After spending years trying to abolish Australia’s leading public funder of renewable energy research and emerging technologies, the Coalition government is planning a new approach, exerting unprecedented power grab over the Australian Renewable Energy Agency, including co-opting clean energy funds to prop-up the fossil fuel sector.
Amid a flurry of announcements over the last few weeks, the Morrison government has unveiled yet another iteration of federal energy policy, the Technology Investment Roadmap, which sets no emissions reduction targets and will be used as the basis for tipping taxpayer funds into projects designed to support the fossil fuel sector, like unproven carbon capture and storage.
To pay for it, the Morrison government is seizing greater control over ARENA, the highly successful clean energy research funding body, and an enduring legacy of the Gillard government’s attempts at taking ambitious action on climate change.
Since its establishment in 2012, ARENA has proven to be a highly successful funder of emerging clean energy technologies, funding some of the world’s leading research through universities and the CSIRO and provided crucial grant funding that kick-started Australia’s now booming large scale solar industry.
Alongside ARENA, the Gillard government established the Clean Energy Finance Corporation (CEFC) as a dedicated investment fund, providing loans and equity to Australia’s emerging clean energy sector and which has also proven to be highly successful, delivering a steady stream of profits back to the government and strengthening the federal budget bottom line.
After taking power in 2013, the Abbott government spent years trying to abolish both agencies, but encountered a roadblock in the Senate. Unable to repeal the legislation establishing ARENA and the CEFC, peace was eventually negotiated under Abbott’s successor, Malcolm Turnbull.
However, under prime minister Scott Morrison, the agencies face a new existential crisis, with the Morrison and federal energy minister Angus Taylor seeking to redirect money into their own preferred technologies, including carbon capture and storage, gas generators and hydrogen produced from fossil fuels.
Taylor has already outlined how he intends to reshape the CEFC, having produced legislative amendments that if passed by parliament, would open up the CEFC to making investments in new gas projects, as well as potentially using the CEFC to prop up loss-making fossil fuel projects.
The unprecedented intervention into how ARENA allocates its funding was detailed in an announcement by prime minister Scott Morrison last week.
While Morrison announced a much needed injection of new funding to the agency, it also comes with a catch – ARENA will be opened up to provide funding to projects outside of the renewable energy sector, including $50 million which has already been set aside for CCS, which is largely designed to enable the continued use of fossil fuels.
While Morrison and Taylor appear to be stopping short of dictating which particular projects ARENA must invest in, the government looks set to direct the agency to pour money into the government’s preferred technologies.
“The Boards of ARENA and CEFC will continue to be accountable for individual investment decisions,” Taylor said in a statement. “The Government will introduce new legislation so both agencies can support new and emerging low emissions technologies (including zero and negative emissions technologies). That ensures they will be able to support critical technologies such as soil-carbon sequestration, carbon capture and storage, production of green-steel, and industrial processes to reduce energy consumption.”
This in itself is an unprecedented incursion into the funding decisions of ARENA.
The board of ARENA is currently responsible for directing the investment priorities for the agency, and regularly sets a ‘general funding strategy’ that guides how the agency is to allocate its funding to renewable energy projects
Under legislation, ARENA is bound to allocate funding in line with the board’s ‘general funding strategy’, ensuring that the agency is transparent in its approach to choosing where to put taxpayer funding, but also providing the agency with a level of independence that is designed to prevent political interference and ministers using the funds for their own desires.
It is a measure that has prevented the kinds of funding allocations that characterised the ‘sports rorts’ saga, that saw the Morrison government funnel taxpayer funding into Coalition electorates before the 2019 federal election.
It is understood that the legislative amendments will seek to breakdown the protections built into the ARENA Act. But, as RenewEconomy previously reported, Taylor has also already succeeded in stacking the ARENA board with preferred candidates.
The latest round of appointments included picking skiing friend Justin Punch to replace the widely-respected Martjin Wilder as the ARENA board chair, appointing one of his own former political advisors, John Hirjee, to the board alongside a prominent climate and energy policy critic Anna Matysek.
With the secretary of the Department of Industry, Science, Energy and Resources also an ex-officio member of the board, Taylor already has a lot of influence over a majority of the ARENA board, and by extension, how it chooses to prioritise its funding.
For what its worth, ARENA itself doesn’t appear too concerned with the plans of the minister to which it reports, including the shift from funding renewable energy projects to “low emission technologies.”
“Over the years, as technologies have matured and reached commercial viability, ARENA has broadened its scope and shifted its focus from funding renewable energy generation — such as solar and wind which are now mature — to supporting the energy transition more broadly including hydrogen, energy storage, electric vehicles and enabling technologies. This is reflected in our current investment priorities which are well aligned with the Low Emissions Technology Statement,” ARENA CEO Darren Miller said.
“It’s pleasing to see ARENA’s hard work in the renewable energy sector acknowledged through new funding and an expanded role. We look forward to building on a strong project portfolio and established stakeholder relationships to help unlock the next generation of low emission technologies.”
But as ARENA says, it has already been supporting new clean energy technologies, including green hydrogen, electric vehicles, storage technologies and grid integration research. It didn’t need legislative amendments to start funding those zero-emissions technologies.
The intervention is really just about channelling funds into the energy sources that the Morrison government would prefer to subsidise – gas and coal.