28 October 2015 Driving abatement through stable policy and long-term commitment to climate actionCarbon Abatement Forum Sydney, 28 October 2015 I would like to acknowledge the traditional owners of the land upon which we meet, the Gadigal people of the Eora Nation, and pay my respects to their elders both past and present, and extend that respect to all Aboriginal people in attendance here today. Id also like to congratulate the organisers of this event it is indeed very timely that we pause to take stock of the commercial, political and economic landscape for carbon abatement in the lead up to the November talks in Paris. The conference program is comprehensive and I am sorry that I wasnt able to join you in discussions yesterday. It is, however, a great pleasure to be here today representing the Federal Labor Opposition. As mentioned in my introduction, my name is Sharon Claydon and Im the Member for Newcastle a city and region that very much sits at the practical centre of a lot of what is being addressed today as we deal with the nexus of energy use, carbon abatement, climate change and sustainability. There really is very little consensus at the moment around even some of the most basic tenants of climate change policy. If we believe that limiting global warming to less than two degrees on pre-industrial levels is the central tenant, critical to the economic, social and environmental future then we need to take robust action that will achieve that goal. Malcolm Turnbulls elevation to Prime Minister last month gave a lot of people hope that it may be the first step in Australia returning to a leadership role in this space but it has been confirmed that there is in fact no change in policy! The new Prime Minister has resolutely committed himself to a policy he himself called in the past an environmental figleaf to cover a determination to do nothing It is well identified that Australia has a very high level of emissions intensity. Per unit of GDP we are second on the table only behind Estonia. Of the fifteen biggest polluters, in aggregate terms, we are the biggest polluter per head of population and we have not brought that down by much since 1990, in contrast to many countries in the OECD that have significantly improved their carbon footprint. We need to face up to the fact that doing our fair share is going to take a significant amount of lifting. We need to be honest about that and develop the policies and strategies required to address it. At a basic level, it is very clear that transitioning an economy that has been built on fossil fuels and agriculture is going to be very difficult; it is going to be a significant transition. But we also should look at the upside, there are significant reductions for us to make if we have the right policies and we have business people who are willing to take risks and pursue innovation. Over the next 40 years Australia is going to experience very substantial population and economic growth. The latest Intergenerational Report suggests that by 2050 Australias population will be about 40 million people, so about two thirds bigger than it is today. There is no other developed nation in the world that is growing that fast. An annual rate of about 1.86 per cent per year is an extraordinary rate in the basket of developed nations. Japan, in contrast, is going to undergo extraordinary shrinkage over the same time period. A population now of about 130 million people is likely to shrink well below 100 million by 2050, probably to around 85 million or the same population that Japan had in 1950. China is likely to shrink in population between now and 2050 too, because of the impact of the one child policy. South Korea similarly, with one of the lowest birth rates in the world, is going to start to shrink in the next decade. The top three of our export partners shrinking in population while we grow by two thirds. Now this is going to have significant social and economic consequences for those nations, but it needs extraordinarily different things when you approach the task of reducing your emissions. At the same time, Australias economy is going to grow substantially. The Intergenerational Report suggested that household incomes, in real terms, after adjusting for inflation, will double over 10 years. So, households, in terms of their purchasing power, will have about twice as much money in 40 years time as they have today. Unlike the countries that will be largely declining over that period of time, Australia will be growing. To the extent we want to reduce our emissions we will be swimming against the tide of population and economic growth. On the upside, ours will be an economy with very significant capital reserves, largely built into our retirement incomes through our superannuation system, and very significant personal or household income. Those finances, whether in terms of income or capital, are an extraordinary foundation on which to finance the transition to a clean energy future. But that population and economic growth tide reinforces the argument for a strong discipline on carbon pollution. It reinforces the argument that Australia must have a hard cap, with a market mechanism operating under that that lets business work out the cheapest and most effective way to operate. So how do we limit global warming to less than two degrees on pre-industrial levels? Todays CO2 concentration is higher than it has been for at least 800,000 years. And this is warming the world at 0.9 degrees above pre-industrial levels. And if we do nothing, if we watch as warming passes 2 degrees, the environmental consequences are widely reported and well-known. Reputex, one of the leading modelling agencies in this area, says emissions in 2020 are likely to be 613 million tonnes, against 559 million