Budget Estimates Hearings 20/08/2014: Luke Foley Questions Minister for the Environment Rob Stokes

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GENERAL PURPOSE STANDING COMMITTEE NO. 5

Wednesday 20 August 2014

Examination of proposed expenditure for the portfolio area

ENVIRONMENT, HERITAGE, THE CENTRAL COAST

The Committee met at 9.00 a.m.

MEMBERS

The Hon. R. L. Brown (Chair)
The Hon. R. H. Colless The Hon. L. Foley
The Hon. A. Fazio
Dr M. Faruqi
Mr S. MacDonald
The Hon. Dr P. R. Phelps
Hon. Greg Donnelly

PRESENT

The Hon. Rob StokesMinister for the Environment, Minister for Heritage, Minister for the Central Coast, and Assistant Minister for Planning

STEVE HARTLEY, Principal Manager Forestry, Environment Protection Authority,

TERRY BAILEY, Chief Executive, Office of Environment and Heritage, and

MARK GIFFORD, Chief Environmental Regulator, Environment Protection Authority, affirmed and examined; and

IAN FRENCH, Chief Financial Officer, Office of Environment and Heritage,

BARRY DESMOND BUFFIER, Chair and Chief Executive Office, Environment Protection Authority,

STEVEN JOHN BEAMAN, Director, Waste and Resource Recovery, Environment Protection Authority, and

CRAIG LAMBERTON, Direction, Hazardous Incidents and Environmental Health, Environment Protection Authority, sworn and examined:


 

CHAIR: I declare the proposed expenditure for the portfolio of Environment, Heritage and Central Coast open for examination. We will begin with questions from the Opposition.

The Hon. LUKE FOLEY: Are you familiar with your responsibilities under the Government's NSW 2021 State plan?

Mr ROB STOKES: Yes.

The Hon. LUKE FOLEY: And if I was to go to that document would it be fair to say that key accountability as far as the environment Minister is concerned is goal 22, that is, to protect our natural environment?

Mr ROB STOKES: Yes.

The Hon. LUKE FOLEY: When I go to goal 22, protect our natural environment, there are six targets, are there not?

Mr ROB STOKES: Yes.

The Hon. LUKE FOLEY: The one I would like to take you to is the target under the headline, "Increase renewable energy—20 per cent renewable energy by 2020". You are accountable for that target, are you not?

Mr ROB STOKES: Yes. It is a national target but we are progressing towards and working in cooperation with other jurisdictions towards the national target.

The Hon. LUKE FOLEY: What was the Liberal-Nationals election commitment at the 2011 election on a renewable energy target?

Mr ROB STOKES: I cannot recall so you will have to elucidate.

The Hon. LUKE FOLEY: I take you to the document titled "NSW Liberal-Nationals plan to boost renewable energy", which states: The NSW Liberal-Nationals support the development of the renewable energy sector. This is why we will

• Establish a Parliamentary Secretary for Renewable Energy to champion the development of renewable energy

• Develop a 2020 NSW renewable energy plan to provide a blueprint to increase the proportion of energy from 7 per cent to meet the target of 20 per cent renewable energy consumption by 2020

Are you familiar with that election commitment?

Mr ROB STOKES: I am now, yes, and I am in general terms as well.

The Hon. LUKE FOLEY: So it is an election commitment to meet a 20 per cent renewable energy consumption target in New South Wales by 2020?

Mr ROB STOKES: From that wording it was unclear to me whether it was referring specifically to generation or consumption but yes, in broad terms, there is a national target and we are committed to working across government and with other governments to achieve that target.

The Hon. LUKE FOLEY: I know there is a national target. Is there a State target?

Mr ROB STOKES: The focus of the State has been working together with other jurisdictions towards the national target.

The Hon. LUKE FOLEY: That is not an answer. Is there a State target?

Mr ROB STOKES: That is an answer and there is a national target.

The Hon. LUKE FOLEY: There is a national target. I take it there is no longer a State target?

Mr ROB STOKES: I draw you to, I think it was John Donne Devotions 17 where he said, "No man is an island" and that relates to the State of New South Wales. As sad as it might be for some of us, we are part of a nation. There is no republic in New South Wales so we have to be cognisant of working together with our partners across Australia. Different States have different resources and different capacities. It is incumbent on each of the States to work effectively and collaboratively to achieve national goals.

