This week the Australian federal government announced a $1.9 billion funding package targeting new and emerging technologies for the Australian Renewable Energy Agency (ARENA) and the Clean Energy Finance Corporation (CEFC). This provides important funding certainty to ARENA and CEFC and is expected to substantially assist in Australia’s energy transition towards a lower emissions energy future.
- The Australian government has announced a $1.9 billion investment package for ARENA and CEFC.
- ARENA and CEFC’s investment mandates will be expanded under new legislation with funding commitments for research and investment in lower emissions technologies.
- It is expected that the investments in the development of new and emerging technologies will support jobs, cut household costs, reduce emissions and improve energy security for Australia.
Australian government plan
The Morrison government is widening ARENA and CEFC’s current mandate (which includes wind, solar, batteries and hydrogen) to include carbon capture and storage, and new microgrids. The $1.9 billion investment package is set to support jobs, cut household costs, reduce emissions and improve energy security for Australia.
The aim is to provide an extra $1.62 billion for ARENA to invest, as well as ensuring new technologies are developed to cut emissions across sectors such as agriculture and transport. ARENA’s future has been secured with a guaranteed baseline funding of $1.43 billion over 10 years. This guaranteed baseline funding will be supplemented with:
- an approval for ARENA, together with the Clean Energy Regulator, to deploy a portion of the $2 billion Climate Solutions Fund; and
- a new $193.4 million fund to be deployed on targeted programs, where ARENA will become a clean technology grants hub for future initiatives.
In particular, there is new funding for:
- a $95.4 million Technology Co-Investment Fund, recommended by the King Review, to incentivise targeted sectors to adopt high productivity and low emission technologies;
- a $50 million Carbon Capture Use and Storage Development Fund;
- a $74.5 million Future Fuels Fund for hydrogen, electric and bio-fueled vehicles;
- a $70.2 million hydrogen export hub;
- a $67 million investment into new microgrids;
- a $52.2 million contribution to increase the energy productivity of homes and businesses;
- a $24.6 million investment into the Emissions Reduction Fund (ERF) to reduce the expected 24 month timeframe by half; and
- a $40.2 million investment into the delivery of future Low Emissions Technology Statements under the Technology Investment Roadmap (TIR) process and the establishment of an offshore clean energy project development framework.
The Australian government will introduce new legislation so both ARENA and CEFC may support new and emerging low emissions technologies, including zero and negative emissions technologies. We expect the legislation will cover soil-carbon sequestration, carbon capture and storage, hydrogen, production for green-steel, and industrial processes to reduce energy consumption.
What does this mean?
The announcement provides the market and investors with some much wanted certainty on energy policy in this country and over time is expected to substantially contribute to Australia’s ability to transition to a cleaner, lower energy emissions nation.
By Elizabeth Charlesworth, Partner, Sydney & Alison Dodd, Partner, Melbourne.