GWH in the
Bill will still ‘lead to more than 23.5 per cent of Australia’s electricity
being sourced from renewable energy by 2020’.[63]
As noted above, the current target of 45,000 GWh by 2020 was
set in 2009 so as to achieve a 20 per cent share of renewables in Australia’s
electricity mix by 2020. In order to provide a workable mechanism, the
percentage targets were converted to a fixed number of GWh of electricity,
which were then set in legislation, based on assumed growth in the usage of
electricity.[64]
Thus the original MRET was set at 9,500 GWh, and the expanded RET at 45,000
GWh. At the time the expanded RET was calculated, the anticipated 2020
electricity usage was 300,000 GWh. 20 per cent of this figure is 60,000 GWh,
but pre-existing renewable generation of around 15,000 GWh is subtracted
to arrive at the 45,000 GWh figure. The expanded RET was then split into a
large-scale target of 41,000 GWh and a notional small-scale target of 4,000
GWh.[65]
However, electricity usage in Australia peaked in 2010–11,
and has been declining since.[66]
This was unforeseen, and the predicted 2020 total electricity usage of 300,000
GWh is now likely to be around 255,300 GWh.[67]
When combined with pre-existing renewable generation (16,150 GWh) and the grid
electricity saved from rooftop solar hot water and photovoltaic systems (around
13,420 GWh), the 41,000 GWh LRET would lead to about 70,570 GWh of
renewable energy, or 27.6 per cent of total usage.[68]
Based on these figures, the proposed revised 33,000 GWh target would lead to
about 24.5 per cent of total usage being generated by renewable sources.
Response to the proposed reduction
As noted earlier, the Clean Energy Council has expressed
disappointment with the reduction in the RET but is pleased that a deal has
been reached to restore confidence to the sector.[69]
Other industry stakeholders have also welcomed the bipartisan agreement to
revise the target in order to provide industry certainty.[70]
However, environmental groups do not support the reduction of the RET, suggesting
that the RET is an important mechanism to reduce Australia’s greenhouse gas
emissions and to modernise and ‘decarbonise’ Australia’s power sector.[71]
The Climate Institute, Australian Conservation Foundation and WWF-Australia commissioned
a report showing that prices to consumers are likely to increase under most
scenarios if the RET is reduced.[72]
These environmental groups suggest that RET should be kept unchanged and increased
beyond 2020. For example, the Australian Conservation Foundation has called for
the renewable energy target to be increased to 50 per cent by 2030.[73]
Comparison with RET review
recommendations
These amendments differ from the recommendations of reviews
by both the Climate Change Authority and the Warburton Panel, presumably as a
result of negotiations following those reviews.
The first recommendation of the Warburton Review was that
the RET ‘should be amended in light of the changing circumstances in
Australia’s main electricity markets and the availability of lower cost
emission abatement alternatives’.[74]
However, the Warburton Review, after considering various options including
reducing the LRET to achieve ‘a real 20 per cent’, actually recommended that
the LRET be closed to new entrants or the target be set annually by the
Clean Energy Regulator to allocate a share of growth in electricity demand to
renewables.[75]
The Climate Change Authority did not favour any significant
scaling back of the LRET but did recommend that consideration be given to
extending the end year for achieving the target by up to three years.[76]
The Authority found that a reduction in RET is not warranted:
... there is no compelling justification for reducing the
target to a level representing 20 per cent of an updated electricity demand
forecast for 2020. There is no reason to think that 20 per cent is the ‘right’
amount of renewable energy...a significant reduction in the target would not
decrease consumer prices and would not provide a satisfactory solution to the
current oversupply problem. It would, however, defer investment in renewable
generation, leading to higher electricity sector emissions, making it harder
for Australia to achieve the deeper emissions reductions required beyond 2020.[77]
Could the 41,000 GWh target be
achieved?
Another reason given for amending the LRET by the Minister
for the Environment is that it is ‘unlikely’ that the 41,000 GWh target would
be met.[78]
This echoes the concerns raised by some stakeholders during the Warburton Review
that it would not be technically possible to construct
enough renewable generation to achieve the target of 41,000 GWh of large‑scale
generation by 2020.[79]
If realised, this situation could leave RET-liable entities in the position of
not being able to procure enough certificates to meet their RET obligations,
and hence be liable for the RET shortfall charge.[80]
In order to meet the current LRET, most sources suggest that
around 9,000 megawatts (MW) of new renewable generation will need to be built.[81]
As of May 2015, Australia had around 4,012 MW of wind generation and
8,018 MW of hydro power,[82]
along with amounts of large scale solar and biomass fuelled generation
totalling less than 250 MW.[83]
At May 2014, according to the Climate Change Authority, 7,700 MW of large-scale
renewable energy projects were approved for development, with 7,250 MW of that
pending financial close or resolution of other issues. An additional 10,050 MW
of projects were in the approval process. The majority of the potential
generation capacity was from wind farm projects.[84]
Typically, an approved wind farm is constructed in one to two years,[85]
meaning there would be opportunity for these farms to be constructed before the
2020 deadline.
However, such a construction rate would be unprecedented,
around three times the highest construction rate yet recorded.[86]
Achieving construction of around 1,800 to 2,000MW of new generation per year
would require significant economic and human resources. Despite this, both the
Warburton Review and Climate Change Authority concluded that achieving the
41,000 GWh target would be technically feasible, particularly given the
renewable energy projects already in the pipeline.[87]
Full exemptions for
emissions-intensive activities
Current partial exemption
provisions
Sections 46A-46F of the RET Act currently provide a framework for partial exemptions for
electricity used by businesses conducting EITEs from their liabilities under
the expanded RET. Under section 46A, businesses carrying out eligible EITE
activities may apply to the Clean Energy Regulator annually for a partial
exemption certificate (PEC). Each PEC represents an amount of electricity to
which RET liability will not apply in a given year. An EITE business can
exchange this PEC with its RET-liable electricity retailer in return for
partial relief from the pass-through of RET costs.[88]
Much of the detail of the partial exemption regime is left
to the RET Regulations. For example, an emission‑intensive trade-exposed
activity is defined in the RET Act to mean an activity
prescribed by regulations.[89]
Schedule 6 of the RET Regulations lists the prescribed eligible EITE
activities. There are currently over 50 activities listed, including for
example, zinc and aluminium smelting, production of glass, methanol, silicon,
manufacture of carton board, packaging and paper, and petroleum refining.
