Budget to cut ARENA funding, bring forward money to CTIP

20 May 2013Archived News Energetics in the News

Published by The Sustainability Report on 17 May 2013.

By Rachel Alembakis.

The government’s proposed 2013-2014 budget provides both approval and disappointment for advocates of the clean energy and energy efficiency industries, as measures impact on funding of both the Australian Renewable Energy Agency (ARENA) and the Clean Technology Investment Program (CTIP).

Treasurer Wayne Swan’s budget proposal will postpone funding amounting to AU$370 million until 2020, and the process to put that money back into ARENA was not specified. This proposal comes a year after the government promised to leave ARENA’s funding intact and isolated from year-to-year funding changes, said Russell Marsh, policy director at the Clean Energy Council.

“The important thing to us is less about the amount of money that was cut and more the fact that it’s a constant chopping and changing to the funding arrangement of ARENA,” Marsh said. “The way the government established ARENA was to effectively isolate it from annual changes to budget that it had experienced in the past. But now, the government has tinkered with the initial allocation in the budget. It doesn’t help the industry in terms of the long-term stability of the ARENA funding package. If you’re a biz looking to invest in a technology in Australia that would come within ARENA’s remit, and the government has cut the funding, what do you do?”

The CEC also criticised the government for cutting a further AU$260 million of funding for energy efficiency programs like Low Carbon Communities and large-scale solar programs.

On the more positive side, in the budget, the government proposed bringing forward AU$160 million in funding for CTIP  to the 2014-2015 financial year and left in place the commitment of AU$1.2 billion in funding for CTIP. CTIP provides investment for companies wanting to increase energy efficiency in their operations. But, noted Jonathan Jutsen, executive director of specialist consultancy Energetics, there still remains political uncertainty if the Coalition win power in Parliament in the September elections.

“CTIP impacts energy efficiency opportunities, but there won’t be a significant immediate impact [from the budget],” Jutsen said. “Bringing forward funding will be largely into the next financial, year, and if there’s a change in government, it’s unlikely that the CTIP in its current format would be retained in a change in government. We would strong support the project continuing if the Coalition removes the carbon pricing program and they have not put their direct action program in place.”

CTIP was started last year. Energetics specialises in advisory services for business, energy and carbon management, and has assisted around 40 clients in putting in proposals to CTIP, with 11 so far obtaining about AU$15 million in capital investment from CTIP, Jutsen said.

“Our clients have been using the program heavily to improve their energy efficiency and reduce their carbon emissions,” Jutsen said. “It’s a significant contributor to helping companies to improve efficiency and reduce emissions to improve profitability and competitiveness.”

Companies working with Energetics have put in proposals to CTIP for funding for projects including process improvements, heat recovery, lighting systems, compressed air, insulation and other activities, Jutsen said.

“The CTIP has definitely accelerated energy efficiency investments in the companies,” he said. “Some may well have gone ahead anyhow, but for a lot of the projects, the reason why they have been put up has been the ability to get up to a one-third grant for funding the projects, which in many cases has taken the payback period down from five years to almost three years. That has had a significant impact and with these programs, if they’re maintained for long enough, they can change the business culture. We are hoping we can get some continuity should there be a change of government.”

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