Federal budget funds Vales Point upgrade and CCS, but snubs EVs

A massive deficit, a range of infrastructure investments that the Morrison government hopes will stimulate the Australian economy, and funding for the Vales Point coal fired power station feature in the Morrison government’s Covid-delayed federal budget handed down on Tuesday night.

The document delivered by Treasurer Josh Frydenberg is being touted as an infrastructure budget, delivering a substantial amount of new transport and city building infrastructure in an attempt to stimulate an economy still reeling from the effects of Covid-19.

Yet electric vehicles barely feature, attracting a mere $5 million of in funding for a new assembly plant and vehicle-to-grid trial, while the Australian Renewable Energy Agency (ARENA) will draw down $223.9 million over the first four years of a promised $1.4 billion in new funding that will now be stretched over the next 12 years.

More galling to those seeking to embrace a clean energy transition, the budget – saddled with a record deficit of $213.7 billion – includes confirmation of an unspecified amount of funding for the Vales Point coal fired generator, co-owned by Liberal Party donor Trevor St Baker,  which reports suggested would include upgraded turbines and high pressure heaters.

“It’s a win for big polluters, a loss for climate action,” said the Australian Conservation Foundation, noting the $15 billion in subsidies being paid to miners under various fuel tax credit scheme.

The Morrison government announced in September that it would provide $1.62 billion in new funding to the Australian Renewable Energy Agency (ARENA), which includes $1.43 billion over the next ten years as baseline funding, and an additional allocation of $193.4 million which will be used to fund a series of hand-picked technologies chosen by the Morrison government.

The budget says ARENA will receive just $223.9 million of this new funding over the next four years. This funding will be partially offset by funding removed from the Climate Solutions Fund, with the budget outlining $96 million that will be taken away from the Clean Energy Regulator over the next four years, which administers the Fund.

The budget will also channel a significant amount of funding to the preferred technologies of the Morrison government, including $50 million in funding for carbon capture and storage projects, a technology that ARENA has not previously supported as it is not a renewable energy technology.

The Morrison government will soon pursue legislative changes to allow ARENA to provide funding technologies outside of renewable energy technologies, including gas and carbon capture and storage.

Other allocations include a $95.4 million Technology Co-Investment Fund, to support a range of energy productivity and energy efficiency measures across industry, transport and the agricultural sector. A previously announced $74.5 million has been allocated to establish a Future Fuels Fund, supporting the uptake of hydrogen, electric, and bio-fuelled vehicles, and $70.2 million has been allocated to the creation of a hydrogen export hub.

A total $67.1 million has been allocated to a new Regional and Remote Communities Reliability fund, to fund the creation of new microgrids and $52.2 million to fund energy efficiency upgrades across buildings, hotels and pubs.

The federal budget has also allocated $134.7 million for a range of electricity infrastructure projects aimed at ‘improving affordability and reliability’, which will include loans to support the early stages of the Marinus Link interconnector, the construction of a big battery project in Western Australia, and funding for the CopperString 2.0 link between Townsville and Mt Isa.

The initiative will also deliver funding for upgrades for the ageing Vales Point coal fired power station, presumably the $11 million funding promise made to power station owner, and Liberal party donor, Trevor St Baker.

While the confirmation of funding for ARENA and other new measures will likely be welcomed by the clean energy sector, the level of allocations to the leading funder of clean energy research have been criticised for not being sufficient, falling short of what had been called for.

“The Government appears to put Australia’s Renewable Energy Agency, ARENA on life-support and the new funding has ARENA at its lowest level since it was established yet somehow it has to deliver more, including on fossil fuels, with less,” the Australia Institute’s climate and energy program director Richie Merzian said.

“ARENA and CEFC have been amazing successes, according to Australia Institute research in their first five years they catalysed over $23 billion in investment in renewables and disappointing to see their funding levels haven’t been significantly increased,” he said.

“The Government claims it is tackling fuel security by entrenching our reliance on oil with over $210 million for petrol storage and refining instead of supporting future fuels like electric vehicles which get only $75 million.”

However, the budget was welcomed by Beyond Zero Emissions, which said the funding commitments for clean energy projects would help Australia seize opportunities being created by the sector.

“The recent policies released by the Government and the measures announced in the Budget are a promising endorsement of the benefits of a clean economic recovery,” Executive Chair of Beyond Zero Emissions, Eytan Lenko said.

“There are trillions of dollars of private capital looking for clean projects to back. A global race is underway to be the friendliest and lowest risk home for that capital to be invested and for new technologies and solutions to be developed,” Lenko said.

“Australia has an enormous opportunity to capitalise on our comparative advantage in renewable energy and to upgrade our industry and infrastructure to harness the benefits of new technology energy.”

Ahead of the budget, prime minister Scott Morrison had also confirmed that $53 million would be allocated for gas market interventions, which will be used to support the development of up to five new gas basins across Australia, including the Beetaloo Basin in the Northern Territory, the North Bowen and Galilee Basin in Queensland and the Narrabri gas basin in New South Wales.

As was flagged in a speech by Morrison to the National Press Club last week, the budget has outlined a $1.5 billion funding to implement a ‘Modern Manufacturing Strategy’ – which will include funding for manufacturing projects that involve ‘recycling and clean energy’, but is still not clear what exactly that will entail, but will almost certainly channel new funding into gas projects.

The Morrison government has unveiled a $7.5 billion plan for transport infrastructure, which will fund the construction of new roads, highway upgrades and new rail connections across Australia – but has snubbed the electric vehicle sector, delivering no incentives to promote uptake of zero emissions vehicles, and virtually no funding to support the deployment of electric vehicle charging infrastructure.