The federal budget handed down by the Morrison government on Tuesday provided confirmation that the Australian Renewable Energy Agency will be provided new funding to support research and development, but the timing of this funding remains uncertain due to confusing and contradictory wording within the budget documents.
Ahead of the budget, federal energy minister Angus Taylor announced that ARENA would receive $1.62 billion in new funding, which would include $1.43 billion in baseline funding delivered over the course of the next ten years, and additional amounts for specified funding offers.
Taylor said that ARENA would also be able to draw upon funds that had previously been allocated to the $2 billion Climate Solutions Fund. An additional amount of $193.4 million was also to be allocated to ARENA, to fund the creation of a clean technology grants hub that it will administer.
However, the federal budget gave contradictory information about how the funding would be allocated, suggesting that ARENA’s new baseline funding would instead be delivered over the course of 12 years, rather than the ten year window outlined by Taylor.
The federal budget papers detail that ARENA would be allocated “$1.4 billion over twelve years from 2020-21 (including $223.9 million over four years to 2023-24) to continue funding ARENA to provide research and development investment for emerging low emission technologies to increase their commercial readiness.”
The portfolio budget statements released for the Department of Industry point to a ten year funding window.
“The Budget also sets out measures that demonstrate how the Government is reducing emissions through technology, not taxes, including $1.4 billion over 10 years for the Australian Renewable Energy Agency to support the Government’s Technology Investment Roadmap, by accelerating the development of new and emerging technologies to reduce emissions,” Taylor said in a statement following the budget.
ARENA’s original funding was set to be exhausted by 2022. It suggests that there’s a possibility the new allocation of $1.4 billion in funding to ARENA may not actually start flowing to the agency until the 2022-23 financial year, and would run for the following ten years until the end of the 2031-32 financial year.
This would also likely align the funding with expected changes to ARENA’s investment mandate, which would see the agency previously dedicated to funding the research and development of clean energy technologies, opened up to providing funding for previously prohibited technologies, including carbon capture and storage and gas projects.
RenewEconomy has reached out to Minister Taylor’s office to clarify the figures, but no response has been forthcoming, and leaves the sector with a level of confusion about the amount of funding that will be made available to ARENA.
Federal Independent MP Zali Steggall said that the allocation fell short of what was needed to fund a transition that would allow Australia to meet a net zero emissions target by 2050.
“$1.4 billion over 12 years for the Australian Renewable Energy Agency is one-tenth of what we need to transition our economy to net zero by 2050. Countries like Canada have allocated $10 billion for their own clean energy infrastructure. As a potential renewable energy super-power, we should do the same,” Steggall said.
CEO of the Australian Conservation Foundation, Kelly O’Shanassy, said that the founding provided to ARENA over the next four years was dwarfed by the amounts provided to the mining industry.
““We welcome ongoing funding for Australian Renewable Energy Agency (ARENA) and the Clean Energy Finance Corporation (CEFC), but of the $1.4 billion announced for ARENA only $223.9 million is allocated over the forward estimates,” O’Shanassy said.
“Mining companies are winners, taking around 45% of the fuel tax credit scheme, which is worth $15 billion to them over the forward estimates.”
It would not be the first time that promised funding for climate change and clean energy initiatives have been stretched out over a longer period of time in official budget papers, compared to what has been announced publicly.
At the time the $2 billion Climate Solutions Fund was announced, then federal environment minister Melissa Price suggest the funding, which was to top up the purchases of abatement under the Emissions Reduction Fund, would be delivered over a ten year window.
However, the budget delivered in 2019, saw the funding stretched out over an extra five years, seeing smaller amounts of funding spread out over the course of 15 years, and beyond the 2030 emissions reduction target of the Morrison government.