Bill's Speeches

ADDRESS TO BLOOMBERG NEW ENERGY FINANCE - SYDNEY - THURSDAY, 23 FEBRUARY 2017

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Last month, around Australia, more than 400 weather records were broken.

Towns and suburbs in New South Wales and Queensland set records for days over 35 and days over 40. The highest daily mean temperature, the highest daily maximum temperature and the number of nights where the temperature didn’t drop below 20 degrees

Here in New South Wales, you sweated or perspired or glowed (depending on which school you went to) through the warmest January on record.

And in Queensland this month: Applethorpe, Warwick, Oakey, Gatton and Kingaroy, have all registered their highest all-time maximum temperatures.

400 plus weather records in one month.

Now of course, no one set of numbers is absolute proof.

And these are weather records, the day-to-day, week-to-week changes that we see, feel and remember for a while. 

Then there is climate, the shift in patterns that occur over years and decades – and we are breaking those records too. 

Climate deniers used to pretend the problem didn’t exist, now many prefer to argue that there’s nothing that we can do.

But what about people who know better?

Yet, through political selfishness, division and weakness, are ignoring the emergency in front of us.

We are running out of time to act on climate change.

And every day our Prime Minister chooses his personal career survival over the science, over the facts, over the future is another day wasted.

Ignoring climate change is a premeditated act of intergenerational theft.

And it is a major economic and financial risk: to investors, business and workers.

Last week, even the prudential regulator intervened publicly.

For the first time, APRA has said that climate risks, and I quote:

"will become an important and explicit part of our thinking.”

And called on our banks, insurers and superannuation funds to:

“rise to the challenge”.

They politely neglected to mention that politicians too need to rise to the challenge too: for the sake of our economy, for our environment and for our energy security. 

Because if you don’t have a plan for climate change – you don’t have a plan for energy security. 

Energy and climate policy must be integrated - because electricity generation contributes nearly 40 per cent of Australia’s greenhouse gas pollution.

It’s one of the fastest-growing sectors of carbon pollution. 

And, together with transport, it’s the sector where the decisions we make: from changing our behaviour, to improving technology can make the biggest difference in cutting pollution. 

Currently, our energy generation is overwhelmingly delivered by coal combustion - by burning coal.

If we’re to reduce our pollution over time – this has to change.

If we’re going to achieve net zero pollution by 2050 – this has to change. 

We’re not writing coal off. We know it will continue to be a major part of Australia’s energy future.  

But it will simply not be possible for Australia to meet even the inadequate Turnbull-Abbott Paris targets without significantly reducing the pollution produced in our energy sector. 

For me and for Labor, it's all about being practical – not ideological.

Consider the basic question of hardware.

Right now, three-quarters of Australia’s coal and gas-fired generators are operating beyond their design life. Some are over 50 years old. 

Not many of us drive 50-year old cars or work with 50 year-old computers or rely on 50 year-old medical thinking when we get sick. 

I'm sure that none of you have, on your person, a 50 year old phone.

We update, we modernise, we plan for the future.

Over the next ten to fifteen years we will have no choice but to progressively replace much of this infrastructure, as it moves well past its use-by-date. 

We should be planning the replacement now - encouraging investors to build and seek new, cleaner sources of power.

Renewables is one – and the obvious alternative to coal as a baseload power source, is gas.

Because, while the Abbott Government abolished the high, fixed carbon price when they got elected nearly four years ago, it has not been replaced with anything. 

This policy paralysis is stalling investment in our electricity sector and does nothing to cut pollution. 

Every investor and energy market player knows that emissions trading in some form is inevitable – in fact, it is necessary.

But without certainty or without the right policies in place, there can be no confidence to invest.

The result is an electricity system stuck in purgatory, with rising pollution, rising prices, and rising energy insecurity.


But by ruling out an Emissions Intensity Scheme within 48 hours of it being recommended, the current Coalition Government, showed they are determined to increase power bills by up to $15 billion over the next decade. 

These are not my figures – they’re from the Australian Energy Market Commission.

The CSIRO and Australian Energy Networks Australia separately estimated that an EIS could save households $216 per year on power bills, on average.

