Taylor seeks to push ARENA and CEFC towards gas and CCS

The Australian Renewable Energy Agency appears set to win a reprieve from the Morrison government, but it comes with a catch, with the agency set to feature in the Morrison government’s plans to revive carbon capture and storage technologies.

ARENA had been approaching the end of its funding allocation, which is expected to be exhausted within the next year, having funded much of Australia’s research into clean energy technologies and underpinned the emergence of a competitive large-scale solar sector, since its establishment in 2012.

However, in a report released on Tuesday, the Grant King led review into Australia’s emissions reduction policies has recommended that the investment mandates for both the Australian Renewable Energy Agency and the Clean Energy Finance Corporation be expanded to allow the agencies to invest in “low emissions technologies”.

“Provide ARENA and the CEFC with an expanded, technology-neutral remit so they can support key technologies across all sectors and be involved in the delivery of the Goal-oriented co-investment program,” the King Review recommends.

The Morrison government has indicated that it will accept the recommendation, and will be another step in its push towards a ‘technology neutral’ approach to investing in the energy sector. This push, however, has largely seen the government prioritise support for the fossil fuel industry over support for the growing renewable energy sector.

So while ARENA is likely to receive a new allocation of funds through an upcoming federal budget, renewable energy projects will now need to compete with fossil fuel interests for grant funding.

The broadened investment mandates would allow both agencies to direct funding to a wider range of projects, beyond the clean energy sector, including energy efficiency and potentially gas and carbon capture and storage projects.

“Neither organisation can support carbon capture and storage. Meeting our long-term emissions reduction goals requires new technologies to be adopted across all sectors, and there are no compelling reasons why these organisations should be preventing [sic] from supporting any prospective low-emission technology,” the King Review report says.

While it likely indicates good news for the future of ARENA, which was approaching the end of its funding allocation and will possibly receive a new round of funding to support an expanded mandate, it could see wind and solar lose out, as renewables will now need to compete with a broader range of technologies for grant funding.

Federal energy minister Angus Taylor has already issued new investment instructions to the Clean Energy Finance Corporation around investments in new hydrogen projects, which have opened the door to CEFC investments in gas to hydrogen projects. If such an investment eventuates, it would be the first time the CEFC would invest in a project utilising a fossil fuel.

The changes will require legislation to be approved by the federal parliament, with ARENA’s legislation currently limiting the agency to only supporting renewable energy projects, and the CEFC’s legislation expressly prohibiting investment in carbon capture and storage projects.

Labor climate change spokesperson Mark Butler said the party would “take the time to consider a detailed response,” but called on the Morrison government to “deliver a COVID-19 recovery plan which brings forward investment in new renewable projects.”

The Climate Council added that carbon capture and storage missed its chance to demonstrate its viability, and any support provided by the government to the technology amounted to support for the fossil fuel industry.

“Carbon capture and storage (CCS) is incredibly expensive. Australian governments have already spent hundreds of millions of dollars on this technology and have very little to show for it. CCS is not a climate solution, but an attempt to prolong the role of fossil fuels in the energy system,” Climate Councillor and former chair of ARENA Greg Bourne said.

The moves have been slammed by environmental groups, which labelled the expansion of the ARENA and CEFC mandates as a “corruption” of their purpose.

“Under Grant King’s proposals two of Australia’s most successful independent statutory bodies – the Australian Renewable Energy Agency and the Clean Energy Finance Corporation – would have their missions to support the clean energy transition in Australia corrupted by new instructions to support fossil fuel projects, including dirty hydrogen with carbon capture and storage,” Australian Conservation Foundation climate campaigner Suzanne Harter.

Progressive think tank The Australia Institute said that it was disappointing that the Morrison government was again prioritising support for the fossil fuel industry and big emitters, at a time when a sustainable economic stimulus in response to Covid-19 would be powerful.

“The Government’s climate credentials are best captured in its wholehearted agreement to encourage voluntary emissions reductions in what appears to be the only recommendation that actually increases emissions reductions targets beyond the existing, weak target of 26% below 2005 levels by 2030,” The Australia Institute’s climate and energy policy director Richie Merzian said.

“Many other industrialised countries are using stimulus programs for the dual benefit of climate action, while Australia is still missing even the most basic climate and energy policy. This review is just tinkering on the margins of addressing Australia’s deep and dangerous fossil fuel reliance.”

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