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Australia dumps clean energy in favour of asphalt economy

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The conservative Coalition government of Prime Minister Tony Abbott has dumped the last significant renewable energy assistance program and a host of other climate and science based research initiatives, as it bets the country’s economic future on a massive road building program and continued support for miners.

Treasurer Joe Hockey’ first budget – delivered Tuesday night – includes the abolition of the $3.1 billion Australian Renewable Energy Agency, an institution formed to help bring new and emerging technologies into production and deployment, and to help fund Australia’s world-leading solar research.

ARENA will maintain funds of $1 billion for around 190 projects – mostly R&D – that have already been contracted since its creation in 2012, but it will have a measly budget of just $15 million over each of  the next two years for new projects.

As foreshadowed by RenewEconomy in early March, ARENA’s functions will be absorbed into the Department of Industry, although a defiant ARENA chairman, Greg Bourne, said the agency would continue its legislated role until a repeal bill passed through parliament, something that the government may not find easy.

ARENA, in the meantime, will continue the work it is legislated to do, including sifting through some 190 proposals worth more than $7.7 billion, many of them from miners looking to tap into ARENA’s $400 million off-grid program.

ARENA was not the only victim of Hockey’s knife, which in the broader economy included sharp cuts to welfare payments and education, with students, families and single parents judged to be among the hardest hit.

The million solar roofs program – like ARENA a core pre-election promise from the Coalition and a founding part of its “Direct Action” program, appears to have sunk without trace, and without funding.

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Direct Action man Tony Abbott

However, the government has allocated $2.55 billion “over 10 years” for the Emissions Reduction Fund, the core plank of the government’s Direct Action policy, which it wants to replace the carbon price.

The ERF has been described by bankers and analysts as a laughable attempt and “wishful thinking” at reaching even a modest 5 per cent emissions reduction target by 2020. (It turns out that the 10 years was a “printing mistake” in the budget papers, much like when Hockey announced last week he would close the Clean Energy Regulator, when really he meant the Clean Energy Finance Corporation, so it’s funding beyond 2017 remains unclear. John Connor explains more about the funding confusion here).

The government – which says it is cutting funding from ARENA because all sections of the community need to “pull their weight” – will instead spend $525 million over four years to pay low wages to a 15,000 strong “green army” of under 25s that will pick up litter and repair mangrove swamps.

ARENA chairman Greg Bourne said he was bitterly disappointed, and noted that if this and the carbon price, the repeal of the Clean Energy Finance Corp, and a reduction in the renewable energy target were to pass through parliament, then the new government would have effectively “cleared the decks regarding clean energy.

“From there, the question is what you build,” he said. “The government is leaving behind a set of options that would allow it to accelerate the deployment of clean energy, and they may well need those options in the future. We are trying to build the infrastrucure of the 21st century in terms of energy.:

Instead, the government is focused only on building the roads of the 21st Century. Most of the funds saved from these cuts will be used for “government spending priorities”, which appear to be “road infrastructure” what Hockey has described as the biggest ever increase in road funding in the nation’s history.

In place of the million roofs program, which was at once stage budgeted for $1 billion, the government has announced a derisable $2.1 million for “community” solar projects on RSL and bowling clubs and the like in 7 marginal electorates. (Yes, they are that cynical).

The Government has also cut $459.3 million (or around three-quarters) of funds from the Carbon Capture and Storage Flagships Program, bringing an end to any new projects or initiatives for a technology that institutions, such as IEA, say is a critical component of decarbonising electricity grids, but for which the coal industry was never much more than a marketing term (see clean coal).

It has cut $16.8 million over two years from the National Low Emissions Coal Initiative, and has slashed $111.4 million over four years from the Commonwealth Scientific and Industrial Research Organisation, the main scientific research body.

A further $10.0 million will be cut from the budget from the Bureau of Meteorology, although it will provide $100,000 to fit out what must be a very small “consolidated supply and logistics warehouse.”

It will also cut $21.7 million over four years through the amalgamation of the National Environmental Research Programme and the Australian Climate Change Science Programme to form a new National Environmental Science Programme.

The clean energy industry, and environmental NGOs, needless to say, were appalled, particularly as subsidies such as the diesel excise exemption for mining companies remained in place, at a cost of $2 billion a year.

John Grimes, from the Australian Solar Council, described the budget as a “boulevard of broken dreams” for the industry. The Budget has delivered a trifecta of broken promises to the solar industry,” said John Grimes, Chief Executive of the Australian Solar Council.
 
For decades, Australian solar researchers have led the world, developing the solar technologies of today and the future, but that all ends today.”