The experts could not be clearer – every household, every business will pay more for their power because of this Government’s policies.

You really have to ask…

How has it come to pass that the Liberal Party, the party previously committed to the operation of markets and a Prime Minister who sings the praises of free trade at every opportunity, continue to stubbornly stand in the way of Australian businesses engaging in a massive global market - emissions trading.

And continue to push a grants program where the government pays big polluters taxpayer money, to keep on polluting. 

They are fond of calling us socialists – their approach is positively Soviet. 

This failure:

  • Puts jobs at risk.
  • It wastes tax-payers money.
  • It makes the transition to clean energy tougher the longer it continues.
  • It increases prices
  • And undermines energy security.

The most environmentally effective, the most economically efficient way of reducing pollution in our energy sector is to judge technology on its merits.

We should let the facts speak for themselves. We should stop wasting time.

Australia is facing a national energy crisis.

Our energy is becoming less affordable, less reliable and more polluting.  

In South Australia – a once-in-a-lifetime storm led to a state-wide blackout and then technical glitches, poor-planning and failures in communication led to unnecessary load-shedding. 

We’ve seen blackouts here in Sydney and the partial shut-down of the Tomago Smelter in the Hunter.Tomago on its own, representing 8 times the amount of load-shedding we saw in South Australia two days earlier.

In Queensland, we’ve seen extreme spikes in wholesale electricity prices – with the average price in January more than twice that of South Australia.  

And, of course, the sudden fashion of the closure of the Hazelwood power station in Victoria will drive up prices and has thrown people out of work.

My point about that list of problems, isn't to say they're not problems, it's simply to say there’s no point blaming renewable energy for all of these developments. Queensland, New South Wales and Victoria are all heavily reliant on coal power. 

I was stunned in September last year, after the storm hit South Australia, when families were still mopping up the damage and SES volunteers were clearing fallen trees, to see government talking heads all over the television trying to leverage some sort of partisan advantage.

I believe Malcolm Turnbull does know better, indeed he came to the office of Prime Minister promising he would be better.  

How is it that a man who used to pride himself on being the renaissance man of climate change, is now out there demonising renewables and talking-up coal?

This Prime Minister personally appreciates and understands the advantage of renewable energy. Which is why it’s so disappointing to watch him attack the renewable energy industry and hurt jobs. 

The attacks on renewable energy, over the last three and a half - nearly four years, frightens away investors and it does nothing to guarantee Australians can keep the lights on - not just tomorrow, but ten years’ time. 

Governments should not be in the scare campaign business. They should be sending a message of certainty.

Certainty for industry, certainty for consumers, certainty for investors and for workers who will be affected by changes in the sector.

When it comes to energy, this is a big deal.

It's estimated that there is US $7.8 trillion of global investment in renewables up for grabs in the next 20 years. 

That’s three times as much as will be invested in fossil fuels globally.

In the renewable jobs and investment race – Australia had a dream barrier draw.

We are the sunniest continent in the world, one of the windiest places on earth and our universities, research centres and firms keep producing leaders in the field.

Australia cannot take its natural advantages for granted, when the rest of the world is hungry for the same investment dollars.

And we won’t win in our region by cutting wages or importing skills – but we can win by being smarter with energy. 

We can be the energy capital of Asia.

And if Australia nails the energy question, we will collect a growth dividend that can set us up for the century ahead.

But despite the prize on offer, despite all our natural advantages – we’re not just stuck in the gates, we are going out backwards. 

When the Coalition came to office and declared war on the Renewable Energy Target scheme - investment in large-scale renewables fell by 88 per cent in one year.  

After being rated as one of the four most attractive destinations in the world for renewable energy investment in 2013 - we can't even get in the top ten anymore. 

In the last three years, the world has added nearly 3 million jobs in renewable energy – and Australia has lost 3,000. 

And If the Liberals just stuck to that old conservative credo of ‘first, do no harm', if they’d just done nothing but keep pace with the global trend – we would have added 7,600 jobs.

Instead, at every turn, they have chosen vandalism over pragmatism.

