ARENA “getting up to speed” on carbon capture as it rolls out new investment plan

The agency created to fund Australia’s push into new renewable energy technologies and innovation will shift its focus to funding a range of technologies completed unrelated to renewable energy, including carbon capture and storage projects, under a new investment plan published on Thursday.

The Australian Renewable Energy Agency (ARENA) has issued an updated investment plan for what it – and most climate scientists – describe as the “critical decade” to achieve significant emissions reductions.

It is the first update since federal energy and emissions reduction minister Angus Taylor issued new regulations design to open up ARENA funds to carbon capture and storage projects, and a range of the Morrison government’s preferred technologies.

ARENA says it will continue to invest in new technologies to support the ongoing transition to renewable energy sources, including to “optimise the transition to renewable electricity”, further lowing the costs of renewable energy and storage technologies and supporting the commercialisation of “clean” hydrogen.

CEO Darren Miller said that there remained key challenges within the energy system that need to be solved to facilitate the increased penetration of renewable sources like wind and solar, including with advance inverters.

“There are technical, commercial and regulatory challenges to be solved, if we are to operate our system with a very high share of renewables,” Miller said.

“Within this theme of integration, we’re particularly interested in the role that advanced inverters can play in keeping the system operating safely and securely.”

“We are working closely with the likes of AEMO, industry bodies, and project developers to trial and perfect this technology. We need to solve the challenge of cost effective energy storage, solar and wind are by their very nature variable,” Miller added.

ARENA will also prioritise further funding towards low emissions metals production, which is likely to see it fund projects looking to replace the use of coal and gas in metals processing – as is currently common in aluminium and steel production – with low emissions supplies of hydrogen.

During the launch of the new investment plan on Thursday, Miller sought to emphasise ahow Australia’s hydrogen industry would help create new low-emissions export opportunities for Australia.

“We need to utilise Australia’s abundant sun and wind resources to produce, use and supply renewable energy. We need to optimise this transition through energy storage, large scale grid integration, flexible demand and further reducing the cost of solar and wind,” Miller said.

“We’ve already committed over $160 million in hydrogen, but we need to continue to grow a clean hydrogen industry and export market as this is still in its infancy.

“We also need to support the aluminium and steel industry to transition, whether through electrification, hydrogen or new alternatives in order to improve the competitiveness and emissions intensity of our heavy industries,” Miller added.

ARENA also has to deliver funding to a range of Morrison government initiatives, including the Future Fuels Fund, the Regional Australia Microgrid Pilots Program, the Industrial Energy Transformation Studies Program, and two freight transport funding programs.

However, the most significant and controversial change for ARENA is the addition of both carbon capture and storage and soil carbon, new priority technologies dictated by the new regulations issued by Taylor.

Australia has just one operating commercial-scale carbon capture and storage project – a project developed by Chevron at its Gorgon LNG facility – which is currently operating at just a fraction of its full capacity due to sand contamination that has clogged key components of the project.

Miller said ARENA is still getting itself “up to speed” on carbon capture and storage technologies and said it would look to approach industry sometime in the future about possible funding opportunities.

“We’ve been working in the background quietly on getting ourselves up to speed on what the opportunities might be in carbon capture and storage, and soil carbon technologies,” Miller said.

“And these are conversations we will have internally and with key stakeholders in the beginning. And once we have a clear pathway as to what the best use of our time, and funding, is into these areas, we will be engaging with the industry.”

The redirection of ARENA funds to technologies like carbon capture and storage has been opposed by many clean energy and environmental groups, including a former chair of the ARENA board, as well as both federal Labor and the Australian Greens.

An earlier set of regulations issued by Angus Taylor was cancelled out after a motion to “disallow” the regulations were passed by the federal senate. However, a second set of re-issued regulations narrowly survived a disallowance attempt, with One Nation senators supporting the Morrison government.

A significant cloud remains over the legality of Taylor’s regulations, that see ARENA funds used to fund projects unrelated to renewable energy technologies.

A parliamentary committee tasked with scrutinising such regulations continues to investigate their legality and is currently seeking additional information from Taylor to determine whether they are compatible with ARENA legislation.