MARK BUTLER MP
SHADOW MINISTER FOR CLIMATE CHANGE AND ENERGY
MEMBER FOR PORT ADELAIDE
PM AGENDA WITH DAVID SPEERS
TUESDAY, 6 DECEMBER 2016
SUBJECT/S: Terms of Reference Government’s Climate Review, Renewable Energy Target, Adani mine.
DAVID SPEERS: Mark Butler thank you very much for your time can I start by asking does Labor standby the stance on climate change you took to the election in July?
MARK BUTLER MP, SHADOW MINISTER FOR CLIMATE CHANGE AND ENERGY, MEMBER FOR PORT ADELAIDE: We do. Obviously there will have to be a review of some elements that would assume that we were elected in 2016, which we weren’t particularly the winding down of the Kyoto Protocol period to 2020 and then the new Paris Agreement period after that but the core elements I think were only developed in the early part of this year after a very extensive consultation process both within the party and then over the course of summer with business, unions, and environmental organisations and we think they’re the right sort of principles.
SPEERS: So some of those core principles: a target of 45 per cent lower emissions by 2030, is that something you would look to go further than or is that still the policy at the moment?
BUTLER: Well we think that is the right target. It was the recommendation of the climate change authority. There is within the Paris Agreement an ability, indeed an encouragement for countries to ratchet up the commitments they took to the Paris conferences because everyone agrees that the sum total of the national contributions or the national commitments that all of the countries took to the Paris conference last year will take us closer to somewhere between 3 -4 degrees of global warming rather than the international commitment to keep global warming well below 2-degrees.
So we are still very confident, and experts continue to support this position that the Turnbull targets of 26-28 per cent by 2030 are way short of what is needed.
SPEERS: Alright so to achieve that, you went to the election promising an emissions trading scheme for the electricity sector. Is that still the policy, you’d still see that approach?
BUTLER: That’s right. We did that after I said very deep consultation with the electricity industry but obviously with also very big energy users and other stakeholders - environment and climate groups – and we decided to pick up a model which was developed by the Australian Energy Market Commission which is the peak Government agency, not just Commonwealth Government but also the State Government agencies, all corporate to create the market commission that sets the rules for the national electricity market. And it said that this sort of model – a carbon trading market, just for electricity generators so a closed internal market for electricity generators was the most effective way to reduce carbon pollution over time but in a way that really has little impact on consumers because it is an internalised market just for generators.
SPEERS: So explain to me how that insures no additional cost for consumers. If some energy companies have to buy permits surely they’re going to pass it onto their consumers?
BUTLER: Well they buy permits from generators that are operating below the emissions intensity baseline. So it is a baseline and credits scheme which assumes that the electricity sector operates at a particular baseline of emissions intensity. Operators above that baseline simply purchase credits from operators that are operating below that baseline, which should lead to a neutral outcome from the electricity sector as a whole.
SPEERS: Yeah, they have to pay for those permits though; those that are emitting above that baseline and they’re going to pass that on are they?
BUTLER: But there will be benefits from operators that are operating below the baseline. So the Energy Market Commission said that in broad terms there would be a neutral outcome for consumers because this would all be money travelling internally within the electricity generation market -
SPEERS: The point I’m getting out here is if your power company is to be a coal-fired power company that is a big emitter you may end up paying more.
BUTLER: Well retailers get the electricity that they end up selling to consumers from a whole range of different generators. And what it will do is send a price signal within the electricity generation market towards lower carbon forms of electricity generation. That really way the reason behind the energy market commission proposal to the Government last year. We picked it up, the Government sat on it and said some pretty ridiculous things during the election campaign, Scott Morrison called it a ‘thumping great electricity tax,’ and Greg Hunt said similar things.
SPEERS: The point I’m trying to establish here is because you know I think it is important to be honest and transparent on what it actually means in practice to those power companies that are emitting more, they would have to pay more, they would pass that on even if they invest in lower emitting power generation, well that’s going to cost them more as well. There is a cost to consumers here.