In addition, the amount of the liable entity’s partial
exemption for the year in relation to EITEs is calculated according to a method
prescribed by the regulations.[90]
The method for calculating an entity's partial exemption is currently based on,
among other matters, an activity's classification in Schedule 6 of the
Regulations as either a highly emissions-intensive activity, which
receives an assistance rate of 90 per cent, or as a moderately
emissions-intensive activity, which receives an assistance rate of 60 per
cent. However, the partial exemption currently does not apply to the portion of
RET costs associated with the original 9,500 GWh MRET. As a result, in 2013,
this translated to an exemption rate of about 75 per cent for highly emissions-intensive
activities and about 50 per cent for moderately emissions-intensive activities.[91]
Proposed amendments
Part 2 of Schedule 1 of the Bill proposes to amend
the RET Act to allow the RET Regulations to provide for full exemptions
from RET liability for all EITE activities. In short, the bulk of the amendments
in this Part achieve this by simply removing the word ‘partial’ in relevant
provisions of the RET Act. For
example, items 7 and 8 remove the definitions of ‘partial exemption’ and
‘partial exemption certificate’ in subsection 5(1) of the RET Act.
Instead, new definitions of ‘exemption’ and ‘exemption certificate’ are
provided. These definitions are essentially the same as the previous
definitions but without the word ‘partial’.[92]
Section 46B currently provides for the Clean Energy
Regulator to issue partial exemption certificates. Item 27 amends
subsection 46B(1) of the RET Act to remove the word ‘partial’ in
relation to exemption certificates. It also provides that a certificate must
specify or describe the amount that is the liable entity’s exemption for the
year in relation to the EITE activity and site.
Item 28 then adds a proposed subsection 46B(4),
which provides that the regulation must prescribe the method for working out
the amount of a liable entity’s exemption for a year in relation to an EITE activity
and a site. Proposed paragraph 46B(4)(b) provides that the
regulations may provide that an exemption certificate may either specify the
amount that is the liable entity’s exemption in relation to the EITE activity and
the site; or describe, in some other way, the amount that is the liable
entity’s exemption in relation to the EITE activity and the site. Item 13
also adds proposed subsection 38B(2) which defines the exemption
amount in an exemption certificate as the amount specified or described
in the certificate as being the amount of the liable entity’s exemption. In
addition to allowing for full exemptions to be provided, these amendments
provide greater flexibility in the way in which the amount of an exemption can
be represented on an exemption certificate. The Explanatory Memorandum states
that:
It is intended that this additional flexibility would empower
regulations to effectively limit the potential for an exemption to be provided
in respect of a particular EITE activity (at a particular site) that exceeds
the amount of electricity consumed in undertaking that activity.[93]
Item 18 removes the references to ‘partial’ in sections
39 and 40A of the provisions which relate to the calculation of the
renewable power percentage and also the small-scale technology percentage. These
percentages are currently calculated taking into consideration a number of
matters, including the amount of all partial exemptions that will be claimed
for the year. These changes allow the additional total amount of full exemptions
to be taken into account in determining the renewable power percentage and
small-scale technology percentage in the future.[94]
Items 5 and 6 amend subsection 5(1) of the RET
Act to remove redundant references to the Carbon Pollution Reduction Scheme
and associated EITE assistance program under the Carbon Pollution Reduction
Scheme Act 2009, which was never enacted.
The Explanatory Memorandum expresses an intention that the
RET Regulations will be amended to complete implementation of 100 per cent
exemptions for all EITE activities as soon as practicable following passage of
the Bill.[95]
In addition, item 37 contains transitional provisions to require the
Clean Energy Regulator to amend exemption certificates already issued for the
current year ‘as soon as practicable’ after the commencement of amending
regulations in order to provide full exemptions from RET liability for all
electricity consumed in undertaking EITE activities in 2015. This means that
this aspect of the Bill will have retrospective operation, although the reasons
for this are not explained in the Explanatory Memorandum.
Why are full exemptions being provided?
The partial exemption provisions were introduced when the
RET was expanded by the Renewable Energy (Electricity) Amendment Act 2009 on
the basis that RET costs reduce the competitiveness of businesses competing in
an international environment.[96]
As the Climate Change Authority noted in its 2012 review:
The general rationale for providing assistance to EITE
activities is that these businesses are competing in an international setting
where their competitors do not face a similar impost. EITE businesses are
unable to pass on the additional cost of the RET to their customers, to remain
competitive, and must absorb the additional cost of the RET. This may cause
EITE businesses to move the activity to a country that does not have a RET (or
other such cost imposition), which is undesirable from an Australian industry
perspective.[97]
Many EITE businesses claim that the current exemption is not
sufficient to prevent a loss of global competitiveness as a result of the
additional costs of the RET scheme.[98]
As a result, the Government has decided to increase the rate
of exemption for all EITE activities, whether highly or moderately
intensive, to 100 per cent as applied to the total RET liability.[99]
The reason given is ‘to ease pressure on businesses undertaking EITE activities
and improve the competitiveness of Australian industry’.[100]
These amendments reflect calls by some industry groups
such as the Australian Aluminium Council, which has been ‘pursuing a full
exemption from the burden of the RET for aluminium smelting and reduced RET
costs for alumina refining’. The Australian Aluminium Council suggests that:
The RET policy imposes costs on Australian smelters that are
not paid by the major global competitors of the Australian aluminium industry,
meaning our smelters will continue to struggle in an already difficult
commercial environment if not fully exempted from the costs of the RET.[101]
The Australian Forest Products Association has also
welcomed the potential for increased exemptions from the RET noting that:
Our large manufacturing companies, such as sawmills and pulp
and paper making enterprises, have had their status as significant energy users
operating in a globally exposed trading environment recognised, and
appropriately fully offset from the beginning of the 2015 compliance year.[102]
Impact of extending exemptions for
EITE activities
The Bill allows for the regulations to be amended to provide
full exemptions for all EITE activities, and the exact details of the
new exemption regime will be contained in regulations which are yet to be
developed. As noted earlier much of the detail of the exemption framework is
left to the RET Regulations, including the list of EITE activities. There are
currently over 50 EITE activities listed in Schedule 6 of the RET Regulations,
and there is the potential for more activities to be prescribed, meaning that a
wide range of activities may be able to be given full exemptions from the RET
Scheme. There will be an opportunity for parliamentary scrutiny of these
amending regulations.
