Electricity Supply Amendment (Greenhouse Gas Abatement Scheme) Bill

About this Item
SubjectsElectricity; Greenhouse Gas Emissions; Environment; Climate Change
SpeakersKelly The Hon Tony; Harwin The Hon Don; Moyes Reverend The Hon Dr Gordon; Chesterfield-Evans The Hon Dr Arthur; Jenkins The Hon Jon; Cohen The Hon Ian; Pearce The Hon Greg
BusinessBill, Second Reading, In Committee, Motion

Page: 3163

    Second Reading

    The Hon. TONY KELLY (Minister for Justice, Minister for Juvenile Justice, Minister for Emergency Services, Minister for Lands, and Minister for Rural Affairs) [5.07 p.m.], on behalf of the Hon. Michael Costa: I move:

    That this bill be now read a second time.

    I seek leave to have the second reading speech incorporated in Hansard.

    Leave granted.

    The international community is quickly coming to the consensus that induced climate change is real.

    While debate will continue, it is prudent and necessary for us to continue acting to address the causes of climate change.

    The world's climate is a complex natural system … while we can never get absolute certainty as to the causes of individual changes in temperature … there is now a body of scientific evidence that cannot be ignored:

    • rising surface air temperatures ;

    • higher subsurface ocean temperatures;

    • increase in average global sea levels;

    • retreating glaciers; and

    • other unambiguous changes to the world's physical and biological systems.

    More than any other government in Australia, the New South Wales Government has recognised the need to address the threat of climate change.

    Australia has too much to lose—we must take strong practical steps to deal with the challenge of controlling and reducing our greenhouse gas emissions.

    Our objective is to reduce the State's greenhouse gas emissions to 2000 levels by 2025, and cut them by 60 per cent in 2050.

    Since 1991 greenhouse gas emissions per person in New South Wales have been cut by 15 per cent.

    Of particular importance is New South Wales's Greenhouse Gas Abatement Scheme—Australia's first carbon emissions trading scheme.

    The scheme is responsible for reducing carbon emissions by 24 million tonnes in total to the end of 2005;

    Ten million tonnes were reduced or abated in 2005 alone—that's 33 per cent more than in the previous year.

    This Bill ensures the ground breaking Greenhouse Gas Abatement Scheme continues until it is replaced by a National Emissions Trading Scheme.

    The scheme's strength is that it harnesses market mechanisms as the most efficient way to reduce greenhouse gas emissions.

    Rather than relying on command and control measures, the scheme creates an environment where reducing greenhouse gas emissions makes good business sense.

    The market-based nature of the scheme delivers on two fronts—it delivers the highest possible greenhouse gas reductions at the lowest possible cost.

    When the then Energy Minister, the Hon Kim Yeadon, introduced the Bill that established GGAS he said…

    …"We have argued for several years that the most equitable and economically efficient means of addressing greenhouse gas emissions is through a national emissions trading scheme—a scheme that sees uniformity in rules, and sees all Australian emitters taking responsibility for their emissions."

    That is still this Government's preferred position.

    The New South Wales Government has called for national leadership from the Commonwealth in ratifying the Kyoto Protocol and establishing a national emissions trading scheme. But the Commonwealth Government has so far refused to do either of these.

    The Commonwealth prefers to rely solely on subsidies to develop cleaner coal technologies in the hope that they can become competitive with ordinary coal technologies.

    We support efforts to research, develop and demonstrate greenhouse-friendly technologies. But the key to making sure this happens in a sustainable way is through a clear market signal.

    Without such a signal these new technologies may not be developed in a fully commercial manner and will almost certainly not be deployed.

    Ironically, the Prime Minister supports a market signal to reduce water use, but opposes a market signal for reducing greenhouse gas emissions.

    But this Government has not used the lack of leadership by the Commonwealth to avoid taking action here in New South Wales—instead we have taken the lead in designing a national emissions trading scheme with all other State and Territory Governments.

    The Commonwealth Government has been invited to join our National Emissions Trading Taskforce at any time, but to date has declined to do so.

    In August of this year, Premiers and First Ministers released a Discussion Paper on a "Possible Design for a National Greenhouse Gas Emissions Trading Scheme". A national scheme could start as soon as 2010 if State and Territory Governments agree to proceed with it.

    The Government is keen to maintain the incentive to invest in low emission generation and abatement projects until a National Emissions Trading Scheme is established.

    Unless Honourable Members pass this Bill, the New South Wales Greenhouse Gas Abatement Scheme would end in 2012, leaving business without the certainty they need to invest now in an environmentally responsible way.

    Many projects encouraged by the Greenhouse Gas Abatement Scheme require significant capital investment, and investors will only receive a payback over a long period of time.

    Without a clear signal that carbon trading will continue beyond 2012, investment in environmentally friendly technologies under the Greenhouse Gas Abatement Scheme may dry up.

    For this reason, the Government decided to extend the Scheme until a national emissions trading scheme is established.

    This Bill extends the Scheme without major amendments. This is an interim measure to provide continuity for investors facing the uncertainty that the New South Wales Scheme may end before a National Emissions Trading Scheme begins.

    If it becomes clear that a National Emissions Trading Scheme is not going to be established or will be delayed indefinitely, the Government will conduct a wide-ranging review of the New South Wales Greenhouse Gas Abatement Scheme.

    The aim of such a review would be to ensure the extended Scheme continues to meet the Government policy objectives over a longer timeframe than currently anticipated. These objectives include a future transition to a National Emissions Trading Scheme.

    Because the New South Wales Scheme is already well-established, the cost of extending it is minimal, compared with ending it in 2012.

    I will briefly give an overview of the Greenhouse Gas Abatement Scheme.

    The objectives of the Scheme are to reduce greenhouse gas emissions associated with the production and use of electricity and to encourage participation in activities to offset the production of greenhouse gas emissions.

    The Scheme focuses mainly on the electricity sector. Electricity generation is the largest source of New South Wales's greenhouse gas emissions, accounting for 54 million tonnes or 35 per cent of New South Wales economy—wide emissions. Emissions from electricity are growing rapidly, while also offering significant opportunities for abatement.

    The scheme includes a penalty regime to create incentives for retailers and large customers to take actions to reduce greenhouse gases under the scheme.

    The scheme also creates the capacity for legal ownership of the greenhouse reductions. This property right is made possible through the creation of greenhouse gas abatement certificates.

    The scheme allows the owners of these certificates to trade them so they can earn revenue to cover their costs and earn a reasonable return.

    The scheme provides for the creation of abatement certificates from activities which offset emissions from electricity, including activities that result in reduced consumption of electricity, activities carried out by large electricity consumers to reduce on-site emissions not directly related to electricity consumption, and the capture of carbon from the atmosphere in forests.

    I now turn to the specifics of the Bill.

    The primary purpose of this Bill is to give effect to the decision to extend the Scheme.

    The Bill amends Part 8A of the Electricity Supply Act 1995 which creates the New South Wales Greenhouse Gas Abatement Scheme.

    The major provision in the Bill is to extend the operation of the New South Wales Greenhouse Gas Abatement Scheme from 2012 to 2021 and beyond or until a National Emissions Trading Scheme is established.

    It's important electricity retailers continue to have incentives to meeting their greenhouse gas targets under the scheme.

    That's why the penalty generally needs to be higher than the predicted costs of greenhouse gas abatement. If the penalty is not higher, electricity retailers may have an incentive to pay the penalty in lieu of funding actual greenhouse gas abatement.

    As a consequence of extending the Scheme, the Government has reviewed the penalty required to maintain the incentive to reduce emissions.

    The Bill increases the penalty from its current level of $11.50 to $15.50 in four equal steps of $1 each starting in 2010 and ending in 2013.

    The Bill also contains a consequential amendment to the Electricity Supply (General) Regulations 2001 to ensure that both the current and the new penalties will be adjusted correctly for inflation in accordance with movements in the consumer price index.

    The Government has an ongoing commitment to improving the efficiency, integrity and transparency of the Scheme. For this reason, the Government is taking this opportunity to make some minor adjustments to the Scheme's administration.

    The Scheme Administrator is required to keep a register of accredited abatement certificate providers and a register of Greenhouse Abatement Certificates. The Bill allows the Scheme Administrator to compile and make available consolidated information compiled from the registers.

    This will improve market transparency and corrects an anomaly that members of the public could compile and publish this type of information, but the Scheme Administrator could not. As Greenhouse Abatement Certificates cannot be registered until after they have been created, information compiled from the register will reflect past events, not current ones.

    Under the Act, people wishing to create Greenhouse Abatement Certificates apply for accreditation. The Scheme Administrator grants accreditation with conditions. A common condition is to prevent double counting of abatement under a mandatory scheme other than the New South Wales Greenhouse Gas Abatement Scheme.

    To maintain the integrity of the Scheme, the Bill expands this provision. It does so by providing the Scheme Administrator with broader discretion to prevent double-counting of abatement used for compliance with voluntary and non-government schemes, or in accordance with any other agreement, arrangement or undertaking.

    The Act currently does not have a clear process for accredited abatement certificate providers to apply to the Scheme Administrator to vary or revoke conditions of their accreditation as their projects grow or change. The Bill allows accredited abatement certificate providers to do this.

    This provision is similar to the existing provision for applying for accreditation, including the provision to allow charging of an application fee and the discretion to charge additional fees, on a cost recovery basis, for investigating complex applications. This will encourage careful consideration of requests for accreditation condition changes.

    The Act currently requires the Scheme's Compliance Regulator, the Independent Pricing and Regulatory Tribunal, to submit its Annual Report by the 30th of June each year.

    However, the accredited abatement certificate providers do not have to register Greenhouse Abatement Certificates until the 30th of June of the year following their creation.

    To assist fuller reporting of the Scheme's operation, the Bill changes the final date for submission of the annual report by the Compliance Regulator to the 31st of July each year.

    This Bill extends the New South Wales Greenhouse Gas Abatement Scheme without major amendment, while allowing the Governor to suspend the operation of the Scheme once a National Emissions Trading Scheme is established.

    The Bill provides the continuity that business needs to invest in greenhouse friendly projects. It continues this Government's track record in preparing the people and economy of New South Wales for a world increasingly acting to reduce its greenhouse gas emissions and to reduce the risks to society from global warming.

    I commend the Bill to the House.

    The Hon. DON HARWIN [5.07 p.m.]: I lead for the Opposition in debate on the Electricity Supply Amendment (Greenhouse Gas Abatement Scheme) Bill. While the Opposition will not oppose the bill, I note that yet again the Government has mismanaged the passage of legislation through the Parliament. In June 2005 the then Premier, the Hon. Bob Carr, committed the State Government to extending the Greenhouse Gas Abatement Scheme from its legislated end date of 2012 to 2020 and beyond on a rolling 15-year basis. Only now, approximately 16 months later, has legislation delivering that commitment finally emerged from the maelstrom of legislation that is being introduced in great volumes as the conclusion of the session approaches. After a delay of 16 months, last week the Government felt the need to urgently rush the legislation through the other place in less than 24 hours.

    The objective of the bill is to extend the Greenhouse Gas Abatement Scheme until such time as a national emissions scheme is implemented. In assessing the merit of trading schemes it is important to consider their cost, complexity and context. An honest and transparent disclosure of the costs and implications of the schemes must be included in any public debate. Similarly it must be understood that such trading schemes are not a comprehensive solution in themselves and that they must be integrated as part of a broader range of measures to reduce emissions.

    With a balanced consideration of cost, complexity and context the Commonwealth Government has chosen not to proceed with the national emissions trading scheme released at this time, although it remains open to the introduction of such a mechanism as global circumstances change. It is my view that a national scheme would probably be the most appropriate way to go when circumstances indicate that that should be so. In the energy white paper entitled "Securing Australia's Energy Future", released in June 2004, the Federal Government commented:

    Australia will not impose significant new economy-wide costs, such as emissions trading, in its greenhouse response at this stage. Such action is premature, in the absence of effective longer-term global action on climate change, and given Australia is on track to meet its Kyoto 108 per cent target. Pursuing this path in advance of an effective global response would harm Australia's competitiveness and growth with no certain climate change benefits.

    Should an effective global response be in prospect, the Government will consider least-cost approaches to constraining emissions. This consideration would encompass the possible introduction of market based measures (such as an emissions trading scheme) in the longer term, noting the potential for these to lead to a better resource allocation and provide industry and individuals with the greatest flexibility in determining how best to respond.

    The New South Wales Labor Government is yet to disclose what costs the New South Wales scheme will place on consumers. However, following a report on the cost to consumers of greenhouse abatement schemes issued in November last year by the Energy Retailers Association of Australia, I have some idea of the costs. The report estimates that the annual cost of electricity in the national electricity market will increase by between $707 million and $965 million per year by 2010 as a result of greenhouse gas emission abatement schemes. The report concludes that the largest average increase in prices for residential customers will be in New South Wales, with increases ranging from $41.86 to $56.10 on a total annual electricity bill of around $1,070 in 2010.

