Paper for the 7th Annual All-Energy Australia Conference
Wednesday, 7 October 2015
Thank you for inviting me here today to speak at the annual All-Energy Australia Conference. I’m delighted to be here.
Climate change and renewable energy are crucial considerations for this Government and we are very focussed on the need to transition to a cleaner, renewable energy supply.
We are in a period of opportunity. The transformations required are significant. Financing the energy infrastructure of the future is a major opportunity for investors. The Government’s emissions reduction polices and our focus on innovation and technology supports this transformation.
Today I’d like to speak further about:
the commitments Australia has made to reduce its emissions;
the recent changes in the Environment Portfolio; and
the emissions reduction fund and the renewable energy target.
The international context and Australia’s 2030 target
As you know, the countries of the world are preparing for the United Nations climate change conference in Paris in December. The Government is working closely with other countries to achieve a successful outcome at Paris. Climate change is a global problem, so we are working towards an agreement that covers all countries, especially the major emitters.
In that context, the Government is prepared to play its part. We have announced the emissions reduction commitment we will take to Paris. Australia will reduce emissions to between 26 to 28 per cent below 2005 levels by 2030. This is a strong, credible and responsible target.
It reflects our national circumstances, including our growing population and economy. It is in step with the actions being taken by other countries like the United States, the European Union, Canada, Japan and New Zealand.
It is an ambitious target, and meeting it will require real effort by Australia. It will require that Australia halves its emissions per person, and reduce by two-thirds its emissions intensity. Australia’s 50-52 per cent reduction in emissions per person will be the equal largest of G-20 economies.
There are some who have questioned this target and called for more drastic cuts to our emissions. To those people I would pose a simple question: how, in the real world, could larger cuts be achieved without causing major economic dislocation? More particularly, how could they be achieved without negatively impacting on investments and jobs?
This is not to criticise ambition, but rather to acknowledge that we need to plan this transition and be aware of the potential impacts.
After all, this is not about whether we need to reduce emissions – we do. It is about how we do it in the most efficient manner which minimises economic dislocation.
How Australia will meet its 2030 target
Our target is a strong target and one that’s achievable for Australia without damaging our economy, destroying our businesses or costing jobs.
We will achieve this target through practical environmentalism – measures that boost productivity, reduce costs, increase technology uptake and improve the environment.
It is a target we will achieve with Direct Action measures, at the core of which will remain the Emissions Reduction Fund and its safeguard mechanism. These policies, complemented by the Renewable Energy Target (RET) and the National Energy Productivity Plan, will be the cornerstone of Australia’s emissions reduction efforts out to 2030 and beyond.
Office of Climate Change and Renewables Innovation
The Government has a strong suite of policies to meet its emissions reduction targets.
To better integrate these policies, promote innovation, attract investment and get the best value for taxpayers, I have created the Office of Climate Change and Renewables Innovation within my Department.
The Office brings together the Clean Energy Regulator, the Clean Energy Finance Corporation, the Australian Renewable Energy Agency, the Climate Change Authority and the climate change and renewable energy functions from my Department.
The Office will bring a fresh focus on the role of innovation to support emerging renewable and low-emissions technologies that will drive down emissions.
The new structure will ensure we are able to seize all opportunities to reduce emissions, increase investment in new technologies and support synergies across existing policies. The Office will also drive the direction of climate and renewables research in Australia.
Maximising these resources within the Office provides opportunities to leverage investments. The combined resources of the Clean Energy Finance Corporation, the Australian Renewable Energy Agency and the Emissions Reduction Fund will provide around $15 billion of support for clean technology and innovation. This is in addition to the support provided by the RET.
I am delighted that the Australian Renewable Energy Agency and the Clean Energy Finance Corporation have moved to my Environment Portfolio.
We want to make the best use of these organisations and their significant resources to ensure their work is synchronised with the RET and the Emissions Reduction Fund.
Technology and innovation will underpin the reduction in emissions required over coming decades to take significant action on climate change. Technology and innovation will also increase the productivity of our economy and will underpin strong economic growth and future prosperity for all Australians.
In September, a comprehensive $350 million support package for large-scale solar power was announced by the Australian Renewable Energy Agency and the Clean Energy Finance Corporation that will make these technologies more affordable in Australia.
Bringing these bodies together under the Office of Climate Change and Renewables Innovation will improve the coordination of investment in new technologies, in particular solar and energy storage.
These organisations also have a role in improving the liveability of our cities. The Clean Energy Finance Corporation and the Australian Renewable Energy Agency will invest in projects to reduce emissions, make our cities more liveable and drive innovation that will make energy cheaper and cleaner.
The new Minister for Cities and the Built Environment, Jamie Briggs, will have day-to-day responsibility for this new area of the Environment Portfolio, however it has long been a personal passion of mine and I look forward to overseeing this work.
Our quality of life depends so much on the environment in which we live. Our cities must be greener and smarter. We need to be able to move around them easily and this requires long-term planning and infrastructure to ensure clean air, clean land and clean water.
Our vision is divided broadly into three pillars: long-term planning, infrastructure and greening our cities.
