Reducing energy consumption is not enough

In Parliament | 20.10.15

Electricity Supply Amendment (Energy Savings Scheme) Bill 2015

The Hon. PENNY SHARPE [3.04 p.m.]: On behalf of the Opposition, I address the Electricity Supply Amendment (Energy Savings Scheme) Bill 2015. The purpose of this bill is to amend the Energy Savings Scheme in the Electricity Supply Act 1995. The bill proposes to amend the Electricity Supply Act by expanding the existing ESS to include gas, consistent with what is currently happening in Victoria, South Australia and the Australian Capital Territory. The bill extends the life of the scheme from 2020 to 2025. The bill also increases savings targets from 5 per cent in 2015 to 7 per cent in 2016, 7½ per cent in 2017, 8 per cent in 2018 and 8½ per cent in 2019. The bill seeks to better recognise energy savings in regional New South Wales by introducing a regional network factor or multiplier of 3 per cent in the Essential Energy regional network.

The Energy Savings Scheme was established by Labor in 2009. The ESS built on Labor's New South Wales Greenhouse Gas Abatement Scheme [GGAS] and complemented efforts at the Federal level to reduce emissions. When the then Minister for Climate Change and the Environment, the Hon. Carmel Tebbutt, introduced the ESS in 2009, she said:

The New South Wales Government is strongly committed to encouraging energy efficiency and reducing greenhouse gas emissions. We are committed to doing this at least cost and with measures that complement the Commonwealth Government's efforts. This is one of the key areas where New South Wales can make a meaningful contribution to the fight against climate change.

The scheme aimed to better position the New South Wales economy for a low-carbon future by creating a financial incentive to reduce the consumption of electricity through energy saving activities. The ESS works by placing an obligation on New South Wales energy retailers and large energy users to purchase energy savings in the form of certificates each year. It assists households and businesses to reduce electricity consumption and electricity bills. Electricity network operators and retailers are required to meet energy savings targets based on their liable acquisitions of electricity. They meet their targets by purchasing and surrendering energy savings certificates that have been created by accredited certificate providers.

In November 2014, the Government commenced a statutory review of ESS which reported in June this year. In short, the review found that the ESS: had created a financial incentive to reduce the consumption of electricity; had been effective in reducing electricity costs for households; has complemented existing national schemes by making emissions reductions achievable at lower costs; and that it has reduced the cost of a need for additional energy generation transmission and distribution infrastructure. The ESS is a Labor legacy, and we will be supporting this bill.

The bill extends the ESS by an additional five years to 2025. In the absence of a national model, this is a sensible move. It makes energy efficiency part of everyday life and recognises that, to do so effectively, we need to invest in this over the long term. The bill will also expand the ESS to provide incentives to save gas as well as electricity. At a time of rising gas prices, this will help balance the commitment Labor has made to reduce emissions and to help households. It also complements incentives to save gas in other jurisdictions where similar schemes operate.The bill will also increase the energy savings targets to deliver more energy savings and greater reductions in energy bills. The targets will increase from 5 per cent in 2015 to 8½ per cent in 2019. As the review notes, the ESS has already seen significant savings in energy consumption and has saved money for consumers. Since 2009 the ESS has assisted the implementation of energy efficiency projects that have saved 12,000 gigawatt hours. Between 2009 and 2013 certificate providers created 8.8 million energy savings certificates—0.7 million were residential certificates, 6.7 million were commercial certificates and 1.3 million were industrial certificates—equal to 8,291 gigawatt hours of energy saved. The Government has said that it expects these further reforms to create savings of an additional $8 billion over the next 25 years.

The bill also makes amendments to the ESS rule to more fairly reward energy savings in regional New South Wales. It does this by introducing a "regional network factor" which will multiply the number of energy savings certificates created for energy savings activities undertaken within the Essential Energy regional network by 3 per cent. This is good news for our regions, where energy can have higher costs. The bill enables greater harmonisation with other State energy efficiency schemes. From its outset the ESS was intended to harmonise with similar schemes in other States. The then Minister for Climate Change and the Environment said in 2009 that the Government:

… would prefer a comprehensive, national, market-based energy efficiency scheme as we believe that would make the national greenhouse gas reduction task achievable at a lower cost to families and businesses. But in the interim, and to the extent that it is possible, New South Wales will seek to harmonise with similar schemes in other States …

One problem identified in the review was that the scheme could be inflexible when responding to changing market conditions. The bill will allow for regulations to prescribe conditions under which energy savings targets and base penalty rates may be changed based on an under- or over-supply of certificates. The bill also makes changes to compliance and a number of improvements to the administration of the scheme. These are sensible improvements and Labor will be supporting them. We are proud of Labor's legacy of reducing energy consumption, reducing emissions and making savings for households. But we question the privatisation of our State's electricity assets and the impact this will have on the ability of people to take greater responsibility for energy efficiency.

Significant change is happening in the energy market. Some have called it more than change—it is significant disruption. The impact of increased efficiency, which reduces demand, and the increased use of renewables save money by delaying the need for more generation and deferring investment in electricity networks, but they are also putting pressure on the traditional financial model for electricity networks. The impact of privatisation must ensure that attempts to increase renewables and energy-efficiency measures are not stymied through the new owners and contract design. Households and businesses must not be penalised for doing the right thing.

