The Federal Government’s 2022-23 Budget has major investments to transform Australia’s energy landscape, including landmark projects and reforms, affordable renewable energy policies, and investments in large-scale storage and transmission for long-term reliability whilst creating jobs and training in the new industries.
According to Minister for Climate Change and Energy, Chris Bowen, and Assistant Minister for Climate Change and Energy, Jenny McAllister, the budget includes “nation-transforming investments” and delivers plans for “critical action and record investments for cleaner, cheaper and more secure energy”.
Mr Bowen said the Budget implements the Government’s Powering Australia plan and prioritises energy market reforms for long term reliability and affordability.
“This is Australia’s roadmap to delivering cleaner, more affordable energy to households and businesses – putting us on track to be a renewable energy superpower and ensuring we take advantage of the job and investment opportunities that have been missed for too long,” Mr Bowen said.
“Australian energy markets are dealing with the consequences of the horrific conflict in Europe and a decade of chaos, denial and delay.
“The Budget proudly builds on the Government’s ambitious climate and energy agenda, which has already seen Australia’s Climate Change Bill legislated, putting Australia on track for net zero by 2050. It includes clean energy projects in the regions, skills development, international climate leadership to drive investment, and close engagement with First Nations communities,” Mr Bowen said.
Ms McAllister said, “Our government is determined to make every watt count. This Budget delivers energy efficiency measures that put downward pressure on prices and reduce emissions.
“After a decade of inaction and dysfunction, the Albanese Government is committed to acting on adaptation including working with First Nations people.”
The 2022-23 Budget includes funding for landmark reforms:
Rewiring the Nation – $20 billion in low-cost finance for the urgent upgrade and expansion of Australia’s electricity grid at lowest cost, to unlock new renewables, increase the security of the grid and drive down power prices. This includes more than $6 billion already announced to help build Marinus Link and VNI-West, which will unlock Tasmania’s Battery of the Nation and Victoria’s offshore wind and renewables industries.
Powering the Regions – the regions that have always powered Australia are the same regions that will power us and the world throughout the global economic transformation – but only with the right investment. This Budget establishes the $1.9 billion Powering the Regions Fund, which will provide dedicated support to make sure traditional and new industries in regional Australia can harness the economic opportunities of decarbonisation. This Fund will support new jobs and long-term international competitiveness.
National Energy Transformation Partnership – for the first time, there is an agreed national plan between the states, territories, and the Commonwealth to keep the lights on through Australia’s massive energy transformation. This includes delivering critical market reforms, supporting investments in the grid such as large-scale storage and transmission, and helping to make homes and appliances more energy efficient.
Creating jobs and spurring investment in new energy industries
- $1.9 billion to establish the Powering the Regions Fund which will support new jobs and the decarbonisation of emissions-intensive industries, and help ensure regional Australians drive Australia’s transformation into a renewable energy superpower
- $71.9 million to build a Hydrogen Hub in Townsville, to fast-track Australia’s green hydrogen industry and take the Albanese Government’s planned investments in regional hydrogen hubs to well over $525 million
- $62 million towards Skilling the Clean Energy Workforce, including financial support, assistance and mentoring to 10,000 New Energy Apprenticeships as part of a $100 million commitment over ten years
- $2.2 million towards developing a Guarantee of Origin Certificate scheme to allow markets to verify and value renewable electricity, hydrogen and green commodities
As well as these measures, the Albanese Government will establish a new Net Zero Economy Taskforce, which will provide advice on ensuring workers, especially those in regional Australia, benefit from Australia’s transformation to a renewable energy superpower.
