Emissions Intensity Scheme

Mr MARSHALL (Dunstan—Leader of the Opposition) (14:47): A supplementary: can the Premier outline to this house exactly how his proposed energy intensity scheme is going to operate, what modelling he has done to see the impact upon costs for ordinary consumers here in South Australia and what prospect is there that this is going to be taken up and implemented immediately?

The Hon. J.W. WEATHERILL (Cheltenham—Premier) (14:48): There are three questions there. I was a little anxious to get up because I am so pleased to be able to answer that question. I won't offer my modelling; I will offer the modelling of the Australian Energy Market Operator, the Australian Energy Market Commission, because they have, in fact, modelled the operation of the emissions intensity scheme. This is the—

Mr Marshall interjecting:

The SPEAKER: If the leader interjects outside standing orders once more, I shall have to remove him under the sessional orders.

The Hon. J.W. WEATHERILL: The first, best position is for there to be a form of the National Electricity Market. It is unlikely that will be achieved because of the various reasons I have explained earlier about the Liberal Party being utterly dominated by coal interests. Nevertheless, to answer the leader's question, because it is an important question, this is the first, best policy position.

The way in which the emissions intensity scheme works is this. It ensures that the rank order of the dispatch of, essentially, bids in the National Electricity Market means that more often a gas-fired generator will be given the opportunity to bid into the market. At the moment, they are always outbid by coal because they can come in at a cheaper price, yet we know that coal is dirtier and more emissions-producing.

So, it means that, on every occasion when we want to try to clean up, in a sense, our power electricity system, the very fuel that will allow us to do that—gas—is being excluded because of the way in which the National Electricity Market works. It actually conducts itself as though all forms of generation are equal. It does not consider the various emissions intensity of each of the schemes.

An emissions intensity scheme would shift the rank ordering between coal and gas and mean that gas would come on more often. What that would do is drive more generation into South Australia and indeed around the nation, and it would also ensure that we have more competition. More competition would drive down prices, firm up our supply and, in the process, clean up our energy generation system.

It also has the other benefit, and the other benefit is for coal. It actually sends a very clear price signal into the market so that coal-fired operators can work out whether they should reinvest in their clunky old coal-fired power stations. This is precisely what is happening in Hazelwood. Hazelwood is going to close on 22 March, and one of the reasons it is going to close is that it needs $400 million worth of investment. The reason its owners won't invest in the $400 million is that they don't know the rules of the game. They cannot take a long-term position in relation to this market because they know a price on carbon is coming; they just don't know what it is or when it's going to come.

Until we do that, you do not get the investment certainty necessary for existing coal-fired generators to make a judgement about how long they should operate, and so you get the unplanned closure of coal-fired power stations around the nation, devastating communities, putting pressure on the National Electricity Market and fundamentally ensuring that the system is broken. That is why all the sensible commentators in the National Electricity Market debate are advocating for an emissions intensity scheme. The only reason why those opposite, cheering on their federal colleagues, are opposed to it is because they are dominated by political interests that are tearing the federal Liberal Party apart. We are seeing it being played out in Canberra as we speak.

Mr VAN HOLST PELLEKAAN: Point of order: the Premier is debating and imputing an improper motive.

The SPEAKER: I uphold the point of order. The member for Stuart.