The Truth About Turnbull’s $1Billion Renewable Energy Fund

With the ousting of Abbott, who many Australians saw as one our most conservative and traditionalist Prime Ministers, it would seem in line with political narrative for Turnbull to release a reinvigorated clean energy fund to spur on private investment and be hailed as a green and liberal leader. It is what we expected to see, and on paper, Malcolm has provided what looks to be a huge investment into the future of the renewable sector. But, if it's too good to be true, and is being provided by the Government, it usually is.

Recently Turnbull and Hunt released a statement saying that there were plans in place to issue a $1 Billion Clean Energy Innovation Fund, which would target renewable technologies and businesses. More importantly, in an attempt to distance himself from the policies of Abbott, the Turnbull government decided not to scrap the Clean Energy Finance Corporation. The CEFC, which acts like any other financier, yet uses government backed funds, was allocated $10 Billion in capital to create a prosperous and active renewable economy and was at risk of being dissolved.

However, the CEFC and the CEIF aren’t the only organisations trying to further the plight of clean technologies. ARENA or the Australian Renewable Energy Agency, which receives direct funding from government grants, has been responsible for much of Australia's Large Scale Solar projects in recent years as well as important R & D. What Turnbull fails to mention in his recent statements, or does so through a politicised filter, is that he plans to defund ARENA which is currently in command of $1.3 Billion in Government funding. So he is effectively giving with one hand, while taking a little more with the other. Furthermore, this new ‘innovation’ fund is using money taken from the $10 Billion that is already allocated to the CEFC. It is interesting to read how this story is reported, as the headlines simultaneously read “Turnbull issues new $1billion fund” and “Turnbull strips $1.3 Billion from clean energy funds”. John Grimes, the head of the Australian Solar Council put simply by saying, “Malcolm Turnbull’s Clean Energy Investment Fund is like an exquisitely decorated Easter Egg. It looks great on the outside, but inside it’s a rotten egg.”

So using the simplest of math, the Australian people are witnessing a backhanded way of reducing the budget for the renewable sector the tune of $300 million. However, it is important not to ignore the nuance of policy. The stark contrast between ARENA and the newly created CEIF is that rather than issuing grants, which is basically free money, the money will be handed over in the form of debt and equity. To some this may seem simply to be smart business and theoretically will mean the taxpayer gets a return on investment, rather than seeing money go down the drain. But to others, it is our duty as a nation to invest in renewables and not just to see a ROI but to reduce our carbon footprint. Hunt had this to say, “We hope that they do better but that’s their target, so instead of giving 100 per cent of the taxpayers’ money away, our goal is to receive 100 per cent of the taxpayers’ money back but with an additional return.”

However, many are concerned that bleeding edge technologies won't be able to receive the necessary capital they need to either commercialise their research or continue to improve performance. ARENA was more willing to give government grants to promising tech, as there was no need to see a return. Now, many believe that Australian business will have to go overseas to seek the investment they need. Furthermore, there is fear that without the stability of government grants, the private sector will turn away from funding Large Scale Solar an industry which has only recently seen a resurgence in investor interest. If this is the case, it is particularly concerning for the Australian public. This is because we are one year away from having to cough up the cash to compensate the government penalties issues to energy providers for not meeting the annual clean energy targets. With more money being stripped from the budget, we are moving ever closer to failing to meet our annual reduction goals.

The defunding of ARENA will, luckily, have to pass through the Senate before being approved, meaning there is still hope it won't be dissolved. However, things could change if Turnbull calls a double dissolution, in an attempt to regain a majority share of the Senate seats. If this new model is approved, many see it as cutting the guts out of Australia’s clean energy funds, as most early stage research won’t be able to receive the appropriate funding. Meaning Australian innovation in cleantech could be coming to end all together.

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