ClimateWorks Australia responds to today’s federal government announcement on the funding and ongoing role of the Australian Renewable Energy Agency (ARENA) and the Clean Energy Finance Corporation (CEFC).
We support the broader mandate for ARENA and CEFC to work across an increased number of sectors, as well as energy. However it is important that this increased mandate is matched with increased funding appropriate to the scale of the decarbonisation opportunity across the whole economy and is guided by the goal of achieving net zero emissions by 2050.
ClimateWorks’ Decarbonisation Futures research shows Australia needs to rapidly develop and commercialise emerging zero-emissions technologies in harder to abate sectors this decade, including agriculture, transport and industry.
Technology investment support for these sectors should be aligned with a trajectory to reduce emissions in line with limiting global warming to well below 2 degrees. This is Australia’s commitment under the Paris Agreement – and, increasingly, the expectation of private sector investors.
We welcome the commitment to 10 years of baseline funding for ARENA, and the additional $193 million allocated to that agency today for the next four years. However we hope that this will be topped up substantially and annually to match the increased mandate and match efforts in other nations.
Recent months have seen other nations such as South Korea, Germany and France invest over A$50bn each in clean technology support and the UK over A$10bn, which represent between 20% and 50% of their national COVID recovery economic investments.
ClimateWorks encourages sophistication in the deployment of additional investment, drawing on the experience of the CEFC and ARENA. We recommend co-designing investment opportunities using a goal-oriented approach across all sectors and technologies. ‘Reverse auction’ style competitive rounds can achieve investment on a scale that catalyses market supply chains, and the successful experiences from those in energy should be expanded and extended to other sectors.
Support for new zero emissions technologies should combine both ‘push’ and ‘pull’ measures: on the one hand, supporting the upfront investments necessary for the development of a technology and, on the other, creating market-scale signals and incentives for supply chain responses (by, for instance, establishing direct procurement criteria for using clean technologies, and tailoring funding rounds to attract larger scale business models for technology rollout than traditional grant programs).
ClimateWorks’ research shows that technologies that create the scale of emissions reductions required to reach net zero emissions are available, if deployed at scale. Australia faces risks if this is not achieved and also has many sources of competitive advantage that can be harnessed to secure a healthier, prosperous future for Australia in a decarbonised world.
Setting deployment goals helps lower the cost of the ‘push’ mechanisms by increasing the scale of deployment and attracting private sector consortia to invest longer term. Targets help lower technology costs by signalling future demand and sufficient scale to leverage private investment beyond just what the initial public program covers.
This week ClimateWorks published the first study of Australia’s largest licensed superfunds alignment with the Paris Agreement and found that a fifth have formally adopted an intention to ensure all of their investment portfolios achieve net zero emissions by 2050.