    The State Labor Government also makes little comment about the broader context of the scheme. That is probably because despite a great deal of noise, spin, colour and movement, it is actually delivering very little in results. On the issue of tackling greenhouse gas emissions the Government is failing to invest in new technologies, is demonstrating no clear leadership, and is bereft of long-term vision. What has happened to the State Government's commitment to produce an energy white paper? Bob Carr made a commitment to deliver such a paper more than 18 months ago, but as yet nothing has been produced. That is in contrast to the Federal Government, which produced a comprehensive plan for addressing greenhouse gas emissions in its energy white paper and has taken a very clear lead on many energy-related issues. The Commonwealth is showing strong leadership with a balanced understanding of both cost and context.

    The Federal Department of Environment and Heritage's Greenhouse Challenge Plus is an integrated scheme enabling Australian companies to form working partnerships with the Commonwealth to improve energy efficiency and reduce greenhouse gas emissions. Such partnerships work towards not only reducing emissions but also accelerating the uptake of energy efficiency, integrating greenhouse issues into business decision making, and providing more consistent and accurate reporting of gas emission levels. The Federal Government also runs a scheme designed to promote and encourage the commercialisation of renewable energy as well as another for greenhouse gas abatement for large projects. The Commonwealth also engages with important global partners such as the United States of America, China and Japan in the Asia Pacific Partnership on Clean Development and Climate.

    Investment is another crucial element in any comprehensive approach to the issue of greenhouse gas emissions. It is another area in which this State Government is lagging behind the Commonwealth and other State jurisdictions. The Federal Government is supporting the development of clean coal technologies through projects such as COAL21, and the Victorian Government is spending $83 million on researching geosequestration, recognising the potential contribution such an approach to the issue could make. Frustratingly, the Iemma-Costa Government is making no such investments in the development of new technologies in New South Wales. It has failed also to provide backing to the proponents of wind farms and other renewable energy projects. The renewable energy certificates available as part of the Federal Government's Mandatory Renewable Energy Target Scheme have been used up—in other States.

    Almost 40 per cent of greenhouse gas emissions produced in New South Wales comes from power generation. A 1,000 megawatt coal-powered fire station produces more than four million tonnes of carbon dioxide equivalent each year, equal to the exhaust emissions from more than a million motor vehicles. It is time the State Government addressed this issue seriously with a detailed, comprehensive plan. Of course, if the State Government were really serious about effectively and meaningfully reducing greenhouse gas emissions, it would not pursue water supply management strategies for Sydney that require enormous amounts of electricity and thus more emissions. Unwilling to pursue environmentally responsible solutions to our State's water crisis, such as large-scale recycling and stormwater harvesting, the Iemma-Costa Government insists on pumping vast quantities of water from the Shoalhaven. That approach to the situation not only damages the ecology of the river but also requires significant amounts of electricity to power the pumping of water from the Tallowa Dam on the floor of the Kangaroo Valley to a height of more than 300 metres up the mountain to Fitzroy Falls.

    The production of such electricity, as I have said, is the major cause of greenhouse gas emissions in New South Wales. The much touted desalination plant, which has been shelved but not ruled out, would make even greater demands on our energy supply. I ask honourable members to bear in mind that the proposed new regime of Shoalhaven water transfers, outlined in the discussion paper, would consume almost as much electricity and produce also as much greenhouse gas emissions as would a desalination plant because of the vast electricity cost of pumping water from Fitzroy Falls to Avon Dam.

    It is extremely difficult to take seriously the State Government's rhetoric about reducing greenhouse gas emissions when at the same time its solutions to the water crisis demand more electricity—because, in turn, that would inevitably result in more emissions. That is a clear demonstration of a government that does not have a comprehensive, integrated and internally consistent plan for the management of the State. An effective and practical way of addressing greenhouse gas emissions is through a reduced dependence on fossil fuels and the adoption of alternatives, particularly biofuels. The Federal Government and the State Opposition have been advocates for biofuels for a long time and I particularly acknowledge the strong leadership of Peter Debnam and Andrew Stoner.

    The Coalition long ago recognised the benefits of ethanol and has actively encouraged its adoption on many occasions, often without the support of the State Government. Ethanol reduces vehicle emissions, and it burns cleanly. When blended with fuel it dramatically reduces pollutant levels. A renewable resource, ethanol consumption also offers economic as well as environmental benefits. Fixed supply agreements provide growers with alternative and stable incomes and allow for the diversification of the regional industry base.

    The Coalition recently made a commitment to expand ethanol usage to 10 per cent by 2011 through a strong marketing plan in co-operation with key industry groups and an upgrading of production and distribution infrastructure. The Leader of the Liberal Party, Peter Debnam, in his address to the NRMA Motoring and Services Alternative Fuels Summit, described ethanol as:

    … a win-win for motorists, farmers and the community in New South Wales, where we have the worst air pollution in Australia and the highest cost burden on every family.

    He explained that:

    … greater use of ethanol-blended fuel would provide a more secure income for our farmers, decrease our reliance on imported petroleum products, result in lower fuel prices for motorists, create jobs in regional areas and reduce cancer-causing pollution.

    It is a shame that the State Labor Government is not taking such a firm leadership position on the role that alternative fuels can play in the reduction of greenhouse gas emissions. I note that in recent weeks the private sector is seizing the initiative. In late September BP negotiated a deal with the Manildra company to provide three million litres of ethanol over the 12 months from 1 November. In announcing the deal the company cited the Federal Government's 2010 national biofuels target as a major incentive. BP is hoping to surpass the target by at least one year. Around the same time Holden Australia announced it would be attaching ethanol-friendly labelling to all its new cars while the Manildra group launched an education campaign on the benefits of ethanol.

    It is a shame that the State Government is not undertaking such an education campaign, or that it is not taking more positive action to accelerate the adoption of ethanol. For example, incentives to ensure the availability of E10 in more service stations across the State would be welcome. The Coalition's action plan sets a target of 500 service stations selling E10 by 2011. The absence of investment and leadership by the State Government stands in sharp contrast to the positive relationship at a Federal level. It is a terrific example of the way in which government and industry can co-operate in the development of new technologies that contribute to the meaningful reduction of greenhouse gas emissions.

    Manildra, located at Bomaderry near Nowra on the State's South Coast, is the largest industrial user and processor of Australian wheat for industrial and food purposes. In 2000 the group was successful in securing a grant of $1 million from the Federal Government under the Renewable Energy Commercialisation Program for the commercial demonstration of technologies with the capacity to deliver major reductions in energy use and produce greater cost efficiencies. As part of its management of the high volumes of effluent starch waste, Manildra successfully designed, developed and commissioned the most advanced starch-based ethanol distillery in the world. By integrating ethanol production operations into its processes, Manildra has been able to reduce the cost of producing a litre of ethanol by approximately 26 per cent.

    The plant at Bomaderry is a fantastic example of a cost-effective, world-class technology development that can result from investment in research and development by a government-industry partnership. I know how much Federal member Joanna Gash and State member Shelley Hancock have put into the success of that partnership and how much they have worked to increase the awareness of the benefits of ethanol to both the general public and industry. I pay tribute to both of them. I also pay tribute to Manildra, a great corporate citizen in the Shoalhaven, and congratulate it on its biofuels leadership, which ultimately is in Australia's national interest.

    As I said at the outset, the effective reduction of greenhouse gas emissions relies on a sound understanding of both cost and context. The Federal Government has developed a plan that is balanced and comprehensive, but the State Government is yet to show the same leadership, particularly in investment. The Coalition does not oppose the extension of the State's Greenhouse Gas Abatement Scheme, although it believes that its results are limited, and it is concerned that the actual economic costs of the program to consumers are yet to be disclosed. The Coalition does not oppose the bill but notes that it is long past time that the State Government developed a sophisticated, integrated and cost-effective approach to greenhouse gas emissions. The Coalition will not support amendments to a less than perfect bill; it will legislate for a better approach in government.

    Reverend the Hon. Dr GORDON MOYES [5.24 p.m.]: On behalf of the Christian Democratic Party I speak to the Electricity Supply Amendment (Greenhouse Gas Abatement Scheme) Bill, which amends the Electricity Supply Act 20002 to extend the duration of the New South Wales Greenhouse Gas Abatement Scheme from 2012 to 2021 and to introduce steeper financial penalties for violations from the current level of $11.50 to $15.50 per tonne of carbon dioxide, adjusted regularly for the consumer price index over four equal rises. I wholeheartedly commend those purposes.

    The bill seeks to extend the duration of the New South Wales Greenhouse Gas Abatement Scheme from 2012 to 2021. The bill addresses carbon emissions produced mainly by electricity generators, retailers and other large electricity traders who are all called benchmark participants. Approximately 40 per cent of the greenhouse gases emitted in our State originate from these sources. These benchmark participants have set greenhouse gas emission benchmarks under the Electricity Supply Act 2002, for which financial penalties apply, if and when these targets are exceeded. The Christian Democratic Party approves of these increased financial penalties to give economic disincentives to companies that generate high-emitting electricity. The bill, however, does not reduce the overall emission target for the electricity sector, which in reality has undergone rapid growth in recent years. The continuing target of the Greenhouse Gas Abatement Scheme is set at 5 per cent below the emissions that were emitted in 1990. That target has not yet been reached. By 2007 it is expected by the Environment Liaison Office to be exceeded by eight million tonnes, or the equivalent of 1.3 million vehicles.

    The fact behind the spin is that emissions continue to rise on the back of an incredible boom in the sector, mainly powered by brand new coal-fired plants. These questions need to be asked: When, if ever, will the Government achieve the set overall emissions target? Does the Government have a year in mind when that goal will be achieved? Will it be 2015, 2025 or 2035? And when will it occur? I suspect, because of this Government's commitment to perpetuating coal-fired power, we will not see any abatement in emission levels for a long time—certainly not in my lifetime. New coal-fired power plants continue to be planned and to be built, each with a lifespan of decades.

    Unfortunately, from my point of view—the view of someone who is committed and who acknowledges the reality of climate change—the Government's greenhouse policy is like the Roman God Janus: remarkably two-faced. The first, green, face heralds the Government's Greenhouse Gas Abatement Scheme. However, simultaneously, the opposing second face is covered in grubby black soot, with its commitment to polluting coal-fired power as opposed to nuclear or other zero emissions technologies such as solar or wind. Today in question time the Minister for Mineral Resources, the Hon. Ian Macdonald, lauded the Government's record in developing the coal industry. He proudly told the Chamber that coal exploration had doubled in New South Wales in the past six months, and he referred to the importance of further increasing the mining of coal.

    Can the Government claim that it is tackling emissions when, to cite just one example, the Moolarben coal project is going ahead in the Mudgee region, which includes one underground mine and three open cut mines, and which will excavate 127 million tonnes of coal? That amount of coal will put approximately 330 million tonnes of carbon dioxide into the atmosphere. If that were not enough, the exploration licence granted by the Government allows the mines to have their very own purpose-built coal-fired power station, which in itself would put 382 million kilograms of carbon dioxide into the atmosphere. The mine itself and the coal that it produces for the world will continue to produce emissions for a period longer than the four to 22 years that the mine will be operational.

    The Government's attitude appears to be the attitude adopted by the Victorian Government many years ago. The then Premier, Henry Bolte, when asked about the enormous amount of pollution being put into the air through the brown coal electricity producing stations in Yallourn, made the remarkable comment, "Don't worry about this kind of atmospheric pollution, it will all blow away." Perhaps the Government thinks it can maintain its green image if it increases the mining and exporting of coal to the world. As long as that coal is not burnt on its back doorstep, it will just blow away. This discreetly ignores the fact that our home-grown coal burnt here, in China, in India, or anywhere else for that matter, contributes just the same as it would to the very nature of the global problem. Morris Iemma is intent on following Peter Beattie in this regard because they both realise the dollar value in their coal reserves on the international market. However, the difference is that Peter Beattie does not pretend to be a greenie on climate change.

    The goalposts have changed. The debate is no longer about whether climate change is occurring; everyone has agreed that it is. Coal producers have admitted as much, as have the oil companies and the countries that have not signed the Kyoto agreement, including Australia and the United States of America. Hence, it is no longer good enough simply to acknowledge that climate change is real and think that makes one "green". The debate is now about how severe climate change will be, how soon its consequences will be felt and what exactly governments should do to respond to it. When it comes to the fine print, this Government continues the green spin while daily taking decisions that perpetuate New South Wales's booming greenhouse gas emissions for the next two generations.

    The Christian Democratic Party supports the bill because we believe in continuing the Government's Greenhouse Gas Abatement Scheme that was initiated in 2002 and because we believe the scheme is prudent in the light of climate change and to reduce our reliance on coal-fired power. However, our support for the bill certainly should not be interpreted as approval of the Government's two-faced record on climate change or support for greenhouse gas emitting, coal-fired power.

    The Hon. Dr ARTHUR CHESTERFIELD-EVANS [5.30 p.m.]: The Electricity Supply Amendment (Greenhouse Gas Abatement Scheme) Bill addresses an important issue that the Australian Democrats take very seriously. We believe we must do everything we can to solve the problem of global warming. We are seeing it happen right now. More frequent and extreme weather patterns, melting polar ice caps, moving ice masses in Greenland and rising sea temperatures are realities. We are currently experiencing the worst drought on record. Those who have visited country New South Wales will appreciate the problems that the drought is causing in this State.

