Climate change and energy


Budget Review 2009-10 Index

Budget 2009 10: Climate change and energy

Dr Julie Styles and Anita Talberg

Overview of climate change programs
Carbon Pollution Reduction Scheme
Clean energy measures
Energy efficiency measures
Climate change research and education funding

Overview of climate change programs

The Government announced that it will provide $15 billion to implement a comprehensive strategy to address climate change.[1] Underpinning its strategy is the Carbon Pollution Reduction Scheme, the legislation for which was introduced into Parliament on 14 May 2009. In addition, the Government is investing substantially in complementary measures to facilitate development and uptake of renewable and clean energy technologies, and to improve energy efficiency across the economy.

The $15 billion is slated for expenditure over ten years from 2008–09. The total includes $2.3 billion provided in the 2008–09 budget for climate change programs, with additional funding announced since then of over $8 billion, and new funding of $4.8 billion provided in this year’s Budget.[2] Approximately $2.4 billion has been allocated since the February 2009 Updated Economic and Fiscal Outlook (UEFO) over the five–year budget forecast period from 2008–09 to 2012–13, with the remainder of the new funding to be spent in later years. The new and revised measures are summarised in Table 1 below and described in the following sections. Table 1 includes measures in addition to those in the budget tables provided in the Ministerial Statement on Climate Change that have here been identified as directly relating to climate change. The estimates in Table 1 refer only to changes since the UEFO.

The Budget also contains savings from the termination of many climate change programs. In February 2008, the Government initiated the Strategic Review of Australian Government Climate Change Programs (the Wilkins Review). The Wilkins Review, published in July 2008, stated that a broad–based and perfectly operating emissions trading scheme would not require any complementary measures. However, it noted that the requirement of a transitional period and limitations of market ability to deliver equitable solutions would necessarily mean that inefficiencies in the system must be addressed through complementary measures. The Wilkins Review made specific recommendations with regard to complementarity of existing programs, as well as general policy recommendations. The Government laid out its response to the Wilkins Review on 12 May 2009, which included identification of programs to continue as complementary or transitional to the CPRS, and programs to cease. Savings from those to cease are also listed in Table 1.

Table 1: Climate change budget measures in the 2009–10 budget

Agency

Initiative

2008-09 ($m)

2009-10 ($m)

2010-11 ($m)

2011-12 ($m)

2012-13 ($m)

Total ($m)

 

New, revised or expanded programs

 

 

 

 

 

 

DCC

CPRS - revised implementation

-

-

1650.0

-505.0

-885.0

260.0

DCC

Australian Carbon Trust establishment

-

28.8

37.5

6.9

1.8

75.0

DCC

CPRS - Climate Change Action Fund - additional funding and re-phasing

1.0

-100.0

-400.0

-

100.0

-399.0

DEWHA

CPRS - Climate Change Action Fund - additional funding and re-phasing

1.5

-

-

-

-

1.5

DCC

CPRS - Global Recession Buffer

-

-

-

70.0

210.0

280.0

DCC

CPRS - National Carbon Accounting Toolbox

-

4.0

4.0

4.0

4.0

16.1

DRET

Clean Energy Initiative

-

300.0

200.0

200.0

200.0

900.0

DIISR

Clean Energy Initiative

-

100.0

100.0

100.0

100.0

400.0

Australian Trade Commission

Australian Trade Commission - Clean Energy Trade and Investment Strategy

-

4.9

5.0

5.0

-

14.9

DEWHA

National Energy Efficiency Initiative - establishment

-

100.0

-

-

-

100.0

DEWHA

Heating, Ventilation and Air Conditioning High Efficiency Systems Strategy - contribution

-

0.7

0.7

0.7

-

2.1

DEWHA

NSEE - Building Code of Australia requirements for commercial buildings - enhancement

