Liberal-controlled oversight committee says Taylor’s ARENA changes should be cancelled

An influential Senate oversight committee has recommended that controversial regulations that open up the Australian Renewable Energy Agency to fund a range of non-renewable technologies – including carbon capture and storage – be cancelled out.

The regulations have attracted criticism, as they effectively allow funds earmarked for supporting the research and development of renewable energy technologies to be redirected to other technologies, some entirely unrelated to renewables, including some that directly support the use of fossil fuels.

The Senate’s Standing Committee for the Scrutiny of Delegated Legislation has recommended the amended ARENA regulations be disallowed, after concluding they are likely to be unlawful by straying too far beyond the original purpose of the legislation which established ARENA.

It’s a significant development, as the scrutiny committee holds considerable influence over the Senate’s views on regulations and a majority of its membership is drawn from Coalition senators.

The ARENA Act states that the purpose of the agency is to use its funding to support increases in the use of renewable energy in Australia, as well as to help make renewable energy technology more commercially competitive.

The new set of regulations issued for ARENA, by federal energy and emissions reduction minister Angus Taylor in July, attempt to extend the agency’s purpose to fund a wide range of non-renewable technologies, including carbon capture and storage, soil carbon, and transport fuel efficiency programs.

As Taylor’s regulations appear to be in conflict with the intentions of the broader parliament when it passed the ARENA Act, there is a significant risk that the regulations and any funding awarded under them would be struck down by a court challenge.

The senate scrutiny committee wrote to Taylor asking for clarification on the validity of the regulations – with Taylor arguing that because the ARENA Act lists supporting renewable energy technology as the “main” object of the Act, it did not prevent it from being allowed to fund other technologies.

However, this failed to convince the senate scrutiny committee, which said on Thursday that it “retains significant scrutiny concerns” and that, due to these concerns, recommended that the Senate “disallow this instrument.”

“The committee notes that the minister’s position is that the absence of a clearly drafted legislative limit or an express statement in the explanatory memorandum that the ARENA is limited to renewable energy indicates that Parliament did not intend the ARENA to be so limited,” the committee said.

“Respectfully, the committee does not accept this, and considers that the express references to renewable energy in the Act and the explanatory memorandum are a clear indication of Parliament’s intent.”

The committee flagged its intention to move its own “disallowance” motion, which would cancel out the regulations when parliament returns.

If the regulations are disallowed, ARENA will revert back to an earlier set of regulations, which were focused on supporting renewable energy technologies.

The committee suggested that the proper way to provide such funding to non-renewable energy technologies would be to either amend the parent ARENA Act – which would require amendments to be approved by both houses of parliament – or for an entirely new agency to be set up with its own legislation.

Taylor is unlikely to try and amend ARENA’s parent legislation as it would potentially open up a new front in a battle with the Nationals over federal energy policy.

An earlier attempt to amend legislation for the Clean Energy Finance Corporation (CEFC) was effectively abandoned after Nationals MPs attempted to move their own amendments that would have seen the CEFC’s funding opened up to funding clean coal and nuclear projects.

Labor climate and energy spokesperson Chris Bowen said that Labor would move to cancel out the latest ARENA regulations if the Morrison government refused to do so.

“It would be unprecedented for the government to proceed with this regulation,” Bowen told RenewEconomy.

“A committee led by Morrison and Angus Taylor’s own Government colleagues has found the dodgy regulation illegal and recommend it be disallowed. It shows Labor was right to originally disallow this regulation that tried to circumvent the parliament.”

“The Liberals have spent eight years trying to abolish and undermine renewable energy agencies including ARENA. Now their attempt to turn ARENA into a slush fund for Angus Taylor’s fossil fuel picks has been found illegal. If the government does not remove the regulation, Labor will move to disallow again as soon as the Senate returns.”

Australian Greens leader Adam Bandt, who has also backed moves to disallow the regulations, said that Taylor’s efforts to channel funding into fossil full projects defied an accelerating shift to cleaner energy sources.

“There is a bigger story to this. The reason that Angus Taylor is having such trouble giving coal and gas cash is that it’s resoundingly unpopular, which is why he’s attempting to do it through the convoluted, likely illegal process,” Bandt said.

“The Government’s attempt to use ARENA as the Trojan Horse for another handout to coal and gas companies has turned out to be an Achilles’ Heel.”

“The only way to stop this government from trying to pour more tax dollars into propping up a dying industry is to kick the Liberals out at the next election and put the Greens in balance of power where we will push Labor to go further and faster on climate,” Bandt added.

Taylor’s office has been contacted for comment from the energy minister.