    The earth's surface temperature rose 0.6 degrees centigrade during the twentieth century and scientists expect the average global temperature to increase by an additional two to six degrees in the next 100 years. This will mean disaster for humanity, a loss of plant and animal species, failed crops, rising sea levels and scarce water resources. It is difficult to believe the many tonnes of coal and the billions of barrels of oil—which were created over thousands of years—that are being expended so rapidly would make no difference to the world's ecosystem. The idea that that huge release of carbon would have no effect is almost absurd. Yet there are those who persist in believing that is the case and who, for venal reasons, attempt to perpetuate that belief.

    If ever there were an absolute nonsense idea, the sequestration of carbon dioxide is it. Everyone knows that carbon dioxide in water fizzes out as soon as the pressure is released. It is also a fact that carbon dioxide in water disassociates to carbonic acid—HC03 plus H+—and that acidic change affects PH levels or may come out of the solution later. The idea that simply pumping it underground to make it go away is a nonsense. That would be admitted immediately were the process not favoured by the coal industry, which has enormous political power. I will draw an analogy with tobacco. Tobacco smoking killed thousands of people but the tobacco companies responded by calling for more research as a delaying tactic. That is what is happening with greenhouse gas emissions.

    The tobacco industry's liars for hire developed public disinformation into an art form. The lessons learned from the tobacco lobby about running disinformation campaigns are evident in all areas of political life—which is why I return continually to this subject. Politicians have learned simply to deny what is obviously true and then claim that the issue is controversial, that no conclusion about it has been reached and that therefore the situation is uncertain. In that manner that which is true becomes, through the transmogrification of a bare-faced lie, untrue or controversial. I think the arguments about carbon dioxide and sequestration are now so far fetched that they rival the stories circulated by the tobacco industry.

    Most scientists conclude that the evidence is getting stronger and that most of the global warming that has occurred in the past 50 years is attributable to human activity, such as burning fossil fuels and the corresponding deforestation, which caused emissions of carbon dioxide and other greenhouse gases. The groundbreaking CSIRO report commissioned by the Department of Immigration and Multicultural and Indigenous Affairs entitled "Future Dilemmas" reveals that we are consuming energy at unsustainable levels. It is widely acknowledged that electricity generation accounts for a large chunk of Australia's greenhouse gas emissions at 33 per cent of the total output. Some 96 per cent of our energy comes from coal and only 4 per cent from other sources, including renewable sources.

    I buy clean energy—and pay more for the privilege in my electricity bill—and I have noted with some discouragement that about 72 per cent or 78 per cent of all clean energy comes from burned forest floor waste, not renewable sources. Renewable sources include hydroelectricity, and I always wonder what volume of water was pumped in the middle of the night by carbon-fired systems. But I gather that the electricity generators may count hydroelectricity in only one part of the system.

    I am also interested in demand management. I live in a flat that is identical to the flat on the floor above me. We have the same electrical and hot water systems. I was interested to find that simply by turning off the electric booster on my solar heater—it is not required for about 90 per cent of the year—and changing my light bulbs to energy-efficient globes I used half the electricity consumed by my neighbour. Identical households can halve their energy usage simply by turning off the hot water booster, using the airconditioner less and installing energy-efficient light bulbs. That says something about the importance of human behaviour—certainly in the domestic sphere in New South Wales—and the possibilities of education about energy conservation.

    The greenhouse gas abatement scheme was established to reduce greenhouse gas emissions associated with the production and use of electricity. The scheme focused mainly on the electricity sector. Electricity generation is the largest source of greenhouse gas emissions in New South Wales, accounting for 54 million tonnes, or 35 per cent, of the State's economy-wide emissions. Indeed, it should be noted that when the legislation was introduced in 1999 and was subsequently amended in 2002 I moved a number of amendments designed to strengthen the bills and to introduce a levy. The Government was most reluctant to introduce a levy—and indeed did not do so for some years. The scheme is meant to encourage participation in activities intended to offset the production of greenhouse gases and enforce a penalty regime designed to create incentives for retailers and large customers to take action to reduce greenhouse gas emissions. In July 2006 the Australian Bureau of Agricultural and Research Economics [ABARE] released a report about climate change technology. In the report ABARE noted:

    Although the introduction of energy efficient and cleaner technologies reduces growth in emissions, global greenhouse gas emissions continue to rise throughout the projection period under each of the enhanced technology scenarios.

    It was referring to the enhanced technology scenarios that ABARE examined in the report. In its reference case global greenhouse gas emissions were predicted to increase by about 76 per cent in the period 2001 to 2030, from approximately 9.4 Gt C-e—gigatonnes carbon-equivalent—in 2001 to 16.6 Gt C-e in 2030. By 2050 global greenhouse gas emissions are predicted to reach about 22.7 Gt C-e. However, Australia is currently enjoying the financial benefits of the resources boom—particularly in Western Australia and Queensland—of which coalmining is obviously an important part. Earnings from Australia's commodity exports are forecast to rise by 14 per cent to $140 billion in 2006-07 according to the September issue of the ABARE Australian commodities report.

    The value of Australia's mineral and energy exports is forecast to be approximately $108 billion in 2004-05, a rise of 18 per cent from $92 billion in 2005-06. Coking coal is the biggest export earner, increasing 59 per cent from $6,318 million in 2005 to $17,076 million in June 2006. But the State Government keeps nudging to build new coal-fired power stations, with recent announcements of major coal exports to China, and BHP Billiton if pushing hard to expand its coalmining operations under the Nepean River.

    It might be noted that involves a lot of longwall mining, which, effectively, is a wall that moves along underground as the roof of the mine collapses behind it. It is as if there is a total extraction. As the overburden—that is the rock and soil between the mine and the sky—falls behind the mining wall, cracks occur all the way from the mine to the surface. Water from the surface will go down through those cracks to the level of the mine. Effectively all the layers of the aquifers that were strata-ed like a layered cake are broken as if someone had made numerous vertical cuts of the cake.

    Generally those aquifers are very important for flows of water. The whole lot is destroyed with longwall mining and becomes one layer down to the level of the mine stratum. Potentially that could mean the river and all its surface water disappear to a new level. The levels of water in most land systems are analogous to a sponge. A sponge can be tipped and water does not immediately fall, but lags. If the area is cut all the way down it will pool at the lowest point, which means that the higher ground has no water and will be turned into a desert. That is the trade-off between our coalmining and our long-term sustainable agriculture in many areas. The fight over water rights and accessibility, particularly in the blacksoil plains near Gunnedah—some of our most productive lands—are totally threatened by longwall mining because of cracks from the surface to the mine level.

    A huge open-cut hole, such as in the Anvil Hill development in the Hunter Valley, cuts through all the layers of all the aquifers and the water flows to the central point. Indeed, I am told that cutting through strata for mining at the Mangrove Mountain area west of Gosford will wreck the water tables. Honourable members have to ask what the effect will be on the land from which the coal is extracted. Shareholders in BHP Billiton or other big mining companies can happily look at their dividends and see their share price increasing—and thank all those hardworking Chinese! However, if they want to look at our country's long-term interest they have to look again. This country has technology, particularly developing solar cells and solar hot water systems, but it is squandering its technological advantage by putting its money into coal loaders and putting its agricultural industries at risk for a quick buck. We must think beyond all the money we make from coal exports.

    It would seem, with this Government's imminent approval of the Anvil Hill mine, and its general cargo-cult mentality of everything for the future and no insistence on higher targets, that at one level it has introduced this legislation and at another it is selling as much coal as it can. The support of John Howard for nuclear energy is also very disturbing. I am amazed that the media has not expressed more outrage at some quick energy results in a half-life of the tailings and waste of 240,000 years.

    The bill amends part 8A of the Electricity Supply Act 1995 extending the operation of the New South Wales Greenhouse Gas Abatement Scheme from 2012 to 2021, or until a national emissions trading scheme is established before 2021. With the Federal Government's stance on Kyoto, it may be that nothing will happen before 2021. Hopefully the Howard Government will fall soon and there will be a more enlightened policy in Canberra. In his second reading speech in the Legislative Assembly Joe Tripodi said that without this bill the New South Wales Greenhouse Gas Abatement Scheme would end in 2012, leaving business without the certainty it needs to invest. He stated:

    Many projects encouraged by the Greenhouse Gas Abatement Scheme require significant capital investment, and investors will only receive a payback over a long period of time. Without a clear signal that carbon trading will continue beyond 2012, investment in environmentally friendly technologies under the Greenhouse Gas Abatement Scheme may dry up.

    The Government has reviewed the penalty required to maintain the incentive to reduce emissions from electricity retailers, and will increase the penalty from its current level of $11-50 to $15-50 per tonne of carbon dioxide in four equal steps of $1 each, starting in 2010 and ending in 2013. I suspect that those penalties have not been collected and that supposedly modest targets have been set and agreed, within which it is an incentive to stay. The bill also contains a consequential amendment to the Electricity Supply (General) Regulations 2001 to ensure that both the current and new penalties will be adjusted correctly for inflation in accordance with movements in the consumer price index. In the Legislative Assembly Joe Tripodi said:

    The New South Wales Government has called for national leadership from the Commonwealth in ratifying the Kyoto Protocol and establishing a national emissions trading scheme.

    That is fine, but on the other hand the Commonwealth Government has refused to do so and this Government, with its coal exports and lack of mandatory support for things like solar power, is trying to play both sides of the equation. Certainly the damage that will be caused by excessive exportation of coal will far outweigh the good that will result from acceptance of this bill. The scheme administrator is required to keep a register of accredited abatement certificate providers and a register of greenhouse abatement certificates. I would like a reassurance from the Minister in reply that the problem of multiple registration of abatement certificates has been solved, but I wonder whether I will get it. The bill will also allow the scheme administrator to make available consolidated information compiled from the registers. The Minister said:

    This will improve market transparency and correct an anomaly whereby members of the public could compile and publish this type of information but the Scheme Administrator could not. As greenhouse abatement certificates cannot be registered until after they have been created, information compiled from the register will reflect past events, not current ones.

    As far back as 2000 I argued that reporting transparency is lacking and the lack of publicly available data often makes it difficult to assess how a particular project created New South Wales greenhouse abatement certificates, and the likelihood that the underlying emission reduction activity was additional. I raised this issue with a former Minister for Utilities, Kim Yeadon, and with Treasury in 2000. In 2005, during debate on a similar bill, I referred to research by the University of New South Wales Centre for Energy and Environmental Markets, which produced an analysis of the New South Wales Gas Abatement Scheme Certificate Registry for the 2003 compliance period. The key findings of this impressive think tank, comprising the Faculty of Engineering, the Faculty of Commerce and Economics, and the Australian Graduates School of Management, were that most 2003 New South Wales Greenhouse Abatement Certificate [NGACs] came from just a few types of projects.

    First, waste coalmine gas and landfill gas projects were the main sources of New South Wales greenhouse gas abatement certificates for 2003, registering just over two-thirds of the total between them. Together with natural gas-fired plant they made up just under 84 per cent of the total, and these three with coal-fired plants made up just under 92 per cent of the total. Second, project accreditations for 2004 included more waste coalmine gas, landfill, demand site abatement, bagasse and fossil-fuel power stations as well as two new activities—sequestration projects and large user abatement certificates. Third, just over 40 per cent of the 2003 abatement certificates were from projects located outside New South Wales. Effectively, this means New South Wales taxpayers were subsidising abatements in other States. It goes on:

    The analysis also found that there is a high level of market concentration. A single participant, Integral Energy, created almost half, or 46 per cent, of 2003 New South Wales greenhouse gas abatement certificates, and, together with Energy Development Ltd, 17 per cent, and AGL, 8.5 per cent, created over 70 per cent. The Herfindahl-Hirschman Index [HHI], a metric measure used to quantify market concentration, for the supply side of the New South Wales Greenhouse Gas Abatement Scheme in 2003 was around 2,540.

    Indicatively, a market where the HHI exceeds approximately 1,800 may be considered highly concentrated, with the implication that the assumptions of a competitive market may be violated.

    The Government also has moved amendments in this bill preventing the double counting of abatement certificates. This is an issue I have asked the Government to address in this Chamber on numerous occasions. Each time the Government has fobbed me off. I am asking it again, as I did earlier in this speech. I quote again:

    Renewable energy certificates created through the Australian Government's mandatory renewable energy target can be used to meet participants' liabilities under the New South Wales Greenhouse Gas Abatement Scheme. These are created using low emission generation plant.

    However, the Total Environment Centre has noted that low emission generation that creates renewable energy certificates under the MRET would occur regardless of the New South Wales scheme.

    The ability for renewable energy certificates to be used as New South Wales greenhouse abatement certificates effectively results in double counting and overblown claims by the scheme. In 2003, 544,518 of the RECs [renewable energy certificates] generated for electricity sold in New South Wales were converted into 488,432 NGACs. They made up 28.5 per cent of total NGACs surrendered in 2003. This is equivalent to one-quarter of the scheme free-riding on the MRET scheme.

    The Total Environment Centre proposes that RECs be excluded entirely from the New South Wales Greenhouse Gas Abatement Scheme to avoid any double counting and to increase the real level of abatement achieved by the scheme. With regard to limiting abatement certificate creation to New South Wales, a significant proportion of NGACs are currently created outside of New South Wales and stop the wide area in which NGACs can be created, releasing pressure for abatement beyond business as usual. As a result, the New South Wales Greenhouse Gas Abatement Scheme may not help in reducing greenhouse emissions over the long term by failing to go ahead with significant abatement activities now.