New South Wales has the highest energy consumption in Australia. Labor supports reducing energy consumption through the mechanism of the ESS but the Government should be showing leadership on this issue at the highest level. Recently the Government dumped State Plan NSW 2021. Within that plan was the important target of containing electricity costs through efficient energy use by assisting businesses and households to realise annual energy savings of 16,000 gigawatt-hours by 2020 compared to "business as usual" trends. The new Premier's priorities do not reflect that target. There is no mention of energy efficiency in either the Premier's 12 priorities or the additional 18 so-called State priorities. The only priority for the environment under this Government is the reduction of litter.

The review of the scheme released earlier this year found that it would fail to meet its target of saving 16,000 gigawatt-hours of electricity by 2020—falling short by about 3,400 gigawatt-hours. If the Minister is serious about the gigawatt-hours by 2020 target, this must be transparent and regularly reported on even as the scheme is extended. We want to see what the money is being spent on and share the success that should drive greater innovation and savings through energy efficiency for households, businesses and large industries. Furthermore, reducing our energy consumption is not enough. New South Wales is way behind in its uptake of renewable energy with only 13 per cent renewable energy generated and just over 5 per cent consumed. According to the Department of Industry and Science report titled "Guide to the Australian Energy Statistics 2015", when it comes to net energy consumption by fuel in Australia, New South Wales lags behind Tasmania, South Australia and Queensland as a renewable consumer.

New South Wales is the sixth lowest State for renewable energy installed since 2001. Labor acknowledges the improvements in large scale solar plants such as those at Nyngan and Broken Hill but the Government simply is not doing enough nor showing leadership on this issue—for example, the latest foray by the Minister for Medical Research and her views on wind farms and trying to stop their growth in this State. Not only is her lack of science and rigour embarrassing but it is also holding our State back in terms of jobs and the rollout of more renewable energy. The Minister would do well to think before she speaks and should get behind supporting renewable energy.

One of the Premier's first acts after the election this year was to eliminate the portfolio of Parliamentary Secretary for Renewable Energy as part of his ministerial reshuffle. This again demonstrates a lack of commitment in this area. He then dumped the NSW 2021 target of 20 per cent renewables from his Premier's priorities. His predecessor abolished the Office of Climate Change. Climate Change is not a niche issue; it needs to be taken seriously by this Government. Let us not forget that the New South Wales Government prepared a post-2020 carbon reduction report for the Federal Government but decided not to submit it. Recently the Sydney Morning Herald reported that:

While not proposing a specific target for greenhouse gas reduction, the submission recommends Australia take into account those of major trading partners and prepare a minimum goal that could be increased if others also make deeper cuts. It cited as an example the Climate Change Authority's recommended 40-60 per cent reduction range on 2000 levels by 2030.

New South Wales has no emissions reduction target and a Premier who is committed only to the reduction of rubbish. It beggars belief that the New South Wales Government, as guardians of Australia's most populous State with the highest per capita carbon emissions, would ignore the advice of its own agencies and choose not to make a submission to the Commonwealth.

Climate change is real and the impact on New South Wales is clear. Failure to act will hit New South Wales economically, environmentally and socially. Our State is expected to become hotter, with the greatest increases in temperature expected to occur in the north and west. North-eastern New South Wales is likely to experience an increase in autumn and spring rainfall; in the south-western regions there is likely to be a decline in winter and spring rainfall. Many parts of the State will experience a shift from winter-dominated to spring-dominated rainfall. More bushfires, floods and storms, and impacts on our water supply and human health are just some of the issues that will face our State if we fail to contain climate change.

The Hon. Dr Peter Phelps: We'll all be ruined, said Hanrahan.

The Hon. PENNY SHARPE: At a time when leadership is needed, this head-in-the-sand approach from the Baird Government is risky and irresponsible. Even if members like the Hon. Dr Peter Phelps do not believe in climate change, as he does not, failure to take on board the risk and trying to ameliorate it is nothing but irresponsible.

The Hon. Dr Peter Phelps: My preselection document is going to be half your speeches.

The Hon. PENNY SHARPE: I am glad I am helping you. Let us contrast that with what Labor delivered when in government, including the Solar Bonus Scheme, the $340 million Climate Change Fund, the establishment of six renewable energy precincts and cutting red tape for renewable energy generation. We did not talk about wind farms resonating in our skulls. Labor established the voluntary GreenPower program under which customers could choose to purchase renewable energy, we supported solar manufacturing, and we introduced a renewable energy target. Labor set ambitious emission reduction targets. We were committed to tackling climate change and developing a clean energy future.

Since coming to Government the O'Farrell and Baird regimes have shown time and again that they have their heads stuck in the sand when it comes to climate change. It is good to see this Government taking practical action through this bill. Labor will support the bill-it was our idea in the first place—but increased energy efficiency is not enough to address what climate change will mean for New South Wales. There is much more work to be done and the Government needs to make a greater commitment.

SOURCE: Hansard