Topics: China-Australia Free Trade Agreement, renewable energy, safeguard mechanism, Emissions Reduction Fund, World Bank Pilot Auction Facility
I'm joined by the Environment Minister Greg Hunt, and a lot to talk about.
First of all, this China free trade agreement – looks like finally a deal done, that's good news.
Look, I hope and believe that there will be an agreement.
The Free Trade Agreement with China is of profound and fundamental importance to Australia.
This is a result that will help set our children and grandchildren up – in terms of food exports, in terms of access to goods, and in particular with regards to service exports.
So to be country which is engaged in the service future of China is a fundamental and unique opportunity for Australia.
The only other country with a comparable agreement is New Zealand, and every analyst has looked at this and says, this goes even further.
So I won't pre-empt what the Labor Party does. But I hope and believe that very shortly we'll have an agreement in Australia.
We have an agreement with China. And for the next generation, that will be profoundly important.
On China, when the opportunities – their clean energy progress has been quite huge. They account, I think from memory for 40 per cent of growth in renewables.
And there is some assessments around the place now that China may have actually peaked in terms of its coal consumption in 2013.
Previous estimations had been that it would be halfway through next decade, but there are some that believe it might have already happened.
Look, the best estimates we have with China are that its emissions will grow from about 6 billion tonnes in 2005 towards and up to 15 billion tonnes by 2030.
Now I hope that it achieves its peak emissions significantly earlier.
That is a good thing for the planet. It's the most important thing in terms of reducing global emissions.
And the Chinese clean air energy market, energy efficiency market on some estimates is the equivalent of up to a trillion dollars Australian.
And that's because clear air and clean water are so fundamental where you have large populations and rapid growth, and it's having an impact on its GDP – that's assessed by everybody.
So the Australian opportunity here is enormous.
The Australian technology companies have huge opportunity in terms of reducing the air pollution, improving the water quality, assisting in the renewables space.
But China will consume all forms of energy going forward.
And what's your view on renewables generally – before we get onto some other specifics, and the Clean Energy Finance Corporation's something we need to touch on – but in terms of renewables, what's your view on the economics of this?
Because there are some in this space who believe that already renewables are at a point where it's not something that needs to subsidised – rather something that needs to be embraced by super funds, corporates across the board – because it is actually now at the point where you make enormous growth, as you alluded to in terms of China.
So renewables are coming down the cost curve.
But if they were cost competitive at this stage you wouldn't need subsidies.
And the moment anybody talks about taking away subsidies, the very people who say that they're cost competitive say no you can't take away the subsidies.
What's the reality? They are fundamental to our transition, and we have the highest rate of solar PV or domestic solar uptake in the world. We have 15 per cent.
And that's not by a little bit, that's double the next best country, which is Belgium.
So that's quite an Australian achievement, and a significant part of that has occurred under this Government.
Now what else do we need to do?
We've now settled the Renewable Energy Target – that will drive us to a doubling of large scale renewables over the next five years. A big ask, but I think achievable.
On the Clean Energy Finance Corporation, many in the sector raise their eyebrows at the ban on some elements of the investments.
I know that you argue that the mandate is about emerging technologies, and it shouldn't be about legacy technologies within renewables.
But I guess you have emerging technologies within wind and solar, don't you? Are you now open – back open – to those things?
Sure. Yeah, so what I've said over the last few weeks, because I've been given by Malcolm Turnbull responsibility for the Clean Energy Finance Corporation and the Australian Renewable Energy Agency and renewable technology policy.
So we've created – which fits very much with the Malcolm Turnbull approach – an Office of Climate Change and Renewables Innovation.
Now, what will we do? We will align the mandate of the Clean Energy Finance Corporation with what was put to the Senate.
And rather than being a negative list, that will be a positive list of focusing on emerging technologies.
So it's going to be less prescriptive on the downside, it will be about a direction to do things – such as we did last week with the City of Melbourne, where we provided a $30 million loan, not a grant, for upgrading the city's lighting system to LED for striking agreements with numerous firms around the city to improve their energy efficiency.
For installation of solar panels…
So do you think there's a place – given those initiatives, do you think there's a key place for an entity like the Clean Energy Finance Corporation within our economy?
Look, our policy on it hasn't changed, but we recognise the reality of the Senate, therefore it remains, so we should make the best use of it.
