Energy Legislation Amendment Bill 2021

Hansard ID: HANSARD-1323879322-119430

Hansard session: Fifty-Seventh Parliament, First Session (57-1)

Energy Legislation Amendment Bill 2021

Second Reading Debate

Debate resumed from 13 October 2021.

Mr JIHAD DIB (Lakemba) (16:32:25):

I lead for the New South Wales Opposition on the Energy Legislation Amendment Bill 2021. As stated in the second reading speech, the bill seeks to modernise and improve a series of administrative processes across a suite of energy legislation. It also seeks to legislate aspects of the New South Wales Government's $3 billion hydrogen strategy. I confirm that the Opposition will not oppose the bill; however, we reserve the right to move amendments in the Legislative Council.

We are at an important juncture in time. The issues of energy security and climate change are interwoven in a way that implores people of all political stripes to find middle ground. Events over the last few years demonstrate that the New South Wales energy framework is in need of modernisation. We have lived through times of high energy costs. Many people will recall that a few years back an unstable energy supply. It is a truism that Australians want to look to a future of diverse, clean and cheap energy supply. This must be enabled by an up‑to‑date, flexible legislative and regulatory regime. The regime must protect and create jobs and at the same time hold an overarching view of not doing any more damage to this precious earth. This principle will be at the forefront of all NSW Labor energy and climate policy.

We must also address emerging cyber threats that require innovative approaches to energy security. NSW Labor Opposition will support the legislative change and reforms needed to provide that security both for industry and households. Like many others, I was concerned by the cyberattack in May 2021 that forced the shutdown of a major energy pipeline in the United States. We need to take precautionary measures to ensure a ransomware attack of that nature does not occur in New South Wales.

Labor appreciates that beyond improving administrative process, significantly, the bill gives effect to aspects of the Government's hydrogen strategy. Labor welcomes the in‑principle hydrogen production incentives announced last week. While it was a significant announcement, Labor has been quite vocal on the importance of cleaner forms of energy, and hydrogen is a key possibility within this mix. Labor reiterates that the detail of the announced policy as well as the follow through and implementation of this strategy are far more important than the announcement alone.

The time to act has well and truly passed and the populous is tired of waiting for action. Far too often we have seen showy announcements on energy and climate, but we are still waiting on things such as the delivery of a climate change adaptation plan—New South Wales is the only State or Territory to not have one—the completion and implementation of an energy efficiency and energy saving plan, with the delay resulting in lost opportunities to cut energy bills for New South Wales by billions of dollars; and the finalisation of the Climate Change Fund Strategic Plan 2017 to 2022. Announcements and intent are welcome, but tangible actions are what is most important.

The use of renewable energy zones [REZs] go to the heart of the NSW Hydrogen Strategy. The hydrogen production fostered by these incentives will be generated by REZs in areas including the Illawarra and the Hunter. It is a good example of what can be achieved when the Parliament takes on amendments from all representatives, such as those put forward by the Labor Party. In November last year the Government introduced the Electricity Infrastructure Investment Bill 2020, creating renewable energy zones in a number of regional areas in The Nationals‑held electorates. Notably, the Illawarra and the Hunter had been overlooked for REZ status by the Liberal‑Nationals Government. Labor moved amendments to ensure the Illawarra and the Hunter were included and would get their fair share of renewable energy jobs. Significantly, this allows some certainty for people at risk of losing their employment as a result of a move towards the development of new energy sources.

Labor is the party of green hydrogen, with Labor governments already delivering in Queensland and Western Australia. A Minns Labor government would do the same in New South Wales from 2023. At its heart, energy security is a household issue. Our constituents know better than anyone the pressure of mounting electricity bills. Many of our constituents are blue‑collar industrial workers and know that industry relies on secure, affordable energy. A clean, cheap and secure energy future requires hydrogen at a macro level, for the reasons I have outlined, and at a micro level to provide long‑term relief to households from crushing energy bills.

The bill before the House proposes amendments to the Electricity Supply Act 1995, the Energy and Utilities Administration Act 1987, the Forestry Act 2012, the Gas Supply Act 1996 and the Pipelines Act 1967. As I said at the outset, the purpose of these amendments to the energy Acts are in large part to improve administrative processes. The amendments reflect alternate sources of energy that include hydrogen and biogas being introduced into the New South Wales energy supply.

The amendments will enable New South Wales to opt into the national regulatory framework for standalone power systems, or SAPs. There will be improvement to the administration of the Energy Security Safeguard and the Energy Emergency Framework. The bill also enhances cybersecurity protections for the energy system. The bill enables renewable energy projects in State forests but only in softwood plantations, not native forests. I will have more to say about that later in my speech. There are several miscellaneous provisions that, for example, will increase options available to networks to resolve issues of private structures encroaching on electricity and gas works.

