Coalition’s $1.4b ARENA extension cuts solar and wind while enabling fossil fuels

In late January 2020, think-tank the Australia Institute (TAI) made a pre-budget plea to the Morrison Government for a $460 million top-up of ARENA’s funding. Today, the Morrison Government has committed a total funding package of $1.62 billion, including guaranteed baseline funding of $1.43 billion over the next ten years. 

With an annual baseline of $143 million then, the package does not quite meet the $230 million per year between 2022-2024 TAI’s Energy Policy & Regulatory Lead, Dan Cass, thought adequate. The Morrison Government’s figure also falls well short of the $3.3 billion mark demanded by the Australian Industry Group. This is to all say that while the Government’s package can be described as an extension, it can just as easily be described as a cut. 

ARENA CEO Darren Miller said the Agency is “delighted to see ARENA’s important role acknowledged with new funding, and we welcome a new era…ARENA is well positioned to support Australia’s energy transformation and emissions reduction goals.” 

In a statement, Shadow Minister for Climate Change and Energy Mark Butler said that while Labor welcomes any additional funding for ARENA, “Scott Morrison again has failed to deliver a broad energy policy that will protect the 11,000 renewable energy jobs that the University of Technology Sydney (UTS) says will be lost without such a policy over the next two years.” 

Controversial carbon capture and storage mandate 

 The Government’s new funding package carries with it an expanded remit including a controversial mandate to invest in carbon capture and storage (CCS), yet another life-line to fossil fuel generators. This move follows ongoing an ongoing attempt by Energy and Emissions Reduction Minister Angus Taylor to expand the remit of the Clean Energy Finance Corporation (CEFC) to allow it to invest in gas generation, which is akin to using Defence Force funds to hire an insurgency group. 

No doubt, this particular stipulation of a CCS mandate (and a proscribed $50 million fund) has the support of Chief Scientist Dr Alan Finkel, who believes some modicum of CCS is necessary for Australia’s future hydrogen economy. Unfortunately, while Finkel’s argument holds some water, it is not enough water for a hydrogen economy. As Tristan Edis, Director of Analysis and Advisory at Green Energy Markets, told pv magazine Australia – Finkel’s logic is understandable but ultimately counter-productive. 

Clean Energy Council CEO, Kane Thornton, who lauded ARENA’s role since its creation in 2011 when he spoke to pv magazine in March, said in a statement that the mandate to include CCS “is a disappointing distraction,” but that “the vast majority of this new funding is consistent with the energy industry and investors’ strong commitment to renewable energy and energy storage.” 

The Climate Council said that 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.” 

According to former ARENA Chair and current Climate Councillor, Greg Bourne, the Morrison 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.”

Prime Minister Scott Morrison described the expanded remits of both ARENA and CEFC as “expanding the focus…to back new technologies that will cut emissions in agriculture, manufacturing, industry and transport.” Of course, CCS is hardly new, indeed it has been a recognised non-starter for over a generation. Moreover, CCS does nothing to “cut emissions” it only sweeps emissions under the rug to fester into bigger problems for later generations and governments. 

Labor has indicated it would support the establishment of separate CCS funding, but Shadow Minister Butler restated that Labor remains opposed to raids on the renewable energy funds it created, namely ARENA and CEFC.

New funding package 

The new funding package pushes ARENA away from it’s proven sweet spot in solar and wind and toward “low emission” technologies, such as CCS. Additionally, the package includes funding for storage and microgrids, including $67 million for new microgrids in regional and remote communities.

Of course, “low emission technologies,” has quickly become the Morrison Government’s favourite euphemism for fossil fuels. Put basically, a euphemism is an abstraction, and as the Trinidadian polymath C. L. R. James astutely noted: “In politics, all abstract terms conceal treachery.” Put differently, euphemisms are plastic flowers on the graves our language cannot bear to visit, and for that reason they are worth paying extra attention. The very fact that the Government is using a euphemism is red-handed evidence of its guilty conscience. 

The Prime Minister said that “Solar panels and wind farms are now clearly commercial viable and have graduated from the need for government subsidies and the market has stepped up to invest.” By that rule, that the gas sector is commercially unviable and the market has no interest in investing in it explains why the Morrison Government is so keen to subsidise gas. But, obviously, gas is not a new technology to be unlocked, it is an old technology unfit for Australia’s energy future. 

On that note, Australian tech billionaire Mike Cannon-Brookes told Guardian Australia that the government’s desire to subsidise the gas industry is “bullshit.” The Morrison Government’s gas-led recovery came with an ultimatum to the private sector that if it doesn’t prop up the gas sector then Government itself would step in to build a new gas-fired power plant in the Hunter Valley, and an expanded Australia Gas Hub in QLD. Cannon-Brookes said the Prime Minister should “Let people come and bid – don’t force the solution and declare the outcome.”

“Be clear about hwo much money you are going to put up,” continued Cannon-Brookes, “don’t say if it’s a gas plant I’ll put up $500 million but renewables don’t need any [subsidy], that’s literally what [Morrison] said, renewables don’t need the subsidies, but gas does. I mean, what? Giant fossil fuel companies need subsidies to extract gas and export it? No they don’t, that is bullshit. So declare the rules of the game. That’s the way to get assets built.”

Hydrogen economy

Among the other “low-emissions” technologies the new funding package invests is hydrogen, a technology that could easily be 100% clean if packages such as these invested properly. Nevertheless, the Australian Hydrogen Council (AHC) welcomed the $74.5 million investment into the Future Fuels Fund and $70.2 million toward a hydrogen export hub to scale-up demand and take advantage of the advancements of this “low emissions”, high powered source of energy. 

“The hydrogen export hub will help promote Australia as a world leader in hydrogen production and exports,” said AHC CEO Dr Fiona Simon, “as is the recognition of hydrogen in the Future Fuels Fund…The investment is a leap in the right direction for the hydrogen industry.” 

To be sure, the funding package still requires parliamentary approval – not exactly a formality considering the Senate rejected the Coalition’s bid to scrap both ARENA and the CEFC in recent history.