Scott Morrison to end Australian Renewable Energy Agency’s focus on wind, solar
Strict rules governing investment agencies will be replaced with a ‘low emissions’ mandate to fund a wider range of energy sources.
The renewable energy rules governing the country’s key investment agencies will be scrapped and replaced with a dramatically expanded “low emissions” mandate to fund a wider range of energy sources, which could also extend the life of coal-fired power plants.
The move by Scott Morrison to end the Australian Renewable Energy Agency’s strict rules on funding only wind and solar projects comes with a $1.9bn budget boost to invest in new technologies including carbon capture and storage, soil carbon, hydrogen and green steel.
The Clean Energy Finance Corporation will also have its mandate expanded beyond “clean energy” – primarily wind, solar and gas — to include future low-emission energy technologies which could lower emissions from manufacturing, agriculture and transport.
The proposed changes set the scene for a second climate battlefront with Labor over the agencies’ roles, since Tony Abbott tried to scrap ARENA in 2014.
Legislation will be needed to change the strict investment rules of ARENA and the CEFC.
Anthony Albanese said in June he would not support any change to ARENA’s remit that would allow it to invest in carbon capture and storage technology.
Having released on Tuesday the government’s cheap gas policy to underwrite a manufacturing revival, the Prime Minister will announce today a major plank of the technology investment roadmap which will use the two key agencies to fund it.
Mr Morrison said the expansion of investment rules would lower emissions, protect jobs, cut household costs and “improve the reliability of our energy supply”. He said wind and solar were now commercially viable and didn’t need government assistance.
The CEFC mandate restricts it to funding only “clean energy technologies” in the commercial phase. ARENA is allowed to invest in only “renewable energy” projects at the early stage of research and development.
The move to legislate a new “low emissions” mandate will create a new flashpoint with Labor, which has refused any attempt in the past to change either agency’s legislated constraints.
The most contentious element of the government’s policy will be using the agencies to drive investment in carbon capture and storage which, while reducing gas plant emissions, could extend the life of coal-fired power stations.
The government claims that carbon capture is backed by the International Energy Agency “along with hydrogen and energy storage as essential to global efforts to reduce emissions as we recover from COVID-19”.
“Australia is in the midst of a world-leading boom in renewable energy with over $30bn invested since 2017,” Mr Morrison said. “Solar panels and wind farms are now clearly commercially viable and have graduated from the need for government subsidies and the market has stepped up to invest.
“The government will now focus its efforts on the next challenge: unlocking new technologies across the economy to help drive down costs, create jobs, improve reliability and reduce emissions.
“This will support our traditional industries — manufacturing, agriculture, transport — while positioning our economy for the future.
“These investments create jobs and they bring new technologies into play. This will not only cut emissions, but deliver the reliable energy Australia needs while driving down prices for homes and businesses.”
Of the $1.9bn in funding, to be contained in next month’s budget, $1.4bn will guarantee baseline funding for ARENA over the next 10 years. ARENA would then be directed by government to administer about $200m in extra funds for targeted investment in targeted projects. A further $300m would be directed to other grants and projects.
Under these grants, the government would pour $70m into developing a regional hydrogen export hub with potential locations identified as the Latrobe Valley in Victoria, Darwin, the Hunter Valley in NSW, Gladstone in Queensland, Tasmania’s Bell Bay and the Spencer Gulf in South Australia.
A carbon capture use and storage fund worth $50m would be established to support emissions reduction from power generation, heavy industry and natural gas production, with potential hubs identified in Moomba, South Australia, the Surat and Bowen basins in Queensland, and offshore sites including the Browse and Carnarvon basins in Western Australia.
Nearly $100m would go towards a technology co-investment fund as recommended by former Business Council of Australia president Grant King in his review into how Australia could unlock low-cost carbon abatement, while $74m is slated for a “future fuels package” to capitalise on opportunities presented by hydrogen, electric and bio-fuelled vehicles.
Regional microgrid projects — small independent power networks — will receive $67m aimed at reducing reliance on diesel generators while just over $50m will go towards a suite of measures aimed at improving energy efficiency for residential and commercial buildings.
And $35m will go towards more accurate energy and emissions data reporting.
Minister for Energy and Emissions Reduction Angus Taylor said the policy was in line with the “technology not tax” agenda for lower emissions.
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