We can deduce the following in relation to certain aspects of the bill. The bill addresses a lack of clarity in the definition of "natural gas" as a renewable gas source, such as the development of green hydrogen. The NSW Hydrogen Strategy sets a target of 10 per cent hydrogen gas network blending, which is considered safe within the existing pipeline infrastructure. However, blended gas would be illegal because it does not meet the current definition of "natural gas". These amendments allow for industry certainty and for a more practical application of the policy direction. The amendment makes sense.

As we know, one of the key inhibitors of new technologies and possible changes is the cost ratio. Often the scale means opportunities are limited to undertake changes in the early stages. The bill also enables certain concessions to lower the price of electricity for green hydrogen production. That allows electricity used to be exempt from costs associated with the Climate Change Fund under the Government's Energy Security Safeguard. As such, purchases of electricity that provide green hydrogen will be given an exemption from network system user charges. Concessions will be available for 12 years and, as I said, that certainty may attract investment and uptake of the scheme.

The bill enables a national energy stand-alone power system [SAPS] framework. SAPSs are electricity arrangements that are not physically connected to the national electricity grid. The amendments provide the option for New South Wales to opt in to the framework if it is beneficial to do so. Typically, a SAPS consists of photovoltaic solar panels, generators and batteries. They are an effective way to supply electricity to regional and remote areas rather than maintaining a connection to the grid. The concerns that arise with that include the loss of network maintenance jobs and the possibility of limited ongoing employment around SAPS. That raises the questions of how they will be maintained in the long term and how an energy supply will be generated if the renewable energy source is lost—for example, if there is a massive storm or, as we have seen in Armidale recently, a tornado. What are some of the solutions to that? We need to consider those questions. The changes will enable a distributor to operate a SAPS for a customer. Most importantly, it imposes consistency of rights and obligations on distributors operating a SAPS as other distributors.

The bill also gives effect to parts of the Energy Security Safeguard announced in 2019, which includes two separate schemes: the energy saving scheme [ESS]—there are a few acronyms in this legislation!—running now until 2050, with an energy saving target of at least 13 per cent; and a new peak demand reduction scheme [PDRS] to support activities that reduce demand at peak times, including a flexible demand response. That was set out in a September 2021 position paper released by the Minister. The ESS provides financial incentives to install, improve or replace energy savings equipment and appliances in households and businesses. The bill will enable projects to switch to cleaner fuels but is focused on enhancing the power of the regulator, IPART, to enforce noncompliance provisions. I appreciate the Minister's office getting back to me when I had concerns about that element of the legislation, and I am satisfied with the intent of the Minister.

I acknowledge and thank the Minister's office for coming back to me so quickly with answers to the questions I had and for being frank about the information that I required. NSW Labor is pleased to see the extension of the ESS, which was a policy that was initially introduced by the former Labor Government in 2009. On the energy emergency and compliance framework, the bill amends processes to align how an energy emergency can be declared. Currently, an electricity emergency can be declared by the Premier but other energy‑related emergencies can be declared by only the Governor. The bill provides that the Premier may now declare an energy emergency in non‑electricity energy‑related emergencies.

The associated process of information gathering is simplified by the bill. Again, that amendment seems sensible. In a time of crisis—and I hope we never have one—we need to have the opportunity to act decisively and manage the situation with all the information and resources at hand. On cybersecurity the bill creates backstop provisions to ensure energy generators, networks and pipelines have protections in place from cyber attacks. A Federal framework does not yet exist, and so the amendments effectively enable New South Wales to align with a future national framework. We have seen an example of overseas ransomware attacks and the crippling effect it can have on energy supply. We also know that cybersecurity is an issue across all elements of society, and that provisions that strengthen security for critical areas are supported.

On forestry, the bill enables renewable energy projects in State forests. The second reading speech and the department brief I received made clear that that will apply to softwood plantations and not native forests or vegetation. I am glad to hear that any developments will still have to go through the same rigorous planning and approval processes. It would be remiss of me not to speak to the timber shortage we are facing in New South Wales. I acknowledge that some of my colleagues will also speak in more detail about that. The timber shortage is a potential looming disaster. Any number of examples of shortage and rising costs point to the fact that there is a great deal of potential to actively grow our plantation timber stocks. In addition to creating more jobs, the plantations also act as an important carbon sink.

Mrs Melinda Pavey:

Hear, hear!

Mr JIHAD DIB:

I thank the Minister. As we amend the forestry legislation, it is important to remember that nationwide current demand is 175,000 cubic metres per month or 2.1 million cubic metres per year and production capacity is restricted to around 150,000 cubic metres per month or 1.8 million per year, which is jeopardising the housing construction sector.

Mrs Melinda Pavey:

Hear, hear!