-

1.5

0.8

0.5

0.5

3.3

DEWHA

NSEE - commercial building energy efficiency - mandatory disclosure

-

1.5

1.5

1.3

1.1

5.4

DEWHA

NSEE - commercial building rating tools - enhancement

-

0.7

0.7

0.6

0.5

2.5

DEWHA

NSEE - energy efficiency labelling - enhancement

-

4.2

4.7

4.8

4.6

18.3

DEWHA

NSEE - energy efficiency requirements for residential buildings - enhancement

-

2.9

2.0

1.7

2.1

8.7

DEWHA

NSEE - minimum performance standards for applicances and equipment - expansion

-

4.1

4.1

4.2

4.2

16.6

DEWHA

NSEE - residential building energy efficiency - mandatory disclosure

-

2.4

1.9

1.6

1.8

7.7

DEWHA

Solar Homes and Communities Plan - additional funding

-

245.3

-

-

-

245.3

DEEWR

Skills for the Carbon Challenge

-

8.3

7.0

5.6

6.0

26.9

DIISR

EIF - Super Science - Marine and Climate

8.0

71.0

116.0

105.0

57.0

357.0

CSIRO

EIF - Maintaining Australia's Marine National Facility

-

6.8

5.7

7.3

9.8

29.6

DIISR

EIF Round 2 - Centre for Climate Change and Energy Research

-

40.0

-

-

-

40.0

DIISR

EIF Round 2 - Building the Sydney Institute of Marine Science

-

10.5

6.0

3.0

-

19.5

DIISR

EIF Round 2 – Institute for Marine and Atmospheric Studies

-

45.0

-

-

-

45.0

DEEWR

EIF Round 2 – Skillsets for  a Low Carbon Economy

Break-down not available

5.0

DEEWR

EIF Round 2 – Rural VET infrastructure to ensure social inclusion, sustainable land use, lower carbon agriculture and efficient water use

Break-down not available

5.5

DEEWR

EIF Round 2 – Learning centre at Energy Australia

Break-down not available

25.0

Treasury

Liquified Petroleum Gas (LPG) Vehicle Scheme - reduced rebate for post-factory conversions

-

8.0

17.2

21.9

22.8

69.9

DIISR

Liquified Petroleum Gas (LPG) Vehicle Scheme - reduced rebate for post-factory conversions

-

48.8

26.7

-4.1

-27.5

43.9

DCC

Department of Climate Change - base departmental funding

-

-1.5

-0.7

-0.3

4.7

2.2

DCC

Department of Climate Change - accommodation fit-out

-

11.8

-

-

-

11.8

 

Total expenditure new measures

10.5

949.7

1790.8

34.7

-181.6

2639.7

 

Reduced program

 

 

 

 

 

 

DEWHA

Green Loans Program - better targeting

-8.5

-20.9

-39.8

-39.8

-16.7

-125.7

 

Terminated programs - deemed not complementary to CPRS

 

 

 

 

 

 

DCC

Greenhouse Action in Regional Australia - termination

-

-3.9

-3.9

-3.9

-3.9

-15.6

DEWHA

Coal Mine Methane Reduction Program - termination

-

-

-2.1

-2.1

-

-4.2

DEWHA

Greenhouse Challenge Plus - termination

-

-2.9

-2.9

-2.9

-2.9

-11.6

DEWHA

Greenhouse Gas Abatement Program - termination

-

-1.7

-

-

-

-1.7

DEWHA

Local Greenhouse Action - termination

-

-3.4

-3.4

-3.0

-3.0

-12.8

DEWHA

Low Emissions Technology and Abatement - termination

-

-5.0

-2.0

-

-

-7.0

DEWHA

Small Business and Household Initiative - termination

-

-5.9

-0.5

-0.4

-

-6.8

DEWHA

Strategic National Response - termination

-

-1.2

-1.2

-1.2

-1.2

-4.8

 

Terminated programs – replaced by NSEE measures

 

 

 

 

 

 

DEWHA

Action on Energy Efficiency - termination

-

-6.9

-6.9

-6.0

-6.0

-25.8

DEWHA

Energy Efficiency of Electrical Appliances - termination

-

-4.1

-4.0

-3.9

-

-12.0

DEWHA

Phase-out of Inefficient Light Bulbs - termination

-

-2.0

-1.9

-0.5

-

-4.4

 

Total savings

-8.5

-57.9

-68.6

-63.7

-33.7

-232.4

 

Total (net) expenditure all measures

2

891.8

1722.2

-29

-215.3

2407.3

Notes: Revenue, expense and capital measures have been combined. Budget amounts are for measures or changes to measures since the February 2009 UEFO. A minus sign before an estimate indicates a reduction in expenses, no sign before a measure indicates an increase in expenses. Totals may differ slightly from estimates in other sources due to rounding errors. CPRS is the Carbon Pollution Reduction Scheme; NSEE is the National Strategy on Energy Efficiency; EIF is the Education Investment Fund.

Sources: Australian Government, Budget measures: budget paper no. 2: 2009–10, Commonwealth of Australia, Canberra, 2009; Australian Government, Portfolio budget statements 2009–10: budget related paper no. 1.14: Innovation, Industry, Science and Research Portfolio, Commonwealth of Australia, Canberra, 2009.