The Hon. LUKE FOLEY: If I look once again at the State election policy commitment of the New South Wales Liberal-Nationals that is to "meet the target of 20 per cent renewal energy consumption by 2020", there is then a reference to the NSW State Plan Performance Report, "Green State", November 2010 on page three. That is a reference to this State's 20 per cent by 2020 renewal energy target, is it not?

Mr ROB STOKES: I reaffirm that the Government has set a target in New South Wales 2021 of 20 per cent renewable energy by 2020 to support the achievement of the National Renewable Energy Target.

The Hon. LUKE FOLEY: So New South Wales does have a target?

Mr ROB STOKES: I have just answered your question.

The Hon. LUKE FOLEY: That is somewhat different to the answer given a couple of questions ago. To be clear, you are now telling us that the State, in its New South Wales 2020-21 plan, does have a target of 20 per cent renewable energy consumption by 2020? Is that a fair statement?

Mr ROB STOKES: Just to be clear in case there was any misinterpretation, I can confirm that the Government has set a target in New South Wales 2021 of 20 per cent renewable energy by 2020 to support the achievement of the National Renewable Energy Target.

The Hon. LUKE FOLEY: Why does the State target of 20 per cent by 2020, to which you have just referred, not appear anywhere in the NSW Renewable Energy Action Plan?

Mr ROB STOKES: I have just said that we have a target in keeping with the National Renewable Energy Target—

The Hon. LUKE FOLEY: A target for the State?

Mr ROB STOKES: Yes, which is consistent with the national target.

The Hon. LUKE FOLEY: In other words we have a State target of 20 per cent by 2020 and a Commonwealth target of 20 per cent.

Mr ROB STOKES: Councillor, the last thing I want to do is to seek in any way to duplicate or add unnecessary red tape to what is a fairly simple proposition, which is that we are trying to increase in an audible, cost-effective and pragmatic way the use of renewables in our energy mix. Target or no target that is our commitment; that is what we are working towards.

The Hon. LUKE FOLEY: With respect, the commitment at the last election that I have quoted twice was for a target of 20 per cent for the State. Do you stand by that?

Mr ROB STOKES: Yes, and I have concurred with you.

The Hon. LUKE FOLEY: To be clear, the State target refers to energy consumption in New South Wales, not energy generation. Is that correct?

Mr ROB STOKES: I do not think it was specific in relation to consumption or generation but I can take that specific question on notice.

The Hon. LUKE FOLEY: Once again if I were to take you to the Liberal-Nationals election policy commitment the words are clear: to meet the target of 20 per cent renewable energy consumption by 2020.

Mr ROB STOKES: From memory it is also reflected in 2021 with the wording "20 per cent renewable energy by 2021". I think that is the precise wording, if my memory serves me right.

The Hon. LUKE FOLEY: The first document I can find of this Government that refers to a target for the State arose from Morris Iemma's greenhouse statement in late 2005 that led to a paper on the New South Wales Renewable Energy Target and made expressly clear that the target was by reference to consumption, not generation. I think it is the case that that policy goal has never changed. Do you agree with me?

Mr ROB STOKES: In relation to specifics about generation or consumption I am happy to take that on notice. But I think the general point, and something that I want to make clear is my commitment and this Government's commitment to see, in an affordable and effective way that brings the community with us, an increase in the use of renewable energy and certainly an increase in renewables as part of the overall energy mix of the State.

The Hon. LUKE FOLEY: Yes, and you have a target that you are accountable for in the Government's State plan and I am trying to be clear on what is the target. I think I can say without fear of contradiction that it is a target for consumption. Is that correct?

Mr ROB STOKES: Yes, and I can also confirm that the New South Wales Renewable Energy Target was never enacted by the former Labor Government. It might have put out documents on it but it certainly was not legislation that was enacted.

The Hon. LUKE FOLEY: We could not get the numbers for it in the upper House. Our intent was

Mr ROB STOKES: I can say we are committed to promoting investment in renewable energy in ways that generate a secure, affordable and as far as possible clean energy for New South Wales. As I have already indicated, the Government has set a target in NSW 2021, as you have indicated, of a 20 per cent renewable energy by 2020 and that is in order to support the achievement of the National Renewable Energy Target. In broad terms, it has been an understanding for many years that the Federal Government takes the lead in climate change mitigation while the States are primarily responsible for adaption responses.

