The Morrison government will have another crack at opening up a key clean energy funding body to carbon capture and storage projects, announcing a plan to establish a new Low Emissions Technology Commercialisation Fund using the Clean Energy Finance Corporation (CEFC).
“Our plan to reach net zero by 2050 is an Australian one that’s focused on technology not taxes and this fund backs in Australian companies to find new solutions,” Morrison said on Wednesday, in the latest of a flurry of announcement since his return from the COP26 climate talks in Glasgow.
“Australia can become a world leader in creating low emissions technology that is both affordable and scalable, helping get emissions down while creating jobs.”
The statement released by Morrison and federal energy minister Angus Taylor on Wednesday did not detail which technologies the new fund would be investing in, but it is understood to be primarily directed towards carbon capture and storage.
The announcement follows the government’s commitment to support investment in 50,000 new electric vehicle charging stations as part of its ‘future fuels strategy’ – a strategy that has been widely viewed as totally deficient.
The $10 billion CEFC was originally created under the Gillard government, dedicated to making investments in emerging clean energy technologies and the CEFC’s legislation specifically prohibits investments being made in carbon capture and storage projects in recognition of its inherent reliance on fossil fuel industries.
The CEFC has been a significant success, although the Coalition government tried to dismantle it, and has invested more than $5 billion in clean energy projects, $3.7 billion in energy efficiency projects and other investments in sustainable infrastructure – and delivering good investment returns.
The checkered history of carbon capture and storage projects could pose significant investment risks, with the technology remaining largely unproven in Australia at large-scale, and would see funds directed to what are ostensibly fossil fuel projects.
The Coalition government has already poured substantial public funding into CCS projects – with Australia now operating just one, troubled, project at the Gorgon LNG facility in Western Australia.
Federal parliament would need to approve amendments to the CEFC’s legislation, lifting the prohibition, to enable the CEFC to administer the proposed Emissions Technology Commercialisation Fund – that it wants to use to fund new carbon capture and storage projects.
Taylor said that the fund would involve $500 million of “new capital” allocated to the CEFC and will seek a further $500 million in investment commitments from the private sector.
“The fund will support Australian innovators to develop their intellectual property and grow their businesses in Australia,” Taylor said.
“It will address a gap in the Australian market, where currently small, complex, technology-focused start-ups can be considered to be too risky to finance.”
Taylor said that legislative amendments would be introduced into parliament before the next election, and the new fund will be expected to generate positive investment returns.
A previous attempt to amend the CEFC’s legislation was abandoned earlier this year, after a group of Nationals MPs – including current leader Barnaby Joyce – sought to move additional amendments to expand the agency’s investments into coal and nuclear projects.
While the Morrison government commands a majority in the House of Representatives, it would need to secure additional votes in the Senate for the legislation to pass – likely to be the two One Nation senators and at least one other crossbencher – unless Labor backs the plan.
Labor spokesperson for climate and energy, Chris Bowen, said that Labor would wait to see the detail of the proposal.
“We’ll look at the detail. Our objections have been the diversion of money for renewable energy into other technologies. The government spins this is new money, but we’ll look at the detail,” Bowen told the ABC.
“We’ve opposed the diversion of renewable energy funding to carbon capture and storage, we have. If this is genuinely new money, then we’ll look at it in that light.”
Australian Greens leader Adam Bandt said that his party would oppose any Morrison government move to amend the CEFC.
“Public money should go to schools, hospitals and renewables, not to tax-dodging billionaire coal and gas corporations,” Bandt said. “Coal and gas are not ‘clean energy’.”
The Smart Energy Council quickly has the proposed fund, which described it as “yet another attempt to prop up Australia’s dying coal industry.”
“Scott Morrison and his colleagues voted repeatedly and unsuccessfully to axe the Clean Energy Finance Corporation. Now they are trying to kill it by other means,” Smart Energy Council chief executive John Grimes said.
“Carbon capture and storage has failed to deliver anything for decades. Whilst the price of solar and renewable energy has plummeted, carbon capture and storage has remained hugely expensive.”
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