As mentioned above, the main instrument of the Government’s climate change strategy is the Carbon Pollution Reduction Scheme (CPRS). However, there are a number of other measures that the Government is funding to facilitate the transformation of industries and communities to a carbon–constrained economy in the transitional period, as the CPRS becomes fully functional and compensation and assistance measures are phased out. The Government is also supporting research into climate change science, and programs to contribute to the realisation of a global solution. Such measures that will receive continued support (but whose funding where applicable is already included in the forward estimates) include:

  • an expanded Renewable Energy Target (RET), to ensure that 20 per cent of Australia’s electricity is generated from renewable energy sources by 2020
  • the Australian Climate Change Science Program ($31.2 million over four years) to continue to enhance understanding of climate change processes and impacts
  • adoption of the Australian Climate Change Science Framework, which sets national climate change science priorities for the next decade and
  • $12.0 million over four years for continued support for Australia’s engagement in international climate change activities, including meeting its obligations under the United Nations Framework Convention on Climate Change (UNFCCC) and the Kyoto Protocol and enhancing strategic relationships. Further funding to support international climate change functions is provided in the Department of Climate Change’s base funding.[3]

New measures announced in this Budget in relation to the CPRS and to support clean energy, energy efficiency and climate change research are detailed in separate sections below.

Carbon Pollution Reduction Scheme

The introduction of an emissions trading scheme is the Government’s major instrument to drive reductions in greenhouse gas emissions. The proposed approach was released for consultation in the July 2008 Carbon Pollution Reduction Scheme (CPRS) Green Paper, and the Government’s position was outlined in the December 2008 White Paper. After releasing exposure draft legislation in April 2009, the Government revised some of the major elements and introduced the Carbon Pollution Reduction Scheme Bill 2009 and related bills into the Parliament on 14 May 2009.

Essentially, the scheme sets a cap on the total amount of carbon emissions allowed by the included sectors, then issues permits up to the cap. Liable facilities that emit carbon or other greenhouse gases must hold a permit for every tonne emitted, and surrender these at the end of each financial year. The permits become a market commodity traded between firms at the going price. Firms need to choose between reducing their emissions and purchasing permits, so the price of permits sets the level of incentive to adopt low–carbon technologies.

The initial proposal for the CPRS outlined an emissions reduction target of five to fifteen per cent below 2000 levels by 2020. Around 1000 entities, responsible for about 75 per cent of Australia’s emissions, would be included in the scheme. A free allocation of around 25 per cent of permits would go to emissions–intensive, trade–exposed industries. According to the Government, ‘every cent raised from the Carbon Pollution Reduction Scheme will be used to help Australians—households and business—adjust to the scheme and to invest in clean energy options’.[4] As such, the expectation is that ‘the net impact of the Scheme on the budget will be neutral over the forward estimates from 2008–09 to 2011–12.’[5]

On 4 May the Government announced revisions to the CPRS, including a delay of the start date to 1 July 2011; allowance for a more ambitious emission reduction goal of 25 per cent below 2000 levels by 2020 (contingent on a similar international commitment); a one–year transition concession fixing permits at $10; a provision for a ‘Global Recession Buffer’ to assist emissions–intensive, trade–exposed industries; and funding for energy efficiency measures.[6]

This Budget does not offer a complete design of the Government’s allocation of funds towards operation of the CPRS. The Government still suggests that the measure is essentially budget neutral, costing only $260 million over three years from 2010–11.[7] Revenues and expenses associated with the scheme prior to the amendments were outlined in the White Paper in December, and final costs were to be published in this year’s budget. However, because of the late changes announced on 4 May, it appears that the budget removes original estimates to the Contingency Reserve in anticipation of revised calculations, and no such final estimates have been provided:

…updated expense and revenue estimates associated with the revised implementation of the Scheme have been included in the Contingency Reserve.[8]

Although the Contingency Reserve is designed to serve such a purpose (amongst other functions), the lack of itemisation makes it difficult to determine how much the Government will invest in the CPRS and over what time–frame.[9] At least one reporter has referred to this budget’s contingency reserve as ‘secretive’.[10]

The Government states that the changes to the CPRS have significantly affected revenue estimates since the UEFO:

Policy decisions since the 2009 UEFO are expected to decrease revenue by $256 million in 2009–10. In 2010–11 and 2011–12, policy decisions detract a further $5.6 billion from revenues, before increasing revenues by $3.2 billion in 2012–13. These fluctuations in the impact of policy decisions are mainly due to the change in the timing of the introduction of the Carbon Pollution Reduction Scheme (CPRS).[11]

It is estimated that in 2011–12, revenue from the CPRS’s fixed $10 carbon permit will be around $4.5 billion. In 2012–13, when the permit price is capped but not fixed, the revenue is expected to climb to around $13.0 billion.[12] Note that these estimates are for revenue recorded for accrual purposes, regardless of whether the permits are auctioned or freely allocated.[13] Under accrual accounting, the freely allocated permits are presumably recorded as an expense, but at this stage it seems this expense is included in the Contingency Reserve and has not been explicitly provided.