The Hon. LUKE FOLEY: What monitoring occurs at the level of State Government in tracking how we are going in meeting that 20 per cent target for six years hence? Are resources devoted towards monitoring and reporting on how we are going?

Mr ROB STOKES: I might refer to Mr Bailey.

Mr BAILEY: The Office of Environment and Heritage has a monitoring program, a reporting framework that sits in under 2021. So we are required to report against that. Certainly the steps that have been taken in the past couple of years, particularly around renewables with the work that is going on around Nyngan and Broken Hill in terms of renewable energy plants, and particularly around local community regional clean energy programs, will start to give us a stronger indication of the sorts of benefits that are coming in those measures through the Renewable Energy Programs.

The Hon. LUKE FOLEY: Minister or Mr Bailey, what is the latest figure you can provide of the total electricity consumed in New South Wales? How much is from renewable sources of electricity?

Mr ROB STOKES: I will refer to Mr Bailey. I want to make the point that part of it is difficult to estimate because we can talk about electricity that is generated from centralised power stations but the one that is tricky to refer to is the more than 240,000 separate—

The Hon. LUKE FOLEY: Off grid.

Mr ROB STOKES: —rooftop installations that have been installed because the benefit of rooftop solar is that it reduces demand for centralised energy consumption. It is difficult to quantify the impact that that has. We know from projections of the Australian Energy Market Operator [AEMO] that that reduces demand. But the biggest proportion of the centralised contribution would obviously come from hydro power, primarily from the Snowy, but wind and now large-scale solar photovoltaics are starting to make a particular impact. I will refer to Mr Bailey for more information.

Mr BAILEY: The question that has been asked is very complicated and particularly complicated around the fact that the State does not have its own energy market anymore; it is part of a national market so the ability to be able to do the calculations is time-consuming in the amount of work that needs to be done there in its own right.

The Hon. LUKE FOLEY: But the Australian Energy Market Operator [AEMO] gives us a figure on grid, to acknowledge the Minister's point, to acknowledge what grid consumption is each year, does it not?

Mr BAILEY: Yes.

The Hon. LUKE FOLEY: So surely that is a big help to you; it breaks it down by State level?

Mr BAILEY: There is no doubt that it is one of the contributing factors that we take into account in the measuring and reporting that we do. The absolute question I would have to take on notice in giving a percentage of charge. We do a series of calculations that assist us in understanding how our contribution exists and working on the numbers of households that will be picked up by the photovoltaic [PV] projects that are being run out of Nyngan and Broken Hill and how they contribute to our work towards capturing the components, as the Minister has mentioned, around the Snowy scheme, and then capturing the smaller components that exist at local community levels and the PV program on houses around New South Wales. The absolute percentage I will take on notice but there are a series of pieces that contribute to us having an understanding of how we are tracking against that 20 per cent.

Mr ROB STOKES: And I can add further, literally off the top of my head so this is a hazy figure but I am pretty sure, that it is around 14 per cent, I think was the latest figure I read. But again that can stand to be corrected on notice. It does obviously change from year to year depending on water volumes in particular, so the contribution of hydro in a wet year can be very significant. So it moves. Also, the other thing that is important to refer to that moves is electricity demand itself and that is perhaps the most powerful component in driving down electricity demand. It is a huge part. The megawatts, the energy we do not use is actually the most efficient form of energy.

The Hon. LUKE FOLEY: You and I are on a unity ticket on that one, Minister. The most recent figure I can find, gentlemen, is 7,881 gigawatt hours of electricity consumed in New South Wales from renewable generation in 2012. Does that sound about right to you?

Mr ROB STOKES: No, it does not. I suspect that is reflecting a dry year but again we can get you the figures. My other suggestion is that these matters of generation profile are probably more specifically directed to the Minister for Resources and Energy but nevertheless we can find you that information.

The Hon. LUKE FOLEY: Do you think you will be able to assist me with figures more recent than 2012 or is there usually a lag of that time frame?