tonnes in 2000 and about 548 million tonnes in 2013 when Labor left Government. So an increase by 2020 of about 10% on 2000 levels, not 5% below, or an increase of 12% on 2013 levels. Reputexs modelling is far more generous to the Government than the Department of the Environments own modelling that sees emissions rising much more significantly than Reputex projects. But any agency, really, who looks at this takes the view that the Governments Direct Action policy is just not going to do the job. Indeed, Bernie Fraser, the recently retired Chairman of the Climate Change Authority, said following his resignation that the government havent really got any comprehensive set of policies to deliver even on that modest target in reference to the reduction target of 26 to 28 per cent by 2030, based on 2005 greenhouse gas levels. We will also need to transition from fossil fuels to cleaner energy sources, particularly to renewable energy. Australia has some of the best renewable assets in the world. We have more sunlight than any other continent. And we are also one of the windiest places on earth. We have enough renewable energy resources to power our country 500 times over. Labor has set a bold new goal for renewable energy. We have said, by 2030, 50 per cent of Australias electricity should come from renewable energy. This is not about leading the world its about catching up. Australian State and Territory governments are already on board. - The ACT has a target of 90 per cent by 2020 - South Australia has a target of 50 per cent by 2025 - Queensland has a target of 50 per cent by 2030 And our city councils are leading too. Where we meet here in Sydney, the City of Sydney Council has set a target of 30 per cent by 2030 and in my home town of Newcastle, the Newcastle City Council has also set a target of 30 per cent but to achieve it by 2020. Councils too, are assisting with the practical actions to address renewable energy use and emissions reduction. Newcastle City Council, for instance, have just concluded their Energy Hunter program, funded through a $1.2 million Energy Efficiency grant by the former Labor government. In its two and half years of operation, Energy Hunter saw about 350 small and medium-sized businesses become more energy efficient through a range of measures, leading to a collective reduction in annual electricity consumption of over 4 million kilowatt hours. This represented a reduction of CO2 emissions of over 4,200 tonnes each year and electricity bill saving of over $1.1 million dollars. At the start of this century, experts predicted that worldwide wind capacity would reach 30 gigawatts by 2010. They were wrong. By 2010 this goal was exceeded by a factor of 6, by the end of last year, a factor of 12. At the same time, it was said that the solar energy market would grow by one gigawatt a year by 2010. This year, it will be exceeded by more than 50 times. What cannot be overlooked, however, is that any transition of electricity sourcing must occur in a well-planned, collaborative fashion. At our recent National Conference, Labor made a resolution to develop an Electricity Modernisation Plan in line with our 50 per cent renewable target. Working with industry, unions and other stakeholders, we committed to developing a strategy that amongst other things: Is consistent with economy wide emissions reduction targets; minimises any cost impact on consumers; is based on a consultative and consensus approach to any increase in the large renewable energy capacity that ensures investment confidence, and certainty for workers in existing generators Deals with the impact of growth in renewable energy on existing generators and networks; Deals with workforce issues such as redeployment, retraining and support for affected workers; Develops structural adjustment strategies and investment for communities impacted by change in the sector; And, most importantly, results in a managed, predictable long-term process of modernisation for the electricity sector. It is, I believe of very particular note that this resolution was seconded by Mr Tony Maher, National President of the Construction, Forestry, Mining and Energy Union, whose members will be most directly affected by electricity modernisation. Tony, in his speech to the ALP conference pointed to the importance of working together with workers and communities at times of transition. Ive seen the significance of this approach first-hand in Newcastle, where the closure of the BHP steelworks in 1999 brought forward a number of fantastic initiatives in our region, most notably today, the construction of the CSIRO Energy Centre on the steel river site to help transition workers at a time when the City of Newcastle was bracing ourselves for what was then Australias largest industrial shutdown. Many men and women, who were losing their jobs, had spent their entire working lives at the BHP steel works. And while many of the 2,000 odd workers who remained at the time of closure did transition to other jobs, the brutal reality for some was that they would never work again. This, of course, has enormous social and economic costs for our communities. I do hope the government has both opportunities and costs in mind, when dealing with industry transition into the future I know this is a very live issue for the automotive manufacturing sector in Victoria and the way things are headed, in our shipbuilding sector as well. We must always look to the opportunities available to us, without forgetting those people and sectors most affected by energy transition. One of the greatest opportunities is the path of innovation. As many of you may know: In 1976 the cost of solar cells was $79.40 a watt. In 2014, it was 69 cents a watt. In the last five years, solar photovoltaic prices have