As noted above, the Government has stated it will reinvest every cent of revenue from the sale of permits under the CPRS back into the community to offset increased fuel and energy costs passed on by liable emitters. In line with this commitment, the excise for petrol and diesel will be reduced from the current 38.143 cents per litre to 35.688 cents per litre on 1 July 2011. The excise will be further adjusted every six months for two years from 1 July 2012 to ensure a ‘cent–for–cent’ offset of the impact of the CPRS on fuel prices. The fuel tax adjustment will cause a loss in revenue of $1.1 billion in 2011–12, $3.5 billion in 2012–13 and $3.9 billion in 2013–14, at which time the adjusted excise will become permanent and no further adjustments will be made in response to impacts of the CPRS.[14]

The Government has stated that it has provided $11.8 million in this budget for the continued development and implementation of the CPRS. A time–frame is not provided.[15] Also in this Budget, to facilitate the operation of the CPRS, to provide transitional assistance, and to enhance community involvement in the CPRS, the Government has announced that it will:

  • establish a National Carbon Accounting Toolbox ($16.1 million over four years). The tool will assist in the accounting and reporting of carbon emissions and removals in the forestry and agriculture sectors under the CPRS, and will build upon the existing National Carbon Accounting System and associated toolbox[16]
  • establish the Australian Climate Change Regulatory Authority (ACCRA). The purpose of ACCRA will be to manage the calculation, allocation, and auction of permits, plus all promotion, compliance and enforcement of the CPRS.[17] The existing Office of Renewable Energy Regulator and its functions will be incorporated into ACCRA.[18] Although the Government has announced $81.9 million for the establishment of ACCRA,[19] including $76.7 million in 2009–10,[20] there is no explicit financial breakdown in further years. The Government states that final funding for 2009–10, 2010–11 and onwards is expected to be finalised in the 2009–10 Additional Estimates process[21]
  • provide a Global Recession Buffer ($1.065 billion over five years). This was announced as part of the 4 May amendments to the CPRS to further assist emissions–intensive, trade–exposed industries in the transition to priced carbon emissions. The assistance increases each year from $70 million in 2011–12 to $290 million in 2015–16.[22] The assistance is to be granted through free allocation of permits, and though the funding is explicitly provided under the expense measures in Budget Paper No. 2 and the climate change Portfolio Budget Statement, the Ministerial Statement on the climate change Budget states that all provision for this funding has been made in the Contingency Reserve.[23] This apparent discrepancy may be a reflection of the last–minute nature of revised calculations for expense measures under the revised CPRS
  • increase funding for the Climate Change Action Fund (CCAF). The CCAF was proposed in the White Paper to assist industries, businesses and communities in the transition to a low–carbon economy through the provision of information, grants and incentives. The Budget provides further funding for the CCAF of $300 million in addition to the $2.45 billion announced in the White Paper, bringing the total to $2.75 billion over five years.[24] Some funding has been deferred due to the delayed start of the CPRS, and provision for the measure from 2010–11 onwards is included in the contingency reserve. The remaining funding for the measure in 2009–10 is $200 million and
  • establish the Australian Carbon Trust ($75.8 million over five years), an initiative to encourage individual and community involvement in the CPRS and to assist businesses to implement energy efficiency measures.

The CCAF funding will provide four streams of assistance, outlined in the White Paper and with expenditure in 2009–10 announced in the Budget as follows:[25]

  • the information stream, with funding of up to $130  million over five years ($20.0 million in 2009–10), will focus on informing businesses and communities about the operation of the CPRS and advice on management of its expected financial impacts
  • the energy efficiency and low–emissions technologies stream, with funding of up to $1.4 billion over five years ($180.0 million in 2009–10), will provide grants and incentives for businesses and community groups to invest in energy efficiency and low–emissions technologies
  • the structural adjustment stream, with provisional funding of $200 million, will provide assistance to workers and communities disproportionately impacted by the CPRS and
  • the coal sector adjustment stream, with $500 million over five years in the form of cash payments for existing coal mines with high emissions, and $250 million over five years for coal mine abatement activities.

The additional $300 million announced in the budget for the CCAF is to provide further support for businesses, communities, workers and regions to assist their transition to a low–carbon economy (presumably falling under the first three of the four streams noted above).

The Australian Carbon Trust consists of two initiatives:

  • the Energy Efficiency Trust has been allocated $50  million over two years to promote and showcase energy efficiency opportunities in businesses and organisations. It will fund energy efficiency improvements in the private sector, which will be repaid by recipients as cost savings from the improvements are realised and
  • the Energy Efficiency Savings Pledge Fund has been allocated $25.8 million over five years for its establishment, and for the creation of web–based tools allowing individuals to calculate savings from their energy efficiency actions and contribute these savings to the fund for purchase and cancellation of carbon permits. This in theory sends a price signal through the carbon market and applies pressure on liable entities to reduce emissions (note though, that permit prices will be fixed for the first year and capped for the following four years).

