Targets added to $2bn Climate Solutions Fund

The remit of the $2bn Climate Solutions Fund has been expanded to finance emission reduction technologies across the economy

Energy Minister Angus Taylor. Picture: AAP

The remit of the $2bn Climate ­Solutions Fund has been expanded to finance emission reduction technologies across the economy including in the high carbon sectors of resources, manufacturing, transport and agriculture.

Energy Minister Angus Taylor will formally enlarge the purpose of the direct action fund on Tuesday as he issues the Morrison government’s response to a climate change review chaired by former Business Council of Australia president Grant King.

The reforms to the fund will enable it to subsidise carbon capture and storage — a technology that captures carbon emissions from high-emitting projects and stores the pollution underground so it is not released into the atmosphere.

The King review was launched last October to identify how Tony Abbott’s Emissions Reduction Fund — which was this year renamed and injected with $2bn of capital — could be utilised beyond its initial purpose of helping fund carbon abatement in projects such as tree planting. The government has accepted 21 of the King review’s 26 recommendations, including cutting red tape for approved projects, subsidising technology that secures ­energy efficiencies in factories, adding carbon capture and storage into the fund’s remit and further incentivising companies to voluntarily lower their carbon footprint.

Mr Taylor said the response to the review was part of the government’s “technology not taxes” ­approach to reduce emissions.

“The government will target dollar-for-dollar co-investment from the private sector and other levels of government to drive at least $4bn of investment that will reduce emissions across Australia,” Mr Taylor said.

“We have seen considerable success in the land and electricity sectors to reduce emissions — this is about supporting and capitalising on new and exciting opportunities in the agriculture, manu­facturing, industrial and transport sectors to build on that success.”

The government also backed a proposal to develop a “co-investment program” to accelerate technological change in heavy indus­try and transport. The Australian Renewable Energy Agency and Clean Energy Finance Corporation will be encouraged to provide support to the “widest range of low emissions technologies”.

The recommendations will be implemented through the government’s planned Technology Investment Roadmap soon to be released for public consultation.

Recommendations from the report the government didn't take up include broadening energy rating schemes for residential buildings and hotels. It also chose not to adopt the recommendation to introduce new measures to address skills shortages in carbon abatement activities, arguing its current policies would address the issue.

Government sources say the strategy will help stimulate the economy post COVID-19. In a speech to the Labor caucus last week, Anthony Albanese put jobs through climate change action as a key part of his party’s agenda.

“We must revitalise high value Australian manufacturing using our clean energy resources,” Mr Albanese said.

The government has so far resisted a 2050 zero-net emissions target, which has been adopted by Labor. Mr Taylor said the strategy would see Australia meet its 2030 Paris targets of reducing carbon emissions by 26 per cent of 2005 levels by 2030. “Our 2030 Paris target is a floor not a ceiling. These reforms will position Australia to over-achieve on our 2030 Paris target while maintaining a strong economy,” Mr Taylor said.