    The Environmental Liaison Office claims the Greenhouse Gas Abatement Scheme has actually prevented New South Wales from achieving 5 per cent below the 1990 emissions target, and that without changing this target, emissions will exceed the target by 8 million tonnes, which is the equivalent of 1.3 million cars. The Environmental Liaison Office proposed that a new emissions target should be set by this bill at 20 per cent below 1990 levels, and that the new target should to be achieved by 2020. I refer to the Total Environment Centre and the Nature Conservation Council submission on extending the New South Wales Greenhouse Gas Abatement Scheme Draft Policy Paper dated the 28 September 2006:

    1. The Target

    The draft policy paper describes a minimalist position with no legislated review of the target or new target and only some minor amendments in relation to fees and release of aggregated information. This is not an appropriate response to the alarming situation of rapidly increasing C02 emissions.

    The draft policy paper argues that in view of the current discussion about a NETS it is too complicated to review the GGAS target and that this would create uncertainty for the investment and electricity industry. It suggests that once the future development of NETS is clear, or if it becomes clear that NETS is not occurring before 2012, work could then begin on a GGAS target for post 2012. This is, in fact, a recipe for more delay and increased business uncertainty.

    It is our view that the target needs to be reviewed urgently or GGAS will not deliver the promised reduction in electricity sector emissions. The consultation document itself shows emissions from the electricity sector rising from 2007 with the scheme as it stands. Electricity sector emissions are already 32 per cent higher than in 1990, and consumption is rising at just under 3 per cent per year.

    Environment groups believe that a target to reduce emissions to 80 per cent of 1990 levels should be set for 2020. This target is seen as a key step in achieving the New South Wales Government's 2050 target. It is vital that this is in place sooner rather than later, so that industry can adjust investment plans and implement abatement to allow a smooth economic transition.

    Tougher GGAS targets in line with the 2020 target will mean that the electricity sector will be on track to reduce emissions should NETS be implemented. Deferring increasing the GGAS target until after the NETS process runs out of steam means that the period of uncertainty is extended, and the eventual abatement task becomes more difficult as emissions have been allowed to rise in the interim. A parallel process is required to avoid delays while the NETS is sorted out (with no doubt a further transition period).

    The current per capita target is about to enter a phase where total electricity sector emissions are expected to rise and keep rising. While GGAS may have achieved some measure of CO2 reductions in previous years, it will lose all credibility if total sector emissions are increasing. This situation also indicates the need to move to an absolute target, rather than per capita.

    2. Renewable Energy Target

    GGAS should be part of a suite of greenhouse programs, including a renewable energy target. The renewables industry needs a degree of support at this stage in order for it to provide the zero emissions generation that will be required to meet the longer term targets, at an economic level.

    Provided technologies are implemented at scale, we can expect costs to fall to equal fossil fuels in the next ten to fifteen years. This will allow clean energy to replace high emission generation capacity as it reaches retirement age. Without the appropriate policy settings, New South Wales will lose its renewable energy industry, and the transition needed will become much more costly.

    The government cannot claim credit for taking action on climate change and electricity industry emissions during the debate on the GGAS reforms and in the run up to the State Election, unless it provides the means to transition New South Wales to a clean low carbon energy supply. It cannot rely solely on GGAS, even an improved scheme. A renewable energy target should be announced concurrent with the reform of GGAS. We note that NETS also assumes that such programs will continue to operate.

    3. Penalty

    The penalty should be increased preferably to $40 a tonne (the level of the Renewable Energy Certificate penalty), perhaps at $5 per year. This would allow a gradual transition to a realistic carbon price that would support clean energy technologies. The effect of this is to reverse the current situation where the market price for abatement is frequently above the penalty, thus making payment of a fine cheaper than obtaining the essential environmental outcomes.

    4. Additionality

    Sunset clause
    A number of projects were grandfathered when the voluntary abatement scheme became mandatory, so that pre-existing abatement schemes contribute a very substantial amount of the abatement required under GGAS. While it may have been appropriate to reward early movers under the voluntary scheme to some extent, there needs to be a sunset clause to ensure that the scheme actually results in tangible additional abatement. We suggest the sunset date should be set at 2010, which would have provided 8 years of benefit. The effect would be to ensure additional abatement measures and give the market 4 years notice.

    Mandatory requirements
    At present there is little to ensure that NGACs are only created when additional abatement occurs. GGAS rules should be amended to ensure additionality occurs, and to ensure transparent verification of new abatement. For example, methane reduction activities limited under licence requirements should not be allowed to create NGACs. This is particularly important because the scheme is a forerunner to NETS.

    5. Physical Emissions

    The measure of GGAS success must be whether it reduces emissions from the New South Wales electricity sector. At present reporting from the scheme does not include physical emissions from electricity consumption within the State. We have a situation where emissions may rise significantly, even discounting effects from the population base increasing, even while the scheme requirements are being met. As the electricity sector is the most significant contributor to New South Wales emissions, it is important that the GGAS scheme actually delivers electricity sector emissions reductions.

    In July 2006 the Australian Bureau for Agricultural Resource Economics stated in a report on technology on climate change:

    Greenhouse gas emissions are expected to increase substantially by mid-century, given projected increases in global population and economic activity and continued reliance on fossil fuels to meet energy demands.

    To be environmentally effective, any policy framework that aims to address climate change must involve major emitters, that includes polices by the rapidly growing developing countries. However, for most developing countries, climate change is not a primary concern given their more immediate concerns about poverty alleviation and economic development. As such, engaging developing countries on the climate issue is politically challenging and must be undertaken in the context of recognising the importance of developmental goals while simultaneously encouraging reductions in emissions. Technological development will be crucial to achieving significant mitigation in emissions growth while simultaneously allowing countries to pursue improvements in energy security and attain their economic and social development goals.

    However, the development and uptake of low emissions technologies is associated with several cost and non-cost barriers, including high capital costs, pricing inefficiencies, lack of subsidiary markets and free-riding issues. Massive deployment of low and near zero emissions technologies would be required, greatly exceeding the degree of technological deployment considered currently. With the amount of money being made from the current resource boom, I doubt the commitment of any government to sacrifice short material gain to save us all from the long-term pain of global warming. While this bill is to be supported, I must say that I think it is a lot of huffing and puffing for not as much environmental benefit as we might have hoped for.

    We really need a continuing and better-thought-out commitment to demand management in electricity, zero emission and sustainable electricity generation, as well as a commitment to transport objectives and policies that will reduce greenhouse gas emissions. I regard that as extremely important. It involves both fast rail and heavy rail to take trucks off the roads, and it involves wind power, solar power, perhaps even tidal power. Indeed, it requires a much different approach from that which this Government has taken. At the moment the Government is attempting to play both sides of the fence, approving large coalmines and small greenhouse gas abatement schemes.

    The Hon. JON JENKINS [6.01 p.m.]: I have listened to the debate with some interest because I have a long-standing interest in climate change. Before I commence my contribution, I want to correct a couple of inaccuracies. Some speakers have said that Australia is in drought. Australia is not in drought. If one were to go to the Bureau of Meteorology web site, one would see the 10-year anomalies for rainfall. The south-east corner of Australia is in drought, a terrible drought; parts of New South Wales have received grossly less than normal rainfall. But the vast majority of Australia is not in drought. In fact, Western Australia was caught out in a recent article in the Sydney Morning Herald. The vast majority of Australia has had either average or above average rainfall and it is only the south-east corner of our country that is in the grips of this terrible drought.

    Reference has been made to the use of alternative sources of energy in our homes—solar hot water, long-lasting light bulbs and those sorts of things. In my view, one stumbling block to progress is the lack of government regulation in encouraging people to make their own houses as efficient as possible. I have often referred in this House to the fact that there are no regulations requiring the efficient design of houses and the use of proper installation, solar hot water and the like.

    I commence by saying that some members may find some of my comments controversial, but political decisions based on the scientific theory of greenhouse gas and its effects on global warming will have long-term effects on the economy and the energy industry. Various groups, for political ends, have hijacked the debate concerning global climate change and the naturally occurring phenomena of climate change. A debate on climate change is important because governments are making decisions founded on assumptions based on the validity of one theory. Those policies will have long-range economic, political and financial implications. The climate change lobby deliberately confuses the difference between believing in climate change and believing in the cause of climate change. They class people who have some doubts about the anthropogenic nature of climate change as climate change sceptics. Let me put it on the record: climate change has always happened, climate change is happening and climate change will continue to happen in the future, regardless of human interference.

    A few thousand years ago, the place where we are standing now would have been under the ocean. I do not know how much above sea level we are, but the ocean was 20 or 30 metres higher than it currently is and the seashore would have been somewhere around Parramatta. A few thousand years before that, Aborigines would have hunted kangaroo on the Great Barrier Reef, which would have been a sandy plain beside the sea. Places such as New York were under several kilometres of ice. Climate change is a naturally occurring event and it will continue to happen regardless of what we do. There is a deliberate campaign of misinformation. Our whole civilisation of the last 2000 years has occurred in a very recent period of earth's existence. When human civilisation evolved in the Nile delta, the area was a rainforest; it is now a desert. Climate change has occurred naturally and will continue to occur, and the misinformation that we can somehow prevent climate change is just bull!

    One third of all Australian greenhouse gas emissions come from electricity production, most of it from burning coal. Coal is cheap and will remain in supply even after oil and gas supplies are depleted in approximately 100 years. Anyone can do a back-of-the-envelope calculation of our current oil usage and our known reserves. No doubt other members of this House have received some of these silly emails about how long oil reserves will last. In around 50 to 100 years we will run out of oil. The United States of America power providers, and China, are amongst the international community expanding coal-fired power stations. Australia has not ratified the Kyoto Convention. However, Australia wants to appear to be working to meet the Kyoto target and is introducing policies to reduce greenhouse gases by approximately 60 per cent by the middle of this century as an economywide target, compared with 2000 levels.

    Investments in the energy sector will automatically be affected, bearing in mind the lead times for energy investment in baseline plant run for many tens of years. It takes a significant amount of time to develop environmental policies for power plants, and then to build the heavy infrastructure that is required. The uncertainty of climate change policy increases risk for investors and will cause delays in investment until a national policy is clearly defined. I suppose I am directing criticism at the Federal Government because we need a clear policy. But I understand the difficulty in determining a clear policy because some of the science underlying this is not certain. Companies that do not cut emissions sufficiently can buy a credit, and that will not resolve the issue of gas emissions. Whilst increasing the penalty for participants is a good idea, voluntary efforts and offset projects by companies should be given credit without excluding projects that began prior to the GGAS scheme, and those credits need to be well documented.

    The Australian Federal Government bases its climate change policy on advice from the United Nations Intergovernmental Panel on Climate Change [IPCC]. The IPCC is a political, not a scientific, organisation. In fact, the document often quoted as being the IPCC report is not the IPCC report at all; it is the summary made by politicians of a scientific report. Anyone who takes the time to read the scientific report of the IPCC will find that it bears little resemblance to the summary report that is quoted by politicians. The global warming lobby has prevailed, despite the fact that a large sector of the scientific community remains unconvinced that significant human-caused global climate change is happening.

    Some would say that the scientific debate on climate change is over, but that is simply not true. I will read the House some examples from the most recent climate change meeting in Stockholm, Sweden. Apart from a few exceptions, such as Jim Hansen, very few climatologists predict cataclysmic climate change. Rather, the media is confronted with an array of social engineers intent on using climate change as a tool to enact all sorts of social change. I digress a moment. I often quote the former Canadian Environment Minister—I think her name is Christine Milne—who is on the record as saying that it does not matter if the science of climate change is phoney, because it is the best way to achieve social justice and equity in the world. What a stunning statement, and unfortunately that is what a large part of the climate change debate is about.

    I will provide the House with a quick review of a report from the latest meeting of international climatologists in Stockholm. The meeting was held in September, which is literally just a month or so ago. The science discussed at the meeting did nothing to reinforce the apocalyptic climate message in presentations such as Mr Gore's film but, rather, mostly contradicted it. The 11 to 12 September meeting, "Climate Change—Scientific Controversies in Climate Variability", was held at Stockholm's Royal Institute of Technology [KTH], which is Sweden's leading science and technology university, and was hosted by the institute's president. Its very title tells us that the issue is not settled among scientists. An audience of approximately 120 people from 14 countries heard various accounts of climate-change science rather than disaster-movie scenarios.

    The conference's organiser, Professor Peter Stilbs, took care to invite a reasonably balanced range of speakers, including persons who argue that the key issue is adaptation to the dangers of natural climate change, including the threat of another ice age—which I will deal with later—and supporters of the view that dangerous human-caused warming is already upon us and that no expense should be spared in its mitigation. Those on the global warming anthropogenic side of the argument included Professor Bert Bolin, who is the first Chairman of the United Nations Intergovernmental Panel on Climate Change [IPCC]. As though to demonstrate the way that emotion has replaced logic and rationale, in an extraordinary outburst against a speaker who was discussing the carbon cycle, Professor Bolin suggested that the speaker might improve his knowledge if he consulted a textbook. Professor Bolin threatened to withdraw from the meeting. Happily, others who were present at the meeting were undeterred, and the meeting continued.