Clean energy measures

Clean Energy Initiative

The Government announced in the Budget a $4.5 billion Clean Energy Initiative, including $3.5 billion of new funding, that will be provided over nine years to support innovation in clean energy and low–emissions technologies.[26] The investment will include:[27]

  • $2.425  billion over nine years for the Carbon Capture and Storage (CCS) Flagships program, including $2.0 billion in new funding, for development of low–emissions coal technologies and to support two to four industrial–scale CCS projects. The program aims to create 1000 MW of low–emissions fossil fuel power generation
  • $1.6 billion over six years for the Solar Flagships program, including $1.365 billion of new funding, for development of solar technologies. The program will support up to four solar power generation projects of capacity comparable to standard coal–fired power stations, to create an additional total solar generation capacity of 1000 MW and
  • $465 million to establish Renewables Australia, including $100 million in new funding, to support development, commercialisation and deployment of renewable energy technologies.

The bulk of the new funding for the Clean Energy Initiative is to be met through the redirection of $2.5 billion that had been set aside for the Education Investment Fund (EIF).[28] The Nation Building Funds Amendment Bill 2009 is to implement the redirection, repealing the crediting of $2.5 billion from the 2007–08 budget surplus to the EIF, and reducing the funds in the EIF to $6.5 billion.[29]

Apparently in addition to the $2.5 billion transfer from the EIF, the Budget states that the new flagship funding includes $400 million over four years from the EIF to support the research infrastructure component of the programs.[30] Proponents of bids will be expected to partner with an eligible research institution with relevant expertise to ensure their project is founded upon rigorous research. Projects under the two flagships are expected to commence construction from 2012, with commissioning from 2015.

The CCS Flagships program will be supported by the Global Carbon Capture and Storage Institute (GCCSI) that was launched by Prime Minister Kevin Rudd on 16 April 2009. The GCCSI will facilitate international cooperation and shared knowledge in the development and commercialisation of CCS technologies to which the program will contribute.

Under the Solar Flagships program, $135 million has been transferred from the $435 million Renewable Energy Demonstration Program (REDP). The first round of applications for the REDP closed in April 2009, and the projects that will be assessed for the remaining $300 million of funding will now be limited to non–solar technologies, namely ocean, geothermal and biomass energy. The solar applicants to the REDP will be eligible for funding under the Solar Flagships program. The Australian Solar Institute will facilitate national and international cooperation and shared knowledge in the development and commercialisation of solar thermal, photovoltaic and energy storage technologies that will be pursued by the program.

Renewables Australia will take over responsibility for management of funds for the REDP, the Geothermal Drilling Program, and the Second Generation Biofuels R&D Program. It will be established in 2009–10 and its activities are expected to include:

  • supporting focused, collaborative, high-priority technology research with the ultimate aim of progressing new technologies and lowering the cost of existing technologies in the market place;
  • supporting and advising government, industry and the community in the promotion, development and implementation of renewable technologies and relevant research and development in essential renewable-related systems; and
  • supporting growth in skills and capacity in renewable technologies for the domestic and international markets.[31]

The Clean Energy Initiative has had a mixed reception. It was welcomed by the Clean Energy Council, Engineers Australia and the World Wide Fund for Nature Australia.[32] The Climate Institute called it ‘a smart and strategic investment in Australia’s comparative advantages of bountiful sun and resource industry research, skills and technologies’, but expressed disappointment that there were not additional incentives under the energy efficiency measures.[33] The Australian New Zealand Solar Energy Society (ANZSES) has welcomed the Solar Flagships initiative. It said that the initiative may help to drive the costs of future medium scale solar installations down, noting that the size of the projects to be funded will represent a ‘leap in capacity’, being hundreds of times larger than existing systems in Australia.[34] The Australian Coal Industry said the funding for CCS ‘will go a long way to making Australia a world leader in developing the technology that will substantially reduce global greenhouse gas emissions’.[35] However, the Australian Greens, NSW Greens, Australian Conservation Foundation and Greenpeace have criticised the weighting of support given to the coal industry relative to development of renewable energy.[36]

Other clean energy measures

In addition to the new measures under the Clean Energy Initiative, the Solar Homes and Communities Plan will receive additional funding of $245 million in 2009–10 but the program will then be terminated when the expanded Renewable Energy Target commences, which will introduce solar credits for small generation units.[37]

The Budget also provides $14.9 million over three years for the Clean Energy Trade and Investment Strategy to promote export opportunities and inward investment in the clean energy sector, delivering the Government’s election commitment to establish a clean energy export strategy.[38] The initiative in part addresses the September 2008 findings of the Review of Export Policies and Programs (the Mortimer Review), which recommended enhancement of Australia’s export capacity and performance in knowledge–intensive sectors where Australia has existing and emerging strengths, including the clean energy sector. The initiative is complementary to the $20 million Clean Energy Innovation Centre, which was launched in April 2009 and provides Australian small and medium–sized clean energy companies with benchmarking services, prototyping and testing facilities and other assistance to help them become competitive exporters.

