Labor’s environment and climate change spokesman Mark Butler on Tuesday confirmed that a Labor government will not reinstate $1 billion in funding for the Australian Renewable Energy Agency, which has underpinned much of Australian investment in solar farms and battery storage and R&D over the past few years.

In the Senate this week, Labor sided with the Coalition to defeat a motion by the Greens to protect the funding of ARENA out to 2022 – effectively signalling the demise of an agency it helped to create a few years ago.

Labor announced last week in its climate and clean energy policy package that it would allocate $206 million to an ARENA funding round for large-scale solar thermal, and nearly $100 million for community energy.

But it left open the fate of the rest of the $1.3 billion of unallocated but legislated funding for ARENA, an agency it created as part of the Clean Energy Future package in 2012.

Butler on Tuesday confirmed the ARENA funding would be dropped, saying Labor saw no point in continuing to “put its body” on the line to defend the agency, when environmental and renewable energy advocacy groups had failed to object when the funding was pulled by the Coalition government in late March.

“I have to stay, having stuck our body between the government and ARENA and the CEFC for the last two and a half years, the response by and large, with a couple of exceptions, was to welcome that … in some cases very enthusiastically,” Butler said in a response to a question from RenewEconomy at a Melbourne conference.

“The one day you can talk to the prime minister about his views on financing for renewable energy technology, people stand up and applaud. Those things have obvious consequences in terms of the Opposition’s, and of the community’s views on these things.”

Indeed, most environmental and renewable energy advocacy groups welcomed the announcement by the Coalition government when it said it would no longer seek to dismantle the Clean Energy Finance Corp, and announced a new Clean Energy Innovation Fund that would be assigned $1 billion of CEFC money.

They even fell for the spin that both agencies had been “saved” by the Coalition, as most in the media did too.

At the time, RenewEconomy – astonished by the response – asked many of those groups if they had actually bothered to read to the end of the government press release, which said that the Coalition would effectively scupper ARENA, strip it of $1.3 billion, remove its grants-based mechanism and relegate it to a role of “advising” CEFC on equity investments and loans.

As we wrote at the time, the hyped-up “retention of ARENA” was nothing of the sort. It was a sleight of hand. Prime minister Malcolm Turnbull had effectively given, or rather shuffled, with one hand, and taken with another

The Australian Solar Council had picked up on this. Others said it was too important to welcome the retention of the CEFC. By the time they and others voiced their concern about the fate of ARENA in the following days, it was all too late.

“So, frankly, we listened to that,” Butler said. “People thought that was a great idea. Some came back and called on me to welcome it as well and then do something additional, which frankly is not how this system works. It’s not how politics works.

“We have our own challenges, in putting together budgets for school funding and other things … people welcomed the clean energy innovation fund, so we welcomed it.”

Butler said that Labor will provide a competitive and targeted round of concentrated solar thermal funding and more money for community power programs, but that will be it.

ARENA, it should be noted, has been responsible for the construction of the three biggest solar farms in Australia – Nyngan, Broken Hill and Moree, as well as the Carnegie wave energy project, and numerous other projects that featured solar and storage, and studies into new technologies, software and business models.

Along with the ACT government’s reverse auctions to support its own 100 per cent renewable energy target, ARENA has underpinned the industry in recent years – from university research, to the rolling out of new technologies, the testing of new business models and ideas, and the financing of large projects.

There are fears that the removal of ARENA funding and its grant-making abilities to leave a significant part of so called “innovation chain” without access to funds. The size and scale of ARENA grant making was often questioned, but many of these projects are too early stage for the equity or loan investments envisaged by the CEIF.

Labor’s decision to stop defending ARENA means there is nothing left to stop legislation being passed to confirm that $1 billion of funding will be removed – to the horror of the Greens, and the renewable energy industry and developers of new technologies.

It could be that Labor is using this as an excuse and is putting ARENA into the too hard basket. It stinks of political expedience. The NGO 350.org said the decision not to reinstate the funding was “deeply troubling” and added that “this is a terrible move that is out of touch with Australians deep support for renewable energy.”

Professor John Hewson, a former Liberal leader, described the abandonment of ARENA as an “absolute tragedy.”

Australian Solar Council chief John Grimes told the Energy Storage Conference in Melbourne on Wednesday that the federal government had “taken a backwards step” in defunding ARENA, and not making the Agency’s competitive grants available any more.

“So they’ll only invest (in clean energy technology) on an equity or …a loan basis, which means that any money that’s given from the government has to be repaid with interest, and there has to be strong independent commercial case… and a risk mitigation.

“A lot of the blue sky research, the first research we might see out of somewhere like the CSIRO… you can’t make a commercial case to say, well lend me $1.5 million I’ll pay you back $2 million in three years (or) five years time.

“It just doesn’t work that way,” he said.

“The opportunities for manufacturing a diverse range of technologies here is very real,” Grimes told the conference.

“There are some great innovations and manufacturing that (are) actually happening here in Australia. …And we’re kind of ringing the bell for government to say, let’s not lose the opportunity to support this strategic sector, like we lost the opportunity to that for solar, where the value of that manufacturing initiative was reaped by other countries, (but) wasn’t reaped by Australia.”

Another NGO said it was bizarre that Labor had abandoned the policy based on a collection of “luke-warm” press releases. It said the retention of the $10 billion was worth celebrating. “It says something about the way that policy is formulated in Australia,” the NGO representative said.



