It’s that time of year again – the Federal Government has handed down its 2022-23 Budget, with the Government doubling-down on its ‘technology not taxes’ decarbonisation messaging.
The Budget includes $2.4 billion of new initiatives under the industry, energy and emissions reduction portfolio, which are expected to support 4,800 jobs.
Federal Minister for Industry, Energy and Emissions Reduction, Angus Taylor, said the 2022-23 Budget is about creating highly-skilled jobs, backing traditional Australian industry while building new clean energy industries, securing reliable and affordable energy, and putting Australia on track to achieve net zero emissions by 2050.
“Our ‘technology not taxes’ approach will make sure Australia meets and beats our 2030 emissions target, and plays a leading role in bringing down global emissions by investing in the technologies that won’t just help Australia, but will help the world.
“We are also investing in critical infrastructure to ensure reliable and secure energy for Australian households and businesses, and build on our strong record of reducing prices.”
The Federal Government said electricity costs for households are now at their lowest levels in eight years, with household power costs reportedly dropping 8 per cent in the last two years.
For small businesses, the average cost has fallen by 10 per cent over the last two years according to the Government, and for large business customers, costs have fallen by 12 per cent over the same period.
Australian east coast gas wholesale prices have reportedly remained internationally competitive, between 70 to 80 per cent lower than prices seen in Europe.
Energy and emissions reduction
The Budget includes $1.3 billion of new investment to maintain energy security, keep downward pressure on energy prices while reducing emissions.
These measures are expected to further support affordable, reliable and secure energy and help Australia reach its target for net zero emissions by 2050, without imposing new taxes or financial burdens on households, businesses or industry.
This investment includes:
- $300 million to support low emissions LNG and clean hydrogen production at Darwin, together with associated carbon capture and storage infrastructure (Darwin is positioned to become one of the world’s leading low-cost clean energy hubs, with access to excellent onshore and offshore natural gas and greenhouse gas storage resources, including the Beetaloo and Petrel basins and the Barossa and Bayu-Undan fields)
- $247.1 million to support increased private sector investment in low emissions technologies including hydrogen, the continued development of a hydrogen Guarantee of Origin scheme
- $200 million to increase onshore processing and value-add of iron ore exports, to support low emissions steel production in Indo-Pacific customer countries like Japan and Korea
- $200 million to enhance Australia’s supply chain security through new low emissions manufacturing facilities (using hydrogen and hydrogen-derivatives like ammonia, as well as carbon capture utilisation and storage) in the Pilbara region
- $148.6 million to support more investment in affordable and reliable power, including the development of community microgrid projects in regional and rural Australia
- $100 million to de-risk private sector investment in firm generation and grid infrastructure to increase system strength and capacity in the Pilbara region
- $100 million to support pre-Final Investment Decision activities and early works to make the Port of Newcastle ‘hydrogen ready’
- $50.3 million to accelerate the development of priority gas infrastructure projects consistent with the Future Gas Infrastructure Investment Framework and support investment in carbon capture and storage pipeline infrastructure
Mr Taylor said with the Budget measures, the Federal Government has committed more than $22 billion of public investment in low emissions technologies by 2030.
In his Budget address speech, Federal Treasurer, Josh Frydenberg, said, “We are investing in clean hydrogen, carbon capture and storage, batteries and large-scale solar.
“We are making further investments in microgrids to support regional and remote communities that don’t otherwise have access to the grid with small-scale renewable energy projects like solar and wind.
“A low-emissions future with reliable and affordable power is critical to our plan for a strong economy.”
These measures in the 2022-23 Budget support the Federal Government’s Modern Manufacturing Strategy, Australia’s Long-Term Emissions Reduction Plan, the Technology Investment Roadmap and Low Emissions Technology Statement, National Hydrogen Strategy and Future Fuels and Vehicles Strategy.
Fuel excise halved
The Budget also includes the halving of the fuel excise over the next six months, in an effort to ease cost of living pressures resulting from inflation and the Russia-Ukraine conflict.
“For the next 6 months, Australians will save 22 cents a litre every time they fill up their car,” Mr Frydenberg said.
“A family with two cars who fill up once a week could save around $30 a week or around $700 over the next six months.
“Whether you’re dropping the kids at school, driving to and from work or visiting family and friends, it will cost less.
