Australian Clean Energy Council Argues For Protecting Renewable Energy Funding

Australia’s Clean Energy Council has argued convincingly against legislation intended to cut future renewable energy grant funding from the Australian Renewable Energy Agency.

“Legislation to be introduced to Parliament this week includes a $1 billion cut to ARENA’s grants funding, and puts everything that it has achieved at risk,” said Clean Energy Council Chief Executive Kane Thornton. Rumors and hints of the intended cut to ARENA (Australian Renewable Energy Agency) funding have been floating around for several weeks now, with both sides of the Australian political aisle arguing in favor of the cuts — tacitly under the assumption it would reduce government spending.

However, the role that the Australian Renewable Energy Agency has played in the country’s renewable energy sector over the past few years can hardly be understated, and cutting off its funding will castrate the Agency’s ability to do much more than cheer loudly from the sidelines.

“While we understand the government is looking for savings, slashing grant funding for renewable energy massively undermines the industry’s efforts to meet our national emissions reduction targets, as well as the 2020 Renewable Energy Target (RET) and beyond,” Mr Thornton continued. “ARENA is an investment by Australia in Australian technology, and it is helping us to catch up in the global race toward clean energy and energy innovation.”

As stated by the authors of the report in their opening sentence, “The Australian Renewable Energy Agency (ARENA) plays a crucial role in supporting the development and demonstration of a range of new renewable energy technologies and systems.” Specifically, in the four years since ARENA was established, the authors argue that it “has been highly effective in accelerating innovation, driving down costs, increasing scale and efficiency and, ultimately, ensuring Australia can transition to a cleaner, smarter energy system.”

Losing such a substantial amount of ARENA’s funding would severely hamper the innovation, research and development, projects, and rate of development across Australia’s renewable energy sector as a whole.

A summary of the impacts of cutting ARENA’s funding reached by the authors of the White Paper, The impact of defunding ARENA: Plunging into the clean energy valley of death, includes:

• The cost reductions seen in exciting near-commercial technologies will stall as the capital grant funding necessary to cross the so-called “valley of death” disappears. Major technology and project developers will leave Australia and these opportunities will be lost.
• Investment in Australia’s first-class renewable energy R&D could wither and die. Innovation in all its forms benefits the national interest and positions Australia for future prosperity in a rapidly changing global economy.
• It will be more challenging and/or more expensive to meet more ambitious renewable energy targets in the future, and Australia’s ability to deliver our Paris climate change commitments will be undermined.
• The level of investment (domestic and foreign) in early-stage clean energy R&D and demonstration projects will fall away as private sector investors take their capital and intellectual property elsewhere.
• International investors in Australia’s renewable energy sector will again be rattled by a perception that Australian policy support for clean energy is uncertain or diminished.
• The local supply chain, manufacturing sectors and skills base developed by ARENA-supported projects in recent years will stall and be lost to Australia. These will be very difficult and expensive to redevelop in the future.
• The challenges in integrating renewable energy into Australia’s traditional energy system would largely remain, slowing the transition to a smarter and cleaner 21st century energy system.
• Australia would miss the opportunity to adopt a diverse set of renewable energy technologies and solutions in the future, and instead remain reliant primarily on the current suite of technologies available.