Statutes Amendment (National Energy Laws)(Regulatory Sandboxing) Bill

Second Reading

Adjourned debate on second reading.

(Continued from 20 October 2022.)

The Hon. H.M. GIROLAMO (16:16): I indicate that I will be the lead speaker in the upper house for the Liberal Party, and I indicate our support for this bill. Both the gas and especially the electricity market are undergoing a significant transformation, and customers have an ever-expanding range of energy services, including rooftop solar, home battery storage, automated home energy management, virtual power plants, electric vehicles, a blend of green hydrogen and natural gas, and biogas.

These innovative technologies are changing the energy landscape. They are helping to reduce emissions across South Australia's electricity and gas networks while at the same time providing a benefit to customers. Innovative business models, technologies and pricing arrangements will help unlock further opportunities for companies working in this space. It is essential that Australia's energy market has a regulatory framework that can respond to these technological advances and operate in the long-term interests of consumers.

Under the current rules and regulations that energy market participants operate under, it is difficult to determine if a new innovation can occur or if in fact the rules create a barrier in trialling an innovative service. A policy tool that is designed to help regulatory frameworks adapt to rapid technological change is the innovation of regulatory sandboxing. A regulatory sandbox is a framework within which participants can trial innovative concepts in the market under relaxed regulatory requirements, on a time-limited basis and with appropriate safeguards in place.

The introduction of a regulatory sandbox toolkit aims to make it easier for businesses to develop and test these innovative energy technologies and business models. This type of innovation in the energy sector can lead to better services and lower costs for consumers.

The Statutes Amendment (National Energy Laws) (Regulatory Sandboxing) Bill 2022 seeks to implement changes to the National Electricity Law, National Gas Law and National Energy Retail Law to introduce a regulatory sandbox toolkit. Key tools in this framework will be enabled by the amendment bill to the National Energy Law that was introduced in August 2021 into the South Australian parliament by the former Liberal government as the lead energy legislator nationally.

The bill introduces a set of innovative trial principles in the national energy laws. These principles must be taken into account by the market bodies when determining whether a trial project is generally innovative in connecting with granting a trial waiver or making a trial rule. This regulatory sandbox that was introduced by the former Liberal government and that has now been reintroduced will provide for a regulatory framework that is better equipped to respond to the rapid change in the energy sector and deliver benefits for customers through innovation.

As I indicated at the start of my speech, the opposition will support this bill, and I look forward to the innovations and improvements it will no doubt encourage going forward.

The Hon. R.A. SIMMS (16:20): I rise on behalf of the Greens to speak on the Statutes Amendment (National Energy Laws) (Regulatory Sandboxing) Bill. This bill, as part of the national energy law reforms, introduces options to trial emerging innovative technologies and business models in the national energy market.

As I have stated earlier in this place, we are in a climate crisis. For over 100 years, fossil fuels have been providing the energy that we need to stay warm, to keep the lights on and to build industry. According to the National Greenhouse Accounts, energy industries were responsible for 17 per cent of South Australia's greenhouse emissions in 2020. To move towards a cleaner and greener future, we need to evolve our electricity distribution, infrastructure, storage and generation. New technologies are vital to move to a carbon neutral society, and this bill allows for trials for energy technologies in a safe and regulated manner.

While the Greens are broadly supportive of the bill, we do have some concerns regarding clause 33, the innovative trial principles. This section of the bill focuses on developing natural gas services. As this is a national energy law, we are advised that there will be reluctance to move amendments to this element.

I do note, of course, that has happened in the past but, recognising the position of the parties and also the desire to expedite this bill, I will not pursue the amendments that I had previously considered. I will, however, ask the government some questions about that during the committee stage.

After the National Hydrogen Strategy was developed, it became clear that a new definition would be required for gas. According to a policy paper released by energy ministers, a decision was made on 20 August 2021 by the ministers that the national gas regulatory framework should:

…be amended and that the amendments should be expedited to ensure that regulatory barriers do not restrict proposed investments in projects and existing regulatory arrangements and protections continue to work as intended where renewable gases are supplied.

On 28 October this year, energy ministers agreed to amend national gas laws to facilitate this change. The public consultation draft to enact this agreement includes greener fuels such as biogas, biomethane, hydrogen and synthetic methane.

We should not need to wait for a future bill to change the terminology in this proposed legislation. We should be doing it here and now. I will certainly be pursuing the government on that matter. By changing the terminology in this bill, we will move away from natural gas, and we could make provisions for future fuels such as green hydrogen. Creating an environment where we can be agile in our energy and trial new innovations will be beneficial to the transition away from fossil fuels. It is in that spirit that the Greens will be supporting this reform.

