On 2 September 2021, the Senate referred the provisions of the Offshore Electricity Infrastructure Bill 2021 (the Bill) and the Offshore Electricity Infrastructure (Regulatory Levies) Bill 2021 (the Levies Bill) (collectively, the bills) to the Environment and Communications Legislation Committee (the committee) for inquiry and report by 14 October 2021.
According to the Explanatory Memoranda (EMs), the bills would:
establish a regulatory framework to enable the construction, installation, commissioning, operation, maintenance, and decommissioning of offshore electricity infrastructure (collectively, offshore infrastructure activities) in the 'Commonwealth offshore area'; and
allow levies to be imposed on regulated entities to recover the costs associated with regulating their offshore electricity activities.
Conduct of the inquiry
In accordance with its usual practice, the committee advertised the inquiry on its website and wrote to relevant organisations inviting submissions by 15 September 2021. The committee continued to accept submissions received after this date.
The committee received 37 submissions, which are listed at Appendix 1, and the public submissions are available on the committee's website at www.aph.gov.au/senate_ec. The committee also received 100 form letters organised by Friends of the Earth. An example is published on the committee's website.
The committee held a public hearing on 1 October 2021 by videoconference hosted from Canberra. A list of witnesses who gave evidence at the hearing is at Appendix 2.
The committee thanks all of the individuals and organisations who contributed to the inquiry, particularly given the short timeframe.
Scope of the report
This report comprises three chapters:
Chapter 1 provides background and contextual information relating to the bills, outlines the Bill's structure and some key provisions, and notes consideration of the bills undertaken by other parliamentary committees;
Chapter 2 sets out some contextual information in relation to the offshore wind industry in Australia; and
Chapter 3 examines several key issues raised by stakeholders in submissions and in evidence, and sets out the committee's findings and recommendation.
Note on references
In this report, references to the Committee Hansard are to the proof (that is, uncorrected) transcript. Page numbers may vary between the proof and the official transcript.
Background and context to the bills
In recent years there has been growing global momentum toward the establishment of the offshore wind industry, as key bodies—such as the International Energy Agency (IEA) and the International Renewable Energy Agency (IRENA)—have endorsed the role of offshore wind in future energy systems.
In September 2021 the Global Wind Energy Council (GWEC), an international trade association for the wind power industry, reported that global offshore wind capacity has reached 35.3 GW (Figure 1.1). Three countries dominate over 75 per cent of current capacity: the UK, China and Germany.
Figure 1.1: Total offshore wind installations by country, 2020
Source: GWEC, Global Offshore Wind Report 2020, 9 September 2021, p. 20.
However, GWEC noted that the IEA's roadmap requires offshore wind annual installations to grow 13-fold, from the 6.1 GW installed in 2020 to 80 GW by 2030. Further, 'IRENA foresees more than 2000 GW of offshore wind installed capacity by 2050 in its 1.5°C scenario, nearly one quarter of total wind power capacity at that time'.
GWEC pointed out however:
…the world has so far installed only 2 per cent of the offshore wind capacity that will be needed by the middle of this century to avoid the worst impacts of climate change.
Australia's offshore wind industry
The Blue Economy Cooperative Research Centre (Blue Economy CRC), which supports industry-led collaborations with researchers and the community, explained that the potential for an offshore wind industry in Australia has long been underestimated:
The conventional wisdom in Australia is that offshore wind energy would not have a role to play in our electricity system. Australia has more sites with good-quality on-shore wind and solar resources without the tighter land space constraints of some other nations. Across many parts of the coastline, the shelf falls away quickly meaning there are [fewer] locations in which fixed bottom offshore wind turbines are viable.
Blue Economy CRC noted that in the Australian Energy Market Operator's 2020 Integrated System Plan:
…offshore wind was not included in the assessment of resources used to allocate Renewable Energy Zones, and was poorly represented in future scenarios for the development of the National Electricity Market.
However, in July 2021 Blue Economy CRC published its evaluation of the potential for offshore wind energy in Australia. Its findings included:
Australia has very high quality and abundant offshore wind resources in a range of locations, particularly in the southern latitudes where the resource is strongest.
The capacity factors for offshore wind are usually higher than onshore wind.
Offshore wind can provide diversity of energy supply due to its availability at times when solar power and onshore wind are not available.
Under 'energy superpower' scenarios, including mass electrification and hydrogen production, offshore wind could become a key strategic resource.
Offshore wind energy could play a significant role in a 'just transition' for oil, gas and coal workers.
Blue Economy CRC highlighted suitable sites for offshore wind in Queensland, New South Wales, Victoria, Tasmania, South Australia and West Australia, close to electricity transmission grids and with high capacity factors.
Its report entitled 'Offshore Wind Energy in Australia' also noted employment opportunities that could be provided by an offshore wind industry in Australia, from 3000–4000 annually in its lowest case scenario to 5000–8000 annually in its highest case scenario, from 2030.