“This cut in fuel excise, which takes effect from midnight tonight, will flow through to the bowser over the next two weeks.”
Transmission, clean energy funding lacking
The Clean Energy Council said that the 2022-23 Federal Budget missed the mark when it comes to cementing Australia’s place as a global clean energy superpower.
Clean Energy Council Chief Executive, Kane Thornton, emphasised the importance of infrastructure spending that supports a rapid transition to renewable energy over the next decade.
“Significant investment is required in the National Electricity Market and network to make this transition happen safely and smoothly,” Mr Thornton said.
“A 21st-century economy needs a modern electricity network that supports reliability, security and low-emissions technologies and delivers low-cost energy to consumers.
“The Federal Budget fails to look to the medium-to-long term future through an all-important lens of reducing the emissions that are having a devastating impact on the climate, the environment and on the lives of everyday Australians.
“The lack of transmission investment is now one of the most critical challenges facing Australia’s energy industry. Instead, yet another Federal Budget has prioritised the fossil fuel industry when Australia’s bottom line should be focused on providing a better future for communities through clean, low-cost renewable energy and storage.”
The use of microgrids and off-grid systems for rural and fringe-of-grid communities can improve safety and reliability while reducing energy costs and the Clean Energy Council said it welcomed the inclusion in the Budget allocation.
Gas a central focus
Australian Petroleum Production & Exploration Association (APPEA) Chief Executive, Andrew McConville, said the Budget has reaffirmed the long-term role of the oil and gas industry in Australia’s economy and lower emissions future.
“As noted by the Treasurer in his 2022-23 Federal Budget speech, Australia is on a pathway to net zero emissions by 2050,” Mr McConville said.
“Measures such as expanding the patent box concession for low emissions technology innovations, $300 million additional funding to support low emissions LNG, hydrogen production and associated carbon capture and storage infrastructure can help us continue to contribute to that pathway.
“Additionally, improvements to environmental regulation and planning for new infrastructure are all important to facilitating ongoing investment that will deliver more secure supply and cleaner energy.”
Local and international commentary
UN Global Compact Network Australia (UNGCNA) Head of Programmes, Corinne Schoch, said, “The Morrison Government’s focus on low-carbon emitting technologies and measures is not a long-term sustainable solution.
“The UNGCNA urges the Government to review its commitment to net-zero by 2050 and set ambitious intermediary climate targets to support the path to decarbonisation.
“This starts with a review of Australia’s nationally determined contributions and ensuring it is in line with the Paris Agreement before COP27. Meeting the 2050 net-zero target can only be achieved if robust targets for 2030 are in place.
“Additionally, the UNGCNA would have liked to see stronger investments towards large-scale renewable energy infrastructure, and stronger incentives for households to participate in the green economy through subsidies for electric vehicles, solar and battery storage.”
Community Power Agency Director, Kristy Walters, called on the Federal Government to get behind a people-powered renewal of regional areas devastated in recent years by floods, drought and bushfires – and now feeling the pinch from price increases.
“We welcome the modest continuation of funding for regional and rural solar and wind-powered microgrids. But regional communities are crying out for properly funded solutions to climate-fuelled natural disasters and high power prices,” Ms Walters said.
“We’re urging the government to establish 50 on-the-ground Community Power Hubs across regional Australia to unlock a wave of prosperity, innovation and resilience – it’s a vote winner.
“People in towns all over Australia are rolling up their sleeves, sitting around a table and coming up with community energy projects that support local jobs, local power, local resilience. But the Federal Budget has delivered nothing to help them.”
Energy Action CEO and Director, Bruce Macfarlane, said businesses needed more incentives to reach net zero.
“The Federal Government is playing an important role in providing a policy framework and industry guidance around emissions reduction, both of which will be key drivers for companies striving to achieve net zero – and the announcement that Australia is on track to exceed our 2030 target reiterates this progress and commitment.
“However, it’s not enough.
“Energy Action’s research shows that only 20 per cent of businesses have set a net zero goal. And of those businesses that have set a goal, only 20 per cent have actually started taking steps to achieve it.
“Ultimately, businesses incur a cost to achieve net zero, and need a way to recover this cost without passing it onto their customers.
“Unless the Government incentivises or mandates businesses on the path to net zero – similar to the incentives and standards announced by the UK Government in April 2021 – the status quo will continue.”
More to come.