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Australian Renewable Energy Agency (ARENA) Saved by the bench How the Senate crossbench saved Australia’s renewable energy industry The Abbott Government’s attempts to abolish key renewable energy policies were foiled by Labor and the Senate crossbench. These efforts have supported $23.4 billion worth of clean energy projects during a period that saw renewable investment fall by up to 48% in some years. Bill Browne Rod Campbell Dan Cass November 2018 Saved by the bench 1 ABOUT THE AUSTRALIA INSTITUTE The Australia Institute is an independent public policy think tank based in Canberra. It is funded by donations from philanthropic trusts and individuals and commissioned research. Since its launch in 1994, the Institute has carried out highly influential research on a broad range of economic, social and environmental issues. OUR PHILOSOPHY As we begin the 21st century, new dilemmas confront our society and our planet. Unprecedented levels of consumption co-exist with extreme poverty. Through new technology we are more connected than we have ever been, yet civic engagement is declining. Environmental neglect continues despite heightened ecological awareness. A better balance is urgently needed. The Australia Institute’s directors, staff and supporters represent a broad range of views and priorities. What unites us is a belief that through a combination of research and creativity we can promote new solutions and ways of thinking. OUR PURPOSE – ‘RESEARCH THAT MATTERS’ The Institute aims to foster informed debate about our culture, our economy and our environment and bring greater accountability to the democratic process. Our goal is to gather, interpret and communicate evidence in order to both diagnose the problems we face and propose new solutions to tackle them. The Institute is wholly independent and not affiliated with any other organisation. As an Approved Research Institute, donations to its Research Fund are tax deductible for the donor. Anyone wishing to donate can do so via the website at https://www.tai.org.au or by calling the Institute on 02 6130 0530. Our secure and user-friendly website allows donors to make either one-off or regular monthly donations and we encourage everyone who can to donate in this way as it assists our research in the most significant manner. Endeavour House, 1 Franklin St Manuka, ACT 2603 Tel: (02) 61300530 Email: [email protected] Website: www.tai.org.au Saved by the bench 2 Summary Between 2013 and 2016, the Coalition Government attempted to abolish Australia’s three key renewable energy policies: the Renewable Energy Target (RET), the Clean Energy Finance Corporation (CEFC) and the Australian Renewable Energy Agency (ARENA). These three policies were saved in the Senate, where the government was defeated by the Labor Opposition and various members of the ‘crossbench’ of Greens, minor party and independent senators. As a result, the CEFC continued financing, ARENA continued providing grants and other assistance and the RET continued encouraging renewable energy generation. In total $7.8 billion in government support has been provided to projects worth $23.4 billion, as shown in Figure 1: Figure 1: Total clean energy support saved by Labor and crossbench (2013–2018) Funding and investment ($m) Total project value ($m) CEFC investment $6,652 $19,000 ARENA grants $1,187 $4,371 Total $7,839 $23,371 In addition, the RET has assisted the installation of 806,000 solar panel systems and 226,000 solar hot water systems between 2013–2018 and the generation of 85m MWh of electricity from large-scale generators. Saving the RET and CEFC has resulted in emissions reductions of at least 334m tonnes CO2-e. This is more emissions reduction than the government’s policy, the Emissions Reduction Fund, is likely to deliver over its six years of operation (92m tonnes from its creation in 2014 to 2020). Projects made viable through ARENA funding will also reduce emissions but since ARENA supports early stage technologies, it is not possible to confidently predict the future performance of those projects in reducing emissions. This support for renewables in Australia occurred at a time of great uncertainty for the industry. Saved by the bench 3 On 17 October 2017, then Prime Minister Malcolm Turnbull proposed a new energy policy for Australia, the National Energy Guarantee (NEG). The NEG was supposed to solve the ‘energy trilemma’: improve security, reduce emissions and cut the consumer price of electricity. However, following events that ended in the toppling of Turnbull’s leadership and the installation of Scott Morrison as Prime Minister, the NEG was declared “dead”. This means that significant uncertainty continues to threaten investment in electricity in Australia. In 2014 and 2015, while worldwide investment in the sector grew, Australian renewable energy investment fell by half. If the Senate crossbench had failed to save the CEFC, ARENA and RET, the decline would have been much greater and the rebuilding of the industry much more difficult. The future of Australia’s renewable sector was saved by the (cross) bench. Saved