Blue Economy CRC concluded its report with five recommendations, the first being for the establishment of a regulatory regime for the development of offshore renewable energy in Commonwealth waters:
A major barrier to investment and development of current offshore wind projects in Australia is that Australia currently does not have a regulatory framework to enable timely permitting and leasing decisions for offshore renewable energy. Consultation on a proposed regulatory framework for the Commonwealth Government has been occurring since early 2020. Given offshore wind projects will typically cross Commonwealth and State jurisdictions, consideration needs to be given in the framework on the ways to provide complementary processes for activities that occur in both Commonwealth and State waters.
Australian Government consideration of offshore electricity
The Australian Government noted the IEA and IRENA's position on the role of offshore wind in future energy systems and in 2019 commenced consultations on a regulatory framework for offshore clean energy infrastructure (generation and transmission).
Consultations initially took place with relevant Commonwealth departments and agencies, followed by the release of a discussion paper and process map for public consultation, from 3 January to 28 February 2020.
The Department of Industry, Science, Energy and Resources (DISER) received 48 written submissions and conducted two information sessions attended by about 300 people during the public consultation phase:
Submissions and feedback received through the consultation process were strongly supportive of the proposed [offshore electricity infrastructure, (OEI)] framework. The OEI framework design was then further refined based on this stakeholder feedback.
DISER submitted that, as a result of its extensive consultations, 'the OEI framework has been specifically designed to regulate offshore electricity infrastructure development in Australia'.
The National Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA), the regulator for the offshore oil and gas (petroleum) industry and proposed regulator for the OEI industry, expressed confidence in its knowledge, expertise and international regulatory connections, all of which NOPSEMA submitted were central to the formation of the bills:
Having made a significant contribution to the development of [the] OEI framework, NOPSEMA is confident that it represents a leading practice approach to regulation of the sector and provides a strong foundation to allow the establishment of an offshore electricity industry in a safe and environmentally responsible manner.
Introduction of the bills
On 2 September 2021, the Hon Angus Taylor MP, Minister for Energy and Emissions Reduction (the minister) introduced the bills into the House of Representatives. He described them as part of the government's actions to strengthen the economy, create jobs and opportunities, ensure the delivery of affordable and reliable power, and reduce emissions.
Minister Taylor explained that the Offshore Electricity Infrastructure Bill would establish 'a regulatory framework for a new Australian industry, building on [the] government's strong record of supporting renewables projects and critical grid infrastructure'. In particular, it would facilitate and regulate the development of offshore electricity infrastructure (generation and transmission) in Commonwealth waters.
In relation to the Levies Bill, the minister stated that it would ensure that the two proposed regulatory bodies (NOPSEMA and the National Offshore Petroleum Titles Administrator) would be 'fully cost-recovered to undertake the functions required to facilitate the life cycle of offshore electricity infrastructure projects'.
According to DISER, the Australian Government had intended to establish the legislative settings and framework for implementation by mid-2021.
Structure and key proposals of the bills
The Bill comprises Chapters 1–8, which set out proposed provisions for an effective regulatory framework for 'offshore renewable energy infrastructure' and 'offshore electricity transmission infrastructure' (collectively, OEI).
'Offshore renewable energy infrastructure' is offshore infrastructure for generating electricity (such as an offshore wind farm) or other forms of energy from renewable resources, and storing or transmitting the electricity or energy.
'Offshore electricity transmission infrastructure' is offshore infrastructure (such as an undersea cable and other infrastructure associated with the cable) for storing or transmitting electricity (including electricity not generated from renewable sources).
The Levies Bill comprises Parts 1–3, which set out proposed provisions for the imposition of an 'offshore electricity infrastructure levy' on regulated entities.
Based on information received throughout the inquiry, this report examines the following key proposals and relevant provisions in the Bill:
Chapter 2 – Regulation of offshore infrastructure activities
prohibition of unauthorised offshore renewable energy infrastructure and offshore electricity transmission infrastructure in the Commonwealth offshore area
provision for the minister to declare areas that are suitable for offshore renewable energy infrastructure
provision for the minister to grant four types of licence authorising offshore renewable energy infrastructure and offshore electricity transmission infrastructure in the Commonwealth offshore area
Chapter 4 – Management and protection of infrastructure
licence holders must have an approved management plan for the licence, which covers the construction, installation, commissioning, operation, maintenance and decommissioning of offshore infrastructure
Chapter 6 – Application of work health and safety laws and other laws
application of the Work Health and Safety Act 2011 to offshore infrastructure activities and the application of relevant state and territory laws.
Reports of other parliamentary committees
When examining a bill, the committee takes into account any relevant comments published by the Senate Standing Committee for the Scrutiny of Bills (Scrutiny Committee) and the Parliamentary Joint Committee on Human Rights (Human Rights Committee).
The Scrutiny Committee assesses legislative proposals against a set of accountability standards that focus on the effect of proposed legislation on individual rights, liberties and obligations, the rule of law and on parliamentary scrutiny. The Scrutiny Committee had examined the Levies Bill but had no comments.
The Human Rights Committee examines bills and legislative instruments for compatibility with human rights, and reports its findings to both Houses of Parliament. The Human Rights Committee had no comments on the bills.