Energy efficiency measures

The Budget contains two new funding commitments to improve energy efficiency in energy delivery and use:

  • $100  million in 2009–10 for the establishment of a new National Energy Efficiency Initiative (NEEI), in partnership with the energy sector.[39] The initiative aims to develop and utilise technology to improve the efficiency of the energy network and
  • $64.6 million over four years in additional funding for the National Strategy on Energy Efficiency (NSEE), to improve the energy efficiency of residential and commercial buildings.[40]

The initiatives are intended to build upon the Government’s $3.9 billion Energy Efficient Homes Package, which was funded as part of the $42 billion February stimulus package (the Nation Building and Jobs Plan). The Energy Efficient Homes Package provides rebates and subsidies for installation of ceiling insulation in homes and solar hot water systems to replace electric hot water systems.[41]

The NEEI will support implementation of ‘smart grid’ technology in the energy distribution network, and ‘smart meters’ in homes, in a regional city of at least 25 000 people. Smart grids help to integrate distributed, intermittent and peak energy sources into the grid more efficiently, including solar and wind power, by monitoring electricity supply and demand. The technology requires efficient communication networks and the NEEI will examine links with the National Broadband Network to capitalise its capabilities including roll–out of smart grid networks across the country.[42] Smart meters installed in households allow real–time feedback and analysis of energy use within homes to help householders monitor and adjust their energy use. The provision of this information through smart metering has been shown to alter behaviour to reduce household energy use.[43]

The NSEE includes a number of measures to improve energy efficiency of appliances, homes, and commercial buildings (listed in Table 1). The package of measures was developed in response to the recommendations of the Strategic Review of Australian Government Climate Change Programs (mentioned above).[44] Many existing energy efficiency programs are to be terminated and replaced by the new measures (also listed in Table 1). For example, the phase–out of inefficient light bulbs has been terminated, replaced by the enhancement of energy efficiency labelling. The replacement measure in this case appears to be an incentive measure rather than a regulatory measure, and may therefore not be as effective in ensuring full replacement of inefficient light bulbs.

One program that was identified in the Strategic Review of Australian Government Climate Change Programs as transitional to the CPRS (and should therefore continue during the transitional period) that has been substantially scaled back in this Budget is the Green loans program. The number of subsidised low–interest loans under the program has been reduced from 200 000 to 75 000 over five years, achieving a savings of $126 million. The Government states that increased availability of rebates provided through other previously announced initiatives, particularly the Energy Efficient Homes Package, will reduce demand for the Green loans.[45] This reduction has been criticised by the Opposition as reneging on a major election promise.[46]

Climate change research and education funding

The Super Science Marine and Climate initiative will provide $387.7 million over five years for infrastructure to support research into the ocean–land­–climate system to improve understanding and projections of climate change. It will include:[47]

Many of these infrastructure investments come under the Government’s National Collaborative Research Infrastructure Strategy, which was established to provide researchers with major research facilities, infrastructure and networks to support world–class research in Australia. The above projects were identified as priorities in the Strategic Roadmap for Australian Research Infrastructure, published in August 2008.[48]

Additional funding that will enhance climate change research and education has been provided under Round 2 of the Education Investment Fund (EIF) as listed in Table 1.[49]

In the area of vocational education and training, the budget includes a $26.9 million investment over four years in Skills for the Carbon Challenge, which is to promote the development of training programs and resources that incorporate sustainability principles and green skills in various industries.[50] The initiative is a response to an idea that emerged at the 2020 Summit that by 2020 Australia should be the world’s leading green and sustainable economy, and that equipping workers and businesses with sustainability skills will be essential to pursue this goal.


[1].    P Wong (Minister for Climate Change and Water), Australian Government climate change strategy, media release, 12 May 2009, viewed 14 May 2009, http://www.environment.gov.au/minister/wong/2009/budmr20090512.html

[2].    Australian Government, Budget statements 2009–10: climate change, Commonwealth of Australia, Canberra, 2009, p. 5, viewed 17 May 2009, http://www.budget.gov.au/2009-10/content/ministerial_statements/climate_change/download/ms_climate_change.pdf

[3].    Australian Government, Budget measures: budget paper no. 2: 2009–10, Commonwealth of Australia, Canberra, 2009, p. 131; P Wong (Minister for Climate Change and Water), Shaping an international solution to climate change, media release, 12 May 2009, viewed 16 May 2009, http://www.environment.gov.au/minister/wong/2009/budmr20090512a.html

