You can tell that the Greens do not have a lot of experience running businesses because their prescription for job creation and greater economic activity is to find the most expensive way of doing something. It is not in dispute that renewable energy is more expensive.
Indeed, Senator Milne admitted that in her contribution. She admitted that when she said that, by exempting the aluminium industry, we are going to increase the power bills of consumers around the country. So renewable energy is a more expensive form of energy. According to the Greens and Senator Milne, by doing the same thing in a more expensive way we will somehow have a stronger economy. It is not a prescription that would be commonly formulated. It is certainly not one that they would put in that context. But sometimes in this place we make things so complex when they should be much simpler.
Whilst the Renewable Energy (Electricity) Amendment Bill 2015 is a complex piece of legislation, it has a very simple prescription at its heart. The renewable energy target mandates that the producers of cheap electricity in our country must buy each year a set amount of expensive electricity. The simple truth underlying this legislation is that renewable energy is expensive. If it were not expensive then the renewable energy sector would not need this legislation. We do not have a shortage of cheap electricity in Australia. We have ample resources of coal and gas. Traditionally, that has meant we have some of the cheapest power prices in the world. Cheap power means dear wages because cheap power helps improve productivity and provides businesses with the ability to invest in more capital and more highly skilled workers.
But renewable energy is somewhere between double and five times the cost of our fossil based resources. We sometimes hear that solar is now competitive with fossil fuel based electricity, to which I respond, ‘Good. We can remove all of these subsidies we currently have to support renewable energy industries if that is the case.’ But of course the Greens do not want that.
As the Productivity Commission stated about the renewable energy target in 2011:
The Commission has assumed that the LRMC— long-run marginal cost— of wind power is A$110/MWh. This is based on data from Frontier Economics (unpublished data) that suggested that the LRMC of wind power projects in Australia was mostly in the range A$100–A$120/MWh.
The average wholesale price of electricity was assumed to be A$50/MWh (section D.1). This implies that for wind power projects to meet their LRMC, the REC— renewable energy certificate— price would need to be around A$60.
That is hard for people to visualise, but let’s try to visualise something a bit more tangible. If you have a 3.5-megawatt capacity wind turbine, you can potentially produce around 30,000 megawatt hours a year. You times it by 24 and by 365 and that gives you the potential megawatt hours that that turbine can produce a year. In this case, it is around 30,000. In fact, most wind turbines in Australia produce power only 30 per cent of the time, so you would only produce just over 9,000 megawatt hours a year. If the RET price has to be $60 a megawatt-hour to produce electricity, that means that that wind turbine would get $551,000 from other energy consumers.
When you next drive past wind turbines on your travels, just remember that each one of those turbines is getting something like half a million dollars courtesy of other energy users and customers in this country just to operate. The average life of a turbine is around 20 years. That means that they are getting around $10 million over their lifetime. That is $10 million courtesy of other power users. That is just one turbine. We are told that we are going to have to install more than 1,000 of these things to meet this target that we are going to legislate here.
Some argue, though, that the renewable energy target will deliver cheaper energy over time. That last bit is important—that it will be not now but ‘over time’. Whether or not that will actually happen is a gamble. It is a risk. There is no guarantee in our legislation that it will become cheaper. Those who argue that this legislation is good for the economy are effectively taking one big punt that some forms of renewable energy will come down like manna from heaven in the future and be cheaper. That is a huge risk to take with our economy.
We have seen this play out before and it ended in tragedy then, too. For a long time people in Australia argued that we should have high tariffs on cars, clothing and whitegoods to help protect local industries and that, over time, those industries would become more competitive and we could remove the tariffs.
Well, that never happened—and I fear the same result will occur with our renewable energy industry, if we maintain as high a renewable energy target as we have had. Worse, at least high tariffs did protect jobs in labour-intensive industries like manufacturing. But renewable energy is not a particularly labour-intensive form of energy provision. Much of the construction of the turbines occurs overseas, and, once the turbines are installed, there are very few people to work out around the turbines. Indeed, some of the management of the turbines that exist in Australia occurs overseas in the home country of their design.
