Yesterday’s announcement of a new $1 billion Clean Energy Innovation Fund (CEIF) is a largely symbolic move designed to boost the Coalition’s green credentials before the upcoming election. It also further cements Malcolm Turnbull’s attempts to distance himself from the policies of Tony Abbott, who gutted the government’s investment in renewables.
In recent days Mr Abbott has continued his efforts to minimise the policy differences between his government and Mr Turnbull’s. This is one area where the differences are stark – and the acronyms are plentiful.
On the surface of it, the new CEIF is a good idea. It will be funded from the existing Clean Energy Finance Corporation (CEFC) set up under Julia Gillard, which Tony Abbott unsuccessfully attempted to abolish. The CEFC will invest $100 annually over ten years in the CEIF, which will use the money to lend to or invest in Australian renewable energy companies.
It is thus not new money, but a new channel for existing money. More importantly, it is intended to signal that the Turnbull government is serious about renewable energy, in great contrast to its predecessor. It also comes at the beginning of what is effectively a long election campaign in which Malcolm Turnbull is battling enemies within his own party as much as the titular opposition.
So, while it is presented as good news for the renewable energy sector, it is more about boosting the government’s environmental credentials, while at the same time sending a strong message to Tony Abbott and his supporters. The troglodytic views of many in the Coalition towards climate change are well known, and in an election year Malcolm Turnbull wants to further distance himself from them.
The CEIF will take over much of the activities of the existing Australian Renewable Energy Agency (ARENA), which the Abbot government also attempted to abolish. That move was denied by a hostile Senate, but the agency was effectively made inactive when the government refused to appoint anybody to its board.
In its announcement setting up the CIEF the government said ARENA would continue to manage its existing portfolio of grants, including $100 million already announced for large-scale solar projects. It said that ARENA would then move from a grants-based role to administering the debt and equity funding of the CEIF, and that its focus would be expanded beyond renewable energy to energy efficiency and low emissions technology.
This opens up the possibility of additional funding for technologies and companies that enable the wider usage of renewable energy, or which make it cheaper and easier to use. InnovationAus wrote about one such company, Brisbane’s Redback Technologies, recently.
But the fund is largely window dressing. The chief executive of the Clean Energy Council, Kane Thornton, describes it as “two steps forward and one step back.” It is hard not to share his cynicism.
“The government’s move to keep the Clean Energy Finance Corporation and establish a new Clean Energy Innovation Fund is a welcome step forward, but comes at the expense of ARENA’s ability to provide capital grants for innovative new clean energy projects into the future,” he said.
“The CEFC has played a key role in driving innovation in the financing of clean energy projects throughout Australia. Cementing its future is an important step forward for the sector. But we are disappointed that the government’s proposal eliminates the grants funding for future renewable energy projects through ARENA, which have been crucial to the success of the agency to date.”
Mr Thornton said ARENA had clearly demonstrated the effectiveness of the capital it has provided for technologies like large-scale solar, leading to its rapid development and substantial cost reductions over the past five years.
“A suite of other exciting new renewable technologies also require this type of support,” he said. “The new Clean Energy Innovation Fund would provide debt and equity through the re-allocation of existing CEFC finance. We need to see further detail to understand the extent to which it could fill the void left by abolishing capital grants.
“ARENA and the CEFC have proven to be highly effective in supporting R&D, demonstrating exciting new technologies and providing innovative financing solutions to unlock opportunities and attract private investment into the sector.”