ARENA to go as Abbott breaks more promises on clean energy

It now seems inevitable that the conservative Coalition government of Tony Abbott will abandon one of its key pre-election energy promises and seek to axe the $3 billion Australian Renewable Energy Agency.

The government is making clear it will dump some 50 government agencies in the budget, and the Australian Financial Review and News Ltd, both citing government sources, said ARENA will be dissolved and its functions relocated to within the department of energy in tomorrow’s federal budget – confirming a story first broken by RenewEconomy in March in our article entitled “Abbott’s new assault on clean energy“.

This is how we reported it then:

“ARENA has already been massively defunded, and there is speculation that if its budget is further cut, as part of Joe Hockey’s first annual budget in May, then the decision may be made to re-absorb the independent, statutory body into a government department.

It used to be part of the Department of Resources and Energy, before being separated out and run by an independent board following a string of disastrous grant allocations. Such a move would cause considerable disquiet in the renewable energy sector in Australia, particularly those looking at new technologies such as hybrid systems, solar PV and solar thermal, storage, and other “enabling” technologies.”

The decision to axe ARENA, and remove most, if not all, its unallocated funds, will be the latest in a string of broken promises from the Abbott government since its election last September.

In Opposition, the Coalition insisted it was a supporter of ARENA and it was not under threat. It also pretended it would continue “bipartisan” support of the 20 per cent renewable energy target, although it was clear to most that this never meant support for the current legislated fixed target of 41,000GWh of large scale renewable energy.

The uncapped component of the small scale renewable energy scheme, which includes rooftop solar, is also under threat, as are the upfront incentives in the form of small scale certificates. And the government’s commitment to a “million solar rooftops” appears to have sunk without trace.

The Coalition has also vowed to dismantle the $10 billion Clean Energy Finance Corporation, although it always made clear it would abolish what it called “Bob Brown’s green bank”. This, of course, goes along with its decision to repeal the carbon price, abolish the Climate Commission and dismantle the Climate Change Authority.

All of these acts were included on the “wish list” of policy actions of the far right Institute of Public Affairs whose acolytes now have a stranglehold over policy making, and were included in the list of recommendations from the Commission of Audit which was dominated by existing business interests. ARENA said last week the commission simply didn’t understand what ARENA was designed to do, and rejected the idea that it was duplicating other agencies.

This, of course, makes Australia world leading in the area of green energy, but not in any way to be proud.

It will be the first country to abolish a carbon price, the first country to wind back the ambitions of renewable energy targets, the first country to dump a newly formed green bank, and the first to slash funding on the sort of R&D and support for emerging technologies that was the speciality of ARENA.

The ARENA decision – like that of the CEFC – will face tough opposition in the Senate, and is likely to force the ARENA board to continue to operate in defiance of the government’s wishes until such time as legislation is changed.

ARENA originally had $3.2 billion of funds to be spent over a decade. However, the former Labor government reduced its funding, and pushed some beyond the immediate financing horizon, and it was cut further to around $2.5 billion in budget forecasts released by the newly elected Abbott government, although these cuts have yet to be enacted.

CEO Ivor Frischknecht says  181 projects that already have a funding agreement in place with ARENA will not be affected by future funding decisions. However, what is in doubt is the funding for close to 190 projects worth approximately $7.7 billion that are in the pipeline.

“We are considering funding proposals for approximately $2.4 billion for projects right across the innovation pathway, with industry investment totalling more than $5.3 billion,” he said in an emailed statement.

And where will the savings from all these cuts be targeted? Certainly not to the retirement of debt to address the confected “budget crisis”, but as Joe Hockey said over the weekend, towards the “biggest increase in road expenditure in Australian history’’ – and to Abbott’s multi-billion dollar maternity leave subsidy.