‘Language of innovation’ wraps fossil fuel subsidies

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Joseph Brookes

Australian governments are wrapping hundreds of millions of dollars worth of fossil fuel industry subsidies in “the language of innovation”, according to new analysis.

The Australia Institute analysed Federal and state government assistance to fossil fuel producers and major users over the last financial year, finding they received $10.3 billion worth of spending and tax breaks.

More than three quarters comes from the federal government, mostly through its Fuel Tax Credit Scheme. The remainder largely comes from the Queensland government and its support of the coal and gas industries.

The report questions the value of the concessions and the increasing investments in non-renewables like gas and controversial technologies like carbon capture storage. Both are popular with the coalition government and often spruiked as emissions lowering initiatives at the bleeding edge of energy technology.

Minister for Energy and Emissions Reduction Angus Taylor insists Australia will lower emissions with technology innovation but has downplayed the role of renewables.

The research highlights the recent $1 billion partnership between the South Australian and Commonwealth government, which focused on gas, hydrogen and carbon capture storage, as a worrying example of the trend towards dressing up subsidy announcements that may otherwise be unpopular with voters.

“It seems that governments and industry no longer feign ignorance of fossil fuel subsidies,” the report concluded.

“Instead, they publicise them, wrapping them in the language of ‘innovation’ and pie-in-the-sky promises of ‘clean coal’ and magical technologies that will absolutely work…one day.”

According to the report, several federal government energy projects also take a “technology neutral” approach to how funding is administered, allowing fossil fuel companies to receive public funding through schemes promoted as driving down power prices and emissions with new innovative technologies.

“A few years ago such [fossil fuel] subsidies would have been announced quietly, but now they’re central to government policy,” Australia Institute research director Rod Campbell, who co-authored the report, said.

“Australia is increasing fossil fuel subsides, while the Biden administration is committing to phase them out. Yet again, Australian governments are going against the tide of global trends and good climate policy.”

At the state level, the fossil fuel industry receives more than $1 billion in subsidies each year, mostly through Queensland government spending measures, according to the research.

The state subsidies are also often announced as part of or supporting “green” or “clean” technologies but can end up supporting fossil fuel companies and high emission technology.

The report identifies South Australian Premier Steven Marshall’s announcement last year to invest $37 million to upgrade a Point Bonython jetty to support the states emerging green hydrogen industry.

“However, according to a budget statement, the $37 million earmarked for investment was in fact ‘to carry out critical maintenance works on the jetty to ensure the ongoing use of the port for oil and gas exports’,” the Australia Institute report said.

The South Australian government has also funded an energy and mining innovation hub connecting fossil fuel giants with smaller stakeholder. The Australia Institute considers the $1.8 million in state funding for the hub to be a fossil fuel subsidy.

In New South Wales, the government’s advisory group Coal Innovation NSW is also a way of subsidising the fossil fuel industry, according to the report. It was set up in 2008 and allocated $100 million in funding to research, develop and demonstrate low emission coal technologies.

“This research and development is funded by a government body because the NSW Government considers there is currently not a ‘socially optimal’ amount of private investment in this area,” the Australia Institute report said.

“Despite being publicly funded, reports on the various projects backed by the fund are not all publicly available, and those that are can be of low quality.”

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