The Federal Government wants to use Australia’s clean energy agencies to prop up dirty fossil fuel projects.
The Government’s plans to change the operation of both the Clean Energy Finance Corporation (CEFC) and the Australia Renewable Energy Agency (ARENA) have been announced today. These changes would allow two of Australia’s biggest clean energy success stories to prop up polluting fossil fuels.
Alongside this, anticipated changes to the Emissions Reduction Fund (ERF) could see taxpayer’s money invested in prolonging fossil fuel use by allowing carbon capture and storage (CCS) to access still more government money.
TOP TAKEAWAYS:
- The Federal Government wants to overhaul the operation of Australia’s clean energy agencies ARENA and CEFC so they prop up fossil fuels.
- These changes would see a big shift in emphasis for the agencies which have previously only been able to invest in clean and renewable technologies.
- Both ARENA and CEFC were set up to drive investment in renewable energy and they are world-class institutions.
- The Government needs to invest in clean energy projects which will create jobs now. Our Clean Jobs Plan identifies 76,000 jobs in industries that will rapidly get people back into the workforce while also tackling climate change.
Using taxpayer money allocated to clean energy and emissions reduction to prop up dirty, polluting fossil fuel projects is outrageous. It’s like using money set aside for koala protection to buy bulldozers to clear their habitat.
The Australian government cannot keep propping up the failing fossil fuel industry at a time where we desperately need to be phasing out fossil fuels all together. Right now, our government needs to be accelerating towards clean, renewable energy which will provide the jobs and sustained economic boost that Australians need.
“The Government’s move to change the remit of both the CEFC and ARENA shows how desperate it is to support the fossil fuel industry. Rather than focussing on past technologies, the Government should be driving for a cleaner future. Only a renewables-led future makes economic sense. Propping up failing fossil fuels and commercially non-viable technologies like CCS is a waste of taxpayers’ money”, said Climate Councillor and former ARENA Chair, Greg Bourne.
There are a lot of moving parts to this story, so let’s start at the beginning…
What is the Clean Energy Finance Corporation (CEFC)?
The Clean Energy Finance Corporation (CEFC) is a public bank designed to support the development of new, clean industries and renewable energy in Australia. It was set up by the Federal Government with public money. This means its investments are paid for by us, with our taxes. Under its current rules, the bank can only invest in energy efficiency and low-emission or renewable technologies.
The CEFC has been an important driver of investment in Australia’s renewable industry, having played a key role in some of the biggest projects around the country. The CEFC contributed to the expansion of the Tesla Big Battery in South Australia (the biggest battery in the world), and nearly 200 other large-scale projects, as well as more than 18,000 smaller projects. Since its inception in 2012, the CEFC has committed $8 billion to clean energy initiatives across the economy. This investment has driven nearly $20 billion more into clean energy projects by facilitating the movement of private finance. These projects have put Australia on a path towards decarbonising our economy.
What is the Australian Renewable Energy Agency (ARENA)?
The Australian Renewable Energy Agency (ARENA) was also established by the Australian Government in 2012, with the purpose of financially supporting companies and institutions that are developing new ways to drive Australia’s clean energy future, by providing early-stage funding and expertise at a time when it is needed most.
ARENA has played a pivotal role in getting Australia’s renewable energy technology and industries to where they are today. Over the past eight years, it has invested $1.58 billion into 543 different renewable energy projects across solar, storage, grid integration and more. Today, wind and solar, backed by storage, is the cheapest form of new energy generation in Australia thanks, in part, to ARENA.
Like the CEFC, ARENA occupies a really important space in Australia’s transition towards a renewable economy – we can’t let the Government get in the way of this.
What is the Emissions Reduction Fund (ERF)?
The Emissions Reduction Fund (ERF) was once the centrepiece of the Federal Government’s emissions reduction policy. Instead of compelling big greenhouse gas emitters to reduce emissions themselves, the ERF pays other people to reduce or draw down emissions on behalf of our big emitters.
Most of the $2.55 billion originally allocated to the fund has been ear-marked for projects in the land sector, by paying people to either restore or not to clear their land, but the ERF covers lots of other types of projects as well.
Before the last election, the Federal Government promised to top up the ERF with another $2 billion. More than a year on, this money still hasn’t been committed to projects, and the ERF is still operating with its existing pool of funds.
The Emissions Reduction Fund (ERF) has had more than its share of problems, and questionable projects routinely come up in the media. However, if done right, the ERF could be a really powerful tool to capture the low-hanging fruit of reducing emissions in Australia.
So what is the Government trying to do?
Firstly, the Federal Government introduced a bill which would allow the CEFC to invest in “loss making” projects… Yes, you read that correctly. This means the ‘clean energy’ bank will be able to fund dirty fossil fuel projects, which even the Government admits are bad economic investments. The new rules will allow the Clean Energy Finance Corporation (CEFC) to give public money away without any conditions requiring it to be repaid. Giving that money to an Australian success story like the CEFC only to force the bank to lose money on old and polluting gas-fired power stations doesn’t make sense.
As if this announcement wasn’t bad enough, the Federal Government has now announced their intention to change the operating rules of ARENA, so that the Australian Renewable Energy Agency can invest in projects that have nothing at all to do with renewable energy and prop up fossil fuels!
Read about the Technology Roadmap here
On top of that, it has been reported that the Federal Government is planning to change the rules of the Emissions Reduction Fund as part of the Technology Investment Roadmap, so that it will hand over even more public money to fossil fuel companies who are chasing the unicorn of carbon capture and storage. After decades of government subsidies amounting to tens of billions of dollars, carbon capture has very little to show for all this hype.
All of these announcements are geared towards allowing more gas and other fossil fuels in Australia’s energy mix. More gas means more emissions. Plus, the gas industry is financially unstable; major companies are already grappling with the fact that their gas facilities are worth billions of dollars less than they thought. Using taxpayers’ money to invest in these risky and polluting projects during an economic downturn is completely irresponsible.
Want to know more about the issues with gas, carbon capture and storage and hydrogen produced with fossil fuels, see our Technology Roadmap Explainer here!
How SHOULD the government rebuild the economy post COVID19?
After devastating fires and years of prolonged drought, topped off by a global pandemic and serious economic crisis, the Australian Government is making decisions right now that will affect the future of this country for decades. We must use this as an opportunity to drive growth in areas of the economy that both create jobs AND tackle climate change, whilst establishing a clean, reliable and robust energy system fit for the 21st century.
The Federal Government’s current plan to prop up the fossil fuel industry with funds set aside for our clean energy future is a recipe for disaster – for the climate, for the economy, and for the Australians who will be paying for it.
Instead, our Clean Jobs Plan shows we can create 76,000 jobs right away, where they are needed and for people who need them most. Investing in clean jobs creates lasting benefits for us all, like cheaper electricity, a more resilient environment, and a pipeline of work in industries that we’ll need in the future. This is the plan Australia needs right now.