The extension of the exemption regime may also have broader
implications. For example, in 2012 the Climate Change Authority warned that:
... extending the partial exemption arrangements to the MRET
will result in higher RET costs for all other liable entities, because they
would need to pick up those costs in order for the target to still be met.[103]
The Warburton Review recommended that the current partial
exemption arrangements for emissions-intensive trade-exposed businesses should
be maintained but not extended, noting that:
Extending the assistance provided to EITE businesses
increases the volume of liable electricity covered by the exemption. In turn,
this transfers a greater share of the cost of the RET to all other electricity
consumers.[104]
The Warburton Review noted concerns raised by EITE
businesses about the cost of the RET, but pointed out that ‘the rationale for
providing the exemption was to reduce the combined impact that a carbon tax and
higher RET costs would have on EITE businesses. The repeal of the carbon tax
will lower electricity prices for all consumers’.[105]
The Warburton Review also noted that its other recommendations relating to the
LRET and SRES would help EITE businesses:
If adopted, the Panel’s recommendations on both the LRET and
the SRES would reduce the costs of the RET faced by EITE businesses in the
future compared with current settings. The Panel also notes that changes to
exemption arrangements for EITE businesses are likely to have a much smaller
impact than factors such as exchange rate movements and global supply and
demand conditions for goods produced by EITE businesses, which are likely to be
far more important determinants of profitability. Given these factors, it is
difficult to justify extending the exemption arrangements for EITE businesses
considering the additional cost this would impose on other electricity
consumers.[106]
However, the Government considers that:
The reduction in the direct costs of the RET resulting from
the lower large-scale renewable energy target will more than offset the impact
on other electricity users of the increase in assistance for
emissions-intensive trade-exposed activities.[107]
Electricity intensity or emissions
intensity?
The Bill also does not appear to address an issue raised
by the Climate Change Authority in its 2014 review, which considered whether
the current basis for assisting particular businesses with RET costs remains
appropriate, particularly in light of the repeal of the carbon price. The 2014
review concluded that if any further exemptions from electricity costs under
the RET are to be granted, this should be on the basis of electricity intensity,
rather than emissions intensity. The Climate Change Authority explained:
Providing assistance based on emissions intensity, rather
than electricity intensity, leads to some anomalies... Based on the current
eligibility thresholds, some activities, such as lime and ammonium nitrate, are
highly emissions‑intensive, but not particularly electricity-intensive.
These activities receive a high level of exemption from RET costs, despite
having lower electricity intensities than some moderately emissions-intensive
activities, such as tissue paper manufacturing.
Providing assistance with electricity costs to businesses
that are not particularly electricity intensive places a greater burden on
non-exempt electricity users. In the Authority's view, any changes to
assistance with RET costs should be based on need and the best measure of need
in this context is electricity intensity. If broadening of assistance is
considered, it should be based on electricity intensity.[108]
The extension of the EITE exemptions may also lead to
other anomalies. For example, the Explanatory Memorandum notes that due to the
fact that the averaging processes for establishing electricity intensity
baselines was based on data from July 2006 to June 2008, there is ‘a risk of
some EITE firms receiving assistance that exceeds the cost impact of the RET on
these EITE activities’. The Government ‘will consult on the detail of
regulations to address this risk’.[109]
Removing RET reviews
Part 3 of Schedule 1 of the Bill contains provisions
to repeal the requirement for periodic reviews of the operation of the RET
scheme by the Climate Change Authority.
Currently, section 162 of the RET Act requires the
Climate Change Authority to conduct reviews every two years into the operation
of the RET Act, Renewable Energy (Electricity) Regulations 2001
and the RET scheme. Item 39 repeals section 162 and therefore removes
the requirement for the Climate Change Authority to conduct these reviews.
Items 40–45 make consequential amendments to the Climate
Change Authority Act 2011.[110]
Items 40 and 41 remove references in the Climate Change Authority Act
to the Climate Change Authority’s obligations to conduct periodic reviews
under the RET Act. For example, section 11 of the Climate Change
Authority Act sets out the functions of the Climate Change Authority. Item
41 repeals subparagraph 11(a)(iv), which provides that the Climate Change
Authority’s functions include conducting reviews under section 162 of the RET
Act. The Climate Change Authority’s other functions are not changed by the
Bill.
Under section 57 of the Climate Change Authority Act,
the Climate Change Minister may, by legislative instrument, give directions to
the Climate Change Authority in relation to the performance of its functions
and the exercise of its powers. Those directions must not relate to the conduct
of, or the content of a report, of a particular review (subsection 57(3)) and
must not be inconsistent with the objects of the RET Act (paragraph 57(4)(d)).
Items 42 and 43 remove the obligation for directions given by the
Climate Change Minister to the Climate Change Authority to be not inconsistent
with the objects of the RET Act. The need for this particular amendment
is not entirely clear, although the Explanatory Memorandum describes this as an
‘application and transitional provision’.[111]
Section 82 of the Climate Change Authority Act
provides an exemption from liability for the Climate Change Authority and
related persons, for damages in relation to acts or omissions done in good
faith in relation to (among other things) the requirement to conduct periodic
reviews under section 162 of the RET Act. Items 44 and 45 remove
this exemption, given that the requirement in section 162 to conduct these
periodic reviews is being removed. Item 46 provides that the exemption from
liability continues to apply to any reviews or related matters carried out before
the enactment of the Bill.
Need for certainty
The Explanatory Memorandum states that this amendment will
‘provide greater certainty for project developers, investors and energy users’.[112]
According to the Clean Energy Council, the 2014 reviews of the RET ‘stalled
investment in large-scale renewable energy such as wind and solar power in
2014, with investment falling by 88 per cent’.[113]
The Climate Change Authority recommended amending the RET
Act to require reviews every four years, rather than every two years. In
its 2012 review, the Climate Change Authority concluded that two-yearly reviews
of the RET risked undermining policy stability and investment in the sector and
recommended that they occur only every four years.[114]
This recommendation was not implemented.
In 2014, the Climate Change Authority review again
recommended that the frequency of statutory reviews of the RET should be
changed from every two years to every four years, finding that ‘frequent
reviews of the LRET create uncertainty which discourages investment in the
sector’.[115]
The Climate Change Authority suggested that reviews every four years ‘strikes a
reasonable balance between the need for policy flexibility and the risks to
investor confidence created by too frequent reviews’.[116]
The removal of the requirement for regular reviews is
consistent with the Warburton Review’s findings, which recommended that:
... the requirement for statutory reviews be removed from
legislation. The Government can initiate a review of the legislation at any
time it considers appropriate and the Panel heard from a wide range of
stakeholders that frequent statutory reviews undermine investor certainty,
hinder the achievement of the scheme’s objectives and reduce the likelihood of
any renewable energy target being met.[117]
According to the Explanatory Memorandum, in lieu of the biennial
reviews by the Climate Change Authority, the Clean Energy Regulator will instead
prepare an ‘annual statement on the progress of the RET Scheme towards meeting
the new targets and the impact it is having on household electricity bills’.[118]
The Bill does not contain any provisions to make this a statutory requirement.
