Emissions Intensity Scheme

The Hon. T.R. KENYON (Newland) (14:33): My question is to the Premier. Why is it in South Australia's interest for an emissions intensity scheme to be established?

Members interjecting:

The SPEAKER: There are many members of the opposition who are on two warnings. I am interested in the answer to this question.

The Hon. J.W. WEATHERILL (Cheltenham—Premier) (14:33): Thank you, sir. Why are they so exercised today? In fact, today's announcement of Pelican Point, which I think is at the heart of their discomfiture, is a good example of what would have happened for an emissions intensity scheme should it be in place in this country. It has a very similar effect. The effect that our plan has had on the South Australian investing climate is very similar to the effect that an emissions intensity scheme would have on the national investing climate.

Businesses crave certainty. They crave the capacity to understand what the rules of the game are so they can make money. It is as simple as that. If they are given a clear set of principles, what they will do is invest in the future. Almost every country and every company that has thought about energy markets knows that there is a price on carbon coming; it's just that it hasn't been described yet. They know it's coming, and so it chills investment to actually not know what it is. You are making a 20 or 30-year investment decision, so you need to understand the rules of the game so you can construct a business case.

This is at the heart of why companies like ENGIE closed Hazelwood. They couldn't make the relevant investment in maintenance because they didn't understand what the future was going to look like. That's why you lead to disorderly exits from the market, such as the closure of Hazelwood and indeed the closure of Northern, because people are basically uncertain about their future. That uncertainty is hurting households and it's hurting businesses.

We have seen at a national level that this investment uncertainty remains. About 5,000 megawatts of installed capacity have disappeared over the last few years across this nation. This is at the heart of the massive price spikes—because you reduce supply with increasing demands and of course you get price increases.

This is the phenomenon that is occurring all around the nation now. We are seeing this now in New South Wales, in Queensland and also in Victoria and Tasmania. This is why the smile has gone off the face of our federal energy minister. He was happily beating up on South Australia about renewables and saying that this was a South Australian phenomenon, and that all has now switched when it became obvious that these pressures are affecting New South Wales.

It started to turn the day after our last blackout on 8 February when there was a load-shedding event of exactly the same quality in New South Wales. All of a sudden, it dawned on those in the Eastern States that this was coming to a place near them, and it's essentially the chickens coming home to roost. It's the lack of a coherent national policy which essentially brings together climate policy and energy policy.

The emissions intensity scheme is something we advocated for back in May, and we took it to COAG in December. It's the fastest way to create investment certainty and resolve issues of unreliability and price increases, and it's worth talking about the people who support it. Of course, we had Dr Finkel, in his review that he presented to COAG, describing this as the lowest cost way of doing it. Spectacularly, Snowy Hydro is the latest group to come out and support a national emissions intensity scheme.

Here is the list of people who support it: the Business Council of Australia, Energy Networks Australia, the Australian Energy Market Commission, Origin Energy, BHP, the Australian Industry Group, AGL, CSIRO, National Farmers' Federation, the Chief Scientist (who of course we just mentioned), the Australian Energy Market Commission, the Clean Energy Council and indeed Mr Nick Xenophon. It seems that the only people who don't support it are the Liberal Party of South Australia, the Liberal Party of Australia and a few coal interests.