Prime Minister Malcolm Turnbull has made much of his so-called “innovation” agenda, but apparently there is such a thing as too much innovation, at least in clean energy. So much for that thought bubble.
The Coalition government has now confirmed that it will strip Turnbull’s flagship $1 billion Clean Energy Innovation Fund – announced in a blaze of publicity less than six months ago – of $800 million, leaving the signature policy initiative with just $200 million to allocate for early-stage higher risk investments.
This is supposedly to make up for the $800 million that the government has reluctantly agreed to leave in the budget of the other big investor in innovative ideas, the Australian Renewable Energy Agency, after its controversial deal with Labor earlier this week.
The money from the CEIF will not be lost – it will be funnelled back into the Clean Energy Finance Corporation from whence it came – but it means that those funds will not be able to support more innovative and newer technologies that required a higher risk profile.
In the end, the result of the various political manoeuvres is this: $500 million lost from ARENA funding, effectively halving its budget in 2017/18 and 2020/21, and Turnbull’s innovation flagship reduced to a line item of $200 million over 10 years.
The re-allocation of money from Turnbull’s pet project was included in an explanatory memorandum on Tuesday, only to mysteriously disappear in an updated version. But a spokesperson for the treasurer’s office confirmed to RenewEconomy in an email on Thursday that $800 million will go back to the CEFC as part of its broader $10 billion mandate.
The extent of the damage to ARENA funding has also emerged, with the agency to suffer the bulk of its budget cuts in the next three years, as this graph below illustrates.
After being starved of funds last year and this year – having a budget of just $89 million and $57 million – ARENA was to have a budget of $499 million in 2017/18, but this has effectively been slashed in half. A similar cut is made in 2019/20.
The Greens says the whole thing is a debacle and makes a mockery of Turnbull’s innovation agenda. Because, it seems, there is such a thing as too much innovation and Labor’s claims of an “urgency to act” are betrayed by the big cuts in ARENA spending in coming years.
Having barreled into the clean energy space by announcing that ARENA grant funding will be killed – sparking warnings that hundreds of research jobs and thousands of clean energy jobs could be lost overseas – the government has now backflipped and effectively canned another scheme that offered a different avenue of funding.
Remember what Turnbull said back in March about the CEIF? He described it as a “very good day for innovation, it is a very good day for technology and for taking on the big challenge of global warming.”
Turnbull said then that the CEIF was critical to ensuring that Australia met its climate targets by “being really smart, by being technically, technologically, scientifically sophisticated and innovative,” and would “drive our overall transition from an economy fuelled by a mining construction boom to the new economy, much more diverse, much more innovative.”
The CEIF would have been able to offer finance at rates of just 1 per cent above the government bond rate, rather than 3 per cent in the case of the CEFC, making it attractive to early technologies.
That changing investment profile of already committed funds was a welcome addition, but the whole package was criticised at the time because the Coalition said it would strip ARENA of all its remaining $1.3 billion – a move many said would create a “valley of death” that would be hard to cross.
The Greens call it a dirty deal. “The more that we find out about this dirty deal that Labor and the Liberals did yesterday the more we understand why they did not want to have a public inquiry into this bill,” climate change spokesman Adam Bandt said in parliament on Wednesday.
“So this amazing deal that has been done has allowed, in the government’s mind, no net change. You have not saved renewable energy, Labor; you have helped kill it.
“It is very, very easy, as Labor and Liberal are wont to do, to talk about bipartisanship and the benefit of it, but the only bipartisanship we are seeing is cuts.
“At the very time when this agency is saying, ‘We need the money now to give confidence to the industry so that we can grow renewable energy projects and grow renewable energy jobs’ – things like solar thermal in Port Augusta or large-scale wind farms just outside of Canberra – Labor signs up to a deal to gut half a billion dollars, almost all of the savings, in the next three years.”