However, the Clean Energy Regulator is already required under existing
provisions of the RET Act to give the Minister an annual report on the ‘working
of’ the RET Act.[119]
The most recent report was tabled on 11 May 2015.[120]
This report does consider the extent to which the RET scheme is performing
against its legislated objectives, but does not appear, for example, to examine
the impact on electricity bills.
Wood waste
Part 4 of Schedule 1 of the Bill amends the
definition of wood waste in the RET Regulations to remove the
restrictions on products derived from biomass in a native forest, subject to
certain conditions.
Section 17 of the RET Act currently lists a number of
eligible renewable energy sources for the purposes of the RET
Act. Wood waste is specifically listed as one of these
‘eligible renewable energy sources’.[121]
Under subsection 17(3), definitions for the various listed eligible renewable
energy sources (including wood waste) may be prescribed in the regulations.[122]
However, biomass derived from native forests is currently
excluded from the definition of wood waste in regulation 8
of the RET Regulations. This definition states that wood waste
means:
(a) biomass:
(i) produced
from non‑native environmental weed species; and
(ii) harvested
for the control or eradication of the species, from a harvesting operation that
is approved under relevant Commonwealth, State or Territory planning and
approval processes; and
(b) a
manufactured wood product or a by‑product from a manufacturing process,
other than a product or a by‑product that is derived from biomass from a
native forest; and
(c) waste
products from the construction of buildings or furniture, including timber off‑cuts
and timber from demolished buildings; and
(d) sawmill residue, other
than sawmill residue derived from biomass from a native forest.[123]
Items 48–50 of Part 4 of Schedule propose to amend
this definition of wood waste in regulation 8. Item 48
amends paragraph 8(b) to remove the words ‘other than a product or a by-product
that is derived from biomass from a native forest’. This means that a
manufactured wood product or by-product of a manufacturing process which
originally came from a native forest is an eligible renewable energy source for
the purposes of the RET Act.
Item 49 amends paragraph 8(d) to remove the words
‘other than sawmill residue derived from biomass from a native forest’. This
means that sawmill residue which originally came from a native forest will be
an eligible renewable energy source for the purposes of the RET Act.
Item 50 inserts a new paragraph 8(e) to
include ‘biomass from a native forest that meets the requirements in
subregulation 8(2)’ in the definition of wood waste.
Item 51 then inserts new subregulations 8(2)–(4),
which are integrity requirements that biomass from a native forest must meet in
order to be eligible under the RET scheme. New subregulation 8(2)
specifies that biomass from a native forest must be:
- harvested
primarily for a purpose other than biomass for energy production; and
- either
a by-product or waste product of a harvesting operation under relevant
Commonwealth, state or territory planning and approval processes for which a high
value process is the primary purpose of harvesting, or a by-product
(including thinnings and coppicing) of a harvesting operation that is carried
out in accordance with ecologically sustainable forest management
principles and
- produced
in accordance with ecologically sustainable forest management principles
required in a regional forest agreement, or if no regional forest agreement is
in place, carried out in accordance with ecologically sustainable forest
management principles that the Minister is satisfied are consistent
with those required by a regional forest agreement.
New subregulation 8(3) provides that the
primary purposes of a harvesting operation is taken to be a high-value
process only if the total financial value of the products of the
high-value process is higher than the financial value of other products of the
harvesting operation. High value process is defined in new
subregulation 8(4) as ‘the production of sawlogs, veneer, poles, piles,
girders, wood for carpentry or craft uses, or oil products’. The Explanatory
Memorandum refers to this as the ‘high value test’:
The high-value test ensures that the primary purpose of the
operation is production of sawlogs, veneer, poles, piles, girders, wood for
carpentry or craft uses, or oil products such that the financial value of these
products is higher than the total financial value of other products of the
harvesting operation.[124]
New subregulation 8(4) then defines ecologically
sustainable forest management principles to mean the following
principles that meet the requirements of ecologically sustainable development
for forests:
- maintenance
of the ecological processes within forests, including the formation of soil,
energy flows, and the carbon, nutrient and water cycles
- maintenance
of the biological diversity of forests
- optimisation
of the benefits to the community from all uses of forests within ecological
constraints.
The amendments in the Bill will mean that the RET
Regulations will be worded exactly as they were before November 2011, when they
were amended to restrict biomass from native forests.[125]
Item 52 is a transitional provision to ensure that
the amendments in this part of the Bill will apply to all electricity generated
from biomass after the commencement of the Bill, including electricity
generators which were subject to the transitional provisions of the November
2011 regulations (discussed further below).
History of wood waste under the RET
scheme
Native forest wood waste was originally included as an
eligible source of renewable energy when the MRET was established in 2001. In
November 2011, following agreement of the Multi-Party Climate Change Committee,
native forest wood waste was removed as an eligible form of wood waste under
the RET. Transitional measures were introduced for power stations that were
already accredited to use wood waste derived from native forest biomass as an
eligible energy source and are effective until 2020.[126]
The Climate Change Authority’s 2012 RET review examined
whether wood waste from native forests should be included in the LRET and recommended
that:
The Government should explore whether the RET eligibility for
native forest wood waste is likely to increase the rate of logging of native
forests. If it is not, then wood waste eligibility should be reinstated,
subject to appropriate accreditation processes designed to ensure that no
additional logging occurs as a result.[127]
However, this recommendation was rejected in the
government response which stated:
Wood waste from native forests was removed from the RET as an
eligible renewable energy source in 2011. This amendment was made to ensure
that the RET did not provide an incentive for the burning of native forest wood
waste for bio-energy, which could lead to unintended outcomes for biodiversity
and the destruction of intact carbon stores. The Government does not consider
that circumstances have changed sufficiently since 2011 to warrant this issue
being reconsidered.[128]
During the 2013 election campaign, the Coalition announced
that it would ‘introduce amendments to the renewable energy regulations
allowing appropriately scaled renewable energy initiatives using wood biomass,
to benefit from energy initiatives available to other renewable energy sources’.[129]
The Climate Change Authority did not consider the issue of
wood waste in its 2014 review. However, the Warburton Review did consider it
and supported the reinstatement of native forest wood waste as an eligible
renewable energy source under the RET scheme. The Warburton Review recommended
that this be ‘implemented through the reintroduction of the relevant
regulations in force prior to 2011’.[130]
The review noted that it had ‘not been presented with any evidence that these
regulations resulted in unsustainable logging activities’.[131]
This Bill implements that recommendation.
Issues relating to native forest
wood waste
The eligibility of biomass from native forests is a
controversial issue. Given the controversial nature of this measure, it is
unclear why the approach has been taken to use this Bill to amend the RET
Regulations, rather than promulgating amending regulations separately.
