Prime Minister Scott Morrison has announced a $1.9 billion investment package in next generation energy technologies to lower emissions, create jobs, cut costs and improve energy supply.
Coupled with announcements regarding the gas sector made on 15 September 2020, this announcement reinforces that the Commonwealth Government is focused on facilitating and encouraging investment in the energy sector as a COVID-19 economic recovery measure.
What does the package include?
The centrepiece of the package is an expansion of the mandates of both the Australian Renewable Energy Agency (ARENA) and the Clean Energy Finance Corporation (CEFC) to invest in next generation projects and technologies.
This announcement is especially timely for ARENA, as it will receive $1.62 billion in new funds and have its statutory life extended by ten years (it is due to shortly exhaust its existing funds).
The package also includes funding for:
- a new Technology Co-Investment Fund (a body recommended by the King Review) to support agriculture, manufacturing, industrial and transport sector businesses who adopt technologies which increase production or reduce emissions ($95.4 million);
- a new Carbon Capture Use and Storage Development Fund to assist in developing carbon capture projects ($50 million);
- a new Future Fuels Fund, which is intended to allow businesses and regional communities to take advantage of hydrogen, electric, and bio-fuelled vehicles ($74.5 million);
- the establishment of a hydrogen export hub ($70.2 million);
- support for micro-grids in regional and remote communities ($67 million);
- increasing home and business energy productivity ($52.2 million);
- implementing recommendations from the King Review, including reducing the time taken to develop new Emissions Reduction Fund methods from 24 months to less than 12 months ($24.6 million); and
- increasing energy/emissions data and cyber-security reporting and the development of a framework for offshore clean energy project development ($40.2 million).
The Prime Minister has foreshadowed new legislation that will enable ARENA and the CEFC to support low/no emissions technologies by expanding their mandates. This is a significant change for ARENA in particular, as it has previously been limited to technologies in the renewables space, and matters incidental or conducive thereto.
The new mandates will allow both organisations to focus on the development and funding of next-generation energy efficient and carbon reducing technologies such as hydrogen, soil-carbon sequestration, carbon capture and storage, green-steel production (based on domestic hydrogen supply) and the energy reduction of industrial processes.
New funding for ARENA
The Federal Government has committed $1.43 billion in funding for ARENA over the next 10 years and an additional $193.4 million for the delivery of targeted programs for future initiatives in clean technology.
In addition to the $1.43 billion, ARENA and the Clean Energy Regulator will be permitted to use part of the $2 billion Climate Solutions Fund, although details on the extent of this use are as yet unclear.
Further information regarding each of the funded items announced by the Prime Minister is yet to be shared, in particular:
- how the $70.2 million in funding for a hydrogen export hub will affect or be accessed by existing private sector projects;
- which government body will be responsible for developing a framework for offshore clean energy project development; and
- details from ARENA on its priority projects and technologies for new funding, including whether any additional funding will be allocated to hydrogen on top of its already announced $70 million Renewable Hydrogen Deployment Funding Round.
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