[4].    Australian Government, Households and the scheme, fact sheet, July 2008, viewed 18 May 2009, http://www.climatechange.gov.au/greenpaper/factsheets/pubs/fs7.pdf

[5].    Australian Government, Budget impact of the Carbon Pollution Reduction Scheme, fact sheet, December 2008, viewed 18 May 2009, http://www.climatechange.gov.au/whitepaper/factsheets/pubs/029-budget-implications.pdf

[6].    P Wong (Minister for Climate Change and Water), New measures for the Carbon Pollution Reduction Scheme, media release, 4 May 2009, viewed 20 May 2009, http://www.environment.gov.au/minister/wong/2009/mr20090504.html

[7].    Budget measures: budget paper no. 2: 2009–10, p. 7.

[8].    Australian Government, ‘Statement 6: Expenses and Net Capital Investment Appendix B’, Budget strategy and outlook: budget paper no. 1: 2009-10, Commonwealth of Australia, Canberra, 2009, p. 6–53.

[9].    For further information on the Contingency Reserve see R Webb, The Commonwealth budget: process and presentation (updated Jan 2009), Research Paper, 2009-10, Parliamentary Library, Canberra, 2009, (forthcoming).

[10]. D Crowe, ‘Depleted cash cache will need a $27bn top–up’, Australian financial review, 14 May 2009.

[11]. Australian Government, ‘Statement 5: Revenue’, Budget strategy and outlook: budget paper no. 1: 2009-10, Commonwealth of Australia, Canberra, 2009, p. 5–15.

[12]. ‘Statement 5: Revenue’, Budget strategy and outlook: budget paper no. 1: 2009-10, p. 5–33.

[13]. ‘Statement 5: Revenue’, Budget strategy and outlook: budget paper no. 1: 2009-10, Box 5, p. 5–35.

[14]. Explanatory Memorandum, Carbon Pollution Reduction Scheme (CPRS fuel credits) Bill 2009 and related bills, p. 8.

[15]. Department of Climate Change, Climate change budget overview 2009-10, Commonwealth of Australia, Canberra 2009, p 9.

[16]. Budget measures: budget paper no. 2: 2009–10, p. 129.

[17]. Climate change budget overview 2009-10, p. 11.

[18]. Budget statements 2009–10: climate change, p. 28.

[19]. Climate change budget overview 2009-10, p. 11.

[20]. Explanatory Memorandum, Carbon Pollution Reduction Scheme Bill 2009, p. 24.

[21]. Explanatory Memorandum, Carbon Pollution Reduction Scheme Bill 2009, p. 24.

[22]. Budget measures: budget paper no. 2: 2009–10, p. 128.

[23]. Budget statements 2009–10: climate change, footnote c, p. 41.

[24]. Climate change budget overview 2009-10, p. 13.

[25]. Department of Climate Change, Carbon Pollution Reduction Scheme: Australia’s low pollution future: white paper, Commonwealth of Australia, December 2008, pp. 18–4 to 18–10.

[26]. P Wong (Minister for Climate Change and Water), P Garrett (Minister for the Environment, Heritage and the Arts), M Ferguson (Minister for Resources and Energy) and K Carr (Minister for Innovation, Industry, Science and Research), $4.5 billion clean energy initiative, media release, 12 May 2009, viewed 19 May 200 http://www.environment.gov.au/minister/wong/2009/budmr20090512g.html 

[27]. Department of Resources, Energy and Tourism, Clean energy initiative, fact sheet, Department of Resources, Energy and Tourism, 2009, viewed 15 May 2009, http://www.ret.gov.au/Department/Documents/CEI%20Fact%20Sheet%20(13%20May%2009).pdf

[28]. Explanatory Memorandum, Nation–Building Funds Amendment Bill 2009, p. 2.

[29]. R Webb, Nation–Building Funds Amendment Bill 2009, Bills digest, 2009-10, Parliamentary Library, Canberra, 2009, (forthcoming).

[30]. The Government announced a special $650 million Sustainability Round of the Education Investment Fund dedicated to projects that support sustainable design, energy efficiency and build capacity for climate change research. The $400 million investment in infrastructure for the Clean Energy Initiative was awarded as part of this round, with an additional $250 million to fund vocational and higher education and research infrastructure related to climate change and sustainability activities. See J Gillard (Minister for Education), Budget 2009–10: investing in tertiary education and research infrastructure, media release, 12 May 2009, viewed 18 May 2009, http://www.deewr.gov.au/Ministers/Gillard/Media/Releases/Pages/Article_090512_182419.aspx

[31]. Department of Resources, Energy and Tourism, Clean energy initiative.

[32]. Clean Energy Council, Budget cashes in on Australia’s clean energy surplus, media release, 13 May 2009; Engineers Australia, Budget clean energy initiative is a positive for climate change, media release, 12 May 2009; WWF, Clean energy commitment welcome but species losses likely to continue, media release, 12 May 2009.