Supporters of these provisions argue that the use of native
forest biomass replaces fossil-fuel generation and that wood waste from forests
is generally burned or left to rot anyway. Proponents also suggest that there
are sufficient safeguards in place to ensure native forest wood waste is
sustainably harvested.[132]
The main concern about the eligibility of wood waste from
native forests under the RET is that it could create an added incentive to log
native forests. Other related concerns are that it could contribute to other
adverse environmental impacts – such as loss of biodiversity, loss of ‘carbon
sinks’, and particulate pollution from burning sawmill waste.[133]
As noted earlier, environmental groups, such as The
Wilderness Society and the Australian Conservation Foundation, have criticised
the amendments to include native forest biomass. The Australian Conservation
Foundation has recently released a statement setting out ‘ten reasons why
burning native forests for electricity should not be included in the RET’.
These reasons include that the addition of native forest wood waste could
restrict the uptake of other renewable energy, particularly large scale solar,
in the RET; burning of native forest wood waste depletes carbon stocks instead
of preserving forests as a carbon sink; burning native forest wood releases
toxins that are harmful to air quality and human health; and has impacts on the
conservation values of Australia’s native forests.[134]
The Australia Institute has similarly suggested that
including native forest biomass in the RET will cause a number of direct and
indirect problems, including displacement of solar and wind energy in the RET
cap, reducing investment in those technologies, and environmental harm caused
by providing support for the continued logging of native forests.[135]
The Wilderness Society agrees with these concerns and has
also queried the adequacy of the safeguards for ensuring that forest management
is conducted in a sustainable manner. The Society suggests that there are
numerous instances demonstrating that mechanisms such as the Regional Forest
Agreement framework and state regulation of logging are inadequate and failing
to protect environmental values:
For example, logging has contributed heavily to the recent
listing of the Leadbeater’s Possum in Victoria as critically endangered – that
is, having a high risk of extinction in the near future. Similarly, recent
evidence has identified logging being approved by the Tasmanian Government in
the habitat of the endangered Swift Parrot, ignoring advice from expert
Government scientists about direct impacts on the species’ viability.[136]
Indeed, the proposed integrity requirements in subregulations 8(2)–(4),
which biomass from a native forest must meet in order to be eligible under the
RET scheme, deserve close scrutiny. In particular, whether the standards
provide sufficient levels of protection for the conservation values of native forests,
and whether there are adequate compliance and enforcement mechanisms, may be a
source of concern for some stakeholders. For example, the effectiveness of
standards for environmental protection in the Regional Forest Agreement regime is
a contentious issue.[137]
However, the Australian Forest Products Association has welcomed
the reinstatement of native forest wood waste in the RET, stating that there is
always a large amount of residue and offcuts from forestry operations, and that
the ‘biomass material in question is a waste product and will not affect the
level of native forest harvesting in Australia’.[138]
The Australian Forest Product Association further explains:
Sustainably managed harvesting and processing operations in
Australia generate mountains of offcuts and organic waste every year. These
offcuts include sawdust, shavings and bark. Additional biomass is left on the
forest floor, providing mountains of kindling for mega bushfires or pushed into
piles to rot away or be burnt to clear the site for regeneration. With the
incentive of renewable energy certificates many regional enterprises would be
able to convert coal or gas fired power and heating facilities to use the wood
waste, reducing greenhouse gas emissions.[139]
On 29 May 2015, the ABC reported that a document from
Victoria's state-owned forestry business, VicForests, obtained by the ABC
stated that this amendment ‘would provide a market for otherwise unsaleable
timber’.[140]
Acknowledgements
The author would like to acknowledge the assistance of Dr
Alexander St John with background material.
Members, Senators and Parliamentary staff can obtain
further information from the Parliamentary Library on (02) 6277 2500.
[1]. As
discussed later in this Digest, prior to amendment of the RET Regulations in
2011, the RET Regulations included native forest wood waste from sawmill
residue, manufacturing operations or harvesting which meets a number of
integrity requirements as an eligible renewable energy source.
[2]. Renewable Energy
(Electricity) Act 2000 (Cth) (RET Act),
accessed 5 June 2015.
[3]. Renewable Energy
(Electricity) Regulations 2001, accessed 12 June 2015.
[4]. Climate Change Authority
Act 2011 (Cth), accessed 12 June 2015.
[5]. The
Clean Energy Regulator is an independent statutory authority established under the
Clean Energy
Regulator Act 2011 (Cth), accessed 12 June 2015.
[6]. RET
Act, section 3.
[7]. Note
that the original target was initially lower: see ‘Brief history of the RET’
later in this Digest.
[8]. RET
Act, section 35.
[9]. Clean
Energy Regulator, ‘About
the Renewable Energy Target’, Clean Energy Regulator
website, 2 June 2015, accessed 3 June 2015. For further information on the
Commonwealth RET scheme and its operation, see: A St John, The
Renewable Energy Target: a quick guide, Research paper Series, 2013–14,
Parliamentary Library, Canberra, 14 May 2014, accessed 28 May 2015.
[10]. Climate
Change Authority, Renewable
Energy Target Review: report, Melbourne, December 2014, p. 9, accessed
4 June 2015; see also A St John, op. cit.
[11]. Warburton
Review (Expert Panel), Renewable Energy
Target Scheme — report of the Expert Panel, (Warburton Review), Commonwealth
of Australia, August 2014, p. 6, accessed 4 June 2015.
[12]. A
St John, op. cit.; K Rudd, P Garrett and C Evans, Labor's
2020 target for a renewable energy future, ALP policy document,
Election 2007, accessed 3 June 2015.
[13]. Council
of Australian Governments (COAG), Communiqué,
COAG Meeting, Hobart, 30 April 2009, accessed 2 June 2015; COAG, Renewable Energy Target Scheme
Design, 30 April 2009, accessed 2 June 2015.
[14]. Renewable Energy
(Electricity) Amendment Act 2009 ; see also A Martyn and J Styles, Renewable
Energy (Electricity) Amendment Bill 2009, Bills digest, 182, 2008–09,
Parliamentary Library, Canberra, 24 June 2009, accessed 5 June 2015.
[15]. Renewable Energy
(Electricity) Amendment Act 2010 (Cth), accessed 12 June 2015.
[16]. See,
in particular, A Martyn and M Roarty, Renewable
Energy (Electricity) Bill 2000, Bills digest, 198, 1999–2000,
Parliamentary Library, Canberra , 9 August 2000; A Martyn and J Styles, Renewable
Energy (Electricity) Amendment Bill 2009, Bills digest, 182, 2008–09, op.
cit.; A Talberg and J Tomaras, Renewable
Energy (Electricity) Amendment Bill 2010, Bills digest, 166, 2009–10,
Parliamentary Library, Canberra, 11 June 2010, accessed 12 June 2015.