Cleaner, cheaper, secure energy
- $224.3 million for the Community Batteries for Household Solar grants program, to deploy 400 community-scale batteries for up to 100,000 Australian households
- $102.2 million for Community Solar Banks for 25,000 Australians living in apartments, rentals and low-income households across Australia
- $157.9 million to support energy security and reliability including:
- National Energy Transformation Partnership
- First Nations Clean Energy Strategy
- Energy and transmission planning
- A National Energy Performance Strategy
- Expansion of the Greenhouse Energy Minimum Standards program and the Nationwide House Energy Rating Scheme
- $63.9 million to invest in dispatchable storage technologies, such as large-scale battery projects – redirected from the failed Underwriting New Generation investments program program which delivered 0MW of capacity
- $22.8 million to support the Australian Energy Regulator (AER) to help integrate more renewable energy into the National Electricity Market (NEM), and improve the regulation of gas pipelines to lower gas transportation costs and promote reliable supply
- $49.5 million to increase the security of the diesel exhaust fluid market in Australia, by securing an emergency stockpile of technical grade urea, investing in sovereign manufacturing, and enhancing market transparency
- $62.6 million for an energy efficiency grants program for small and medium-sized business to reduce energy use and lower energy bills
- $83.8 million to develop and deploy First Nations Community Microgrid projects. Remote communities will benefit from improved security and affordability of energy supply
Reducing emissions and addressing climate change
- $15.9 million to engage with First Nations people on climate change including establishing the Torres Strait Climate Centre of Excellence
- $47.1 million to restore the Climate Change Authority and fulfil its new functions established by the Climate Change Act 2022, improving transparency of climate action in Australia
- $141.1 million to realign investment in carbon capture technologies to hard-to-abate industrial sectors (such as cement manufacturing) and accelerating carbon dioxide removal and negative emissions technologies
- $345 million for the Electric Car Discount which will cut taxes by exempting eligible electric cars from fringe benefits tax and the five per cent import tariff
- $14 million for the Australian Automobile Association to conduct on-road emissions and fuel consumption testing of light vehicles sold in Australia
- An additional $275 million to deliver the $500 million Driving the Nation Fund, to reduce emissions in transport by building a national electric vehicle charging network and investing in infrastructure for zero-emission vehicles for highways, fleets, and freight hubs
The Australian Renewable Energy Agency (ARENA) and the Clean Energy Finance Corporation (CEFC) will both have their funding maintained. These agencies will have responsibility for administering the below programs;
- CEFC will be the finance arm of the new Rewiring the Nation Office (RTNO), with the Australian Energy Market Operator as a technical advisor
- ARENA will deliver:
- $230.1 million as part of Driving the Nation
- $188.4 million for the Community Batteries for Household Solar grants program
- $60 million to expand ARENA’s existing Large Scale Battery Storage Funding Round
Rising household bills
While the budget allows for progressive plans and projects to ensure future affordable and reliable energy for Australians, there is forecasted to be a 56 per cent price jump in household energy bills across 2022-23.
Federal Treasurer, Jim Chalmers, said there will be an estimated 20 per cent retail electricity price growth across the country in late 2022, as well as a 20 per cent retail gas price increase, with additional rises to come in 2023.
Clean Energy Council: an important transition
With close to $25 billion committed to clean energy spending, this is a budget of a Federal Government that clearly understands the importance of the clean energy transition. This funding supports Australia’s rapid transition to renewable energy, ensuring more Australians can access clean, low-cost electricity.
Clean Energy Council Chief Executive, Kane Thornton, said the budget was the medium-to-long-term Federal Government expenditure that the industry has long called for.
“[The] announcements reveal a breadth and depth of commitment not seen before when it comes to successfully managing a fast and fair transition to renewable energy,” Mr Thronton said.
“Funding, like that announced under the Rewiring the Nation program to proceed with Marinus Link and for Clean Energy Finance Corporation funding for the Victoria-NSW KerangLink interconnector, enabling more clean, low-cost renewable energy and storage to power Australian homes and business, is what will ultimately ease cost-of-living pressures.
“We’re being warned that there is more pain on the way in the short-term due to our reliance on an energy system built around the failing dirty technologies of the past – unreliable coal and expensive gas. [The] Federal Budget gets Australia on the right track, making the most of the renewable energy boom and setting our nation up for clean energy superpower status.
“It’s a budget that has prioritised funding in the renewable energy labour market that supports a growing and diverse regional workforce. Clean, low-cost energy can provide enormous opportunities for workers, communities and our environment.
“After a decade in the energy wilderness, [the] Federal Budget accelerates the transition to clean, affordable and reliable renewable energy while investing heavily in the jobs and skills needed to realise that transition.”
APPEA: Code of Conduct adjustments needed
The Australian Petroleum Production & Exploration Association (APPEA) said the budget outlines that the resources industry will continue to deliver huge economic benefits for Australians.
Actual Petroleum Resource Rent Tax (PRRT) payments for 2021-22 were $2.166 billion with forecasts being revised up since the Pre-Election Fiscal Outlook by $200 million to $2.79 billion.
The Budget estimates that $11.45 billion will be collected between 2022 and 2026.
