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Federal Government’s proposed ARENA regulations voted down by the Senate

13 July 2021

#Renewable Energy, #Government

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Federal Government’s proposed ARENA regulations voted down by the Senate

The Federal Minister for Energy and Emissions Reduction, Angus Taylor, recently proposed the introduction of new regulations that would have changed the funding powers and direction of the Australian Renewable Energy Agency (ARENA).

ARENA was established by the Australian Renewable Energy Agency Act 2011 (Cth), which came into effect under the Gillard Government in 2012. ARENA’s role is to improve the competitiveness of renewable energy technologies and promote innovation to increase Australia’s renewable energy supply. As the legislation currently stands, ARENA is limited to only providing funding for renewable energy projects. So far, it has invested over $1.7 billion in 586 projects across Australia, covering a range of renewable energy technologies, including electric vehicles, battery storage, and large-scale solar, wind, geothermal, and hydrogen energy production.

The proposed regulations would have broadened the scope of ARENA’s funding abilities, allowing it to invest in low-emission technologies, such as carbon capture and energy storage projects. The regulations would have also allowed ARENA to financially assist any project that controls or prevents the emission of greenhouse gases, including non-renewable energy projects. To support the motion, the Department of Industry, Science, Energy and Resources told the Senate that the proposed regulations could conceivably allow funding to be delivered to gas projects. The new regulations could also support some of the Government’s 2020-21 Federal Budget programs aimed at “ensuring more affordable and reliable power in regional Australia”.

The proposed regulations were challenged by Labor, the Greens and independents because the rules were inconsistent with the primary purpose of the legislation that established ARENA. The group also raised concerns that the proposed regulations granted Minister Taylor powers beyond the scope of the controls he had under the legislation. However, the Federal Government justified the regulations as necessary for implementing budget measures that will support its ‘Technology Investment Roadmap’, which includes programs that fund carbon capture and storage and soil carbon, fossil hydrogen and sustainable transport.

After an unsuccessful attempt to block the regulations in the lower house, a motion to disallow the regulations was passed in the Senate.

While the implications for Federal Government funding of initiatives under its Technology Investment Roadmap, including the use of carbon capture and storage with natural gas to produce ‘blue’ hydrogen, remain to be seen, it is expected that ARENA’s funding powers will be expanded in the near future. While some of the current opposition to the proposed bill may be based on the Federal Government’s purported support of a ‘gas led recovery’, the fact remains that newer renewable technologies will require funding support if they are to attract investment and be financially competitive with established wind, solar PV, gas and coal generation.

Authors: David Harley & Scott Schlink

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