Mr JIHAD DIB:

I acknowledge the Minister. I thank her very much for her interjections. Furthermore, a domestic industry ensures that sourced timber is developed in accordance with sustainable ethical practice. Forestry Corporation, for example, is bound by sustainable forest management certification, which also represents our responsibility as good global citizens. As we know from its website, the worldwide certification of programs aims to prevent unregulated or illegally logged forest timber entering international markets. Buying certified local timber not only helps reduce the market for timber from unregulated forests but also reduces emissions from importing timber. The responsible wood certification system sets out the criteria that forestry management must meet. According to the Forestry Corporation website, that includes:

forestry activities undertaken in a systematic manner that addresses a range of forest values

provide for public participation and foster productive community relationships, particularly with neighbours

protect and maintain the biological diversity of forests, including their successional stages across the regional landscape

maintain the productive capacity of forests

maintain forest ecosystem health and vitality

protect soil and water resources

maintain forests' contribution to the carbon cycle

protect and maintain the natural, cultural, social, religious and spiritual heritage values of Indigenous and non-Indigenous people

maintain and enhance long-term social and economic benefits.

As we can see, the requirements of the certification system are quite prescriptive and it is important to confirm that the bill and regulations that arise from it meet the aforementioned conditions. The second reading speech by the member for North Shore on behalf of the Minister made reference to offset land assets. In the speech, the member for North Shore said:

These actions could, for example, include requiring developers to offset land losses …

However, that points to an aspiration and not a directive. The specific nature of that statement is not reflected clearly in the legislation. There remains some vagueness regarding it. Offsets are a crucial element, but it is also very important to note that offsets in areas far removed from the place of origin will have a significant impact on localised employment. The Opposition has been assured that regulatory changes will follow the bill that will require, for example, Forestry Corporation to implement actions to minimise the impact of any approved projects, including requiring developers to offset land losses at their own expense. That example was cited in the second reading speech, as I highlighted earlier. It is a sad reflection of politics that we may be sceptical and have to seek further information, but we must have guarantees that the appropriate regulatory changes will promptly follow the passage of this legislation to minimise the impact of approved projects.

The last thing the Opposition wants to see is an important form of carbon sequestration and an employment opportunity being removed to support renewable energy projects because the net result is not an improvement on securing a renewable energy future. NSW Labor will ask for a guarantee of offsets in the regulations to come, and I foreshadow a potential amendment to the bill in the Legislative Council on that issue. The Minister's speech in reply is an opportunity to hear a clear response to that concern. We seek clarity around the issue of offsets, particularly any land used for the purpose of this legislative amendment being offset by the same, which is essentially a net zero loss. We also strongly urge an increase in the landmass used for softwood and exotic tree plantations in consideration of offsets. Furthermore, it should be expected that as mature trees are replaced, CO2 absorption is reduced. It would make sense then that smaller and immature trees planted as replacements be greater in number to make up for that shortfall.

I also raise an issue around biomass incineration for energy. I thank the Minister's office and the department for getting back to me with some clarification. The conversion of biomass to energy is a complex and polarising issue. Whilst it is not in the intent of the bill, it is possible that the generation and storage of energy from renewable sources will leave the door slightly ajar if one considers biomass incineration a renewable energy source. Given the possible wiggle room in the legislation, it is important to put on the record that the bill is not designed to enable the use of Forestry land for the generation and storage of energy obtained from biomass incineration. I look forward to the response from the Minister in his speech in reply, as this concern has been raised by a number of stakeholder groups. In addition, section 60 of the bill, "Forest permits for non-forestry uses", refers to the issuing of permits for:

the purposes specified in the permit, including recreational, sporting or commercial activities ...

To this end, the Opposition would like assurances that this proposed use of land would be regulated to ensure that safety risks and extensive community consultation are taken into account and covered. As members know, forests are open to a variety of recreational activities. An assurance that rigorous processes will be undertaken to ensure that those permits will be for safe, affordable and non-exclusive activities is important. I ask the Minister to respond to this in his speech in reply. As I touched on earlier, the bill does not make clear the impact that this may have on Forestry Corporation employees. As members can imagine, regular and secure employment is a key issue for people. The Opposition supports the bill to, amongst many other things, enhance employment opportunities rather than diminish them, especially in the public sector.

NSW Labor will not oppose the bill because the amendments it makes to the Electricity Supply Act are largely administrative and serve to improve processes and address twenty-first century challenges to energy security. However, we will reserve our right to move amendments in the Legislative Council based on the responses the Minister gives in his speech in reply to some of the issues that I have raised. The Opposition notes that consultation with certain industry and employment representative groups has been lacklustre. If the Government is serious about protecting and creating jobs then energy modernisation legislation should be developed with proper input from unions such as the Australian Workers Union [AWU], which became more engaged with the bill when I contacted it. I thank the AWU, the Construction, Forestry, Maritime, Mining and Energy Union's manufacturing division, the United Services Union, the Public Service Association, the Electrical Trades Union, Timber NSW and the Nature Conservation Council of NSW for their feedback on the bill.