APPEA Chief Executive, Samantha McCulloch, said the best way to put sustained, downward pressure on gas prices is to bring on new supply.
“This will boost energy security, support manufacturing, reduce emissions, and ensure the industry can continue to deliver the substantial economic benefits to Australians we see in [the] Budget figures,” Ms MsCulloch said.
“The industry has announced more than $20 billion in investment in recent years but moratoriums and regulatory uncertainty are impacting future investment opportunities.”
Ms McCulloch said in reviewing a voluntary industry Code of Conduct the “ever-changing policy” risks new investment and supply as well as the associated economic, emissions reduction and energy security benefits.
Ms McCulloch said if the Federal Government was to go down the path of making the new Code mandatory, then it should be broadened to include the whole supply chain, to ensure full transparency around the commercial conduct of all participants in the gas market.
“That includes all parts of the gas supply chain as well as commercial and industrial customers – we are fully committed to realising the objectives of the Code,” Ms McCulloch said.
“APPEA members have engaged for more than two years on the development of the Code – with representatives of major commercial and industrial customers, as well as with the government and with regulators – to provide greater supply certainty and transparency to the market.
“With the Code covering customers and all parts of the gas supply chain, the Government will have full awareness of the true state of the gas market.”
Ms McCulloch said the oil and gas industry is playing a crucial role in putting Australia on the path to net zero emissions, investing billions of dollars in the projects and technologies that will deliver deep emissions cuts.
“We welcome the confirmation of government funding for the Middle Arm Sustainable Development Precinct in the Northern Territory but are disappointed to see reduced support for industrial Carbon Capture and Storage (CCS) given its essential role in reaching net zero,” Ms MsCulloch said.
Climate Energy Finance: lost opportunities
Independent think tank Climate Energy Finance Director, Tim Buckley, said while there were positives, the fossil fuel subsidies were a “major disappointment”.
“Overall the budget looks to be pragmatic, consistent and aligned with the pre-budget government commitments and direction of policy discussions when it comes to decarbonisation of our energy systems and economy,” Mr Buckley said.
“Subsidies for the fossil fuel sector is an area of major disappointment and lost opportunities given the extreme export war-profiteering by a few mostly foreign firms while most Australians are wearing the full export price parity cost of using Australian public resources.
“The budget reinstates the full petrol excise on all Australians, but continues to allow the mining industry a continuation of their 60-year-old $4-5 billion annual diesel fuel excise exemption.
“Multinational tax reform is mentioned, and the budget assumes a $953 million increased contribution assumption by limiting multinationals debt-deductions and other loopholes, but there is no further insight on how multinationals like Exxon and Chevron, BP and Shell who book Australian revenues in the tens of billions but paid zero corporate tax here in the last seven years (according to the ATO Tax Transparency disclosures).
“And there is no commitment to reduce the scam of the PRRT, which is delivering Federal LNG royalties at just a fraction of leading global peers like Norway, India and Indonesia.
CO2CRC: Budget cuts cruel
The CO2CRC shared its concern on the Federal Government’s decision to effectively abolish all financial support for carbon capture utilisation and storage, calling the removal a “staggering reversal of established Government policy which had positioned Australia as an innovation leader in this essential emissions reduction technology”.
The Budget cut over $250 million in funding for Carbon Capture Utilisation and Storage (CCUS) and other low emissions technology as the Government shifted its support to harder-to-abate sectors.
CO2CRC CEO, Matthias Raab, said Australian CCUS technologies are years ahead of what industry currently deploys and provide the next generation of projects with sophisticated and tested technologies and at lower costs.
“Australia is poised to use its innovation to decarbonise its emission intense sectors and roll out these technologies globally. Research and innovation without government support will be virtually impossible, undermining Australia’s emission reduction targets,” Dr Raab said.
Dr Raab said the Government’s decision impacted Australia’s ability to achieve an accelerated and efficient energy transition.
“The world recognises CCUS technology widely and invests heavily, led by the US and many European countries.
“CCUS is recognised by the UN’s International Panel on Climate Change (IPCC) and the International Energy Agency (IEA) as critical to achieving net zero emissions goals by 2050.
“The rest of the world is investing in CCUS, but the Australian Government is now withdrawing. The big swings in policy make it almost impossible to establish investment at scale and as does the lack of bipartisan support.
