Australia on Wednesday announced it will set up a A$1 billion ($760 million) Clean Energy Investment Fund to be jointly managed by two climate institutions that former PM Tony Abbott attempted to abolish.
The decision to retain the Clean Energy Finance Corporation (CEFC) and the Australian Renewable Energy Agency (ARENA) is Prime Minister Malcolm Turnbull’s first significant step away from the climate policy put in place by his predecessor, whose attempts to shutter the two agencies were blocked by the Senate.
“The Government 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,” Turnbull and Environment Minister Greg Hunt said in a joint statement.
The new fund will target low-carbon projects such as large-scale solar with storage, off-shore energy, biofuels and smart grid, they added.
But while the fund is new, the cash is not.
Its A$1 billion budget over the next decade will be taken from funds already pledged to the CEFC. And while that money will now be administered by the Renewable Energy Agency, ARENA will not receive its legislated long-term A$1.3 billion budget, even though parliament has not approved the withdrawal.
ARENA’s original budget was meant to be used for grants.
“Going forwards, ARENA will have A$1 billion for investing which will actually come back to the taxpayer rather than losing 100% of what was going in grants,” Hunt told Sky News.
“In addition, there will be A$130 million of grant funding that’s available. But we are unapologetically – and I think for all the right reasons – predominantly focusing on getting the taxpayers’ money back rather than giving it away.”
Observers cautiously welcomed the announcement.
“The market recognises that an economically efficient transition to a low carbon economy must involve greater investment in clean energy and low carbon technology. There is no shortage of investor appetite for low emissions technologies and clean energy, but getting the policy signals and investment settings to align is critical to moving capital,” said Emma Herd, CEO of the Investor Group on Climate Change.
“It would be a big mistake to lose ARENA’s grant-making lever. In addition, the government will have to deal with the legislative fact that it should be putting A$1.3 billion into that task,” said Climate Institute CEO John Connor, adding that a broader climate policy framework was needed for Australia to wean itself off coal.
By Stian Reklev – stian@carbon-pulse.com
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