The Hon. C.M. SCRIVEN (Minister for Primary Industries and Regional Development, Minister for Forest Industries) (16:23): I would like to thank the Hon. Ms Girolamo and the Hon. Mr Simms for their contributions and also their indications of support for this bill. The world is on an unstoppable trajectory to decarbonise and avoid the effects of runaway climate change. This has led to a race between nations to create new systems and reap the benefits as world trade changes direction.

Australia, and South Australia in particular, has been blessed with bountiful energy resources—the fossil fuels of the past as well as the renewable sources of the future. What we are doing here in considering this bill is opening the gateway to accelerate the transition to a decarbonised future. Sandboxing, this regulatory framework that we are building up to allow new technologies to be tested in real-life experiences, is the way that we will move forward.

This is an exciting piece of legislation. It is exactly the type of Australian innovation that will help us to lead the world. This is not a South Australian invention; it is an Australian invention. This is Australia at its best: bipartisan support, national recognition, national adherence to a piece of legislation being passed in this parliament. This is how we can deal with decarbonisation, by getting on with it and working together. I commend the bill to the council.

Bill read a second time.

Committee Stage

In committee.

Clause 1.

The Hon. R.A. SIMMS: I did want to ask the minister about the potential changes to terminology to natural gas. I am wondering if she could update the committee on what plans are in place in that regard at a national level.

The Hon. C.M. SCRIVEN: I thank the honourable member for that question. I am more than happy to do so. The bill before the Legislative Council contains language and definitions that are consistent with the current national energy laws. The language and the definitions can only be changed through a lengthy process that involves all jurisdictions in the Australian electricity and gas markets. While this bill, the Statutes Amendment (National Energy Laws) (Regulatory Sandboxing) Bill 2022, uses these terms, they are expected to be changed in the near future.

The energy ministers, which formally brings together all jurisdictions, have agreed to pursue reforms to the language and definitions under which the term 'natural gas' in the rules will be broadened to include hydrogen, biogas and other forms of renewables. A bill to effect these reforms is in the process of being finalised and will be introduced to the South Australian parliament in the very near future.

If, as the Greens had initially indicated, they would like amendments, that would actually then involve us going back to every other jurisdiction for approval before coming back to the Parliament of South Australia. That would, unfortunately, have somewhat of a perverse effect, because this bill aims to encourage innovation in the market and instead the bill would be delayed and only be proclaimed at a later date than if the bill is passed and then the language changes are made via a second bill.

I understand the Greens may not proceed with their proposed amendments, given this information, and then I would expect that we can all look forward to supporting the second bill in the future, which embraces the renewables sector by changing the language.

The Hon. S.G. WADE: I would just like to clarify the advice that the minister gave. I certainly appreciate that the Greens are not insisting on change now, but I would not want the parliament to be misinformed about the way the national law works in this case. In relation to national energy law, as I understand it, it is up to each jurisdiction to enact nationally consistent legislation. There are no, shall we say, lead legislators whose law is applied to us by the effect of state and federal legislation. Could we just clarify what is the process by which the national law in relation to energy is maintained in this regime?

The Hon. C.M. SCRIVEN: I am advised that as the lead legislator, which South Australia is in these, the laws are picked up by the other jurisdictions. The laws are scheduled in the national act and all of this is done by agreement, which is why it would not be considered prudent or appropriate to make changes in this circumstance.

The Hon. S.G. WADE: Yes, so just to clarify: it is still within the legislative competence of this parliament to make changes.

The Hon. C.M. SCRIVEN: I am advised that we are not so much referring to the legislative competence. What we are referring to is that changes to national laws are made by agreement, and as the lead legislator that is why we take the approach that we do.

The Hon. S.G. WADE: I thank the minister for that clarification. I think it is important for us to appreciate the powers of the parliament that persist under nationally consistent legislation. I and the opposition certainly concur with the government that it would be prudent to continue to maintain consistency in national energy law across Australia.

The Hon. R.A. SIMMS: I note that there is not support from the Labor Party or the Liberal Party for the amendment. In light of the position put by the government that there is the potential to slow down a reform of this nature, I confirm we will not be pursuing the amendment.

Clause passed.

Remaining clauses (2 to 45) and title passed.

Bill reported without amendment.

Third Reading

The Hon. C.M. SCRIVEN (Minister for Primary Industries and Regional Development, Minister for Forest Industries) (16:33): I move:

That this bill be now read a third time.

Bill read a third time and passed.