BUTLER: Well you’ve got to separate the two things out. What we are seeing at the moment is a couple of different things happening in the market. You’ve got a renewable energy revolution, you’ve got instability in the gas market that the Government has sat on for three years and you’ve got a position where a whole lot of the generation fleet that was built in the 1960’s and 70’s particularly is reaching the end of its design life.
AGL’s economic department published a paper only a few weeks ago that said that three quarters of our electricity generators using coal and gas – three quarters of them are already operating beyond the end of their design lives. There is no question, leave aside climate change imperatives and what is happening in renewable energy, at some stage in the next 10 years Australia would have to think about replacing our existing generation fleet with new generation. And really the real question is what is that going to be?
From the Labor party’s point of view we’d like as much of it as possible to be modern, clean, renewable energy. There’s no question we are going to have to start replacing that infrastructure.
SPEERS: Alright but again it costs to speed up that transition, to clean, modern renewable infrastructure as you say. That’s going to cost if you are going to speed up that process.
BUTLER: Well they don’t drop out of the sky. Hazelwood was announced as a closure, a plant that opened in 1964, operating way beyond its design life. If you are going to replace a plant like Hazelwood whether you replace it with a coal-fired power station, or gas, or wind, or solar, someone is going to have to pay for that. In the olden days the State Governments used to pay for it using taxpayers’ money, nowadays if private companies are going to pay to replace that infrastructure with whatever type that money will end up being recouped somehow.
But that’s not an effect of climate change policy that’s just about where we are in our history of electricity generation. We’re at a point where we have to think about renewing our fleet.
KARVELAS: Now the Government is as part of the Terms of Reference for its review of its Climate Policy is going to look at an energy intensity scheme in the electricity market. It seems to be fairly much along the lines of what you took to the election; do you welcome them having a look at this?
BUTLER: Yes, to some extent. We took this policy to the election as part of a much broader electricity modernisation strategy that covered some of the things we just talked about. You can’t just have this policy and assume that this alone will lead to the renewal of our generation fleet in a way that guarantees a reliable supply and affordability. But to the extent there is a glimmer of hope in this review that was announced yesterday, we do welcome that because it is as you said a policy that we took to the election.
What is disappointing about the announcement yesterday in the context of electricity policy is that it appears that Malcolm Turnbull and Josh Frydenberg have really shut the door on any renewable energy policy beyond about 2018/2019, which effectively is when the 2020 Renewable Energy Target starts to roll off. That I think is a very, very poor outcome for Australia.
SPEERS: Your preference still on renewables is to get to 50 per cent renewable energy as a goal at least by 2030. Is that still your plan and how much would that cost?
BUTLER: It is difficult to cost that because it would be built over the next 15 years but there is no question, no expert can tell you that there is any way we can satisfy our Paris Commitments our international commitments to reduce carbon pollution without having about half of our electricity generation fleet being sourced from renewable resources by the end of the next decade. What we also know, again from expert after expert is that when you start –
SPEERS: You can do it through international permits and I know you are open to that as well, that would be a lot cheaper than a 50 per cent renewable energy target here.
BUTLER: But at some point you are going to have to start to move Australia to a low carbon economy. Like every other economy around the world -
SPEERS: But at a cost, and that’s what I’m asking. A 50 per cent renewable target comes at a big price doesn’t it?
BUTLER: Well as I was about to say, expert after expert have projected the cost of different forms of electricity being built over the course of the next 15 years, now 14 years, to 2030 and all of those projections indicate that solar power in particular but also wind power are very quickly becoming the cheapest form of electricity to build.
Now what happens today is that people often compare the cost of building a new solar plant to the cost of operating an existing coal-fired plant which has already been built usually at taxpayers’ expense and fully depreciated. But when you compare apples with apples, the cost of building a new plant, renewable energy is fast becoming the cheapest option on pretty much every piece of expert advice that you care to look at.