We saw it again, in the Prime Minister’s "reset" speech at the Press Club. It was going to be an ‘agenda-setter’ for the year.

He declared ‘the battlelines are drawn’ on energy policy.

If he wants to pick that fight, fine.

But wouldn’t it be better – for jobs, for investment, for our country – if this was an area of consensus rather than conflict. 

If instead of passing lumps of coal around the parliament, like some primary school show-and-tell, the government sat down and acknowledged that the RET scheme achieves its target in 2020 and Australia needs a plan that goes beyond 2020.

And if the Coalition are out of ideas, we offer the government partnership and we offer them some policies. Beginning with our commitment to 50 per cent renewable energy by 2030.

Let's forget the word games for a moment - this is our target, it is our goal, it is our objective, it's our aspiration.

You can call it what you like.

50 per cent renewables is what we would like Australia to achieve. It is what we want Australia to achieve. 2030 is when we want to get there.

And with the right leadership, we can get there.

While the existing legislated RET scheme will help, it won’t be enough. 

We need to catalyse much more private investment in renewable generation and technology.

It’s why we need:

  • An Emissions Intensity Scheme for the electricity sector;
  • It is why we need ongoing support for research and investments in renewable energy technology, including through ARENA and CEFC; 
  • And it is why we need a plan to modernise the National Electricity Market, making sure for instance, that the rules reflect the imperative to reduce pollution.

Labor’s plan is about delivering cleaner, cheaper, more reliable energy. 

It’s about sending a signal, providing the certainty that our hosts Bloomberg have estimated will drive $48 billion in private sector investment.

That’s not a cost figure. It is money brought into the economy by renewable energy.

It is investment in technology, financing, energy-generation, an investment in advanced manufacturing and installation that will create tens of thousands of jobs. 

Our energy generation assets are long-lived assets, in place for decades.

Without confidence in the policy environment, investors will never part with the billions of dollars necessary to get these projects off the ground. 

The first and most important step we can take to provide that certainty, to assist the transition to renewable energy is establishing an Emissions Intensity Scheme in the electricity sector.

The idea of an EIS has been supported by virtually everyone except the current Coalition government.

As you know better than me, an EIS sets a benchmark for the amount of greenhouse gas emissions that are produced per megawatt hour of electricity.

So this rewards energy generators that produce electricity with greenhouse gas pollution less than the benchmark, and it provides a disincentive for energy generators that produce pollution levels higher than the benchmark.

This will drive investment in new sources of energy generation.

In renewables – but also in lower-pollution sources like gas.

Gas produces roughly half the pollution generated by burning coal – so an EIS will inevitably make it a more attractive investment.

That’s important: for industry, reliability and security.

Because, even though the experts agree that every year will bring: more advances in renewable technologies, more distributed generation and far greater use of batteries and storage.

Gas will be critical as a cleaner, cheaper and more flexible source of baseload power compared to coal.

This is what we mean by judging technology on its merits. Science trumping slogans. 

Labor will consult with energy providers and users regarding the baseline and other design details. 

Because we understand that setting these parameters contributes to the energy mix – and to investment. 

50 per cent of renewables by 2030 is not an extension of the existing RET scheme. 

It’s not something that we will need to legislate, because we are confident Australia will achieve it.  

Because industry wants to get there, investors want to get there, households want to get there. And a Labor Government will work with maximum rigour to get there.

The electricity sector is complex – but the most important thing the government can do is set clear and consistent price and investment signals for the market.

How on earth can you recommend to invest in this sector, while we have the culture wars over the merit of wind power versus coal?  

This is why our EIS does not rely on taxpayer funding or government officials making investment decisions. It is a market solution.

How did it come to be Labor supporting the role of the market in climate and energy - and the government opposing it?

Now this solution has been extensively modelled by a range of experts, including: the CSIRO with Energy Networks Australia, Jacobs for the Climate Change Authority and Frontier Economics for the Australian Energy Market Commission.

The clear consensus is that it is the most effective way of cutting pollution and power prices, without compromising the stability of the electricity grid.

In fact, it is the cheapest way of reducing pollution – full stop.

