Labor softens stance on Taylor’s changes to ARENA regulations

Labor could deliver the Morrison government a partial victory in its quest to open up a key clean energy funding body to a new range of different technologies after deciding not to oppose the entirety of new regulations issued for the Australian Renewable Energy Agency (ARENA) by the Morrison government.

Federal energy and emissions reduction minister Angus Taylor last week issued a new set of regulations for ARENA in another attempt to allow it to fund technologies handpicked by the Morrison government – including carbon capture and storage and fossil-fuel hydrogen production.

It is Taylor’s second attempt to expand ARENA’s functions to allow it to fund a range of non-renewable energy technologies that the Morrison government wants to target under its Technology Investment Roadmap.

An earlier set of regulations, issued by Taylor in May, were cancelled out by a vote of the federal senate after Labor, the Greens and the crossbench combined to vote them down.

Labor will now take a softer stance on the re-issued set of regulations, with Labor’s shadow cabinet agreeing on Monday that the party will focus its opposition on funding for carbon capture and storage projects and the production of hydrogen using fossil fuels.

“The revised regulations include new safeguards on the implementation of 2020 Budget measures – an admission that Labor and the Senate were right to disallow the original regulations. Labor will support these measures,” Labor climate and energy spokesperson Chris Bowen said.

“Labor supports any new energy technologies like CCS where they stack up scientifically and commercially. But deserving non-renewable technologies should be supported in other ways, and not allowed to dilute ARENA’s funding and expertise.”

Labor will argue that ARENA funding should not be used to support projects using fossil fuels but other parts of the regulations, which allow ARENA to provide funding to a range of sustainable transport initiatives, the development of alternative fuels and microgrid initiatives, will not be opposed by Labor.

These measures include $192.5 million in budget funding spread across the Future Fuels Fund, the Freight Energy Productivity Trial Program, the Industrial Energy Transformation Studies Program and the Regional Australia Microgrid Pilots Program.

It also includes funding for technologies identified in the Morrison government’s Technology Investment Roadmap, including energy storage and low emissions metals processing.

Meanwhile, assertions from Taylor that a number of clean energy and climate change groups have spoken in support of the ARENA regulations have been rejected. The clean energy sector has largely reacted with dismay that ARENA is being co-opted to fund the government’s preferred technologies.

One of the groups the Morrison government has cited as being in support of the regulations, the Australian Council for Social Services, said it remained opposed to directing ARENA funds to fossil fuel projects.

“ACOSS opposes changes to ARENA’s mandate to invest public funds in technologies that would support fossil fuels such as Carbon Capture and Storage and Gas,” ACOSS senior adviser on climate and energy, Kellie Caught, told RenewEconomy.

“Public funds should instead be used to accelerate cheaper renewables and energy efficiency, particularly for people and communities experiencing financial disadvantage.”

However – indicating of the industries set to benefit from new regulations – groups that have expressed enthusiastic support for the re-issued ARENA regulations are those representing the fossil fuel industry.

The Australian Petroleum Production and Exploration Association (APPEA), a group representing Australia’s largest oil and gas producers, backed the public funding being provided to carbon capture and storage and fossil hydrogen projects.

“All technology, including hydrogen and carbon capture and storage, should be on the table to help reduce emissions,” APPEA chief executive Andrew McConville said.

The Australian Greens are set to maintain their full opposition to the ARENA regulations, saying that the renewable energy body should not be used to direct funds to fossil fuel projects, and will argue that the regulations themselves go beyond the powers granted to Angus Taylor under the ARENA Act.

In May, a Coalition controlled oversight committee questioned the legality of the regulations, asking Taylor to justify how he had powers to direct ARENA to give funding to projects that did not involve renewable energy technologies.

The committee noted that the formal objects of the ARENA Act – which spell out the agency’s purpose – are to support projects that reduce the cost of renewable energy technologies and those that help increase the use of renewable energy in Australia.

However, the ARENA Act does not explicitly authorise the agency to spend funds on projects outside the renewable energy sector.

Before Taylor responded to the committee, the earlier iteration of the regulations was cancelled out by successful disallowance motions moved by Labor and the Greens.

The disallowance motions won majority support in the federal senate after One Nation leader Pauline Hanson abstained from a 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.

But with changes in the regulations designed to place limits on the amount of funding that may be spent on the Morrison government’s preferred technologies – those identified in its Technology Investment Roadmap – as well as new reporting requirements, the new version of the regulations are likely to stand a better chance of survival.

The changes are possibly enough to convince Hanson to support them in the senate. With Labor set to pick and choose which parts of the regulations it supports and opposes, the new ARENA regulations are unlikely to be disallowed once again their entirety by parliament.

The regulations could still be cancelled out by a court, if it were to rule that the regulations were beyond the powers of the energy minister, and it is understood that the Australian Greens and clean energy advocacy groups are considering mounting such a legal challenge.