Mr ROB STOKES: We will have to take that on notice but I am confident we can find more recent

The Hon. LUKE FOLEY: In light of your election policy commitment, which referred to 7 per cent of your election policy document, can you shed any light today on what both the percentage and the total gigawatt hours of renewable energy consumption was when this Government came to office in 2011?

Mr ROB STOKES: I would have to take that on notice but again it may also be a matter that the Minister for Resources and Energy might be able to shed some light on as well as to actual energy generation and consumption.

The Hon. LUKE FOLEY: If I go to the New South Wales' forecasts of AEMO's national electricity forecasting report, the most recent figure I can find for actual energy consumption is a 2013-14 estimate of 66,233 gigawatt hours. Does that sound about right?

Mr ROB STOKES: You will have to run that by me again, sorry.

The Hon. LUKE FOLEY: It is 66,233 gigawatt hours of total annual energy consumption on the grid in New South Wales. I am not talking about renewables, I am talking about the lot.

Mr ROB STOKES: Okay. There you go.

The Hon. LUKE FOLEY: You think that sounds about right but you will take it on notice?

Mr ROB STOKES: No. If that is what the document says, it is what it says.

The Hon. LUKE FOLEY: You accept it.

CHAIR: Thank you, Minister. I will now pass over to Dr Mehreen Faruqi.

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The Hon. LUKE FOLEY: I think we have agreed that estimated energy consumption in New South Wales in 2013-14 was 66,233 gigawatt hours. Do you or your office responsible for meeting the target under the State Plan have an estimate of total electricity consumption in New South Wales in 2020?

Mr ROB STOKES: I am not seeking to pass buck, but I have a direct responsibility for energy efficiency and the Minister for Energy and Resources has responsibility for the energy sector more broadly. Some of these questions are moving away from my direct responsibility. I obviously have a strong interest in them and we have a role to play in trying to promote renewable energy. However, in terms of energy policy more broadly, that is specifically within the remit of the Minister for Energy and Resources.

The Hon. LUKE FOLEY: We started with the New South Wales 2021 State Plan and we agreed that you are explicitly accountable under goal 22 for the 20 per cent target for renewable energy by 2020. I am seeking to hold you to account by asking questions about what we are doing to achieve that goal. Is it not logical that in seeking to achieve that your office or the Government as a whole would have a projected figure for total electricity consumption for 2020 so that we can then project what 20 per cent would be and work out how we achieve that? Surely we measure this.

Mr ROB STOKES: You quoted a specific figure. Obviously I do not have the specific generation figures in front of me. From memory, the Australian Energy Market Operator [AEMO] projections were just that—they were projections based on economic growth and the measures were low, medium and high. That is what energy modelling tends to do.

The Hon. LUKE FOLEY: Which one do we use?

Mr ROB STOKES: I will take many of the specifics on notice. While we did agree that the Government is accountable for an overall target, Minister Roberts has oversight of this State's renewable energy aspirations, and I will assist him in that.

The Hon. LUKE FOLEY: Mr Bailey, in any plan to get to 20 per cent by 2020 does the State have a projection that tells us how much electricity we are projected to consume in 2020? Surely we have such a

Mr BAILEY: Projective figures are done.

The Hon. LUKE FOLEY: Do you rely on the AEMO?

Mr BAILEY: The AEMO sets three levels—low, medium and high—that are related to growth in the economy. There is certainly a stated position that the Government has committed to deliver annual energy savings of 16,000 gigawatt hours by 2020. As we move towards 2020 we will continue to monitor that against the low, medium and high scenarios to ensure that we meet the 20 per cent target by 2020. However, the current commitment is 16,000 gigawatt hours by 2020.

The Hon. LUKE FOLEY: No, that is a figure of energy saving not consumption.

Mr BAILEY: That is correct.

The Hon. LUKE FOLEY: I am asking you about renewable energy consumption. I put it to you and the Minister that it is impossible to track how we will achieve the 20 per cent State target unless in the first instance you can tell us what the Government projects total energy consumption will be in 2020.

Mr ROB STOKES: This is getting technical and we will legitimately have to take the question on notice. However, from memory, the Renewable Energy Action Plan includes a graph that indicates on the basis of projected growth in energy consumption where we are going in terms of energy savings and renewable energy. I see you have it in front of you. From memory, there is a graph—

The Hon. LUKE FOLEY: It is well thumbed.