According to the government’s own experts – an EIS could cut power prices by up to $15 billion over the decade. 

The AEMC has said it would cut pollution – while maintaining, and I quote the:

"reliability, security and economic efficiency of the wholesale electricity market - at the lowest long-term cost to consumers."

And in 2009, when none other than Malcolm Turnbull was championing an EIS designed by Frontier Economics.

He described it, with trademark humility as: 

“genius and wisdom” 

“a vastly superior approach”

And a:

“cheaper, greener and smarter way to cut emissions which would result in much lower electricity prices.”

What has happened to Malcolm Turnbull, who is this current fellow? 

On this question – I agree with the old Malcolm Turnbull.

I just wish Malcolm Turnbull still agreed with himself.

For Labor, renewable energy is not about ideology - it is about inevitability.

The cost of solar technology is falling at exponential rates - and the efficiency is climbing rapidly.  

The University of New South Wales keeps setting world records in this field, amongst others. 

Since 2000, solar power has doubled seven times as a proportion of global energy generation. Wind power, four times.

Since 2009, solar costs have dropped 90 per cent and the cost of wind power has dropped by 50 per cent.

Australians are onto this - they're not waiting for the government to get its act together. Families and small businesses are voting with their feet.

In just over a decade, the number of households using rooftop solar panels has soared from a few hundred to 1.6 million. 

There is not an industry in taking off solar panels on roofs, there is an industry in installing solar panels.

What that number means - 1.6 million households, it means a higher proportion of households in Australia have solar panels than anywhere else in the world. 

Renewable energy is now the cheapest form of new generation, followed by gas and then coal – and it’s only going to get cheaper.

Improvements in energy storage and battery technology are going to see more households and businesses getting on board renewable energy.

The number of homes with battery storage is expected to triple this year alone.

But we can’t leave all the heavy lifting to individual households and businesses. 

Our National Electricity Market was designed for an economy powered by traditional sources – but it simply hasn’t kept up with: rapid changes in our energy mix, big advances in technology, changes in consumer behaviour or the imperative to reduce pollution.

Instead, outdated rules and regulations are exacerbating the recent energy issues across the country during periods of peak demand.

In this context, there’s little doubt the Coalition’s determination to privatise networks continues to impact on security and reliability.

Do we have an energy system which is focusing on the needs of industry and consumers? 

Or do we have a series of energy generators determined to pay for the overall prices they pay for privatised assets in the last ten to fifteen years?  

Sadly, I think the latter is what motivates the system, whereas it should be the former.

We need to have a system, even when there isn’t peak demand, where we don't have rules stifling new ways for people and businesses to generate, use and manage their electricity.

We need to build an electricity system that manages the fluctuating nature of renewables, and smoothly integrate them into the national grid.  

That’s why Labor promised an Electricity Modernisation Review at the last election – because we didn’t need a state-wide blackout to know that it was time to update the system. 

We shouldn’t have to wait for another election to get this underway.

The Government, in partnership with the states, should be examining:

  • Technical solutions to prevent unnecessary power losses;
  • Greater connectivity to improve network efficiency across the country;
  • Improvements to the governance and accountability of state and federal regulators; and
  • changing the National Energy Objective to include reducing pollution as a guiding principle.

We also need genuine competition and transparency in the market, so as to remove the perverse incentives for providers to hold back supply and drive up price. 

My team and I are happy to work with the Government to tackle Australia’s energy crisis.   

This starts with fast-tracking the work required to finalise Professor Finkel’s Energy Market Review and immediately releasing the final report when it is received.

It can’t be allowed to sit on the shelf and gather dust – or be shuffled out the door in a two-line press release at 4pm on a Friday.

I’ve spoken to you today about Labor’s plan for more jobs, more investment, lower power prices and greater security.

And apart from his constant abuse of renewable energy, what does the Prime Minister offer as an alternative? Clean Coal.

He is betting the bank on dirty, unaffordable technology. 

If we were going to be kind, we’d call it an optimistic strategy.

The analysis from the Climate Institute was not that kind. 

