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Coalition, Labor agree to slash $500m from ARENA budget

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The Australian Renewable Energy Agency will have its funding slashed by $500 million after Labor and the Coalition agreed on Tuesday to a compromise deal on the government’s omnibus budget repair package.

As RenewEconomy flagged last week, the compromise came after ARENA sought to strike a last-minute compromise on its funding position, in an effort to continue its support of critical research and early stage development in new renewable energy and storage technologies.

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Several scenarios were reportedly outlined by the Agency’s board, including that the cuts be reduced to $300 million or $500 million.

The Agency has been awaiting news of its fate since March, when the Turnbull-led Coalition proposed to essentially de-fund it and replace it with a new “Clean Energy Innovation Fund.”

The two mainstream parties finally agreed on stripping $500 million from the remaining $1.3 billion legislated budget in the agency that was created by Labor in 2012, but which the Coalition has spent three years trying to dismantle, along with the Climate Council, the Climate Change Authority, the carbon price, and originally the renewable energy target and the Clean Energy Finance Corporation.

There has also been a furious public and industry-based campaign to save ARENA, both from state governments, the renewable energy industry, NGOs, and researchers, who warn that Australia will face an exodus of R&D capabilities and new technologies if the cuts go ahead.

Just last week, ARENA announced the 12 large-scale PV projects that won grants in what many thought might be the agency’s last major funding round. The tender was credited for reducing solar PV costs by 40 per cent, and a similar program is being sought for large-scale solar thermal with storage.

Labor says it will seek talks with the Coalition over the funding priorities for ARENA. Both parties had expressed interest in solar thermal with storage, which is considered a critical new technology for a high renewables grid.

In the meantime, the party is taking credit for “saving” ARENA. But others are not so complimentary, like the Greens, who described Labor as “clean energy charlatans” because of the move.

“Labor had absolutely no reason to cut half a billion dollars out of ARENA,” climate change spokesman Adam Bandt said. “If Bill Shorten had joined with the Greens and the crossbench, we could have stared the Coalition down and found fairer places to raise revenue.”

The Clean Energy Council said Labor’s position, while a material improvement on the Coalition’s, was a disappointment to the renewable energy industry and would “rattle the confidence” of investors.

“A cut to ARENA’s funding is a move at odds with the federal government’s innovation agenda and is a disappointing change in the ALP’s position,” said CEC chief Kane Thornton. “While we recognise the budget constraints facing the nation, clean energy innovation is a crucial lever to transition the Australian economy and create investment and employment opportunities for the future.

Environmental group WWF-Australia described the funding cuts as unnecessary and short-sighted: “Why punish an agency that is making a difference?” asked WWF-Australia spokesperson Kellie Caught. “Just last week ARENA’s announcement on big solar showed its worth.

“Polling conducted in May found more Australians support ending fossil fuel subsidies to raise revenue than any other major measure on the table, with a quarter of respondents wanting the funds specifically spent on growing renewable energy,” Caught said.

“WWF calls for ARENA’s remaining $800 million to be put to work urgently to deliver clean energy innovation and jobs for Australians. Pushing investment out to later years leaves ARENA vulnerable to further raids on its funding.”

Industry group Solar Citizens has directed its anger towards the Turnbull government, describing the $500 million funding cut as further evidence of the Coalition’s “unrelenting ideological war on renewables.”

“ARENA is a critical engine for innovation, for the transformation of our energy system and for the places across Australia that benefit from the projects they fund,” said Claire O’Rourke, National Director of Solar Citizens.

“The Coalition government has driven this cut to innovation in Australia’s premier growth industry as part of a war on renewables that looks more like the old-hat Abbott agenda that Australians do not want.

“We need ever greater levels of investment in innovation and research on renewable energy in this country, not a reduction, it flies in the face of common sense to cut it.

“Australia needs a national plan to harness the multi-billion dollar renewables boom and manage the orderly transition to 100% clean renewable power but we are unlikely to see one from this Coalition who are hell bent on holding back the transition,” said O’Rourke.  

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  • Kenshō

    Now let’s see ARENA leverage investment in RE/storage. The investment is needed to flow on to community level projects. ARENA has previously funded large scale PV, at a time the rest of the community is already moving on to RE/storage. Even for the minority who had them, FIT’s have almost ended. For many of us who couldn’t achieve the personal finances at the time FIT’s were available, we’ve already moved on and adopted storage.

  • lin

    Shame, Labor. Shame!
    We expect mindless stupidity and capitulation to the FF lobby from the Libs, but again Labor fails to grow a pair. No wonder its primary vote continues to slide. They make themselves less and less relevant with each passing election.

    • Brunel

      ALP capitulating shows why I vote almost always vote for minor parties.

  • Eb

    A shameful day for Australia, this will increase the longterm costs of reducing global carbon emissions while minimising Australian innovation. Hopefully this disgrace will be remembered at the next Federal election.

  • KiwiInOz

    The cuts are purely ideological. As the sovereign issuer of the Australian currency, the Australian government does not need to raise revenue or find savings. It merely has to decide where it will invest its spending power to achieve social, environmental or economic ends on behalf of its citizens, while keeping inflation within reasonable bounds.

  • David leitch

    Cuts are bad but keeping ARENA going is great. Well done to all who participated in the rescue mission.

  • Peter Campbell

    And yet, supposedly, we can afford 100x the amount cut from ARENA to purchase just 12 submarines.