Mr ROB STOKES: There is a graph that provides an indication. Again, the problem is we are in a market that is changing all the time and there are certain things we do not control. One of the biggest drivers is Federal policy, which we do not control. The sorts of things States do control are planning processes and energy-efficiency measures. The Energy Savings Scheme is well regarded as a leading white certificate scheme for energy efficiency.

The Hon. LUKE FOLEY: Sure, but I am asking about measurement.

Mr ROB STOKES: In terms of big economic drivers, they are controlled—quite appropriately—by the Federal Government. We need to work within that context.

The Hon. LUKE FOLEY: I will get to them in a minute, but it is the case that in Federal legislation there is a gigawatt hour figure for 2020 of 41,000 gigawatt hours. There is a table in the legislation that delivers an annual target. You can construct a graph as there is a trajectory. The legislation the former Labor Government put before the last Parliament had a similar table. You made the point that legislation was not passed by the Parliament. Is it or is it not the case that the Government has a table somewhere that gives us a projected trajectory in order to meet your State Plan target? Do we have that?

Mr ROB STOKES: I can say this sort of data is simply not held within OEH. It is a matter for the Department of Resources and Energy. We can take that on notice and get that for you. These are portfolio issues that we have a strong interest in because of their environmental impact.

The Hon. Dr PETER PHELPS: And Minister Roberts will be before the Committee this afternoon.

Mr ROB STOKES: There are technical specifics. I suspect Minister Roberts will have to take questions on notice because answers will need to provide specific data, which I assume will be held by the Department of Resources and Energy.

The Hon. LUKE FOLEY: I make the point again: Minister, it is your accountability under the State Plan. You made some very strong statements in your early months as Minister, and I applaud you for them. You are the self-styled Arnold Swarzenegger of Australia when it comes to renewable energy. Surely in order to meet the target you boast of somewhere we have to measure it and set out a trajectory to get there, or does New South Wales not do that?

Mr ROB STOKES: Yes, and that is a matter that I am working with the Minister for Energy and Resources on. I do not want to suggest questions for him, but I suspect the Minister will get his opportunity as well, and these might be questions you can put to him. I will seek that data. I understand it is not specifically within OEH but it is a matter for the Department of Resources and Energy, which is where the Renewable Energy Advocate sits.

The Hon. LUKE FOLEY: Can I put some ballpark figures to you for your comment? The Australian Energy Market Operator [AEMO] medium energy consumption forecast for 2020 for our State is 66,849 gigawatt hours. I think 20 per cent of that is 13,370 gigawatt hours. Earlier you were unable to give me a figure for renewable consumption at the moment or at a recent point in time. If we use the 7,881 figure—you said it might be a bit low, but if we cannot do any better we can start there—is it not the case that we need to ramp up renewables by about 5½ thousand gigawatt hours between 2012 and 2020? Is that ballpark correct?

Mr ROB STOKES: Again, we are talking a bit in the dark, because the specific figure you are after I need to get from the Department of Resources and Energy. You have given me a great opportunity to talk about some of the big projects we have underway. We have had incredible success in being able to work with the Federal Government to unlock funds from the Australian Renewable Energy Agency. I am very confident that each of the projects will be successful—and we know, in relation to the potential solar flagship projects in New South Wales, three of them are up and we have a very good shot, I suspect, of getting another one up, and is Capital Solar as well. That compares very favourably with performance in other States. We have some big projects underway. There are many projects for which planning approval has been provided. I can probably get you a specific figure for the wind energy projects consented to. Of course, the Government is not a project developer. We can provide a planning approval framework and assist proponents to develop sensible projects. But in terms of finance required to get projects off the ground, that is not within our accountability. We help to create a marketplace, but it is up to the private sector to consider what projects make economic sense.

The Hon. LUKE FOLEY: What is the status of your election commitment and State Plan target? If you cannot tell us what the measurements or the projects are and how to get there, can you tell us it is in the hands of the Feds?

Mr ROB STOKES: No.

The Hon. LUKE FOLEY: Is your rhetoric simply wishful thinking? What is the plan to get there, Minister?