WWF Australia’s Kellie Caught described it as an “attack on renewable energy programs”, while Environment Victoria’s Mark Wakeham described it as a “freeway builder’s dream.”

Clean Energy Council Deputy Chief Executive Kane Thornton said many companies had been driving innovation in exciting new technologies like large-scale solar, geothermal and ocean energy, and now the development and commercialisation of homegrown innovations will likely go offshore, along with the jobs and investment they would bring.

“A global race for renewable energy is on, and the removal of ARENA will see potential Australian and international investors now look to countries with much stronger support for renewable energy innovation, meaning we may well miss out on billions of dollars of investment and highly-skilled jobs,” Thornton said.

   

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  • Geoff Bragg – SEIA

    Giles – you could be forgiven for wondering if starting a publication called Renew Economy was a wise move. Tracking the next industrial revolution has just led us all in an about-face, now going the wrong direction. Be careful – this website may not be here in a day or two, mysteriously vanishing into thin air along with everything else renewable and clean.Very disappointing……..

    • Well, in that case, I will have to drive down one of the roads of the 21st century (actually, it’s got a lot of pot-holes) to the nearest surf break!

    • Michel Syna Rahme

      No one is giving up around here…. Who of us thought this was going to be an easy task? Who of us thought that the coal industry was just going to back down and run! I have absolutely no doubt we will succeed in the long run… This transition is only just beginning! Dig you heels in, suck it up, save for some battery storage, do your small part… Do you actually really doubt that renewables and clean energy generation technology is not going to continue into becoming the next industrial revolution?

  • juxx0r

    You’re forever bangin on about how two faced the politicians are yet you’re always referring to the ‘diesel excise exemption for primary industries’ as the ‘diesel excise exemption for mining companies’. Smarten up or you’ll be regarded as just as two faced.

  • Neil_Copeland

    None of the bad news in the budget should stop domestic installations of solar, the actions of the rest of the world will ensure prices of solar and storage keep falling. If the government fails us and the environment then we should continue without them.

  • Chris Fraser

    ARENA will be among the 16,500 public service jobs to go within three years. This could be the start of the Fifth Great Extinction.

  • John J Sarter

    This is tragic news for the renewable energy industry in Au, and for the whole world as a result. I encourage businesses involved in R&D in Australia to move operations to beneficial and welcoming National havens where we will continue to move beyond cost parity with fossil fuels. The current administration will soon enough discover the folly of their misguided policies, and I believe the people of Australia will then turn this ship back around to a better and sustainable charted course.

    • Alen

      Giving up is not the solution here, and I definately do not want the likes of Abbott and his ‘coal mates’ thinking that this is the complete end of renewables in Australia. Before it was out of passion and belief in aGW that I advocated and followed RE, now there’s alot of stubborness that will drive me.

    • Guest

      I admire your optimism, John Sarter, but I don’t think the current administration, dominated by the right-wing faction of the Liberal Party and led by a dinosaur like Tony Abbott, will ever “discover the folly of the folly of their misguided policies”. There are none so blind as those who will not see. The best that can be hoped for is that the centre and left of the party, best represented by Malcolm Turnbull, will regain some ground – or that the Liberal Party will be unceremoniously turfed out of government at the earliest opportunity.

    • Michael Bourke

      I admire your optimism, John Sarter, but I don’t think the current administration, dominated by the right-wing faction of the Liberal Party and led by a dinosaur like Tony Abbott, will ever “discover the folly of their misguided policies”. There are none so blind as those who will not see. The best that can be hoped for is that the centre and left of the party, best represented by Malcolm Turnbull, will regain some ground – or that the Liberal Party will be unceremoniously turfed out of government at the earliest opportunity.

  • Pedro

    Can anybody explain with a good argument why the mining sector and agricultural sector should not have to pay fuel excise. Joe Hockey says that the vehicles are driven on private land so should not have to pay excise. I find this very weak as those enterprisers require quality roads which can accomodate extremely heavy vehicles to bring in and out heavy equipment, goods or produce.

    • Chris Fraser

      The linkage between the fuel excise and investment in public roads was already very weak due to the money raised going directly into consolidated revenue. No, the exemption was maintained because Warren Truss was asked by his constituency to keep it. But really, and in fairness, it should have been removed because of its contribution towards the cost of doing business.

  • Alen

    I’m actually surprised Abbott is investing so much in roads, the way he has us heading I thought it wouldn’t be long until he got us back using the horse and carriage. Surely horses prefer walking on soft dirt than on hard asphalt, don’t they?