24th February 2020
Submission to Offshore Clean Energy Infrastructure Regulatory Framework Discussion Paper
Please direct any enquiries to:
Andrew Bray
National Coordinator, Australian Wind Alliance
0434 769 463
About AWA
The Australian Wind Alliance (AWA) is a community advocacy group. Our members include farmers, wind workers, local businesses and community supporters. We are independent of the wind industry. Our mission is to stand up for wind power, to build prosperous communities and lower emissions.
AWA is well connected with on-the-ground issues at many wind farm projects and is in a unique position to help find solutions. We see great potential for offshore wind to deliver the same benefits for Australia and for regional communities as onshore wind has over the last 30 years.
Summary
This submission responds to the Offshore Clean Energy Infrastructure regulatory framework discussion paper and process map and is informed by our attendance at the Melbourne information session on the framework.
The Australian Wind Alliance believes there is a need for an Offshore Clean Energy Infrastructure regulatory framework and thanks the Department of Industry, Science, Energy and Resources for the opportunity to comment.
AWA identifies the following key issues:
- The need for strong community engagement and Benefit Sharing in the framework process
- Ensuring the offshore wind framework is fit for purpose to allow offshore wind to play its part in urgently transitioning Australia’s energy system to zero emissions
- Facilitation of high levels of workplace health and safety
- Issues with the National Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA) as regulator
- Ensuring Ministerial decisions are transparent, timely, evidence based and specific
- Bonds and license timeframes which could act as barriers
Opportunity to unlock potential
The Australian Wind Alliance welcomes the process currently underway to facilitate the development of offshore wind energy in Australia. A clear regulatory framework will allow offshore wind to contribute to the future clean energy system in Australia, which is vital for our energy security and transition to a zero carbon economy. This submission draws on the lessons learned in countries that have developed offshore wind farms such as the United Kingdom, Germany, Denmark and China. The Global Wind Energy Council calculates that 23 GW of offshore wind capacity has been installed to date and predicts this number will grow rapidly. The International Energy Agency World Energy Outlook reports that there are 150 new offshore wind projects in development globally and that offshore wind has the potential to supply “18 times global electricity demand today.”
The Australian context
The Australian Government is a signatory and party to the Paris Agreement. The Agreement recognises that a transition to a zero carbon economy will be needed to limit temperature increases to 1.5 °C above pre-industrial levels. The electricity sector, which accounts for around a third of Australia’s total emissions, has demonstrated that strong uptake of renewable energy can displace greenhouse gas emitting coal-burning power and dramatically reduce sector emissions. The ratcheting-up mechanism in the Agreement means that Australia has agreed to increase policy ambition in terms of reducing emissions over time.
At the sub-national level, every state and territory in Australia has a zero emission target by 2050. Several states and territories have renewable energy targets to kick start this work now. Projects such as the Star of the South demonstrate that international appetite to invest in Australian offshore wind projects exists now, which makes the task of developing this framework all the more urgent.
The Framework
The intention of the framework to facilitate offshore wind development is generally supported by AWA. We have noted a number of tensions that have arisen from applying an existing framework for the regulation of offshore petroleum infrastructure to clean energy infrastructure of offshore wind - an issue identified by law firm, Allens Linklaters.
Community benefits
The Australian Wind Alliance has worked extensively to improve the social licence of wind energy and ensure communities benefit from the rollout of onshore wind projects. There are a number of ways offshore wind can similarly benefit regional communities as part of a just and equitable transition to clean energy.
Firstly, Benefit Sharing can be built into the process. Benefit Sharing best practice and engagement is outlined in the Australian Wind Alliance, Building Stronger Communities: wind’s growing role in regional Australia and the Clean Energy council’s Guide: To Benefit Sharing Options For Renewable Energy Projects. There are some Benefit Sharing mechanisms that have been applied in Australia already that can apply to offshore wind including:
- Neighbourhood/community benefit programs
- Sponsorship, grants and legacy initiatives
- Local jobs, training and procurement
- Employee volunteerism
- Innovative products
- Innovative financing and co-ownership
The key to determining the best mix of Benefit Sharing solutions is strong community engagement from the developer as early in the process as possible. Identifying involved communities in offshore wind projects and production of a clear plan to engage with these communities should be part of the framework. The goal should be an Engagement Program and Benefit Sharing plan that suits the circumstances of the communities involved. There should, therefore, be flexibility for the developer to respond to what the community seeks rather than any kind of one-size-fits-all requirement.