So, if this legislation is not to create jobs, what is it for? One of the objects of the Renewable Energy (Electricity) Act is ‘to reduce emissions of greenhouse gases in the electricity sector’. However, renewable energy is a particularly costly way of doing that. According to the Productivity Commission, the implicit abatement cost of the large-scale renewable energy target is between $37 and $111 per tonne. This is a much higher price than the less than $15 per tonne that was recently achieved through the coalition’s Direct Action policy. The Productivity Commission’s estimate also assumes that renewable energy has no emissions itself, which is not correct, given that wind turbines, for example, are made of steel and need enormous amounts of concrete to hold them in place. Some estimates say that each megawatt of wind power produced takes around 460 tonnes of steel. Each megawatt of wind power also takes around 870 cubic metres of concrete. Now, let us compare that to something else—natural gas. Natural gas takes 27 cubic metres of concrete for each megawatt of power and 3.3 tonnes of steel for each megawatt. I wonder which one is more environmentally sustainable and friendly? The renewable energy target gets less bang for more buck. That is why I think it is a good thing that this bill reduces the target and exempts more industries from having to purchase renewable energy certificates.
This new law will ensure Australia’s emissions-intensive, trade-exposed industries will be fully exempt from the increased costs imposed by the renewable energy target. These costs are imposed on industries like the aluminium industry in Central Queensland. There are two major aluminium refineries near Gladstone that employ almost 2,000 people. When Senator Milne talks about jobs and the aluminium industry, she might want to reflect on the 2,000 people in Central Queensland whose full-time jobs rely on cheap power. If we remove cheap power, they will no longer have jobs. Central Queensland is already doing it tough after a slowdown in the coal mining sector. It does not need the double whammy of pressure on its aluminium industry too. I welcome that this legislation will remove this sword of Damocles that has been hanging over the head of the Gladstone economy.
I have been fortunate enough to attend five hearings of the Senate Select Committee on Wind Turbines. Of course, I will not pre-empt the findings of that committee here today. But I have been to some of these people’s homes; I have heard their genuine concerns about the impact of wind turbines. These people are normal, everyday Australians. I do not know if Senator Milne has gone and spoken to some of these people before she dismisses their concerns as ludicrous, but I think she probably should have an obligation to do that. You can go and talk to these people—people like Rikki Nicholson from Cape Bridgewater. He has had to move out of his home. He and his wife have moved out of their home because of the impact of turbines. There is Mr David Mortimer from Lake Bonney in South Australia. His wife has suffered so much that he sold his farm so he could live further away from the wind turbines. And Mr Ron Jelbart, from east of the Macarthur wind farm, has badly disrupted sleep, and his son also suffers similar complaints, including tinnitus, when he visits their farm.
The stories go on and on. Last week we had a couple, Clive and Trina Gare, who are hosts of wind turbines. They have been paid around $1 million by the wind turbine industry. But they say they would never have them again, given the problems they have caused them, particularly in terms of their sleeping. I do not know if wind turbines have caused these complaints. I am not a medical professional. But it does seem coincidental that there are so many people willing to go so far and at great financial cost to move from their homes and disrupt their lives because of the impact they feel has been caused by wind turbines. I certainly believe that there are legitimate questions, particularly around the impact of infrasound and low frequency noise that is generated by wind turbines.
What has concerned me more than the concerns of the community, though, is the dismissive and contemptuous attitude of some in the wind industry. Multiple wind turbine operators have said to the committee that because they comply with all regulations they have no further obligations to the residents that claim to be affected. That is not true. Under the long-established tort of negligence, persons engaged in supplying goods and services have a duty of care to take reasonable actions to prevent foreseeable damage occurring. Some in the wind industry are not being reasonable. A representative from one wind company tabled a cartoon belittling the complaints of affected residents to the Senate committee. A cartoon! Another wind industry staffer has tweeted that those complaining are ‘nutters’. This is not the behaviour of an industry that is taking their responsibilities to the wider community seriously.
Given that the wind industry does not seem to be serious about taking their obligations into account, we should be. We should not be giving each wind turbine $500,000 a year through this legislation without then making sure that they are not doing harm to people and causing adverse health impacts. While the wind industry does not seem to believe that it has an obligation to do no harm, I think we do. Until we know more about the impact of wind turbines, particularly the impact of infrasound and low frequency noise, we should have a moratorium on the accreditation of new wind turbines under this legislation. Under division 3 of this legislation, the regulator has the power to accredit new wind turbine operators. That should not occur until we understand the full impact of these things. It should be on our watch that we make sure that we do not do harm to people. We must do more research into this before we go down the path of funding through enormous amounts of government subsidies, or legislation that imposes subsidies, that potentially cause harm.