    Leading climate modellers Professor Hans von Storch and Professor Lennart Bengtsson described the attribution studies used by the IPCC to recognise the fingerprint of human-caused warming, but the computer models omitted certain climate forcings. Few at the meeting seemed convinced that they had significant predictive or attribution quality. The former research director of the Swedish Meteorological and Hydrological Institute, Professor Sten Bergstrom, described the many vicissitudes of recent natural climate changes in Sweden that have included the presence of a more than one kilometre thick covering of ice as recently as 20,000 years ago over much of the country. When commenting about the difficulty of distinguishing possible human-caused changes from natural variability, Professor Bergstrom's conclusion was that the main problem is adaptation to today's climate. His view resonated strongly with many who were in the audience.

    Many other feet-on-the-ground science results were discussed at the meeting—for example, the remarkable fact that global average temperature has been static since 1998, despite increasing carbon dioxide emissions. The realisation was not lost on many attendees that if current predictions are true, we cannot have static or falling temperatures. It was also noted that the short period of late twentieth century warming preceding this stasis, which was approximately 0.4 degrees Celsius, took place at a rate and to a magnitude that lies within natural climate variability. Contrary claims, including those of the IPCC, were based largely on the hockey stick or spaghetti diagram statistical depictions of climate history that have been completely and thoroughly scientifically discredited, as explained to the meeting by the Canadian mathematician Steve McIntyre.

    Several presentations contributed to a strong impression that the global greenhouse gas cycle is inadequately understood with the result that we cannot determine whether all these significant sources, sinks and flows of greenhouse gases are known accurately enough to assess human causation. For example, in 2006 alone, trees, a new source for methane, which is also a major greenhouse gas, and a new sink, desert sand grains, were described for the first time at the KTH meeting by Dr Peter Stakalos. Because Scandinavian countries have a particular interest in climate events that affect the nearby Arctic polar region, which has been referred to during this debate, the Stockholm conference received a detailed briefing on recent warming that has occurred in the Artic region and in Sweden. The briefing was provided by Professor Erland Kallen, the Director of Arctic Climate Impact Assessment, who noted that late twentieth century Arctic warming does not exceed earlier warmings in magnitude, such as the one that peaked in the 1930s.

    Despite all public alarmism that surrounds climate warming, the recent warming may have had an entirely natural cause. What overall conclusions may be drawn from the Stockholm meeting? From the papers presented, it is clear that the alarmist case for dangerous global warming rests on circumstantial evidence, inaccurate computer models and political activism. It is premature to conclude, as have member countries of the European Economic Community and other Kyoto signatories, that modern industrial carbon dioxide emissions pose the predicted grave hazard to the planet. It is entirely likely that warming produced by emissions may serve as a useful counterbalance to future climatic coolings that are bound to develop. For the information of honourable members, I note in this regard that the Russian Academy of Science has issued warnings of a forthcoming ice age, not warnings related to global warming. The proposition that climate-change science is conclusive and that all scientists agree, end of story, is simply not true. There are rabid scientists on both sides of the argument over which way the earth's climate will go. The simple fact is that we do not know.

    Carbon taxes and other measures that are based upon the supposition that dangerous global warming is under way are quite unable to be justified on the basis of scientific evidence. This conclusion stands, even though we may invoke the precautionary principle, because our knowledge of natural climate changes tells us that future climate cooling remains at least as strong a hazard as is twentieth century warming. Australians and Americans have every reason to appreciate why their governments have eschewed the Kyoto accord and have been encouraging the development of the Asia-Pacific climate agreement: those governments have put the interests of their citizens ahead of speculative political do-gooding that leans toward expensive and ineffectual climate mitigation.

    IPCC activity has been focused on comparing contemporary climate change with climate change that has occurred over the past 1,000 to 2,000 years. In geological terms of millions of years, that is simply too short and atypical a period from which to seek to understand climate change. Scientific data from sediment cores from beneath the deep-sea floor and from ice cores throughout Greenland and Antarctic ice caps have led to the following generally agreed inferences. Over the past 600,000 years, substantial glacial and interglacial oscillations have occurred on the 100,000-year scale. For more than 90 per cent of that time, the earth's mean temperature was cooler—much cooler than it is now—by about 0.05 degrees. Warm interglacial periods comprised less than 10 per cent of the time and on average lasted only 10,000 years. Our whole civilisation and modern society have developed during the warmest interglacial period, known as the Holocene period, that already has lasted 10,000 years. Superimposed on these longer-term climatic cycles are short-term cyclic isolations on all scales, such as sunspot cycles and several smaller 2,000 to 5,000 year cycles of unknown origin, albeit related to the earth's orbit and other celestial activity, and episodes of abrupt climate change occurring across almost the full glacial-interglacial range in a period ranging from as short as a few years to a few decades. We do not know the cause of abrupt climate changes, but we know they occurred because the evidence exists in geological records.

    The Hon. Peter Breen: Volcanoes?

    The Hon. JON JENKINS: Possibly. We simply do not know. However, if that had occurred, there would be sedimentary evidence in the ice cores, but there is no evidence. Changes in temperature and atmospheric carbon dioxide, which can be measured in ice cores, occur in close parallels over both annual and long-term glacial-interglacial periods that are neither particularly high nor particularly fast changing. Indeed, temperatures in Antarctica for the three interglacial periods that preceded the Holocene were respectively approximately 5, 4 and 6 degrees warmer than today's temperatures. In other words, in the previous three warming periods, the Arctic region was 5, 4 and 6 degrees warmer than it is currently. Global average temperature has been reasonably static since 1998, despite increasing carbon dioxide emissions. Late twentieth century Arctic warming does not exceed earlier natural warmings in magnitude, as the peak that occurred in 1930 shows. The earth's geological record contains many examples of sharp temperature changes of 1 degree or more over periods as short as several years or several decades.

    The Hon. Peter Breen: We have not reduced carbon dioxide.

    The Hon. JON JENKINS: I acknowledge the interjection. Carbon dioxide has been present in the earth's atmosphere in orders of magnitude that are higher than it is at the present time.

    The Hon. Peter Breen: Yes, but it had been reducing consistently for millions of years. We have stopped that reduction, that process. That is what we have done in the current age.

    The Hon. JON JENKINS: Carbon dioxide has been present in orders of magnitude higher than it is currently, and we did not have runaway temperatures. General climate models are mere experimental tools that are based on linear models. Climate change policy is fundamentally flawed because it is based on uncertain models. Climate change science is so uncertain that we cannot predict accurately even 10 years in advance, let alone 100 years, whether average global temperatures will rise, as predicted by some computer models, or fall, as predicted by others. According to one computer model, the chaos theory, weather is a complex system with so many underlying variables that a computer system may not be able to reliably predict it.

    Having put my thoughts on the record about climate change I will return to the main thrust of the Electricity Supply Amendment (Greenhouse Gas Abatement Scheme) Bill. The greenhouse gas abatement scheme allows a market mechanism by allowing trading of energy credits. That has several advantages including the advantage of allowing the market to seek out the lowest-cost ways of achieving any particular emissions cap. Firms are liable to be willing to pay for permits if internal costs of reduction are higher than the price of permits. The scheme allows a variety of technologies to be adapted to commercial competitiveness. Limited permits to emit greenhouse gases provide an in-built mechanism for adjustment assistance. The scheme can facilitate trading in future emission permits and its penalties encourage compliance.

    However, there is a cost, as always. The cost for the Commonwealth, the New South Wales and the Queensland schemes respectively are $40, $14.30 and $13.10 per megawatt hour. The Victorian scheme's default penalty charge is an indexed $43 per megawatt hour. By 2010, when the schemes are at full maturity based on those premiums, the estimated annual cost in today's dollars is $222 million in New South Wales; $68 million in Queensland, which has a higher gas content; $146 million in Victoria; and the Commonwealth's Mandatory Renewable Energy Target Scheme will be about $380 million.

    Those co-existing different regulatory regimes merely complicate the picture and add to investment uncertainty about future regulatory regimes. The technological techniques that power providers use to implement carbon dioxide capture and storage [CCS], or geological sequestration, are commercially available. However, electricity producers have not incorporated that technology when building power plants, but across the world they are building power plants that use conventional steam facilities that they say are carbon dioxide capture ready and are waiting for such time as the CCS is officially mandated.

    The United Kingdom Government is about to officially recognise that there is an economic cost of pumping carbon emissions into the earth rather than the air with the release of the Stern review, which is expected to conclude that climate change policies need to promote long-term solutions rather than short-term solutions. However, the uncertainty of the situation with respect to national policy is counter-productive to long-term investment. It takes between five and ten years to get approval, to gather the necessary contracts and the preliminary requirements to build a power station. Presumably the power station will have a life expectancy of between 20 and 30 years. I have detailed already that almost every generator in New South Wales is very close to the end of its life. Yet, we have no long-term certainly about what power companies are expected to do with their power generation technology.

    The bill does not solve any long-term issues; it has a short-term approach to problems. Market analysis of the first phase of the European Union's carbon emissions trading system found that the European Union is unlikely to meet its Kyoto Protocol emissions targets. The gas trading schemes have provided large profits for power generators that have no net effect on greenhouse emissions. The combined European Union 15 emissions were only 0.9 per cent below the 1990 levels, so those countries are way below their target of cutting greenhouse gas pollution by 8 per cent by 2012—they simply will not make it. That is the biggest failure of Kyoto: no-one was ever going to meet the targets.

    Global population is increasing and so is the demand for electricity consumption. Global electricity consumption is projected to increase by 160 per cent by 2050. The greenhouse gas debate has now given nuclear power new credibility. The Federal Government has quietly promoted the nuclear angle, whereas Labor's position is that Australia should ratify Kyoto and its target of reducing greenhouse gas emissions to 60 per cent of the 1990 level. We simply cannot do it; it is not possible without completely turning society on its head. In the absence of a national carbon emissions trading scheme and in the absence of an international approach to carbon emissions, caution needs to be exercised when creating State-based energy legislation that will affect the competitiveness of Australia's trade-exposed energy-intensive industries. Therefore, until there is a comprehensive international action on emissions reductions the competitiveness of Australia's trade-exposed industries needs to be protected.

    The foundations of climate change on which this bill are based are misleading and the goal of reducing greenhouse gases to extreme levels could impoverish the State and yet have no real effect on global emissions. The single biggest argument for alternative sources is not greenhouse gas emissions because we are wasting a precious and irreplaceable resource. For that reason alone we should be investing in alternative technologies. However, it is a shame that a better system could not be derived that encourages that investment. Schemes based on ethanol or biodiesel to replace fuels for transport completely ignore the fact that we would have to create an additional 30 million hectares of cultivated land to supply the base fuel. Schemes based on irregular wind power ignore the variability of supply, land usage and distribution problems, which are effectively insurmountable for base-load supply.

    Photovoltaics at their current efficiencies may prove useable for small households but will never replace industrial and commercial use. Before jumping into the nuclear solution, Australia needs to explore other options such as geodynamics as an alternative source of renewable emission-free electricity, as deep below our continent lies the equivalent of 400 billion barrels of oil—free! We need to look at developing that hot fractured rock technology. However, the bill is not conducive to investment in research and development in the long term let alone long-term infrastructure. The bill could result in energy intensive industries relocating to less-regulated venues either in Australia or overseas and will result in little investment in alternative technologies. There is no single silver bullet and the final solution will involve a mix of both biorenewables—that is, ethanol and biodiesel—physical renewables—that is, wind, wave and solar—nuclear, geothermal, hydrogen generation and fossil fuels.

    Mr IAN COHEN [6.26 p.m.]: The Electricity Supply Amendment (Greenhouse Gas Abatement Scheme) Bill introduces the greenhouse gas abatement scheme, which mandates that all major producers of greenhouse gases must earn or buy a certain number of greenhouse abatement certificates to offset the greenhouse gas emissions that they generate. That is a positive scheme, but it certainly does not go far enough. Earlier, honourable members, with one exception, said that there is a significant issue with greenhouse emissions and that there is a need for governments to act in a strong and forthright manner. The New South Wales Government, and dare I say the Federal Government, have had their head in the sand on this matter.

    At this time in history we are reaching a crisis point on climate change. It is not time to tinker around the edges; it is time for real action on climate change. The general public has recognised that. However, there are always the climate change sceptics, like the Hon. Jon Jenkins and the Treasurer, who, I suggest, does a great deal of damage to the New South Wales Labor Government from his powerful position in the political system. Yet he is not recognised for that. As a result, he is a great ambassador for the coalmining industry, and I will address that matter later. It is that type of attitude that shows Labor shedding its green feathers. During Labor's 12 years in government in this State we have witnessed a lack of perseverance and certain people have been allowed to develop a diabolical, cynical and, might I say, bent attitude to greenhouse gas emissions, and have refused to act in a way that will significantly impact on climate change.

