by Kane Thornton, Chief Executive, Clean Energy Council
With the COVID-19 pandemic plunging Australia into its first recession in almost 30 years, the October Federal Budget was touted by the Federal Government as one of the most important since the Second World War. As such, it represented an enormous opportunity to modernise the energy system and create the building blocks for a renewable energy export industry, all while significantly reducing Australia’s emissions profile.
Unfortunately, the Budget failed to grasp this opportunity fully, all but ignoring the considerable potential of renewable energy to create jobs, drive investment and reduce emissions.
However, the Budget did provide some positive signs – both from the government and the opposition – that the ideological heat may finally be coming out of the energy policy debate and that some degree of bipartisanship on energy could be possible.
Missed opportunity, but some progress made
In the leadup to the Budget, the Clean Energy Council outlined its vision for the economic recovery in A Clean Recovery, a comprehensive package of reforms to use renewable energy to inject more than $50 billion into the economy and create over 50,000 jobs in regional Australia while building the infrastructure necessary to develop a 21st-Century electricity system.
Despite receiving enormous support from right across the spectrum – including big business, community groups, energy experts and economists – the government ignored most of the measures outlined in A Clean Recovery, passing up the opportunity to create thousands of clean energy jobs and drive unparalleled investment in rural Australia.
However, there were some positives for the industry, with the Budget locking in previous commitments to extend the Australian Renewable Energy Agency and support important transmission investments.
Other new initiatives such as the instant asset write-off available for businesses will also likely boost the uptake of commercial-scale solar, while a range of programs to develop skills and workforce capability will likely help develop the clean energy workers of the future.
There were also some encouraging signs for women wanting to work in the renewable energy industry, with the allocation towards women in science, technology, engineering and maths likely to result in a more inclusive and diverse workforce.
Hope for truce as Opposition replies
The Clean Energy Council also lodged a pre-Budget submission in the leadup to the Budget, which contained many of the measures outlined in A Clean Recovery.
One of our major recommendations was for the establishment of a future transmission fund to help deliver the Australian Energy Market Operator’s 2020 Integrated System Plan (ISP).
This would address one of the most significant challenges currently facing the renewable energy industry-underinvestment in the grid stifling new generation investment, constraining existing generation and resulting in increased energy security and reliability challenges and higher power prices.
It was, therefore, a significant boost to the industry to see the Federal Opposition give a prominent place to this recommendation in its Budget reply through the announcement of the Rewiring the Nation Corporation.
According to the Labor party, the new body would take advantage of the Commonwealth’s ability to borrow at lower interest rates to fund projects needed to rebuild the electricity grid that has been identified in the ISP.
With funding of $20 billion, the plan is an ambitious proposal to provide network businesses and private investors with the certainty they need to make the necessary financial investments in these long-lived assets promptly.
Putting aside the various announcements for a moment, one of the most notable things to come out of the Federal Budget was the lack of criticism from both sides of politics on the other’s energy policies.
This may have been a result of energy taking a back seat to the debate on the COVID-19 recovery, but it could also be because the measures outlined were far more pragmatic and sensible than we’ve previously been used to in the energy policy space.
While it would be a courageous person to predict that this signals the end of the energy policy wars that have plagued Australian politics for the past two decades, it does provide some hope that the debate has shifted enough to allow some progress to be made on federal energy policy finally.
State initiatives the gold standard for energy ambition
Regardless of whether this is a new era for federal energy policy in Australia or yet another false dawn, the clean energy transition continues to gain momentum due to the outstanding work of state and territory governments.
Throughout this year, Queensland and New South Wales have committed to vast new renewable energy zones, Victoria has announced another reverse auction for 600MW of new renewable energy capacity and Western Australia has embraced clean energy in its 20-year energy plan.
When added to the world-leading renewable energy penetration in South Australia and Tasmania’s ambition to achieve 200 per cent renewables, it is clear that the states and territories are doing the heavy lifting in the continued absence of federal leadership.
The Federal Government’s dithering and delaying on energy policy has finally caught up with it, as the states and territories have taken matters into their own hands.
This has left Australia with an electricity system that is in urgent need of reform, and significant work will now be required to ensure that Australia’s electricity system delivers the price, reliability and environmental standards that Australians expect.
While this year’s Federal Budget made some tentative steps in the right direction, much more will need to be done in the coming years to make up for the time wasted across two decades of energy policy inaction.