In Australia, the Federal Government announced that it is establishing a $1 billion Clean Energy Innovation Fund to support emerging technologies make the leap from demonstration to commercial deployment.
The Clean Energy Innovation Fund will target projects such as large-scale solar with storage, off-shore energy, biofuels and smart grids.
Prime Minister Malcolm Turnbull said that “the strong suite of climate change policies will work to achieve our commitment to reduce emissions by 26 to 28 per cent by 2030. This target is ambitious but achievable.”
The $1 billion Clean Energy Innovation Fund will be jointly managed by the Clean Energy Finance Corporation and the Australian Renewable Energy Agency, drawing on their complementary experience and expertise. It will provide both debt and equity for clean energy projects.
The fund
The $1 billion Clean Energy Innovation Fund will be established from within the CEFC’s $10 billion allocation. This Fund will make available $100 million a year for ten years.
Previously, the Liberal Government under former PM Tony Abbot, a climate skeptic, had announced plans to scrap the Clean Energy Finance Corporation and the Australian Renewable Energy Agency.
By contrast, the Turnbull Government said it will “retain and reinvigorate the Clean Energy Finance Corporation and the Australian Renewable Energy Agency as part of our strong commitment to supporting jobs and innovation through investment in clean and renewable energy in Australia.”
The refocused agencies will work together to provide capital investment in Australian businesses and emerging clean energy technologies.
The Government said that “ARENA will continue to manage its existing portfolio of grants and deliver the announced $100 million large-scale solar round, and will be given an expanded focus beyond renewable energy to enable energy efficiency and low emissions technology. This will provide greater alignment with the CEFC and ensure that ARENA is able to support the full spectrum of emerging clean energy technology options. Once the $100 million large-scale solar round is complete, ARENA will move from a grant based role to predominantly a debt and equity basis under the Clean Energy Innovation Fund.”
The government added that “The changes announced work hand in hand with the Emissions Reduction Fund, the Renewable Energy Target, the National Energy Productivity Plan and our broader support for clean energy to reduce emissions and drive productivity across the energy sector.”
Reaction from the community
The Clean Energy Finance Corporation said it welcomed the Australian Government’s announcement that the organisation will have a greater focus around innovation, through the new fund.
The CEFC also, not surprisingly, “welcomes the Government’s confirmation that it will retain the CEFC and the Australian Renewable Energy Agency.”
CEFC CEO Oliver Yates said: “The creation of the CEIF will help innovative entrepreneurial companies build their commercial strength, so they can make a positive contribution to the Australian economy and our national emissions challenge.”
Labor Party: “Window dressing”
The Australian Labor Party opposition leader Bill Shorten described the changes as “all front and no substance,” charging that ‘What we see is Mr Turnbull scrambling with window dressing to pretend that he’s not the same as Mr Abbott.”
Australian media outlets noted that the changes did not represent new commitments to spending on clean energy, but rather a restoration of spending that originally was proposed at higher levels by the former Labor Government but scheduled for the scrap-heap by the Abbott Government. Legislation that created ARENA allowed for $1.3 billion in grants.
John Connor of the Climate Institute told the ABC that “The core role of ARENA was to bring forward new innovations, to actually get these trialled and tested and begin the process of getting them ready for the market. The Clean Energy Finance Corporation’s core role was to help bring them to the market. So let’s not get rid of ARENA’s core role, which is that grant role, which is an investment.
But Prime Minister Malcolm Turnbull said, “Historically, and you see it across the board, the Federal Government has been very much like an ATM (automatic teller machine). It’s been making grants, and the object has been to make the grant without frankly a lot of follow-up as to whether it’s effective. By ensuring that you take a more economic approach, you will ensure that you have a much more rigorous analysis, and that you will get a better quality of investment and a better quality of project.”
Climate Minister Greg Hunt added, “Instead of giving 100 per cent of the taxpayers’ money away, our goal is to receive 100 per cent of the taxpayers’ money back, but with an additional return.”
The Digest’s Take
Althoguh we note that the policy announced by the Liberal Government is in many respects well short of industry support levels from the Labor Party, now in opposition — far better to have two parties wrangling over whether $1.3 billion or $1.0 billion is the right investment, and whether that should be in the form of grants, or debt and equity — than the previous battle over whether there should be a clean energy investment scheme at all.
With both major parties now agreed on vigorous support for clean energy, investors can have confidence that the policy support has solidified, and that Australia has shifted towards a consensus on clean energy that is remarkable in contrast to the ruinous attempts by the Labor Government to unilaterally impose a more ambitious, though laudable, clean energy structure.
The brilliantly-intentioned Australian carbon tax, rushed into the market, did little to spur long-term clean energy investment and energy security — in fact, it frightened governments around the world from imposing carbon taxes at all when they saw the tax become an election issue and led, in part, to the toppling of the Labor government at the polls.
We note that no major low-carbon road transport at-scale project has been announced for years in Australia — but with both major parties now in support of clean energy investment, we expect to see investor interest galvanized. And with both Virgin Australia and Air New Zealand tipping a stronger interest in deploying advanced low-carbon fuels at scale and the US Navy looking for refueling options for the Great Green Fleet — we may well see an uptick in project action Down Under in the near future.
