Taylor’s contentious ARENA regulations survive after tied senate vote

The Morrison government has narrowly avoided a second embarrassment in the federal Senate, with controversial new regulations issued for the Australian Renewable Energy Agency (ARENA) set to remain in place after a vote on whether they should be cancelled out was tied.

On Wednesday evening, the Australian Greens moved a ‘disallowance motion’ in the federal Senate, which would have cancelled out new regulations issued by federal energy and emissions reduction minister Angus Taylor, and which would have prevented the Morrison government from redirecting funds earmarked for renewable energy projects to instead fund carbon capture and storage projects and other technologies using fossil fuels.

Despite the Greens securing the support of the Labor opposition and most of the Senate crossbench, a vote on the disallowance motion was tied after One Nation senator Malcolm Roberts sided with the government.

With the Senate’s numbers diminished due to current Covid-19 related restrictions, the vote on the motion was tied at 15-15. As an outright majority is required to pass motions in the federal parliament, the motion failed.

The disallowance motion moved by the Australian Greens had specifically targeted a section of the regulations re-issued by Taylor, which would have expanded ARENA’s functions to providing funding support for the Morrison government’s Technology Investment Roadmap.

This section would have opened up ARENA to funding projects using the government’s handpicked selection of ‘priority’ technologies, that include carbon capture and storage, soil carbon and hydrogen production – including projects that use fossil fuels.

Parts of the new ARENA Regulations were not targeted by the disallowance motion – including those that allow ARENA to administer a range of government initiatives that were funded by the last federal budget – will remain in place, largely reflecting the position of the federal Labor opposition not to oppose those sections of the new regulations.

These initiatives include the $71.9 million Future Fuels Fund – which is expected to expand the uptake of electric vehicles, biofuels and hydrogen-fuelled transport – as well as two sustainable freight initiatives, the $43 million Industrial Energy Transformation Studies Program and the $50.4 million Regional Australia Microgrid Pilots Program.

The unsuccessful disallowance sees Taylor narrowly avoid a second embarrassing defeat in the Senate after an earlier attempt to expand ARENA’s functions was blocked in its entirety.

The first set of regulations issued by Taylor in May were cancelled out after One Nation leader Pauline Hanson abstained from a disallowance vote – motivated by a desire to show she can differentiate One Nation from the Morrison government – denying the Morrison the government the majority needed to save the regulations.

Hanson also did not vote on Wednesday evening on the second set of regulations, and there are questions around whether this absence was appropriately accounted for given the diminished number of senators currently sitting due to Covid-19 restrictions.

Either way, the regulations have been controversial, even amongst Coalition ranks, as they seek to expand the functions of ARENA to funding non-renewable energy technologies. With the ARENA Act being clear in its purpose – to establish an agency dedicated to supporting only new renewable energy technologies – there is a serious legal question around Taylor’s powers to extend that purpose to funding non-renewable technologies.

ARENA was established under the Gillard government in 2012, as part of its broader carbon pricing policy package, as a dedicated agency to fund the research and development of emerging renewable energy technologies. ARENA has played a crucial role in supporting a number of technologies to become commercially viable in Australia, especially the emergence of large-scale solar PV projects.

The functions of the agency are guided by specific legislation, the Australian Renewable Energy Agency Act, which only explicitly authorises the agency to spend funds on projects using renewable energy.

Both Labor and the Greens have argued that the new regulations issued by Taylor are beyond the scope of the ARENA Act, and therefore beyond the scope of powers ARENA’s legislation grants to Taylor as the federal energy minister.

A Coalition controlled oversight committee sought further advice from Taylor about how the earlier iteration of the regulations could be lawful, but these regulations were cancelled out by the Senate before the advice was delivered.

The regulations could still end up being the subject of a formal court challenge to their legality, and it is understood that both the Australian Greens and clean energy industry bodies are considering this avenue.

“This regulation is unlawful and the government is just trying to deliver for its gas donors,” Australian Greens leader Adam Bandt said. “The whole thing is a moving feast and if minister Taylor thinks this is over, he is wrong.”