Chapter 2


Chapter 2

Key issues

2.1        This chapter discusses the key issues raised in submissions, including:

  • funding arrangements for the Australian Renewable Energy Agency (ARENA); and
  • transferred Commonwealth funding agreements.

Funding arrangements for the Australian Renewable Energy Agency

2.2        The Multi-Party Climate Change Committee's Clean Energy Agreement noted that, in addition to the $3.2 billion in existing government support for renewable energy technologies, ARENA would receive funding from:

  • the dividends from investments made by the Clean Energy Finance Corporation (CEFC) (another measure proposed in the Clean Energy Agreement);[1] and
  • a share of the future carbon price revenue notionally allocated to the Jobs and Competitiveness Program, should that revenue be made available following reviews by the Productivity Commission.[2]

2.3        GE Energy noted that the bills do not refer to the two additional funding sources identified in the Clean Energy Agreement.[3] In answer to a question on notice, the Department of Resources, Energy and Tourism (the department) responded that it would be appropriate for the future legislation establishing the CEFC to give effect to the commitment for dividends from its investments to be paid to ARENA.[4]

2.4        Further, the department noted that amounts potentially payable to ARENA from the two additional funding sources are not currently quantifiable. Therefore, the bill does not include any such amounts in subclause 64(1) (which is reproduced at paragraph 1.28) and provides a means of including such amounts as 'ARENA's money' in subclause 67(1). The department informed the committee:

It is intended that any money received as dividends from the CEFC or from a share of the future carbon price revenue notionally allocated to the Jobs and Competitiveness Program would be paid to ARENA under subclause 67(1)(b).[5]

Transferred Commonwealth funding agreements

2.5        Some submissions referred to programs and initiatives under which existing Commonwealth funding agreements will not be transferred to ARENA.

Renewable Energy Equity Fund

2.6        The Australian Centre for Renewable Energy (ACRE) identified six existing programs and measures whose funding agreements will be transferred to ARENA on 1 July 2012.[6] Its submission also identified the Renewable Energy Equity Fund (REEF) as a transferred Commonwealth funding agreement however REEF is not described as such in the C & T bill.

2.7        The department advised that REEF (which is closed for new applications, the fund being fully invested)[7] will not be transferred to ARENA, with the department to maintain responsibility for this concluding program.[8]

Connecting Renewables initiative

2.8        During the 2010 election campaign, the Labor Party announced a $1 billion, 10-year Connecting Renewables initiative (the initiative), with the aim of bringing more renewable energy onto the Australian electrical grid.[9] Funding for the initiative was provided for in the 2010–11 Mid-year Economic and Fiscal Outlook, through monies originally set aside for the Renewable Energy Future Fund.[10] 

2.9        However, while the Australian Government has indicated that ARENA will have responsibility for managing the unallocated funds from the Connecting Renewables initiative,[11] GE Energy noted that the C & T bill makes no mention of the initiative.[12] The Clean Energy Council similarly called for clarification on this issue.[13]

2.10      By way of response, the department observed that the C & T bill transfers agreements to which the Commonwealth was a party before 1 July 2012. However, at present:

There are no funding agreements to transfer under the Connecting Renewables Initiative. Should a funding agreement be entered into before 1 July 2012 it would transfer pursuant to subclause 2(1)(a)(vii) as a funding agreement under a program or initiative specified by the Minister, or pursuant to subclause 2(b) as an agreement specified by the Minister.[14]

2.11       In contrast to unquantifiable funding sources, the department added that the unallocated funds from the initiative are included in subclause 64(1) of the bill.[15]

Conclusion

2.12      The committee supports promoting the competitiveness of renewable energy technologies and increasing the supply of renewable energy throughout Australia. In the committee's view, central to these objectives is the establishment of an independent authority to administer the Australian Government's existing renewables funding, such as is proposed in the bills.

2.13      While only a short time frame was allowed for this inquiry, the committee considers contributors' responses indicative of the broad level of support for the various proposals contained in the bills.

2.14      The committee notes that, due to the unquantifiable nature of additional funding, for example, the dividends from the yet to be established CEFC, there is necessarily an element of uncertainty regarding ARENA's future funding allocation above the $2.5 billion specified in clause 64. However, the committee is satisfied with the department's responses on these and other issues, which the committee found to be logical.

Recommendation 1

2.15      The committee recommends that the bills be passed.

Senator Doug Cameron
Chair

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