[17]. RET
Act, section 162.
[18]. The
objects of the RET Act are set out in section 3, and are outlined
earlier in this Digest.
[19]. Climate
Change Authority, Renewable
Energy Target Review: final report, Melbourne, December 2012, accessed
4 June 2015.
[20]. Climate
Change Authority, Renewable
Energy Target Review: report, Melbourne, December 2014, accessed 4 June
2015.
[21]. Ibid.,
pp. 8, 23.
[22]. Ibid.,
pp. 2, 4, 37.
[23]. Ibid.,
p. 39.
[24]. Australian
Government, ‘RET Review’,
Department of Prime Minister and Cabinet website, accessed 4 June 2015.
[25]. Australian
Government, ‘Terms
of Reference’, Department of Prime Minister and Cabinet website,
25 February 2014, accessed 4 June 2015.
[26]. Warburton
Review (Expert Panel), Renewable Energy
Target Scheme — report of the Expert Panel, (Warburton Review),
Commonwealth of Australia, August 2014, accessed 4 June 2015.
[27]. Ibid.,
p. i.
[28]. Ibid.,
pp. vii–viii.
[29]. I
Macfarlane (Minister for Industry and Science) and G Hunt (Minister for the
Environment), Doorstop
interview: Melbourne: 8 May 2015: Renewable Energy Target, transcript,
8 May 2015, accessed 4 June 2015.
[30]. Explanatory
Memorandum, Renewable
Energy (Electricity) Amendment Bill 2015, p. 6, accessed 12 June 2015.
[31]. M
Butler, ‘Second
reading speech: Renewable Energy (Electricity) Amendment Bill 2015’, House
of Representatives, Debates, 2 June 2015, p. 3, accessed 12 June
2015.
[32]. M
Butler (Shadow Minister for Environment, Climate Change and Water), Labor
fights to remove wood waste from RET, media release, 2 June 2015,
accessed 3 June 2015.
[33]. M
Butler, ‘Consideration
in detail: Renewable Energy (Electricity) Amendment Bill 2015’, House of
Representatives, Debates, 2 June 2015, p. 77, accessed 12 June
2015.
[34]. See,
for example, Senator Di Natale, RET
deal is an irresponsible backwards step, media release, 18 May 2015,
accessed 3 June 2015; Senator Di Natale, Labor
must not allow Abbott's slash and burn Renewable Energy Target, media
release, 27 May 2015, accessed 2 June 2015; Senator Waters, Old
parties pass pitiful, forest-burning Renewable Energy Target through Lower
House, media release, 2 June 2015, accessed 3 June 2015.
[35]. J
Lambie, Lambie
welcomes RET deal and vows to fight to keep wood waste, part of the Scheme,
media release, 18 May 2015, accessed 2 June 2015; J Lambie, Lambie
calls for a National RET target of 32,000 GWH - or less, media release,
10 April 2015, accessed 2 June 2015.
[36]. G
Lazarus, Senator
Lazarus reaffirms support for RET, media release, 24 March 2015, accessed
3 June 2015; G Lazarus, Senator
Lazarus launches national solar energy campaign, media release, 26
April 2015, accessed 3 June 2015.
[37]. D
Conifer, ‘Crossbench
Senator John Madigan urges Labor to return to talks over Renewable Energy
Target’, ABC News online, 14 November 2014, accessed 3 June 2015.
[38]. L
Cox, ‘Senators
could demand wind power restrictions in RET scheme’, The Sydney Morning
Herald (online edition), 19 May 2015, accessed 4 June 2015; see also D
Leyonhjelm, ‘The
RET bomb is set to explode’, The Australian Financial Review, 10
April 2015, p. 38, accessed 4 June 2015.
[39]. R
Lewis, ‘Wait
for wind inquiry before changing RET’, The Australian, 22 April
2015, p. 3, accessed 2 June 2015; see also Senate
Select Committee on Wind Turbines, accessed 9 June
2015.
[40]. R
Muir, ‘Matters
of public importance: Abbott Government’, Senate, Debates, 11
February 2015, p. 527, accessed 12 June 2015.
[41]. E
Borrello, ‘Labor
indicates winding back Government-crossbench deal to reduce Renewable Energy
Target’, ABC News online, 23 March 2015, accessed 3 June 2015.
[42]. L
Cox, ‘Senators
could demand wind power restrictions in RET scheme’, The Sydney Morning
Herald (online edition), 19 May 2015, accessed 4 June 2015.
[43]. See
for example Australian Conservation Foundation, Sad
day for the climate as politicians agree to cut RET, media release, 8
May 2015, accessed 5 June 2015; The Climate Institute, RET
compromise no real solution, media release, 8 May 2015, accessed
5 June 2015; N Cašule, ‘Here’s
what your political representatives just did to our renewable energy future’,
Greenpeace website, 19 May 2015, accessed 5 June 2015.
[44]. Ibid;
see also Australian Conservation Foundation, Embrace
renewables’ potential, don’t wreck the RET, media brief, 27
February 2015, accessed 5 June 2015; The Climate Institute, Australian
Conservation Foundation, WWF-Australia, Who
really benefits from reducing the Renewable Energy Target, Policy
brief, August 2014, accessed 5 June 2015.
[45]. The
Wilderness Society, Coalition
must learn torching forests is not renewable energy, media release, 8
May 2015, accessed 3 June 2015.
[46]. Australian
Conservation Foundation, RET
debacle a bonus for big polluters, media release, 8 May 2015, accessed
12 June 2015.
[47]. Australian
Aluminium Council, Business Council of Australia, Cement Industry Federation,
Clean Energy Council, Energy Users Association of Australia and the Tasmanian
Minerals & Energy Council, Open
letter from peak bodies calling for urgent Renewable Energy Target resolution,
30 March 2015, accessed 5 June 2015.
[48]. Australian
Chamber of Commerce & Industry, Australian Industry Group, Business Council
of Australia, Australian Aluminium Council, Cement Industry Federation, Energy
Users Association of Australia, Tasmanian Minerals and Energy Council, Business
calls for a RET compromise, media release, 4 May 2015,
accessed 5 June 2015.
[49]. Australian
Aluminium Council, Aluminium
sector calls for final RET resolution, media release, 8 April 2015,
accessed 5 June 2015.
[50]. Australian
Aluminium Council, Warburton
Review calls for significant RET changes, media release, 28 August
2014, accessed 5 June 2015.