    The purpose of the bill is to extend the greenhouse gas abatement scheme until 2021 and beyond, until the implementation of the National Emissions Trading Scheme. The bill increases penalties for electricity retailers and large electricity users who manage their own benchmarks but fail to meet them. The bill is aimed at ensuring that participants comply with emission reductions rather than choose to exceed emission targets and instead pay the penalties, which can work out to be cheaper. That occurs not only in the area of carbon trading; polluters believe it is easier to pay the fines. At the end of the day developers who make significant profits find it is easier to pay the fines for breaking zoning laws or restrictions imposed by State government agencies or local councils. That is what is happening with the Greenhouse Gas Abatement Scheme, which means we will have no increased opportunities to resolve our pollution and greenhouse gas emissions problems.

    There are loopholes in the law, and those who have significant financial clout can get away with polluting. The Government introduced the Greenhouse Gas Abatement Scheme, or GGAS, in 2002 and that scheme will be in place until 2012. The bill extends the scheme until 2021. A first sighting of the bill makes one wonder why there is such an interest in a long-term extension of the scheme. The answer is simple. The scheme can be extended on a rolling basis over a period of 15 years, with the Governor terminating its operation if a national emissions trading scheme eventuates. In great part the open nature of the scheme provides certainty and incentives for gas-fired power generators and enables them to generate abatement certificates.

    While gas-fired power generation is preferable to coal-fired power generation we must look towards cleaner, renewable and well-established technologies such as wind, solar, and wave power. The bill does not provide any additional incentives to make such technologies more viable. Those who are promoting gas-fired power stations need security and projected longevity to make it worth their while to set up and function into the future, which is all well and good. Many people who are concerned about greenhouse gas emissions see gas-fired power stations as a transitionary solution and not an end in themselves. We should be thankful that the Government is now looking at bridging the gap with gas-fired power stations rather than promoting coal-fired power stations before the election.

    I am not confident that that will not be the case after the election and I would like to be proven wrong. With the reckless attitude of this Government and its extraction, export and coal-fired power production in New South Wales, there is no guarantee that we will not see coal-fired power stations in the future. I would like such a guarantee from the Government, but I am not confident about any government in the future. After the election I am sure we are likely to see a dominant majority Labor government. At this stage the attitude of the Government towards coal-fired power stations is cavalier to say the least. If there is no radical transformation in this area we could be in real trouble after the election. The bill should provide further incentives to make technologies such as wind, solar, and wave power fare more viable.

    [The Deputy-President (The Hon. Kayee Griffin) left the chair at 6.35 p.m. The House resumed at 8.00 p.m.]

    Mr IAN COHEN [8.00 p.m.]: I note that the Electricity Supply Amendment (Greenhouse Gas Abatement Scheme) Bill also seeks to increase the penalties for failing to comply with benchmarks. While this is a welcome step, the Greens believe that penalties will still not be high enough. I foreshadow that I will move amendments in Committee to increase these penalties further in order to ensure that electricity retailers and large users will not be let off the hook lightly with a slap on the wrist for adding to our greenhouse gas overload.

    I do not have the percentages with me, but the aluminium industry—including aluminium smelters in the Hunter—uses more than 20 per cent of the electricity generated in New South Wales. It is a huge energy consumer. I have asked questions in this place as to why the aluminium industry does not pay its way but it seems that it has a prior agreement with the Government about the electricity rates it pays. That does not make a great deal of sense when consumers are trying to do the right thing. Coal-fired power plants generally run the smelters, and the industry is getting its power at very cheap rates.

    There are transparency and accountability issues with the scheme. When a certificate is cashed in it is not apparent whether it was effective in abating greenhouse gases. There are also problems with the overall accounting of the scheme. There is a lack of publicly available data about how projects create the certificates. Another issue is the methods and equations that are used and how compliance is achieved.

    The Greens welcome the changes to the scheme's administration in regard to the maintenance of a register of accredited abatement certificate providers and a register of greenhouse abatement certificates. Until now, this information was not easily available. I support moves towards greater transparency in the scheme. Although the Government has been patting itself on the back about action on climate change, the bill falls well short of the mark. The Minister's press release about the bill states:

    The highly successful NSW Greenhouse Gas Abatement Scheme is to be extended a further nine years to take the equivalent of a million cars off the road.

    However, this is not the case. The scheme will not lead to actual greenhouse gas reductions. Because the scheme deals with per capita greenhouse gas reductions and because these targets are not being increased, population growth will ensure that greenhouse gas emissions continue to increase. The Greens believe that, rather than per capita reduction targets, there should be an absolute greenhouse reduction target. This target should be 20 per cent below 1990 greenhouse levels.

    The move to convert the per capita target to an absolute emissions target is supported by environment groups and the Australian Business Council for Sustainable Energy. Whilst an absolute target is the preferred option, I will move an amendment in Committee to increase per capita targets, because if per capita reduction targets do not increase, overall emissions will continue to rise with population growth. The benchmarks also need to be reviewed, taking government greenhouse commitments into consideration. Climate change science is evolving rapidly, with figures for necessary greenhouse gas reductions constantly being reviewed. It seems only reasonable that the Government should review its targets based on its commitments and on results that current targets are producing. The Greens will move an amendment to this effect in Committee.

    There has been a market concentration in regard to the creation of New South Wales' greenhouse abatement certificates [NGACs]. In 2003 AGL, Energy Developments Limited, and Integral Energy created more than 70 per cent of NGACs. More than 45 per cent of all certificates were created by Integral Energy. It is clear that GGAS is not encouraging long-term sustainable energy solutions. Additionality is another major concern with GGAS. This was also an issue with the Commonwealth Mandatory Renewable Energy Target Scheme, but as the target has been exceeded and is now defunct it will not be as much of a problem in the future.

    However, additionality is still a concern in other respects. For example, schemes that were voluntary prior to GGAS were made compulsory in 2002. Some of them still contribute abatement towards GGAS, even though they existed before the scheme was introduced. In other words, no new measures were adopted but NGACs are still being created. The Greens would support the insertion of a sunset clause for schemes that began before 2003 that are continuing to create certificates. Whilst we have not been able to draft an amendment to this effect due to time constraints, a 2010sunset clause would be appropriate. This would mean that a scheme that was voluntary initially would still be able to generate certificates for eight years and the existence of a sunset clause would favour new projects.

    Another problem with the scheme is that it enables certificates to be created interstate. Whilst this applies only to projects that feed into the national electricity market, of which New South Wales is a part, it is problematic because New South Wales businesses, not businesses outside the State, should benefit from the scheme. It means that massive polluters such as the Hazelwood power station in Victoria, a brown coal power station, can create certificates by implementing some efficiency measures that abate its emissions to some degree.

    Limiting the creation of certificates to within New South Wales would create an impetus for companies to find new ways of limiting emissions, rather than finding the lowest common denominator elsewhere in Australia. By not limiting certificate creation to New South Wales the scheme is limited to little beyond business as usual. A large number of certificates are created through actions that have to be carried out anyway. An example of this is biogas and methane avoidance, which could be a licence condition and therefore would already be mandatory. But it creates certificates even though this avoidance would have to take place despite GGAS. The Greens will move an amendment in Committee to tighten this loophole.

    We need a mandatory renewable energy target. We need a strong Federal target, but in its absence the States should impose targets. South Australia and Victoria are doing this. The target should be 20 per cent by 2012. This is achievable. Australia and New South Wales are lagging behind the world in this respect. Nations and states around the world have introduced targets. I will mention just a few. Austria has a mandatory renewable energy target of 78 per cent by 2010. The European Union, which comprises 25 member nations, has a target of 21 per cent by 2010. California is a powerhouse economy on a global scale. I understand that its Governor, Arnie Schwarzenegger, told Al Gore that he would have to trade in his Hummer as a result of his own greenhouse gas and energy saving efficiencies. If Arnie Schwarzenegger can do it and can commit California to a 20 per cent reduction by 2017, why can we not do the same?

    The Hon. Tony Kelly: His Hummer contributes most of that.

    Mr IAN COHEN: I acknowledge the interjection by the Minister for Justice. Yes, his Hummer probably contributes significantly to the Californian energy equation. Texas has set a target of 2,880 megawatts by 2009 and Nevada 15 per cent by 2013. Another appropriate example, if one looks at the high-tech powerhouse of California and the emerging massive economy of China, is China's target of 10 per cent by 2020, which shows we are really having an impact. Denmark has set a target of 29 per cent by 2010, Portugal 45.6 per cent by 2010, Spain 29.4 per cent by 2010, and Sweden 60 per cent by 2010.

    A Government responsibility is to provide for real support for renewable energy—real financial incentives. These targets will not result in job losses, but actually will create many new job opportunities. New South Wales and Australia are missing out as cutting edge technology moves offshore due to lack of support and incentives here. Clean energy creates more jobs than fossil fuel developments. A solid Australian solar photovoltaic industry could employ 80,000 people by 2020, with the right incentives. Australia has been, and should be, at the cutting edge. Many years ago I think the Fraser Government planned to go completely solar at Lightning Ridge but, instead, it built a massively long power line to that area. So Lightning Ridge is now connected to the grid with a massive waste of electricity being carried that distance.

    The Hon. Tony Kelly: There is a lot of leakage in the line.

    Mr IAN COHEN: I acknowledge the interjection. All lines running over New South Wales have an astronomical amount of leakage from power production. What is the answer? The answer is simple: it is decentralisation, having smaller community-based or even individual power plants and working on solar technology—wind, wave and many other opportunities that can occur with alternative technology. They are the job creators. It is not the centralised technology. As an executive from Enron said not so long ago, if we could find a way to own the sun, we would all go solar. I think the control of power generation by industry is what it is all about. There is plenty of opportunity, and a will in the community.

    I have put solar hot water systems on houses. I have also seen people go off the grid or augment the grid. If people are not on the grid they can get various isolation supports from the agencies, but if they are on the grid they do not get much support. There are opportunities for every house to have a solar panel. Solar hot water systems that provide a massive savings on energy consumption in households could create a difference. Who does the significant task of bolting the systems onto the roofs of houses? Who manufactures them? The local people, working in the local community. That is the real way to achieve job generation, rather than constantly rely on centralised power sources.

    According to Greenpeace, if we move early we can attract manufacturing facilities to Australia and create even more new jobs, including more than 10,000 new jobs in manufacturing, construction and maintenance and new jobs and investment primarily in rural and regional Australia. That is where the opportunity lies and where the jobs will be. We would have an endless energy supply, unlike fossil fuels, which one way or another will eventually run out.

    I constantly hear misinformation, from the Federal Government down to some of the more absurd greenhouse sceptics in this House, that the nuclear option is the way forward. But if we look at the amount of energy consumption in mining, transport and manufacture—not to mention the security that is involved—to create a highly toxic product that can have up to 100,000 years lifespan, and all the associated activities need to secure that type of product, it is not advantageous. The advantage lies in decentralised systems and even large-scale wind and solar farms. We have the technology—it is now developing—and it is a tragedy that governments are so slow to act.

    This Government is keen to see the Anvil Hill coalmine go ahead. Today the crossbenches were lobbied by people who were not just the average greenies. Of course, there are a lot of biodiversity issues with the Anvil coalmine site but because of its very special location in an area where animal species can travel through the Great Divide, it creates a very rare ecosystem. Horse breeding, wine, tourism and many other clean green industries would bring in a great deal of money. However, if people sit down to a nice lunch at a Hunter Valley winery and the wind blows coaldust across their food they will not return. They are the problems people face in the Upper Hunter at the present time because this Government is hell-bent on going ahead with creating such a massive additional mining operation in the Upper Hunter.

    Al Gore made a very timely visit to Australia. His film, An Inconvenient Truth, is a very polished documentary that provides significant avenues to the broader community, making them accept that climate change is the biggest threat to our world. This issue should go beyond politics. We have had negligent leadership. Some honourable members have made many statements in this House about the lack of acceptance of greenhouse gas issues. A great deal of self-interest has been promoted in this House which ignores the fact that Australia has a very special responsibility with its coal production, transport, and export to create problems with global warming. The coal industry is a very powerful industry and a great generator of export finance but it does not create the jobs that many other industries do.

    Eventually, coal will run out for the coal industry and easily accessed deposits will run out for the nuclear industry. Eventually it will cost more and more in energy and expense to extract uranium for export. Similarly it will cost more and more in financial and environmental terms until we get to the point where those limited resources will be depleted. Where do we go then? We have industries that will go on sustainably, if we could look beyond the mining mentality that Australia is the mine of the world. It is an exploitative industry and it is having a massive destructive impact on our global environment

    On 4 November a Walk Against Warming will be held, and people and environment groups will mobilise. This is not just the fringe element, although I know many take great pride in stating that that is the case, and even Mel and Kochie from the Sunrise program are behind it. They are showing that this debate is truly moving into the mainstream. In Al Gore's documentary, An Inconvenient Truth, they say we are reaching the tipping point.

    I know many keen greenies and avid scientists who believe that we have gone too far. I referred to the tipping point, but there are two of them: one is when we reach the point that the consequence is a devastating melting of the permafrost in Siberia, creating situations that we will not be able to retrieve by returning to the type of environment that we have experienced. Global warming is not a natural change. There have been catastrophes on a global scale, but global warming is not a natural change. In terms of history, industrialisation and humanity have produced a catastrophic event, so that in a relatively short period of time we see a massive transformation of this planet's elements, with the loss of a huge number of species and the creation of environmental refugees.