SPEERS: Sure but surely you have to have some sort of ballpark cost in mind before you go down this path of a 50 per cent target otherwise you don’t know what it is going to mean for households; what it is going to mean for industry, what it is going to mean for investment in Australia?
BUTLER: Well what we do know is that this is only from Tony Abbott’s own hand-picked panel when he reviewed the Renewable Energy Target; expanding renewable energy has been putting downward pressure on wholesale power prices. We also know from experts that –
SPEERS: That panel didn’t recommend the 50 per cent target?
BUTLER: No well that wasn’t their job to recommend one way or the other what might be the case after 2020 –
SPEERS: But with a 50 per cent target surely you have to have some sort of cost idea as to what the impact would be?
BUTLER: Well what we do know as I said from expert advice, after expert advice is that it is (renewables) going to be the cheapest way of renewing our electricity fleet over the course of the next 15 years and it will be the only way in which we can renew our electricity fleet in a way that is consistent with the commitments we made at the Paris conference; or more particularly the Turnbull Government made on Australia’s behalf.
But I come back to the point David, that replacing or renewing our electricity infrastructure is not an option. It’s not an option and it’s not driven just by climate change policy. It is driven by the age of our existing infrastructure. I’ve talked about the age of the infrastructure today, by the end of the 2020’s the plant that we have today will be operating so far beyond the end of its design life it will be having extraordinary maintenance bills coming in and delivering very unreliable supply - leaving aside the carbon pollution effect that it has.
SPEERS: Given all that, the push for modern, renewable energy as you say. Why is Labor backing the opening, the construction of what would be the largest open cut coal mine in Australia, the Adani Carmichael Mine?
BUTLER: Well at the end of the day that mine is going to have to stand on its own two-feet commercially. That’s always been Labor’s position. It will have to comply with the nations and the state of Queensland’s environmental laws, and there should be the strictest possible environmental safeguards there. But we haven’t yet seen the way in which this project is going to stand on its own two-feet because reports have been very mixed over the last couple of days about whether the Turnbull Government is going to have to sling a billion dollars in taxpayers’ money in way of this multinational, multibillion dollar company. To build what would effectively be a private railway line.
SPEERS: Your Queensland Labor colleagues certainly want that billion dollar loan from the Federal Government, you don’t?
BUTLER: Well with the greatest respect, it is a Federal fund and this is a fund to provide infrastructure for Northern Australia. It hasn’t spent any money in the significant period of time it’s been operating. By way of contrast for example, the Labor party through Anthony Albanese took a policy to the last election to spend a billion dollars of that fund on tourism projects. There are hosts of small to medium size projects that with a bit of concessional loan support from a fund like this would be able to expand tourism opportunities in North Queensland very substantially. But we’ve seen nothing from this Government all we’ve seen –
SPEERS: We’re told this mine will generate thousands of jobs, just to be clear on this you’re saying that the billion dollar loan should not be given to Adani even if it stops the mine opening?
BUTLER: Again, we saw a spokesperson from Adani say this morning that the loan was not necessary. The loan was not something that would determine whether or not this mine went ahead so I don’t know quite why this Government is deciding to sling a billion dollars towards this project, a private railway project, that the company itself says it doesn’t need is beyond our imagination.
SPEERS: Just to be clear on your position, you say no loan even if it means no mine?
BUTLER: We’ve said that for a substantial period of time. Indeed, Josh Frydenberg who was the Resources Minister only a few months ago before the election, also said that this project should also stand on its own two-feet. I think there is very good reason for that. This is a large multibillion dollar, multinational company seeking to open a mine in an industry where the Queensland Resources Council itself said is already having significant pressures on it. They reported earlier this year that more than half of the thermal coal operations in Queensland are already operating at a lost.
SPEERS: Mark Butler we will have to leave it there, I appreciate your time this afternoon thank you.
BUTLER: Thanks David.