2015-11-10
Mr BARBER (Northern Metropolitan) — The Greens support the bill. In fact the Greens believe the bill should go even further, and the reason we support it is that pretty much everything the previous speaker just said was wrong. Let us go through it one by one in the small amount of time that we have left available to us.
In fact even though the sitting has just been extended for another hour, the good news is that, first of all, I am a night owl and, secondly, I am passionate about energy efficiency. This is a scheme that has been rolled out across Victoria over many years. It has been voted through this house initially with the support of all parties, then the coalition parties in government tried to scrap it. Over that time hundreds of thousands of Victorian households across all electorates represented here today have benefited from the scheme and made big savings to their energy bills.
Low-income people have actually been over-represented in the scheme because as it happens the method of rollout — knocking on people's doors and offering them these free energy-saving devices — has tended to target people who are at home during the day, and that has been a lot of people who are actually pension beneficiaries. Not only has it helped cut energy use in all those homes but in fact it has driven down the wholesale price of electricity to the extent where we have all benefited. The poor unfortunates who are out of pocket here and who Mr Drum is really defending are in fact shareholders in coal-fired power stations, because from the moment we introduced this legislation into the Parliament back at the beginning, from the moment the different targets were gazetted, we have been something close to 100 per cent confident that by the nature of the way this scheme operates, energy demand will fall.
The fact that members of the Labor and Liberal parties are still wandering around, wondering what to do about the fact that large parts of our coal-fired generation fleet in south-eastern Australia are going into mothballs, just shows that they did not really understand their own policy at the time it was implemented. To make it really simple, we are talking about 6.5 million tonnes of CO2. A tonne of CO2 avoided in the Victorian electricity grid is about 1 megawatt hour, so it is 6.5 million megawatt hours, year after year, cumulatively, that will fall away from the demand side of the equation. Supply and demand is a reasonably simple concept that not everybody apparently subscribes to, including those people who have shares in coal-fired power stations.
The claim has been made here that there are no further low-hanging fruit. First of all, we have to understand the nature of how this scheme has been modelled in various iterations as the target has been adjusted. Mr Drum expressed a lot of scepticism about the modelling. The thing to understand about the way the economic modelling has been built in the regulatory impact statements for this scheme is that it treats lack of electricity use as a loss to the economy — that is, if I do not buy the product of a coal-fired power station, if in fact I just get perfectly good lighting in my house but do not need to pay as much as I used to, that is actually deducted from economic benefit. When you take away that rather perverse aspect of the modelling, then you see that in fact this is a scheme with no losers except for those who own shares in coal-fired power stations.
The fact that the scheme now rolls on and on off into the future as a result of this legislation — which I freely acknowledge the Labor Party picked up out of the fire and through this Parliament was able to protect and now even to come in here today and expand — says that the situation for coal-fired power stations is not going to get any better. Likewise there has been a reduction in demand from other sources, with major industries and of course the smelter down at Geelong closing. All these items together make it pretty clear that there is going to be an ongoing decline in demand for electricity, notwithstanding population growth and in fact well and truly encouraging economic growth.
Yet to this day there is still no plan for any staged, timed, rational reduction to the supply side of the equation — that is, to remove coal-fired power from the grid. Instead we are getting an unplanned, largely irrational closure of parts of coal-fired power stations or even whole stations elsewhere in the grid to the extent that coal-fired operators themselves are calling for a rational plan to address some of the barriers to exit.
It is great that all parties are voting for this in the Parliament here tonight, but what it means is 6.5 million megawatt hours less of electricity that will be consumed. In the various regulatory impact statements we can find analyses of the new forms of energy efficiency that we have not even begun to tap.
I will just mention one — roof insulation. That is a measure that should be brought into the scheme. The previous government was studying it. One of its documents looked at bringing roof insulation into the scheme. It is only because of the tragedies and the debacle of the roof insulation scheme led by former federal environment minister Peter Garrett that we are shying away from this issue. It is crazy to be spending money on energy to heat up our homes and watching it all go straight up through the ceiling, particularly in homes of older housing stock from the pre-1960s era. A lot of that stock is in Melbourne, and there are certainly large amounts of it in regional Victoria.