The greater the consultation, the better the chance of addressing all concerns to make the legislation as good as it can be. By and large, the message from the unions was the same. They are employee bodies that have a social conscience agenda and recognise the reasons behind the amendments in the bill. They raise very important issues of safeguards to employment, guarantees that things will not be lost and a desire for genuine quality control. They are an important part of the process. I urge that any future legislation takes into account their viewpoints when developing policy and processes.

Job protection and creation should be at the forefront of energy legislation. Energy modernisation and the creation of new industries like hydrogen will create jobs. The Government should not ignore the fact that revisions that enable a regulated, standalone power system in various locations could have an effect on maintenance jobs. It should consider how best to support affected workers. Labor will continue to support efforts to modernise the legislative and regulatory energy regime. We know that the energy market and the opportunities and challenges that accompany it change at a rapid rate. Where the Government can provide clarity and certainty to households and industry, we will support it. The Opposition champions the importance of balancing the need to position our State as a renewable energy superpower with the need for energy guarantees and affordability, the development of the manufacturing sector and outstanding employment opportunities. By and large, the bill addresses some of those guiding principles. I thank stakeholders for their input on the bill. I also thank my many colleagues who have contributed to the bill. I also thank the Minister's office and the Department of Planning, Industry and Environment for their input. I look forward to the Minister's responses to the questions that I have asked at the conclusion of the second reading debate.

Mr MARK COURE (Oatley) (16:54:05):

I am pleased to support the Energy Legislation Amendment Bill 2021. I jumped at the chance to speak in debate on the bill, which will modernise and harmonise procedures that relate to energy supply issues and emergencies. It is time for those emergency provisions to be updated, as they have been operating unchanged since they commenced in 1987, when I was in year 2 at St Joseph's in Oatley.

Mr Jihad Dib:

Were you born then?

Mr MARK COURE:

I was born then. Given the recent demands on resources to respond to energy emergencies, it is critical that the emergency provisions relating to energy and energy resources are fit for purpose and relevant. Those demands were seen in the 2020 Black Summer bushfires, during which multiple emergency agencies had to work together to manage the impact of the fires. The changes in the bill will allow the Government to implement the appropriate response plan when an energy-related emergency arises. They will also establish a consistent approach to how the Government manages energy emergencies across the New South Wales energy utility sectors.

Australia and the world has seen an increase in cybersecurity threats. Social media platforms such as Facebook have been exposed to cyber attacks, the most recent of which took place earlier this year and caused the personal data of 500 million users to be leaked. Two weeks ago WhatsApp was also attacked. Critical energy infrastructure assets are not immune to cyber threats and attacks. Those attacks are occurring more often as the energy sector becomes increasingly digitalised. In its 2020-2021 annual cyber threat report, the Australian Cyber Security Centre noted that top-tier cyber criminals prefer to hunt big game entities, which are often high-profile, high-value targets that provide essential services or critical infrastructure. That is why the Government needs to be able to act to ensure that the State's critical infrastructure is protected from any future cyber attack. It needs to ensure that the appropriate arrangements are in place to protect the continuation of essential services.

The bill sets out a streamlined framework so that emergencies can be quickly responded to. The State's response to emergencies must continue to adapt, as threats can evolve very quickly. The bill will allow for quick action to be taken and will ensure that there is a single framework to respond to energy-related emergencies, whether for electricity, gas or other fuels. As seen during the devastating bushfires of 2020, an emergency can impact multiple energy sectors. One lesson learned from those catastrophic fire conditions was that the emergency framework needs to be more efficient. The bill will provide the backdrop to protect crucial energy infrastructure with a formed national framework.

Die Hard 4.0, Die Hard 4.0

We need to stay vigilant to the threat that cybersecurity poses to the State's critical energy infrastructure. In 2015 and 2016 cyber attacks on Ukrainian power stations affected more than 200,000 customers. Let me be the first member in this Chamber to refer to which I watched only a week ago. In Hollywood the threats are real. InJohn McClane attempts to stop a cyber terrorist from hacking critical government infrastructure.

Mr Jihad Dib:

Yippee-ki-yay, mother—

Mr MARK COURE:

Yes, that is later in the speech. In May this year the United States' largest fuel pipeline operator was shut down for nearly a week, creating supply shocks in the US market. Those types of cyber attacks are becoming more common. So far in 2021 the Australian Cyber Security Centre has received more than 67,500 reports of cybercrime of all types.

Debate interrupted.