    As a leading nation we are perpetrating quite inhumane actions and contributing to global warming that will bring about environmental changes such that our Pacific neighbours will have great problems surviving. As a coastal nation, I predict that we will be impacted, with an increase in violent climatic activity and increased cyclonic activity. I might be wrong, but I suggest that will be in the very near future. Due to poor planning laws some inappropriate developments, encouraged by the current planning Minister, are occurring up and down the New South Wales coastline, and that will lead to trouble in the not too distant future. We are a community that lives on the coast, and we are very vulnerable to climate change. Let us see what happens to real estate if that type of event takes place. I have mentioned in the House before that I was in Sri Lanka at the time of the tsunami. I was on the beach and saw—

    The Hon. Rick Colless: That was due to tectonic plate movement, not global warming.

    Mr IAN COHEN: I agree with the interjection of the Hon. Rick Colless. The tsunami catastrophe was due to the movement of tectonic plates. But when you see the whole ocean rising, be it by only a couple of metres, you realise the magnitude of such a catastrophe. I was only two kilometres or so from the train coming down from Colombo to the south-west coast to Galle. I did not see the event, but I saw the after-effects; the train looked like a matchbox toy, and several thousand people died in the catastrophe.

    Those are the sorts of things that we need to seriously think about and be defensive about, rather than saying, "Oh, it's not proven yet." What has to occur for us to be convinced? How much evidence must we get before we will be convinced that climate changes are having a catastrophic effect on not only our society but also those in the Pacific and Indian oceans, where low-lying coastal communities already are suffering great hardship. Before they actually disappear, the viable agricultural land of those communities will be inundated due to rising sea levels. We need to take some degree of responsibility for that.

    I am pleased that the New South Wales Government is urging the Commonwealth Government to adopt a national scheme to reduce greenhouse gases, without resorting to nuclear power. The idea that nuclear power is somehow a solution to climate change is a dangerous fallacy. Nuclear power will not reverse climate change. Even if the world's nuclear energy output doubles by 2050, that would reduce greenhouse gas emissions by only 5 per cent. Replacing polluting coal power with another environmental disaster is not a way forward. Nuclear power production produces large amounts of greenhouse gas emissions at every stage of the cycle, from mining uranium through to decommissioning nuclear power plants. On top of that, we are left with a legacy of dangerous nuclear waste that will last many thousands of years.

    The Greens do not oppose the extension of the Greenhouse Gas Abatement Scheme. It is a scheme that we have supported in the past. But we offer only lukewarm support for this bill, as it does little beyond extending the scheme to ensure that operators of gas-fired power stations have some certainty when building projects. We need strong action on climate change now. The Government continues to twiddle its thumbs while the planet heats up, while the drought tightens its grip, while our rivers run dry. Quite clearly, we need to act, and we have to demonstrate statesmanship and leadership at both the State and Federal levels. That seems to be wanting at present. Over the next few years we will see whether governments of both persuasions are prepared to take note and act.

    Interestingly, if action is undertaken, that will be of great benefit to society and to Australian industry. We have been at the forefront of solar power development, and we could take up that position again if government gives appropriate incentive to industry. Solar power and wind power are the way to go. The Greens consider this bill, which embraces the viability of gas-fired power stations, is a significant step at this time of change. However, without the follow-up of truly greenhouse-reducing, cutting edge, futuristic technology, I am afraid we will have a much poorer environment and much poorer living conditions within Australia and overseas. With that, the Greens support the Electricity Supply Amendment (Greenhouse Gas Abatement Scheme) Bill. We hope the Government can do much more.

    The Hon. GREG PEARCE [8.26 p.m.]: I support the comments made by my colleague the Hon. Don Harwin. I am one of those who have long been interested in these issues. In my former life as a lawyer, and specialising in environmental law for a significant portion of that life, I had the good fortune and great experience of being a representative on Australia's delegation in the early 1990s at the preparatory meetings for the Earth Summit, which took place in 1992, and in negotiating the Climate Change Convention and the Biodiversity Convention statement on deserts and all of those other documents that were adopted back in 1992.

    Contrary to a lot of the voodoo and doomsday positions taken in debate on these sorts of issues, and particularly the green-pink industry, which specialises in voodoo and doomsday, the world community has taken very significant steps in recognising, trying to understand and dealing with those issues. Indeed, this is a matter on which Australia has led the way. Ours is a very fine record. I think that is because Australia, from an informed position, adopts the precautionary principle and tries to lead wherever it can.

    However, there are some problems with the scheme proposed by the bill. The fact is that Australia and New South Wales, in terms of both world economy and world output of greenhouse gases, are not of a size that enable us, by ourselves, to make any real change to what is happening. Certainly, we should continue to lead by example. But one of the key issues is to continue to inform ourselves on what we are trying to do. In his speech my colleague the Hon. Don Harwin posed a number of questions about the cost of the scheme, and what sorts of positive impacts there will be from national attempts to ensure we make a great contribution on the issue.

    The Hon. Don Harwin referred to the November 2005 report of the Energy Retail Association of Australia—that association made an attempt to work through some of the costs of this sort of scheme and I think he mentioned the individual cost to consumers. The report of the association estimated that the annual cost of electricity in the national electricity market would increase by between $707 million and $965 million per year in 2010 as a result of the Greenhouse Gas Abatement Scheme. There is a major cost involved. The Government has been unable to advise what impact the scheme will have on those sorts of costs and whether this scheme will really make a significant contribution to international issues or the leadership role that New South Wales is trying to pursue.

    The Hon. Don Harwin also mentioned a number of Federal Government initiatives. We should be very proud of the work that the Federal Government has been doing on renewable energy, energy saving and emission reduction generally. One concern I have is that much of the focus is on emissions reduction without an understanding of the impact of some of these predictions relating to climate change. I would like to see a great deal more work undertaken to come to grips with that and enable an informed assessment about what else we should be doing.

    The Hon. TONY KELLY (Minister for Justice, Minister for Juvenile Justice, Minister for Emergency Services, Minister for Lands, and Minister for Rural Affairs) [8.31 p.m.], in reply: I thank honourable members for their contributions the debate. The New South Wales Greenhouse Gas Abatement Scheme is a world-leading emissions trading scheme. The Electricity Supply Amendment (Greenhouse Gas Abatement Scheme) Bill will ensure that the scheme continues to fulfil a pivotal role in greenhouse policy by providing certainty to investors in abatement projects that there will be a market value for greenhouse gas abatement beyond 2012. The Government's preferred outcome would be for that carbon price signal to be provided through a national emissions trading scheme. However, if that outcome is not possible or is likely to be delayed, the New South Wales Greenhouse Gas Abatement Scheme will continue to support a wide range of abatement projects and thereby provide a tangible and effective means of addressing global warming.

    I turn now to some of the comments made by the Hon. Don Harwin and correct the record. I agree with a lot of the honourable member's comments in relation to ethanol and its effect on the environment, jobs and a whole host of other things. Where I disagree is in relation to the policy positions of our two parties. It was the New South Wales Labor Party at its annual conference last year that called on the State Government to mandate the use of ethanol in the government vehicle fleet. That recommendation was accepted and New South Wales became the first State in Australia to do so. That policy formed part of the contracts issued on 1 July. At this year's annual conference the Labor Party called on the State Government to consider mandating the use of biofuels by 2011. The Government has made an announcement in that regard and has also set up a task force.

    At the conference mentioned by the Hon. Don Harwin, the NRMA conference, I called on the Federal Government to mandate the use of biofuels nationally and it was at that conference that the Federal Government rejected the call. In relation to other comments by the Hon. Don Harwin that a national emissions trading scheme is premature, I note that the European Union has an emissions trading scheme, the New South Wales scheme has been operating successfully for more than three years and the North American States are considering establishing an emissions trading scheme. It is the Commonwealth that has failed to show leadership in this area. As a result, the States have had to step into the gap to develop a National Emissions Trading Scheme, and a discussion paper has been released with comments due in December of this year.

    I am advised that the cost to household electricity bills of the extension of the Greenhouse Gas Abatement Scheme is small—less than 10¢ per week. GGAS has, in contrast to what the honourable member said, achieved significant results. Since its commencement, GGAS has prevented more than 25 million tonnes of greenhouse gases from entering the environment. In 2005 alone, 10 million tonnes of greenhouse gas emissions were reduced, which is equivalent to 2 million cars. GGAS has meant incentives for investment in low emission technology. It has played a significant role in attracting gas-fired power plants such as Tallawarra. Gas-fired plants produce significantly fewer emissions than coal-fired plants.

    New South Wales has a coherent plan for dealing with greenhouse gases. It is called the "Greenhouse Plan" and was released by the Premier in November 2005. That plan does not relate simply to emissions from the stationary electricity sector but also to emissions from other sectors of the economy. It is a public document and I encourage the Hon. Don Harwin to read it. In response to the honourable member's point regarding new technology, I must point out that New South Wales has a $200 million Energy Savings Fund that encourages new technologies and demand management. The New South Wales Greenhouse Gas Abatement Scheme has provided the incentive for 146 projects that reduce or offset greenhouse gas emissions. Many of these would not have gone ahead without the scheme. Projects that have benefited from the scheme include:

    Gas-fired power stations;

    Projects to improve efficiency at existing power stations;

    Power stations using waste coalmine gas and methane from landfills and sewage treatment plants;

    Projects to help customers improve their energy efficiency;

    Planting forests to capture carbon; and

    Industries converting from using coal to gas.

    Honourable members will see that projects supported by GGAS are not limited to encouraging gas-fired power stations only. The specialist jobs created by these projects are a direct result of the implementation of the Greenhouse Gas Abatement Scheme. The scheme is preparing the community and businesses of New South Wales for a world increasingly acting to reduce its greenhouse gas emissions. That is protecting jobs in New South Wales by making sure we do not miss out on the clean energy industries that will be needed.

    The Australian Business Roundtable on Climate Change warned that acting early is more cost effective than delaying—that means delaying would have an effect on the New South Wales economy and cost New South Wales jobs. That is why the New South Wales Government acted early by implementing, and now extending, the New South Wales Greenhouse Gas Abatement Scheme. With regard to the point made by the Hon. Dr Arthur Chesterfield-Evans that no penalty has ever been paid, I am pleased to note that all participants are complying with the scheme, and are choosing to reduce their greenhouse emissions rather than paying a penalty. That is the goal of the scheme. It creates incentives for reducing greenhouse emissions, and participants have to date preferred to abate carbon emissions rather than pay penalties.

    In relation to the University of New South Wales report referred to, I note that it is out of date. The statistics quoted related primarily to 2003, the first year of the scheme. I remind the House that GGAS was one of the first mandatory emissions trading schemes in the world and predated the European Union scheme. It has achieved a lot and expanded a great deal since its first year. GGAS has reduced emissions by 25 million tonnes, with 10 million tonnes in 2005 alone. That is a significant increase on previous years and we expect similar growth in 2006. With regard to double counting, the bill strengthens the integrity of the scheme by ensuring that the Independent Pricing and Regulatory Tribunal [IPART], the scheme administrator, has discretion to prevent abatement or renewable energy certificates being created for abatement activities that are done for compliance with other schemes, whether mandatory or voluntary, compliance with the law under New South Wales or another jurisdiction, or in accordance with any agreement or undertaking.

    Paragraphs (a) and (b) of proposed new section 97DD (3) are extremely broad and will be used by IPART to ensure that the scheme has integrity and transparency. A few honourable members have concerns that emissions from the electricity sector continued to rise. One of the reasons that the New South Wales Greenhouse Gas Abatement Scheme targets the electricity sector is that the greenhouse gas emissions from electricity are growing rapidly. Whilst also offering significant opportunities for abatement, if the scheme is extended to 2021 it will save an extra 86 million tonnes of greenhouse gas emissions than if the scheme ended in 2012. These are real reductions in greenhouse gas emissions to the atmosphere across the whole national electricity market. In other words, we are not simply shifting emissions across State borders.

    Some of the emissions savings come from industry and forest planning projects because one of the objectives of the scheme is to offset the production of greenhouse gas emissions. This represents emissions trading doing what it is meant to do—find the most cost-effective ways to reduce greenhouse gas emissions. It is commonsense. Consumers will gain more greenhouse savings for every dollar. If we had a national emissions trading scheme and if all Australian emitters, not just those in New South Wales, took responsibility for their emissions, greenhouse savings would increase. That is why the New South Wales Government is working hard with the other State and Territory governments to develop a national emissions trading scheme. That is why we have called on the Commonwealth Government to join us in this important work. The Commonwealth Government is still welcome to join at any time.

    I thank the Hon. Jon Jenkins for his contributions to the debate and his presentation of a different point of view. In relation to his concern that greenhouse gas reduction schemes have an economic cost, I note that the Greenhouse Gas Abatement Scheme can be extended with minimal cost. I am advised that extension of the scheme will mean an average increase in the cost of electricity of less than 0.5 per cent. The benefits of the scheme will far outweigh the minimal cost of the extension to 2021 and beyond.

    As I noted earlier, to date electricity retailers have chosen to create or purchase abatement rather than pay a penalty. In the 2005 compliance year, the Independent Pricing and Regulatory Tribunal [IPART] reported that all participants were compliant with the scheme. It is not accurate to say, as did Mr Ian Cohen, that New South Wales electricity retailers find it easier or better to pay the penalty than comply. That is simply not the case. Proof of that is in IPART's annual report on compliance and operation of the scheme. The report has been tabled in this House and is available on IPART's web site.