by the bench 4 Introduction After the Coalition Government was elected in 2013, Prime Minister Tony Abbott sought to wind back climate action and renewable energy policy. Labor Prime Minister Julia Gillard had negotiated the Clean Energy Future (CEF) package with the Greens and crossbench Senators (and crossbench Members of the House of Representatives). The CEF consisted of two main measures: a national carbon price and a renewable industry support package, centred on the creation of the CEFC and ARENA. Prime Minister Abbott succeeded in repealing the national, economy-wide carbon price. However, he failed to dismantle the CEFC and ARENA. He also failed to repeal the RET, which, significantly, had been created by former Liberal Prime Minister John Howard in 2000, with a target of 2% or 9,500 GWh by 2010.1 The current policy is for the RET target to remain flat between 2020 and 2030 and then lapse with no replacement.2 Australia’s climate and energy policies are again under a cloud of uncertainty, with Tony Abbott continuing his attacks from the backbench in 2018.3 Tony Abbott and the controversially-named ‘Monash Forum’ of backbenchers propose withdrawing from the Paris Accord, repealing the RET, dismantling the CEFC and ARENA and subsidising the construction of new and economically unviable coal-fired power stations. What has saved the RET, CEFC and ARENA in the four years since the Coalition came to power is one thing: the Labor Opposition in both houses and the crossbench of the Senate. It is rare for Australian governments to have a majority in the Senate. For 35 of the past 37 years, governments have required the agreement of either the opposition or independents and minor parties on the crossbench to pass legislation. 1 St John (2014) The Renewable Energy Target: a quick guide, Research Paper Series, p 2 2 Clean Energy Regulator (2018) When does the Renewable Energy Target end?, http://www.cleanenergyregulator.gov.au/RET/Pages/About%20the%20Renewable%20Energy%20Targ et/When-does-the-Renewable-Energy-Target-end.aspx 3 Grattan (2018) Exit Paris climate agreement: Tony Abbott, http://theconversation.com/exit-paris- climate-agreement-tony-abbott-99319 Saved by the bench 5 When the Abbott Government was elected, the balance of power in the Senate was held by the Australian Greens, with independent senator Nick Xenophon and Democratic Labour Party senator John Madigan also on the crossbench. The government had 34 senators4 and required 39 in order to pass or repeal legislation,5 which is the hurdle necessary for ending the RET and dismantling the CEFC and ARENA. The new Senate that sat between July 2014 and May 2016 saw the crossbench grow to include the Palmer United Party (including senators Jacqui Lambie and Glenn Lazarus, who would leave the party to become independents), Ricky Muir of the Motoring Enthusiast Party, David Leyonhjelm of the Liberal Democrats and Bob Day of Family First. The government had 33 senators in this Senate.6 Having been typecast as ‘conservative’ or ‘right-wing’, the new minor parties on the crossbench were widely expected to vote with the Abbott Government – and, indeed, Day and Leyonhjelm proved to be fairly reliable votes for the government. But Xenophon, Wang, Lambie, Lazarus, Muir and Madigan, along with the Greens, ensured that the Senate crossbench served as an important check on the government’s power. Labor’s opposition and the crossbench’s scrutiny of the government’s policies have thus far saved the CEFC, ARENA and RET. Thanks to these senators, investment in renewable energy has continued through a time of great uncertainty for the energy sector. This report quantifies the contemporary and ongoing benefits of the crossbench’s protection of Australia’s renewable energy policy infrastructure. Quantifying these benefits is difficult as different parts of the policies produce different benefits measured in different ways at different times. Some of the policies also interact and overlap. As a result, we have focused on the various kinds of financial support these policies have provided to clean energy projects. 4 Parliament of Australia (2011) Senate composition, http://www.aph.gov.au/About_Parliament/Parliamentary_Departments/Parliamentary_Library/pubs/r p/rp1112/12rp02/12rp02-17 5 The Guardian (2015) Senate calculator, https://www.theguardian.com/australia-news/ng- interactive/2016/jul/04/senate-calculator-legislation-pass-after-australian-election-2016 6 Parliament of Australia (2016) Senate composition, http://www.aph.gov.au/Senators_and_Members/Senators/Senate_composition Saved by the bench 6 Australian Renewable Energy Agency (ARENA) ARENA and Australian energy innovation ARENA and the CEFC were carefully designed to fit into existing institutions and markets, to accelerate innovation in clean energy in Australia. Figure 2: Clean energy innovation chain in Australia Source: ARENA Annual Report 2015–2016, p 17 At the earliest stage of innovation, basic scientific and engineering research is done by universities and the CSIRO and funded through the Australian Research Council (Figure 2 above).
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