Mr ROB STOKES: Here are some specific figures.

The Hon. LUKE FOLEY: Good.

Mr ROB STOKES: I have mentioned generation from solar. Off the top of my head, there are well over 240,000 solar photovoltaic [PV] systems, microgeneration solar on residential rooftops. We have several environmental—

The Hon. LUKE FOLEY: That is megawatts?

The Hon. Dr PETER PHELPS: No, that is individual systems.

Mr ROB STOKES: Microgeneration—individual systems.

The Hon. LUKE FOLEY: The number of households with panels.

Mr ROB STOKES: Yes, that is right.

The Hon. LUKE FOLEY: That is about 380 megawatts.

Mr ROB STOKES: I think the average is around 1.5 kilowatts per system, so they are not big systems individually but collectively they make a significant impact. We have the large-scale solar projects currently under development, which will literally dwarf anything else currently under construction in Australia. In relation to the generation capacity of existing wind energy projects, it is more than 4,000 megawatts. In total, there are 18 wind farms in New South Wales that are operational, under construction or not yet under construction.

The Hon. LUKE FOLEY: We agreed your target is consumption. How are we going on consumption? You cannot tell us.

Mr ROB STOKES: In relation to projects currently in the planning system—that is, for which approvals have been given—they will provide an extra 5,373 megawatts of renewable energy capacity.

The Hon. LUKE FOLEY: Let us go to that. Many of the projects in the system will fall over if the Commonwealth abolishes or heavily waters down its Renewable Energy Target. That is the case, is it not?

Mr ROB STOKES: It is really difficult for me to comment on hypotheticals.

The Hon. LUKE FOLEY: What is the position of the New South Wales Government on the review of the Commonwealth Renewable Energy Target? Do you support 41,000 gigawatt hours?

Mr ROB STOKES: Yes. Again, there is a submission by my colleague the Minister for Resources and Energy. If you have specific questions in relation to that, I suggest you direct those questions to the Minister.

The Hon. LUKE FOLEY: You have made strong statements on the Commonwealth target, so I will ask you about it. Is it not the case that the latest position of the New South Wales Government, as expressed in the New South Wales Government's submission to the review of the Renewable Energy Target, is that you support the 41,000 gigawatt hour target?

Mr ROB STOKES: Yes.

The Hon. LUKE FOLEY: The Government argues that the date of 2020 be pushed out—in other words, a so-called true 20 per cent. That is the position, is it not?

Mr ROB STOKES: No, and again we are getting into matters that really fall outside my portfolio responsibilities. I am happy to provide some assistance, but specific questions should be directed to the Minister for Energy and Resources.

The Hon. LUKE FOLEY: Are you telling me that is not the position of the Government?

Mr ROB STOKES: I can say that, as I recall, we did not refer to pushing out the date. We said 41,000 gigawatts, whenever that represents 20 per cent.

The Hon. LUKE FOLEY: The Government recommends extending the time frame for the scheme and pushing out the date.

Mr ROB STOKES: From recollection, we did not provide a date. That was the point. We support the

The Hon. LUKE FOLEY: You do not support 41,000 gigawatt hours by 2020, you support 20 per cent by 2020. There is a difference.

Mr ROB STOKES: We support a 41,000 gigawatt hour target.

The Hon. LUKE FOLEY: At a date later than 2020.

Mr ROB STOKES: We have two things operating at the same time: We have energy generation, but we also have energy consumption. Consumption is decreasing. In a context where we do not need as much energy, and I think we are at one on this that that is a good thing, if we can power our lifestyles and our economy using less energy, that is fundamentally probably the most important goal, to try to use less energy to reach the same objectives. You referred to my comments about California before. The comments that I made were in reference to energy efficiency specifically and clean energy more broadly. California is a terrific example because since, I think, the early seventies—1971, I think—energy demand has remained relatively flat while the economy has grown more than 20 times. That is the sort of objective we need to aim for, but the problem is we certainly do not want the perverse outcome of direct investment into generation capacity in the context of a market that is using less energy. You want new capacity to meet unmet demand. The challenge we have is where demand is being met investment could go into more useful elements of renewable energy.

CHAIR: Order! Opposition time has now concluded.