    In relation to pre-existing abatement activities, I am advised that this refers to category A generation which was introduced to provide credit for early action. The projects that were recognised under category A criteria were recognised under the voluntary greenhouse gas reduction scheme that preceded the current GGAS. The previous scheme ended when GGAS began. The projects that previously were recognised by the earlier voluntary scheme could continue to be recognised by GGAS.

    Reverend the Hon. Dr Gordon Moyes referred to New South Wales gas-fired plants. As I have stated previously in this House, I would like the Greens to take a national approach to the use of coal-fired plants and campaign to get rid of the Victorian coal-fired electricity plants that are burning dirty brown coal, thereby creating 30 per cent more damage to the environment than do New South Wales electricity-generating plants. I urge the Greens to encourage more electricity to be generated from New South Wales coal, rather than from Victorian coal. I commend the bill to the House.

    Motion agreed to.

    Bill read a second time.

    In Committee

    Clauses 1 to 5 agreed to.

    Mr IAN COHEN [8.44 p.m.]: I move Greens amendment No. 1:

    No. 1 Page 3, schedule 1 [1], lines 6-9. Omit all words on those lines. Insert instead:

    (e) for the year commencing 1 January 2007—7.27 tonnes of carbon dioxide equivalent of greenhouse gas emissions per head of State population,

    (f) for the year commencing 1 January 2008—7.07 tonnes of carbon dioxide equivalent of greenhouse gas emissions per head of State population,

    (g) for the year commencing 1 January 2009—6.86 tonnes of carbon dioxide equivalent of greenhouse gas emissions per head of State population,

    (h) for the year commencing 1 January 2010—6.68 tonnes of carbon dioxide equivalent of greenhouse gas emissions per head of State population,

    (i) for the year commencing 1 January 2011—6.49 tonnes of carbon dioxide equivalent of greenhouse gas emissions per head of State population,

    (j) for the year commencing 1 January 2012 and each subsequent year—6.29 tonnes of carbon dioxide equivalent of greenhouse gas emissions per head of State population.

    This amendment seeks to reduce per capita emissions to ensure that total emissions do not continue to increase owing to population growth. The amendment seeks to reduce emissions to 20 per cent below 1990 levels. For the electricity sector, the 1990 emissions were 44 million tonnes. A 20 per cent reduction would lead to emissions of 35 million tonnes. The Greens of course would have preferred an absolute emissions cap, but as the Act deals with per capita targets, this amendment seeks to adjust the per capita targets to achieve a reduction in line with an absolute target of 20 per cent below 1990 levels. I commend Greens amendment No. 1 to the Committee.

    The Hon. TONY KELLY (Minister for Justice, Minister for Juvenile Justice, Minister for Emergency Services, Minister for Lands, and Minister for Rural Affairs) [8.45 p.m.]: The Government does not support the amendment. The bill is not about changing target levels. At this stage the Government does not support changing the targets. A change to the benchmark now would be premature because consultation on the National Emissions Trading Scheme [NETS] is ongoing. It would be unnecessarily burdensome to industry to have to plan for a new Greenhouse Gas Abatement Scheme [GGAS] benchmark when there is still a strong chance that GGAS will be replaced by NETS in the not-too-distant future. Major amendments to the scheme's design at this time may create confusion for the business sector.

    Amendment negatived.

    Mr IAN COHEN [8.45 p.m.]: I move Greens amendment No. 2:

    No. 2 Page 3, schedule 1. Insert after line 9:

    [2] Section 97B (3)

    Insert after section 97B (2):

    (3) The Minister must, not later than on 31 December 2007, review the State greenhouse gas benchmarks to determine whether they remain appropriate to achieve the greenhouse gas emission targets of the government.

    (4) The Minister is to seek and consider submissions from the public on the review.

    (5) A report on the outcome of the review is to be tabled within each House of Parliament.

    This amendment seeks to ensure that greenhouse gas benchmarks are reviewed at the end of next year. Climate change science and global emission reduction targets are under constant review. It is appropriate for the Government to review the benchmarks in the legislation, taking its greenhouse commitments into consideration. The review process should include a public submissions component and a report should be tabled subsequently. The Government has a target of a 60 per cent reduction by 2050 based on 2000 levels. The progress of the Greenhouse Gas Abatement Scheme should be reviewed to ensure that benchmarks of the scheme are working to achieve the Government's long-term targets. I commend Greens amendment No. 2 to the Committee.

    The Hon. Dr ARTHUR CHESTERFIELD-EVANS [8.46 p.m.]: I support this amendment. The targets should be reviewed. I generally support the environmental lobby's attempt to put some meaningful numbers to greenhouse gas abatement proposals. There has been a lot of fine rhetoric. While the New South Wales Government may have been the first out of the blocks, it has not been particularly aggressive in effecting change. Certainly the Europeans have been far better than Australians in the utilisation of wind power and solar power in spite of far worse climatic conditions existing in Europe than exist here. Indeed, Australia had a lot of expertise that unfortunately has been frittered away because there have been no Government incentives.

    If real costs and firm targets were set, that would favour the alternative energy industry. In the short term, the costs of implementation would have to be taken into account, but changes in the medium term would considerably favour the economy. Targets should be supported. I support the Greens amendment and I am disappointed that the Government does not. Given that there has been so much discussion about the Anvil Hill coalmine increasing Newcastle's coal output by 65 per cent, the Government's reluctance to set targets or even review its policies is a poor show.

    The Hon. TONY KELLY (Minister for Justice, Minister for Juvenile Justice, Minister for Emergency Services, Minister for Lands, and Minister for Rural Affairs) [8.48 p.m.]: The Government does not support this amendment. During the second reading debate in the other place the Minister indicated that a review would be undertaken. He said:

    If it becomes clear that a national emissions trading scheme is not going to be established or will be delayed indefinitely, the Government will conduct a wide-ranging review of the New South Wales Greenhouse Gas Abatement Scheme.

    The New South Wales Government is leading the way on the National Emissions Trading Scheme [NETS]. As the Minister noted in the other place, any review of the Greenhouse Gas Abatement Scheme [GGAS] should take NETS into account. In the light of that, it is not appropriate to restrict the timing of the review, as proposed by Mr Ian Cohen. Instead, some facility should be maintained so that a review of GGAS can meaningfully take into account the outcomes of the NETS debate. In undertaking the review, the Government will undertake appropriate consultation and process.

    Amendment negatived.

    Mr IAN COHEN [8.50 p.m.]: I move Greens amendment No. 3:

    No. 3 Page 3, schedule 1 [2], proposed section 97CA (2), lines 12-22. Omit all words on those lines. Insert instead:

    (2) The amount of the greenhouse penalty per tonne of carbon dioxide equivalent of greenhouse shortfall determined under this Part is the following amount, as adjusted in accordance with any regulations made under subsection (3):

    (a) for the year concerned before the year commencing 1 January 2008—$12.50,

    (b) for the year commencing 1 January 2009—$14.50,

    (c) for the year commencing 1 January 2010—$16.50,

    (d) for the year commencing 1 January 2011—$18.50,

    (e) for the year commencing 1 January 2012 and each subsequent year—$20.50.

    The amendment increases penalties beyond the increases proposed by the Government. Increasing the penalty rates according to those figures would improve the prospects for renewable energy being taken up to achieve abatement: that is, it would make renewable energy more economically viable. As I said in my contribution to the second reading debate, in the long term that would be of great advantage to decentralised, often country, and regional-based industries throughout New South Wales.

    The Hon. TONY KELLY (Minister for Justice, Minister for Juvenile Justice, Minister for Emergency Services, Minister for Lands, and Minister for Rural Affairs) [8.51 p.m.]: The Government does not support the amendment. It would appear that the proposal is to amend the penalty levels as a result of the first amendment moved by Mr Ian Cohen to change the target emission levels. If the target is not amended, there is no need to amend the penalty. Increasing the penalty on its own would not result in a decrease of greenhouse emissions.

    Amendment negatived.

    Mr IAN COHEN [8.52 p.m.]: I move Greens amendment No. 4:

    No. 4 Page 3, schedule 1. Insert after line 22:

    [3] Section 97D Accredited persons may create abatement certificates

    Insert after section 97D (2):

    (3) Despite anything to the contrary in this Part, the regulations or the greenhouse gas benchmark rules, a person who is an accredited abatement certificate provider must not, after the commencement of this subsection, create an abatement certificate in respect of an activity occurring outside this State.

    The amendment is aimed at preventing greenhouse abatement certificates being created outside New South Wales. Currently certificates can be created by schemes such as the Hazelwood power station in Victoria, a brown coal power station. By restricting certificate creation to within New South Wales borders, New South Wales businesses would benefit rather than those interstate. It would also promote the creation of certificates for activities that go further than just business as usual and further than simply picking the lowest hanging fruit, so to speak. The Minister told me that he would encourage a campaign in which greenies would campaign against coal from Victoria—dirty brown coal power generation, which is literally costing the earth with its greenhouse emissions.

    Given that the Minister expressed such a sentiment at the conclusion of the second reading debate, he should support my amendment to strike a blow for black coal in New South Wales. That would not be much of a step forward, but the Minister could acknowledge by supporting Greens amendment No. 4 that there is bad, and there is worse. Certainly the brown coal in Victoria is far more polluting.

    The Hon. TONY KELLY (Minister for Justice, Minister for Juvenile Justice, Minister for Emergency Services, Minister for Lands, and Minister for Rural Affairs) [8.54 p.m.]: Whilst Mr Ian Cohen has given a convincing argument, the Government does not support the amendment. The amendment would result in a huge increase in costs for consumers and no change in greenhouse emissions. There is no greenhouse benefit in the amendment; in fact, what Mr Ian Cohen is proposing would have the opposite effect. Climate change is a global problem. It makes no difference whatsoever where greenhouse emissions are saved. A central premise of the GGAS is that the most efficient scheme is the one that saves emissions no matter where they occur. As long as the emissions are reduced and abated at a site that is electrically connected to New South Wales those greenhouse savings should be counted towards the target.

    Amendment negatived.

    Mr IAN COHEN [8.54 p.m.], by leave: I move Greens amendments Nos 5 to 9 in globo:

    No. 5 Page 3, schedule 1. Insert after line 22:

    [3] Section 97DD Conditions of accreditation

    Renumber section 97DD (1) (a) and (b) as section 97DD (1) (b) and (c), respectively, and insert the following before those paragraphs as renumbered:

    (a) a condition that requires the person accredited as an abatement certificate provider not to create an abatement certificate in respect of the greenhouse gas emissions abated by an activity if an abatement certificate or a renewable energy certificate has already been created in respect of that abatement or if that abatement has already been used for the purposes of compliance with another scheme (whether mandatory or voluntary and whether or not imposed by or under a law of this State or another jurisdiction or otherwise), or in accordance with any agreement, arrangement or understanding of any kind,

    No. 6 Page 3, schedule 1. Insert after line 24:

    [4] Section 97DD (3) (a)

    Omit the paragraph.

    No. 7 Page 3, schedule 1 [4], line 25. Omit "(a) and (b)".

    No. 8 Page 3, schedule 1 [4], line 27. Omit "wherever occurring".

    No. 9 Page 6, schedule 1 [10]. Insert after line 14:

    51 Conditions of accreditation

    Section 97DD, as amended by schedule 1 [3] to the Electricity Supply Amendment (Greenhouse Gas Abatement Scheme) Act 2006 does not apply to or in respect of the accreditation of a person accredited as an abatement certificate provider before the commencement of that item.

    Amendment No. 5 tightens up the Government's proposed amendment to ensure that abatement that occurs through other schemes, for example limiting methane emissions due to Environment Protection Authority licences, does not create certificates. This is to apply to both mandatory and voluntary schemes, whether aimed at greenhouse gas abatement or not. While the Government's amendment makes that type of provision discretionary, the Greens amendment makes it compulsory. Amendments Nos 6 to 9 are consequential on the success of amendment No. 5. I commend the amendments to the Committee.

    The Hon. TONY KELLY (Minister for Justice, Minister for Juvenile Justice, Minister for Emergency Services, Minister for Lands, and Minister for Rural Affairs) [8.55 p.m.]: I agree that amendments Nos 6 to 9 are consequential amendments, and as the Government does not support amendment No. 5 it cannot support the consequential amendments. The Government proposes a change to the Act that is very similar to the amendments moved by Mr Ian Cohen. The key difference is that the Government's bill allows the Independent Pricing and Regulatory Tribunal [IPART], as the scheme administrator, the flexibility to take account of a change in future circumstances. The Government's proposed change to the existing Act was prompted by a request from IPART, and IPART has not asked that the requirement be mandatory. Although the Government's proposal is very similar to the amendment moved by Mr Ian Cohen, the Government believes it is important to maintain some flexibility for the scheme administrator. Therefore, the Government does not support the amendments.

    Amendments negatived.

    Schedule 1 agreed to.

    Schedule 2 agreed to.

    Title agreed to.

    Bill reported from Committee without amendment and passed through remaining stages.