It found that a new coal plant would only get built if the government was prepared to guarantee a subsidy of between $27 and $44 billion dollars.

Now, $44 billion is more than Australia spends on Medicare and hospitals combined. Never mind, we will have clean coal.

Without that massive subsidy, investors would need prices four times higher than they are today for these plants to be built. 

Either way - the government's option is the most expensive option.

Given the rapid advances in renewables - these plants are destined to be obsolete by the time they are built. It would be like building the NBN with copper.

And using the word “clean” might be good marketing – but it’s wrong

Without carbon storage and capture – again, very expensive – even the newest, cleanest coal plant would produce more pollution than the oldest, dirtiest gas plant.    

It’s no wonder that business leaders are running a mile.

Which private company would take on this kind of massive cost – and risk - when the technology will be out-of-date before the ribbon-cutting ceremony?

Industry does not want this. It is not viable.

When private investment cannot be found – this means the cost will be subsidised, will be carried by taxpayers, through government support. 

And it will be carried by households, through higher prices.

Even if a clean coal plant could be built – there is nothing to suggest it should. 

Gambling Australia’s energy future on unbuilt and unproven clean coal is like punting on last year’s grand final today – and still picking the losing team.

I don’t think leadership is about outmanoeuvring or outsmarting your opponent – and turning out to be wrong. 

But on climate change, that’s exactly what is happening.

For me, leadership is stating what you’re going to do.

It's telling the nation where you believe the nation should be headed to, it’s being prepared to argue your case – and being prepared to be attacked.

It’s about taking political risk – because you know it’s the right track for the country.

This is what’s missing in Australia’s climate change debate: leadership.

The leadership to tell the truth.

50 per cent renewables is where Australia needs to head – and Labor is not walking back from that.

If the Liberal-Nationals want to attack us, they should - we will still lead.

Because we know what the alternative looks like: blackouts, price-spikes, the loss of renewable jobs and investment.

And the longer we delay, the more expensive it gets. Not just the prices for households and businesses.

But the massive economic cost of failing to act on climate change. And of course, the massive opportunity cost forgone by not taking the opportunity of climate change.

But I want to return now to where I opened the speech, by talking about the 400 weather records broken in January.

Does anyone think this is the end of the breaking of records?

Have we finished, is it over now? Can we go back to the old past and coal in the manner in which the government is talking about?

If 400 weather records in January are not sufficient to ring an alarm bell across the policy makers of the Coalition benches, then what will?

How many records will be broken next Summer? 

How many weather records have to be broken before the government accepts that its current response on climate change is insufficient? 

How long will Australia wait?

How many more fires, more floods, more droughts?

How high, to be prosaic, will insurance premiums have to go?

How much damage to farms, crops and livestock, to coastal infrastructure and homes does it take? 

Climate change is not business as usual. It is a far greater threat to the living standards of ordinary Australians than the development of renewable energy.  

The earlier that Australia commits to a proper program for diversifying our energy and investing in renewables, the better.

In other words – the more we invest and develop now, the cheaper renewable energy will be in the future. 

It is time for leadership. 

We know Australia needs more renewable energy. 

Labor has the leadership, the courage and the character to not back down in front of the government's attack. 

We believe we have the leadership to tell Australia the truth.

I do say this, most seriously, that or opponents have adopted to go low - to adopt a more dishonest course. 

That we don't really have to do anything, that the world is too harder place, that there's nothing that we can do, and that any change is adverse. 

The problem is we don't have that debate in isolation of the changes which are happening despite the inaction of the government.

We are genuinely confident that the science makes sense, that the economics makes sense. 

We are genuinely confident that backing in renewable energy as part of our energy mix by 2030 - 50 per cent - it is the way of the future.

It is what leadership is about.

We are genuinely confident that even as the politicians bicker in  Canberra in that most frustrating forum for people to watch, that Australians are already working out what needs to be done.

Today, I started to outline our plan which is about: cleaner, cheaper, more reliable power.  

More jobs, more investment and more opportunities for all Australians. 

We will not be deterred by the government's attack - Labor is going to lead on this very important issue.

ENDS


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