[51]. Clean
Energy Council, Major
breakthrough puts renewable energy deal within reach, media
release, 18 May 2015, accessed 4 June 2015.
[52]. Clean
Energy Council, Thousands
of jobs, billions of dollars up for grabs from renewable energy deal,
media release, 27 May 2015, accessed 4 June 2015.
[53]. Australian
Forest Products Association, Greg
Hunt- the Minister who kept his promise, media release, 27 May 2015,
accessed 5 June 2015; Australian Forest Products Association, Common
sense to reinstate wood waste in RET deal, media release, 11 May 2015,
accessed 5 June 2015.
[54]. Explanatory
Memorandum, op. cit., p. 7.
[55]. The
Statement of Compatibility with Human Rights can be found at page 21 of the Explanatory
Memorandum to the Bill.
[56]. Note
that the SRES remains unchanged by the Bill.
[57]. Note
that the target set out in item 2 of the Bill for 2020 is actually 33,850 GWh.
This is because the target is increased by 850GWh per year until 2020 to accommodate
a transitional measure relating to waste coal mine gas (as discussed in the
next paragraphs), The target drops back to 33,000 GWh in 2021 and stays at
this level until 2030.
[58]. Subsection
40(1A) provided for the targets to be increased in each of 2012 and 2013 by
half the excess above 34.5 million renewable energy certificates, and for the
reduction in annual targets in the period 2016 to 2019, each by one quarter of
the excess. See further Supplementary Explanatory Memorandum relating to sheet
CA251, Renewable
Energy (Electricity) Amendment Bill 2010, pp. 2–3, accessed 12 June 2015.
[59]. Explanatory
Memorandum, op. cit., p. 10.
[60]. Explanatory
Memorandum, op. cit., pp. 9–10; see also Explanatory Memorandum, Renewable
Energy (Electricity) Amendment Bill 2010, pp. 41–42, accessed
3 June 2015.
[61]. Explanatory
Memorandum, op. cit., p. 10.
[62]. Ibid.,
p. 9.
[63]. G
Hunt (Minister for the Environment), ‘Second
reading speech: Renewable Energy (Electricity) Amendment Bill 2015’, House
of Representatives, Debates, 27 May 2015, p. 3, accessed 4 June 2015.
[64]. Warburton
Review, op. cit., p. 15.
[65]. Ibid.
See also A St John, op. cit.
[66]. Bureau
of Resources and Energy Economics (BREE), Australian
energy statistics, table O, BREE, Canberra, 2014, accessed 3 June 2015.
[67]. Climate
Change Authority, 2014, op. cit., p. 10; Warburton Review, op. cit., pp. 126–130.
[68]. Ibid.
[69]. Clean
Energy Council, Major
breakthrough puts renewable energy deal within reach, media
release, 18 May 2015, accessed 4 June 2015.
[70]. See,
for example, Energy Supply Association of Australia, RET
deal welcome, electricity market challenges remain, media release, 19
May 2015, accessed 5 June 2015.
[71]. See,
for example, The Climate Institute, RET
compromise no real solution, media release, 8 May 2015, accessed
5 June 2015.
[72]. Australian
Conservation Foundation, Embrace
renewables’ potential, don’t wreck the RET, media brief, 27
February 2015, accessed 5 June 2015; The Climate Institute, Australian
Conservation Foundation, WWF-Australia, Who
really benefits from reducing the Renewable Energy Target, Policy
brief, op. cit.
[73]. Australian
Conservation Foundation, RET
debacle a bonus for big polluters, media release, 8 May 2015, accessed
12 June 2015.
[74]. Warburton
Review, op. cit., p. vii, recommendation 1.
[75]. Ibid.,
p. 64, recommendation 2.
[76]. Climate
Change Authority, 2014, op. cit., pp. 35–37.
[77]. Ibid.,
p. 34.
[78]. G
Hunt (Minister for the Environment), ‘Second
reading speech: Renewable Energy (Electricity) Amendment Bill 2015’, House
of Representatives, Debates, 27 May 2015, p. 3, accessed 4 June 2015.
[79]. Warburton
Review, op. cit., pp. 33–34.
[80]. See
further Climate Change Authority, 2014, op. cit., p. 27.
[81]. Warburton
Review op. cit., p. 29; Climate Change Authority, 2014, op. cit., p. 25.
[82]. Note
that the majority of existing hydro generation is not eligible for inclusion in
the RET.
[83]. Parliamentary
Library estimates, compiled from Energy Supply Association of Australia, Electricity
Gas Australia 2014, Melbourne, 2014, p. 22, and Australian Energy Market
Operator (AEMO), ‘Generation
information’, AEMO website, 15 May 2015,
accessed 3 June 2015.
[84]. The
Climate Change Authority reported that the project ‘pipeline consists of about
16,100 MW of wind farm projects and 1,700 MW of large‑scale solar
projects’: Climate Change Authority, 2014, op. cit., p. 25.
[85]. Clean
Energy Council, Wind
farms – a guide for communities, Clean Energy Council, Melbourne, 2014,
p. 5, accessed 3 June 2015.
[86]. Climate
Change Authority, 2014, op. cit., p. 25.
[87]. Warburton
Review, op. cit., p. 43; Climate Change Authority, 2014, op. cit., p. 25.
[88]. Explanatory
Memorandum, op. cit., p. 11.
[89]. RET
Act, section 5.
[90]. RET
Act, subsection 46B(1) and RET Regulation 22ZA.
[91]. Climate
Change Authority, 2014, op. cit., p. 37.
[92]. See
also items 4, 9–12, 14–26 and 29–36 which amend relevant
provisions of the RET Act to remove the word ‘partial’.
[93]. Explanatory
Memorandum, op. cit., p. 14.
[94]. Ibid.
[95]. Ibid.,
p. 12.
[96]. The
provisions for partial exemptions were added on a similar basis to arrangements
being developed under the then proposed Carbon Pollution Reduction Scheme:
Climate Change Authority, 2014, op. cit., p. 37; see also A Martyn and J
Styles, Renewable Energy (Electricity) Amendment Bill 2009, op. cit.
[97]. Climate
Change Authority, 2012, op. cit., p. 94.
[98]. Warburton
Review, op. cit., p. v.
[99]. That
is, unlike the partial exemption, it is intended that the full exemptions will
cover costs associated with the original 9,500 GWh MRET as well as the costs of
the expanded target: see G Hunt, ‘Second reading speech: Renewable Energy
(Electricity) Amendment Bill 2015’, op. cit., p. 5.
[100]. Explanatory
Memorandum, op. cit., p. 12.