We need to safely, and with good quality assurance around it, get installation into as many of those homes as possible, because people in those areas have very high power bills and yet are still sitting there shivering. In some cases of extreme energy poverty — and we are hearing more and more of this — people are all going around to one person's house and putting the heater on there. They might go down to the library or the shopping centre to stay warm so they do not have to run up energy bills. If their heat is going straight up through the ceiling, then that is a bad outcome. We should be digging deeper into this trove of energy efficiency options.
Within the existing architecture of the scheme, we could make it possible that rather than individual items that are plugged in and installed generating credits, we have whole projects generating credits. Particularly in the commercial sphere, we could have a project-based model, where a benchmark of energy use is created for a particular facility. Then a whole series of technologies can be deployed, often with great synergy between them, attracting the same payment per tonne. As I say, that is in the area of a megawatt hour, which has been trading at around $15 in this scheme. On those numbers alone, it is well and truly an exercise that pays for itself, when you consider that people are paying a $30 or $40 wholesale price, depending on their retail arrangement.
These sorts of energy efficiency schemes, and energy efficiency itself, have been known for decades to be the best self-funding mechanism we have. Probably over time it will do about half the heavy lifting when it comes to reducing our emissions. A different sort of scheme but with the same aim was created in the past within the Victorian government. It was around public buildings — hospitals, schools and so forth. There was a pool of funds they could access in order to invest in energy efficiency. With the returns being so high, they were able to pay back the money, which could be reused again and again. I believe there are moves to reinstate that. We should be rapidly ramping up efforts within public buildings. We can then move out from there into state-owned enterprises, such as Melbourne Water, and other bodies that are large users of energy, and keep recycling those investment funds at the high rate of return we could expect.
It would be great to see local governments being able to access their savings as well, but unfortunately rate capping is going to put a hard limit on their revenues, and therefore their borrowing. That means they will have to pass up in many cases positive net present value investments that they would otherwise have made if they were rational and unconstrained borrowers, as we would expect to occur within an efficient market.
That just leaves the whole range of other problems around the management of the grid itself. Last week we had one of the power companies saying that people who invest in solar and disconnect from the grid are 'greedy and selfish'. Could members imagine what would happen if Woolworths said that people who shop at Aldi are greedy and selfish because they are no longer helping Woolworths cover its fixed costs and overheads? Bad luck, mate.
As long as energy demand reduction continues to occur, those grid operators are going to have the dilemma that they are trying to recover the costs of their show over a smaller and smaller pool of electrons, requiring them to charge more and more or attempt to charge fixed costs. We have already seen them try to put fixed charges on those who have solar panels, but someone with solar panels is just someone who has a lower use of energy from the grid. For that matter, a person who is efficient and frugal in their use of energy is not contributing much to the overall costs of the grid, so perhaps we will be fining them soon for not using enough energy!
The whole system has to be rethought. It is coming to a shuddering halt. There is at least one member in this place who understands very much what I am talking about, but he will not get his chance to speak tonight at the rate that we are going. So, even as we all hold hands here and agree that we should bring this scheme into place, what we are voting for is a further reduction in energy demand leading to a further impact on the traditional big, dumb and centralised coal-fired power grid. Yet when these power stations start closing down, going into mothballs or laying off workers, there will be a great moaning of MPs in this area saying, 'Why is this happening? What a tragedy! What can we do about it?'. We are part of doing it right here tonight, as it is when we continue to support solar and wind into the grid. It is important that members vote for this legislation with their eyes open.
It is now in the hands of the government to expand the target over future years. It can do that through a regulatory approach. Along the way it can let new types of technology and new arrangements participate and qualify for the scheme, and that is an exercise that it should be moving on very rapidly because there is very little time to waste when it comes to reducing emissions and preventing dangerous global warming.
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