fallen by 75 per cent, and wind power costs have fallen by 14 per cent. Over the next five years costs are projected to halve, making solar the cheapest form of electricity generation in many parts of the world. The researchers at the University of Newcastle working on their solar paint technology tell me that well be printing solar panels at the hardware store within a couple of years which will no doubt lead to further dramatic decreases in price that are yet to be factored in! And of course, the cost of battery storage has been halving every 18 months. The trend is unstoppable. For the first time, new global investment in renewables exceeds new investment in traditional sources. Labors goal for renewable energy matters. Our goal will: - Provide certainty and confidence for investors. - Encourage research and development in great institutions. - Foster the right regulatory framework, allowing industries to thrive by generating their own power. - And manage the transition to a clean energy economy in a fair way, without leaving Australian workers behind. As well as renewable energy, we need better energy productivity. Were now about 58 per cent below the OECD average in terms of energy productivity. China has caught up to us, having increased its energy productivity by 150 per cent in recent years. President Obama has a policy of doubling the US energy productivity. This is a very important policy area for Australia and one that Labor is working through now to ensure our policy will drive innovation, further investment and jobs, while improving energy productivity and reducing our emissions. Having population growth in a carbon constrained economy is also a wonderful opportunity to rethink our urban design and transport systems. Yes, we have challenges and debates about infill development, but we still have the least dense cities in the world. Even New Zealand has denser cities than Australia. Of the 276 cities in America that are assessed for urban density, Sydney is only denser than about eight of them and the biggest of those is about the size of Greater Newcastle which has a population of around 300,000 spread over a 260 square kilometre area. There is substantial capacity for us to talk about sensible ambitious urban design in cities like Melbourne and Sydney which are going to be cities of about eight million people by the middle of this century mind you, a city of eight million still wouldnt make it inside Chinas top 25 largest cities! Australias transport is among the least energy efficient in the world (notwithstanding the terrific work of Transforce, which as we know is the only carbon neutral transport company in Australia). A very big part of our energy inefficiencies in transport stems from the Governments propensity to continual investment in roads over rail. A recent international scorecard published by the American Council for an Energy-Efficient Economy revealed that Australia has scored poorly in the energy efficiency of its land transport, and is significantly behind other major economies. This means that Australians are using more energy to travel each kilometre than people in developed nations such as the US, and other major emerging economies including Brazil, China and India. Australias investment in the construction of new roads in recent years has been to the detriment of urban transit. In the first budget prepared by this Government, approximately A$4.25 billion of funds originally allocated for urban rail construction were withdrawn and instead re-allocated to the construction of new roads. We are hearing positive noises from our new Prime Minister that this may change. I am very passionate about the prospects of high-speed rail and the potential economic benefits it could bring to regional cities like Newcastle. Today I drove to Sydney through heavy congestion, making it here in a little over two hours. With high-speed rail, the journey would be cut to just 39 minutes. The other area in greatest need of transition is the land sector, there are so many opportunities in terms of carbon pollution reduction, and if we get this right it will improve our agricultural productivity, which is critically important with a growing population. We know that there are fantastic innovators in this area; they just need the right policy settings. Australia has much to gain from the opportunities that are inherent in a clean energy future. Under Labor, renewable energy boomed and Australia rose to one of the four most attractive destinations for global renewable energy investment, along with China, the US and Germany. Households with solar panels rose from 7,000 to more than 1.2 million and jobs in the renewable energy industry tripled. We established both the Australian Renewable Energy Agency (ARENA) and the Clean Energy Finance Corporation (CEFC) both of which have a vital role to play in developing a clean energy future. ARENA has invested 1.1 billion dollars and leveraged 1.7 billion in private investment in new and emerging renewable energy projects. And since its inception, the CEFC has committed over 1.4 billion dollars in finance to investments in clean energy projects valued at over 3.5 billion dollars. The CEFC investments are expected to achieve abatement of 4.2 million tonnes of CO2 emissions per annum, while also producing a positive net benefit to the Australian taxpayer. These are just some of the benefits of stable policy and long-term commitment to climate change. Instead of working to abolish ARENA and the CEFC, or demonise some renewables and technologies over others, the government really needs to get on board, so we can be prepared for both the challenges and opportunities ahead. Thank you for your time today and I wish you well in your deliberations for the remainder of the conference.