Prime Minister Scott Morrison has unveiled plans to change the rules around investment of funds from the Australian Renewable Energy Agency (ARENA) and the Clean Energy Finance Corporation (CEFC).
The Federal Government plans to introduce new legislation which would allow ARENA to invest in technologies to lower emissions outside of wind and solar.
The move will likely be met with resistance from the Federal Opposition, which has previously expressed concern about any change to ARENA’s investment remit. ARENA however has welcomed the proposed changes.
Under the new proposal unveiled by Mr Morrison, Australia’s two key renewable energy investment agencies would have their rules expanded to allow for investment into low emissions technologies as new legislation is set to be passed by the Federal Government.
Mr Morrison said that renewable projects like solar and wind are clearly viable, and no longer need government subsidies to progress.
A funding boost of $1.9 billion has also been committed by the Federal Government for the Australian Renewable Energy Agency (ARENA) and The Clean Energy Finance Corporation (CEFC) to invest in new technologies including carbon capture and storage, hydrogen, soil carbon, and green steel.
The CEFC is also set to have its investment rules expanded beyond clean renewable energy projects to include low-emissions projects. However the CEFC invested projects must produce less than half of the emissions of the grid.
ARENA will be allowed to invest in renewable energy projects that are in the early stages of research and development while the CEFC is restricted to funding clean energy technologies that are in the commercial phase.
Mr Morrison said the $1.9 billion investment package in future technologies to lower emissions would back jobs, cut costs for households and improve the reliability of energy supply, however there is some concern from the industry that the new changes could potentially extend the life of coal-fired power plants.
The Prime Minister said ARENA will receive $1.62 billion to invest in addition to expanding the focus of ARENA and the CEFC to back new technologies that will cut emissions in agriculture, manufacturing, industry and transport.
“Australia is in the midst of a world-leading boom in renewable energy with over $30 billion invested since 2017. Solar panels and wind farms are now clearly commercially viable and have graduated from the need for government subsidies and the market has stepped up to invest,” the Prime Minister said.
“The Government will now focus its efforts on the next challenge: unlocking new technologies across the economy to help drive down costs, create jobs, improve reliability and reduce emissions. This will support our traditional industries – manufacturing, agriculture, transport – while positioning our economy for the future.
“This will not only cut emissions, but deliver the reliable energy Australia needs while driving down prices for homes and businesses.”
The new package also invests in a range of low-emissions, reliable new technology advancements including:
- Supporting businesses in the agriculture, manufacturing, industrial and transport sectors to adopt technologies that increase productivity and reduce emissions through a new $95.4 million Technology Co-Investment Fund that was recommended by the King Review
- Piloting carbon capture projects with a $50 million investment in the Carbon Capture Use and Storage Development Fund
- Helping businesses and regional communities take advantage of opportunities offered by hydrogen, electric, and bio-fuelled vehicles with a new $74.5 million Future Fuels Fund
- Setting up a hydrogen export hub worth $70.2 million to scale-up demand
- Backing new microgrids in regional and remote communities to deliver affordable, reliable power with $67 million
- Contributing $52.2 million to increase the energy productivity of homes and businesses, including a sector specific grant program for hotels supporting equipment and facilities upgrades
- Slashing the time taken to develop new Emissions Reduction Fund (ERF) methods from 24 months or more to less than 12 months, involving industry in a co-design process and implementing other recommendations from the King Review into the ERF, worth $24.6 million
- Boosting energy and emissions data and cyber-security reporting and supporting the delivery of future Low Emissions Technology Statements under the Technology Investment Roadmap process, as well as developing an offshore clean energy project development framework, together worth $40.2 million
Minister for Energy and Emissions Reduction, Angus Taylor, said getting the next generation of energy technologies right would not only help to keep prices low and the lights on, but would grow jobs, strengthen the economy and reduce emissions.
“We will reduce the cost of new and emerging technologies, not raise the cost of existing technologies or layer in new costs to consumers and businesses through mandated targets or subsidies,” Mr Taylor said.
“The Government recognises the strong growth in emerging energy technologies that will play a role in Australia’s energy mix into the future. We need to get the balance right and our investment to re-energise ARENA will deliver that.
The Federal Government said it will provide ARENA with guaranteed baseline funding of $1.43 billion over 10 years. ARENA’s baseline funding will be supplemented in two ways:
- Together with the Clean Energy Regulator, ARENA will be approved to deploy a portion of the $2 billion Climate Solutions Fund
- ARENA will also become a clean technology grants hub for future initiatives, with a new $193.4 million provided to deploy targeted programs.
The Boards of ARENA and CEFC will continue to be accountable for individual investment decisions. The Government will introduce new legislation so both agencies can support new and emerging low emissions technologies (including zero and negative emissions technologies).
The Federal Government said this ensures ARENA and CEFC will be able to support technologies such as soil‑carbon sequestration, carbon capture and storage, production of green-steel, and industrial processes to reduce energy consumption.
“ARENA has played an important role in this growth, and as the cost of renewable technologies has fallen dramatically, the Government is investing in the future of ARENA to support the next generation of energy technologies,” Mr Taylor said.
ARENA CEO Darren Miller welcomed the new funding and an ongoing role for the agency.
“We are delighted to see ARENA’s important role acknowledged with new funding, and we welcome a new era for ARENA,” Mr Miller said.
“There is still much work to be done but with an experienced team, industry knowledge and strong networks across a range of technologies and sectors, ARENA is well positioned to support Australia’s energy transformation and emissions reduction goals.”
Over its lifetime, ARENA has helped to improve the competitiveness of renewable energy technologies such as large scale solar, grid scale batteries, pumped hydro, bioenergy, distributed energy technologies and hydrogen. Since 2012, ARENA has supported 543 projects with $1.58 billion of funding that has leveraged nearly $5 billion in additional private and public sector investment.
As technologies have matured, ARENA’s focus has evolved from supporting pure renewable energy generation technologies to assisting with the integration of these technologies to support the operation of the system with ever increasing shares of variable renewable energy. ARENA’s current investment priorities include a focus on integrating renewables into the grid, accelerating the uptake of hydrogen and supporting industry to reduce emissions.
“Technology and innovation are critical to the energy transition and to Australia’s efforts to reduce emissions and create new economic opportunities,” Mr Miller said.
“ARENA has played a key role in reducing the cost and increasing the supply of renewable energy for the past eight years. We look forward to continuing this important work with the next generation of energy technologies.”