Community Engagement and Benefit Sharing was an eligibility and evaluation criteria for projects under the Victorian Renewable Energy Target. A similar criteria or test could be included in the framework. The criteria could include net benefits to the environment, as well as community engagement and benefits, as part of the management plan.
Secondly, the relevant government agency should aid the rollout of offshore wind projects through a national assessment to determine the best locations for offshore wind. An assessment can include considerations such as existing ocean industries like fisheries, wind resources, relationship to AEMO’s Integrated System Plan as well as social aspects, including the need to transition workers from fossil fuel to renewable energy jobs in places like the Latrobe and Hunter Valleys. This would also avoid developers investing time and money in locations that may never become available for development. The framework currently has no provisions for such an assessment plan.
Bond
Requirements for a decommissioning bond in full before approval appears to be an unnecessary barrier. Offshore fossil fuel assets are not required to pay similar bonds except in Victoria. It is unclear why offshore wind farms are being made an exception in energy generation especially when the asset is not based on a finite resource. A decommissioning bond should not be an arbitrary test of financial capability and we see no need for it so early on in the process. Should a bond be required, it could be made a condition of a licence and be made progressively as the project moves out of the capital-intensive construction phase. There may be other forms of financial security and discretionary powers given to the minister similar to those explored in the Discussion Paper – Decommissioning Offshore Petroleum Infrastructure in Commonwealth Waters.
NOPSEMA
The Australian Wind Alliance sees issues with the National Offshore Petroleum Safety and Environmental Management Authority (NOPSEMA) as the responsible body for ongoing compliance and regulation. Although there are synergies there are also some important differences between offshore petroleum and offshore wind that could warrant a new entity to regulate offshore wind energy. The level of environmental risk from offshore wind is orders of magnitude less than offshore petroleum, which involves the risk of large-scale oil spills. NOPSEMA does not work in the electricity sector but predominantly in the extraction of oil and gas. The majority of its workforce is based in Perth, reflecting Western Australia’s importance in this sector. There have also been questions raised over NOPSEMA’s effectiveness as a regulator in terms of Occupational Health and Safety, which we can only note without assessing the claims. If NOPSEMA were able to bolster its capability in power systems and clean energy and expand their operations to the eastern seaboard, this may mitigate some of these issues.
Ministerial involvement
The framework contains multiple major decision points for the Energy Minister. It is essential that these decisions be transparent, timely, evidence based and should not include any other matters - only those prescribed in the framework. The framework must ensure that all timelines and progress towards them are made public. Ministerial decisions and all accompanying reasons and assessments should also be made public.
30 year timeframe
The framework discussion paper proposes the limit of the Commercial Licence to 30 years. The discussion paper states that “A Commercial Licence will provide rights to undertake a commercial offshore clean energy activity for an initial term of up to 30 years. The licence can be renewed indefinitely (up to 30 years per renewal) for as long as a declaration is in place over the area.” We are concerned that a 30 year period may not cover the natural life of an offshore wind project from the beginning of construction, through operation to decommissioning (if required). To reduce financial risk associated with a potential curtailment of the life of an offshore wind asset, we suggest that the term of the licence should be extended to 50 years.
Climate and energy
Offshore wind is likely to be a key element of a future 100% renewable electricity system. The importance of offshore wind in addressing climate change and the reduction of greenhouse gas emissions must be central to any legislation regarding energy such as offshore wind. There is currently no mention of climate change in the framework discussion paper. We see great value in a multi-jurisdictional national assessment and framework to facilitate planning and a vision for that energy transition that could include CSIRO, ARENA, AEMO, Geoscience Australia, Bureau of Meteorology amongst others.