[101]. Australian
Aluminium Council, Warburton
Review calls for significant RET changes, media release, 28 August
2014, accessed 5 June 2015.
[102]. Australian
Forest Products Association, Greg
Hunt- the Minister who kept his promise, media release, 27 May 2015,
accessed 5 June 2015.
[103]. Climate
Change Authority, 2012, op. cit., p. 96. Note that the Climate Change Authority
considered the assistance for EITE activities in its 2012 review, but did not
form a conclusion. At the time, the carbon pricing mechanism included a similar
assistance regime for the same activities, leading the Authority to recommend
the Productivity Commission consider the issue as part of its broader review of
carbon pricing assistance: Climate Change Authority, 2014, op. cit., pp. 37–38;
see also Climate Change Authority, 2012, op. cit., pp. 94–98.
[104]. Warburton
Review, op. cit., p. 80; see also p. viii, recommendation 4.
[105]. Ibid.,
p. 82.
[106]. Ibid.
[107]. G
Hunt, ‘Second reading speech: Renewable Energy (Electricity) Amendment Bill
2015’, op. cit., p. 5.
[108]. Climate
Change Authority, 2014, op. cit., p. 38.
[109]. Explanatory
Memorandum, op. cit., p. 12.
[110]. Climate Change Authority
Act 2011, accessed 2 June 2015.
[111]. Explanatory
Memorandum, op. cit., p. 17
[112]. Ibid.,
p. 16.
[113]. Clean
Energy Council, Tough
year over, big opportunity ahead for renewable energy, media
release, 3 June 2015, accessed 4 June 2015.
[114]. Climate
Change Authority, 2012, op. cit., p. 39.
[115]. Climate
Change Authority, 2014, op. cit., p. 32.
[116]. Ibid.,
p. 50.
[117]. Warburton
Review, op. cit., p. vi, see also recommendation 7 and discussion at pp. 87–88.
[118]. Explanatory
Memorandum, op. cit., p. 16.
[119]. RET
Act, section 105. Note that Minister is also able, by legislative
instrument, to give directions to the Clean Energy Regulator under
section 41 of the Clean
Energy Regulator Act 2011, accessed 12 June 2015. Such directions must
not be inconsistent with the objects of the RET Act.
[120]. Clean
Energy Regulator, Renewable
Energy Target 2014: administrative report: encouraging investment in renewable
energy, May 2015, accessed 3 June 2015.
[121]. RET
Act, paragraph 17(1)(j).
[122]. Paragraph
17(1)(t) of the RET Act also allows for other energy sources to be
prescribed by regulations.
[123]. The
Regulations give the following examples for paragraph (b): Packing case,
pallet, recycled timber, engineered wood product (including one manufactured by
binding wood strands, wood particles, wood fibres or wood veneers with
adhesives to form a composite).
[124]. Explanatory
Memorandum, op. cit., p. 19.
[125]. Renewable Energy
(Electricity) Regulations 2001 (as in force 6 October 2011), regulation 8.
These were amended by Renewable
Energy (Electricity) Amendment Regulations 2011 (No. 5), Schedule 1, item
1, accessed 12 June 2015.
[126]. Warburton
Review, op. cit., p. 5; see also Renewable Energy
(Electricity) Amendment Regulations 2011 (No. 5).
[127]. Climate
Change Authority, 2012, op. cit., pp. 111–113, recommendation 28.
[128]. Australian
Government, Australian
Government response to the Climate Change Authority’s Renewable Energy Target
Review final report, March 2013, p. 11, accessed 5 June 2015.
[129]. Liberal
Party of Australia and the Nationals, The
Coalition’s policy for a strong and sustainable forestry industry, Coalition
policy document, Election 2013, September 2013, p. 5, accessed 2 June 2015.
[130]. Warburton
Review, op. cit., p. viii, recommendation 6.
[131]. Ibid.,
p. v.
[132]. Ibid.,
pp. 86–87; Climate Change Authority, 2012, op. cit., p. 112; see also G Hunt, ‘Second
reading speech: Renewable Energy (Electricity) Amendment Bill 2015’, op. cit.,
p. 5.
[133]. Australian
Network of Environmental Defender’s Offices, quoted in Climate Change
Authority, 2012, op. cit., p. 112.
[134]. Australian
Conservation Foundation, Ten
reasons why burning native forests for electricity should not be included in
the RET, media release, 15 May 2015, accessed 4 June 2015.
[135]. R
Denniss, Do
we need to burn forests to save the environment, Briefing note,
The Australia Institute, 15 May 2015, accessed 5 June 2015.
[136]. The
Wilderness Society, Native
forest wood and the Renewable Energy Target, Briefing paper, May 2015,
accessed 12 June 2015.
[137]. See,
for example, J Feehely, N Hammond-Deakin and F Millner, One
stop chop: how regional forest agreements streamline environmental destruction,
Lawyers for Forests, Melbourne, 2013, accessed 12 June 2015.
[138]. Australian
Forest Products Association, Common
sense to reinstate wood waste in RET deal, media release, 11 May 2015,
accessed 5 June 2015.
[139]. Ibid.
[140]. G
Borschmann and S Phillips, ‘Timber
company to benefit as RET deal creates market for unsaleable timber, says
VicForests analysis’, ABC News, 29 May 2015, accessed 11 June 2015.
For copyright reasons some linked items are only available to members of Parliament.
© Commonwealth of Australia
Creative Commons
With the exception of the Commonwealth Coat of Arms, and to the extent that copyright subsists in a third party, this publication, its logo and front page design are licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Australia licence.
In essence, you are free to copy and communicate this work in its current form for all non-commercial purposes, as long as you attribute the work to the author and abide by the other licence terms. The work cannot be adapted or modified in any way. Content from this publication should be attributed in the following way: Author(s), Title of publication, Series Name and No, Publisher, Date.
To the extent that copyright subsists in third party quotes it remains with the original owner and permission may be required to reuse the material.
Inquiries regarding the licence and any use of the publication are welcome to webmanager@aph.gov.au.
Disclaimer: Bills Digests are prepared to support the work of the Australian Parliament. They are produced under time and resource constraints and aim to be available in time for debate in the Chambers. The views expressed in Bills Digests do not reflect an official position of the Australian Parliamentary Library, nor do they constitute professional legal opinion. Bills Digests reflect the relevant legislation as introduced and do not canvass subsequent amendments or developments. Other sources should be consulted to determine the official status of the Bill.
Any concerns or complaints should be directed to the Parliamentary Librarian. Parliamentary Library staff are available to discuss the contents of publications with Senators and Members and their staff. To access this service, clients may contact the author or the Library‘s Central Entry Point for referral.