[33]. The Climate Institute, Budget boost for clean energy solutions: vital and smart investment in Australian clean energy solutions, media release, 12 May 2009.

[34]. Australian New Zealand Solar Energy Society, Budget solar initiative welcomed, media release, 13 May 2009.

[35]. Australian Coal Association, Coal industry welcomes new funding for carbon capture and storage, media release, 12 May 2009.

[36]. B Brown (Australian Greens Leader), Green opportunity missed in budget 2009, media release, 12 May 2009; L Rhiannon (NSW Greens), Federal budget backs coal industry, kills off tens of thousands of jobs in Hunter, media release, 13 May 2009; Australian Conservation Foundation, Federal budget 2009: green stimulus welcome, media release, 12 May 2009; Greenpeace, Massive polluters’ welfare crushes hopes for ‘green’ budget, media release, 13 May 2009.

[37]. P Wong (Minister for Climate Change and Water), Government response to recommendations of the strategic review of Australian Government climate change programs, 12 May 2009, viewed 16 May 2009, http://www.environment.gov.au/minister/wong/2009/wilkinsresponse.html

[38]. Budget measures: budget paper no. 2: 2009–10, p. 253; S Crean (Minister for Trade), $14.9 million for clean energy trade and investment, media release, 12 May 2009, viewed 18 May 2009, http://www.trademinister.gov.au/releases/2009/sc_090512_budget1.html; K Carr, S Crean and P Garrett, Labor’s commitment to make Australia the clean energy hub of the Asia–Pacific region, media release, 5 September 2007, viewed 18 May 2009, http://pandora.nla.gov.au/pan/22093/20071124-0102/www.alp.org.au/media/0907/msCCindtra050.html

[39]. Budget measures: budget paper no. 2: 2009–10, p. 199.

[40]. Budget measures: budget paper no. 2: 2009–10, pp. 202–204.

[41]. See  R Webb, S Kompo–Harms and J Styles, Appropriation (Nation Building and Jobs) Bill (No. 1) 2008–09, Bills digest, no. 95, Parliamentary Library, Canberra, 2008–09, viewed 17 May 2009, http://www.aph.gov.au/library/pubs/bd/2008-09/09bd095.pdf

[42]. P Garrett (Minister for the Environment, Heritage and the Arts), S Conroy (Minister for Broadband, Communication and the Digital Economy) and M Ferguson (Minister for Resources and Energy), New national energy efficiency initiative, media release, 12 May 2009, viewed 17 May 2009, http://www.environment.gov.au/minister/garrett/2009/budmr20090512h.html

[43]. ‘Smart approaches to electricity use’, ECOS, vol. 135, Feb–Mar 2007, p. 12, viewed 21 May 2009, http://www.ecosmagazine.com/?act=view_file&file_id=EC135p12.pdf

[44]. P Wong (Minister for Climate Change and Water), L Tanner (Minister for Finance and Deregulation) and P Garrett (Minister for the Environment, Heritage and the Arts), Streamlining the Australian Government’s climate change programs and making energy efficient choices even easier, media release, 12 May 2009, viewed 17 May 2009, http://www.environment.gov.au/minister/wong/2009/budmr20090512h.html 

[45]. Budget measures: Budget paper no. 2: 2009–10, p. 196.

[46]. G Hunt (Shadow Minister for Climate Change), Rudd breaks key environment election promise on green loans, media release, 8 May 2009, viewed 16 May 2009, http://www.greghunt.org/Pages/Article.aspx?ID=1343

[47]. K Carr (Minister for Innovation, Industry, Science and Research), Super science—marine and climate, media release, 12 May 2009, viewed 15 May 2009, http://minister.innovation.gov.au/Carr/Pages/SUPERSCIENCEMARINEANDCLIMATE.aspx

[48]. Department of Innovation, Industy, Science and Research (DIISR), Strategic roadmap for Australian research infrastructure, DIISR, Canberra, 2008, viewed 21 May 2009, http://www.innovation.gov.au/ScienceAndResearch/Documents/Strategic%20Roadmap%20Aug%202008.pdf

[49]. For further information see J Gillard (Minister for Education), Budget 2009–10: investing in tertiary education and research infrastructure, media release, 12 May 2009, viewed 18 May 2009, http://www.deewr.gov.au/Ministers/Gillard/Media/Releases/Pages/Article_090512_182419.aspx

[50]. J Gillard (Minister for Education), 2020 summit: skills for the carbon challenge, media release, 23 April 2009, viewed 18 May 2009, http://www.deewr.gov.au/Ministers/Gillard/Media/Releases/Pages/Article_090423_091944.aspx


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