“Australia through CO2CRC and its partners is leading the world in innovation and technology development. We are recognised and praised by the rest of the world, but now not supported in Australia.
“The lack of investment into our partnership program will set Australia back in progressing carbon removal technologies such as CCUS and direct air capture (DAC) and deny Australian industry its greatest chance to achieve significant emissions reduction this decade.
“This decision has damaged Australia’s international partnerships and reputation as a trusted ally to our trading partners looking for targeted emission reduction technologies.”
Dr Raab said the next five to ten years are critical for Australia to develop the science and technology needed to reduce emissions through industrial-scale, multi-billion-dollar carbon capture, use and storage projects. He said the technology was essential to Australia achieving its transition to a cleaner energy future.
“The net amount of fossil fuels in the global energy mix is still 80 per cent. Solar and wind deliver about three per cent of the world’s energy,” Dr Raab said.
“Renewables will grow – and that’s very important in lowering emissions. But fossil fuels are part of the way our entire economy has evolved and cannot be simply set aside and replaced by renewables.
“If we aspire to a lower-emissions future, it must realistically be framed in the context that fossil fuels will be around for the foreseeable future. CCUS is the only viable way to a lower-emissions future that necessarily uses fossil fuels.”
Farmers for Climate Action: Farmers welcome investments in climate and agriculture
Farmers for Climate Action CEO, Fiona Davis, said the budget delivered many investments across climate, agriculture, emissions reduction and rural Australia.
“The budget delivers big investments in regional renewable energy, something Farmers for Climate Action had called for just weeks ago in our Farm Powered report about renewables in the regions,” Dr Davis said.
“It also delivers funding for emissions reductions in Australian agriculture and other funding direct to farmers.
“We’re particularly pleased with the $302 million over five years to support the agricultural sector further develop sustainable farming and land management.
“We welcome the $20.8 million over two years from 2022–23 to support Australia’s readiness to respond to drought events, which are of course driven by climate change.”
The Farmers for Climate Action welcomed the Rewiring the Nation plan, the Powering the Regions fund, the National Reconstruction Fund, the $20 million investment into the farmer and land manager outreach program for carbon market participation, the 400 community batteries, and the asparagopsis commercialisation investment.
Farmers for Climate Action does not support taxpayer investments in new coal and gas developments, which drive climate change.
The Energy Efficiency Council (EEC) has welcomed the energy efficiency initiatives contained in the Federal 2022-23 October Budget.
The EEC said the measures are modest investments in reinvigorating Australia’s energy efficiency efforts but will play an important role in unlocking energy efficient investment in future years, by improving frameworks that help consumers make energy efficient choices.
EEC CEO, Luke Menzel, particularly welcomed the investment in energy efficiency upgrades for small and medium sized enterprises.
“Australia’s business and industry are hurting as high gas and energy prices take a toll. Smart energy management and efficiency can help cut energy bills right now, and this is an important down-payment,” Mr Menzel said.
However, the EEC said the task of industrial decarbonisation is enormous, and the forthcoming National Energy Performance Strategy will need to set an ambitious program of energy management for Australian businesses.
The National Reconstruction Fund and the Powering the Regions Fund – committed to in this Budget – will also play an important role in helping reinvigorate Australian manufacturing, and enable efficiency and electrification across the economy.
The EEC also welcomed other measures to support transitioning our energy system to being net zero-ready, including the deployment of community batteries, and investments in new energy system architecture.
Mr Menzel noted the foreshadowed Integrated System Plan review could uncover opportunities to harness demand-side measures in the energy system to accelerate the transition and reduce costs.
“Preparing our energy system for a net zero future is incredibly important, but we can be smart about where we put our money. Unleashing energy management to right-size our energy network investments will make every dollar go further, and reduce costs to consumers,” Mr Menzel said.
The Federal Government’s housing package also presents opportunities to champion energy efficiency to create healthy, comfortable homes for the most vulnerable in our communities.
“There’s 40,000 new homes in the pipeline which can be efficient, comfortable and affordable. We must use this opportunity to build new housing that not only lowers energy bills for occupants, but will protect their occupants against a changing climate,” Mr Menzel said.
Finally, the EEC said the Federal Government’s jobs and skills investments are part of a critical expansion of the workforce that will build our net zero transformation. These measures in the budget start the job of skilling up a new energy workforce that can build efficient, productive, low-emissions businesses – which is a core enabler of the net zero transition.