I think that there can be a better and more focused integration of the Renewable Energy Target, the Emissions Reduction Fund, with ARENA – the renewable energy agency, and the Clean Energy Finance Corporation.
We should be investing in new activities, not for example investing in existing products.
So if something is already in existence – such as a wind farm that had already been built – that didn't to me seem as if it was consistent with a purpose or intention, or its optimal use.
No, and you're not critical of wind energy, it’s safe…
No, I've been a supporter of wind and solar and hydro and geothermal…
No I know. So do you think that was a mistake of the former leadership – was that a setback in terms of the Coalition's credibility on that stuff?
People have their different views and as I said at the time beauty is in the eye of the beholder and I expressed my complete and genuine support for all forms of renewable energy.
We need to be realistic about the cost…
It is popular isn't it?
It isn't free.
But it is popular.
Well look it's the right direction to head as a country but we have to get the balance.
So 23.5 per cent is a very significant goal.
The highest rate of PV uptake – of solar uptake – in the domestic sphere in the world is a big achievement.
Now we have to go on and double that both in terms of the home and in terms of the large scale generation which people see.
In terms of the safeguards mechanism, you say that it will reduce emissions by 200 million tonnes by 2030…
…do you concede that then the mechanism needs to be toughened because at the moment it's not going to provide any reductions is it – on its current setting?
No, no. Respectfully, there's a very different position – and that is we're on track to meet our targets now for 2020.
I think that debate has now been completely run and won.
The critics have basically run up the white flag and said okay, we were wrong, you will meet your 2020 targets.
And now for 2030, similarly, we've set an ambitious goal, minus 26-28 per cent again puts Australia at the forefront of any G20 country in the world. We have…
But the safeguard mechanism – you need to toughen it to get there don't you?
…per capita a target which is not bettered by any other country.
And the safeguard mechanism will see Australia reduce emissions by 200 million tonnes which is a very significant figure over the course of the decade from 2020 to 2030.
It's flexible, it's designed to be flexible, and it does it without raising electricity prices. I would say this…
Is that – at the moment where it sits though it's not going to create any industry emission reductions?
No, this is one of the myths of the ALP.
It's not designed to impose a tax on firms. That's absolutely correct.
We don't want to be raising the cost of business or raising the cost of electricity for families or firms…
But this will reduce emissions in Australia by 200 million tonnes over the course of a decade.
And that's then coupled of course with the Emissions Reduction Fund.
Is that because anything over the business as usual in the out years is going to be penalised?
It's because it increasingly applies to new entrants and new firms and sets national best practice standards. As the benchmark…
So you don't need to toughen it then?
…for all new firms.
Well it is sufficiently tough at this point to achieve our 2030 target.
We've designed a 2017 review and we've designed it precisely so as if the world comes back in 2020 or 2025 for a new round of targets, this is the flexible mechanism.
We don't have to redo everything.
We certainly don't need higher electricity prices which is the Shorten approach.
And I just respectfully today – and I don't want to be political – say perhaps it's time for our alternative government to say – what is their proposal and will they or won't they be increasing electricity prices? That's a fair question.
My last issue that I want to touch on is the World Bank's Pilot Auction Facility for methane and climate change.
This is a $100 million project and supported by a number of countries around the world.
You've copped flack for the Emissions Reduction Fund as part of Direct Action, but this project is almost – it’s very, very similar to the ERF isn't it?
Sure. Well the World Bank has designed a global Emissions Reduction Fund.
It's $100 million, it's supported by the US and German, Sweden and Switzerland.
I understand that they are encouraging other countries to come in and support it.
So the system we've designed in Australia now really has two existing and a third proposed major international partner.
The Clean Development Mechanism which the UN put in place, the World Bank's Pilot Auction Facility which has been a tremendous success, and the International Aviation Industry or IATA is proposing a system with remarkable similarity to the Australian model.
Will you seek to link in to those international mechanisms?
Look at this stage we're simply focusing on our current system.
We have a review in 2017 and we'll see how the Paris conference goes.
But I think the key message for Australians is not only are we going to meet our 2020 and 2030 targets, but increasingly with three major systems – two current and one proposed – the world is turning to the Australian model.
Minister Hunt, I appreciate your time.
Thanks a lot Kieran.