Opportunities include improving the energy efficiency of buildings and public lighting, as well as boosting the uptake and supporting low-emissions transport and electricity. Australia leads the world in researching and developing some of these technologies - like improved photovoltaic cells and solar thermal applications.
The Emissions Reduction Fund and the safeguard mechanism
The Emissions Reduction Fund provides positive incentives for the community and businesses to reduce emissions in ways that lower energy use and input costs and increase productivity.
It is a policy that is appropriate to Australia’s economy, geography, and national circumstances.
And it is already achieving results. At its first auction in April this year, 107 projects were contracted to deliver 47 million tonnes of abatement at a price of $13.95 per tonne. These cover projects across the forestry, waste, agriculture and transport sectors.
To say I am enormously pleased with this result would be an understatement. I think it demonstrates the great potential of the Emissions Reduction Fund to deliver real outcomes by focusing on positive support for emissions reduction, rather than the carbon tax model which penalised businesses as well as mums and dads. At the end of the day, it is the policy that delivers the results that counts.
We will be adding further projects to these at the Fund’s next auction at the beginning of November.
There is a wealth of information available on how businesses can benefit from the Fund.
I encourage you to look into these opportunities and learn more.
As you know, an important element of the Emissions Reduction Fund is the safeguard mechanism. Currently being finalised, the safeguard mechanism is designed to ensure that emissions reductions purchased by the Government are not offset by significant rises in emissions above business-as-usual levels elsewhere in the economy.
It does this by setting an emissions limit – or baseline – on Australia’s largest emitters in a way that supports economic growth and allows businesses to continue normal operations.
The Government has consulted widely on the final design of the safeguard mechanism. It will cover only the largest-emitting facilities in the economy that emit 100,000 tonnes or more of emissions. Around 140 businesses will be covered. This will ensure that we safeguard emission reductions while minimising unnecessary red tape for small businesses.
The Fund is just one of the Government’s measures that will help reduce emissions. Other measures, including those that will sit under the National Energy Productivity Plan, will also play a role.
The National Energy Productivity Plan
When we announced our 2030 emissions- reduction target, the Government confirmed that action would be taken to deliver a 40 per cent decrease in the amount of energy used per unit of GDP between 2015 and 2030.
The National Energy Productivity Plan will include measures to make energy choices easier and will encourage improvements in the efficiency of appliances, equipment, buildings and transport. It will support and encourage businesses to show leadership in improving energy productivity.
The plan will encourage innovative efforts by government and businesses, and will see the development and application of new technologies that deliver more efficient, lower-cost energy services for consumers.
My colleague Josh Frydenberg, the Minister for Resources and Energy, will have more to say about the National Energy Productivity Plan in coming months. It is an exciting policy. We all know that working smarter by doing more with our energy makes good economic sense and good environmental sense.
The growth in renewable energy generation
I now come to the issue of renewables.
The Renewable Energy Target forms an important part of the Government’s plan to cut emissions and support a strong and sustainable renewable energy sector.
The contribution of renewable energy to our overall energy mix is rising. Renewable energy generation has almost doubled as a result of the RET scheme. Today, renewables contribute around 14 per cent of Australia’s electricity generation. This will rise to 23.5 per cent by 2020 under the RET.
Putting this into perspective, the revised target – passed with the support of the Opposition and the Senate cross-benchers – requires the same amount of large-scale renewable energy to be built in the next five years as has been built over the past 15.
This is a major challenge – one which I know the renewable sector is determined to meet.
We have delivered the certainty that businesses were demanding and removed what they claimed was a blockage on securing investment. I now look forward to the sector following through on the promised projects to reach the 2020 target.
We are entering a period of unprecedented opportunity for renewable energy. Advances in technology will play a major part in progressing the renewable agenda in the years ahead.
We have seen significant steps forward in 2015. Advanced solar, energy storage, wave energy and other technologies have come far and have so much more potential.
I am excited to see what the future holds and I am confident that Australians will lead the way with creative and innovative solutions.
There is much to be done and many more opportunities to grasp. But this should not come at the cost of our competitiveness or jobs. That is why we reformed the RET.
I’d like to finish by reiterating that there will be many opportunities to progress to a low-carbon future for Australia, with certainty locked in for the RET, strong 2030 emissions-reduction targets, low-cost abatement opportunities purchased through the ERF and continual advancement in emerging renewable and low-emissions technologies.
We have set ambitious yet responsible emissions-reduction targets and will be part of the crucial international talks in Paris at the end of the year. And as we meet our goals, we will aim to do more.
We will focus on innovation through the Office of Climate Change and Renewables Innovation, which will support an integrated and innovative approach to reducing emissions.
We have a plan to make our cities greener and more liveable. Renewable energy will have an important part to play in this.
And with more auctions under the Emissions Reduction Fund, we will open up new opportunities for businesses and the community to reduce emissions across Australia.
Underpinning our environment policy is the notion that a clean and healthy environment and a strong economy are equally important. They are not mutually exclusive - we do not have to choose one over the other. We can have both.
I wish you all the best for the remainder of the conference. Thank you.