| February 16, 2023

Powering the Regions Fund Consultation

The Smart Energy Council welcomes the opportunity to provide a submission on the Powering the Regions Fund. The Smart Energy Council is the peak independent body for Australia’s smart energy industry, representing around 1000 residential, commercial and large-scale renewable generation and storage companies, smart transport firms, as well as the renewable hydrogen and ammonia industry.

The Smart Energy Council believes we can and must have a strong economy and a safe climate. Australia is extraordinarily well placed to be a global leader in the zero emissions economy of the future – creating jobs, investment and new industries, particularly in regional communities – and the Powering the Regions Fund can, and must, play a critical role in helping achieve that vision.

The Smart Energy Council welcomes the establishment of the $1.9 billion Powering the Regions Fund. With the right design features, including ensuring it is consistent with the Climate Change Act 2022, the Powering the Regions Fund will deliver significant benefits for regional communities and for our climate.

This submission addresses key design features of the Powering the Regions Fund and highlights the related economic opportunities for regional communities that was identified by a recent Climate Capital Forum report.

 

Key Design Features

The Powering the Regions Fund should only be allocated to zero emissions projects or projects that will deliver at least 43% emissions reductions by 2030, consistent with the Climate Change Act 2022.

Where possible, funds should be allocated at arms-length from the political process, meaning the use of existing independent institutions should be leveraged ahead of allocating resources to existing Government programs or new ones administered by departments.

Having said that, the Department of Climate Change, Energy, Environment and Water (DCCEEW), the Industry Department, the Department of Foreign Affairs and Trade and other relevant government agencies should be significantly better resourced to implement the transition to at least 43% emissions reduction by 2030 and at least 75% emissions reduction by 2035. This is consistent with the Smart Energy Council’s Federal Budget Submission.

 

Decarbonising Existing Industries

The Smart Energy Council would welcome additional funds being allocated to the Australian Renewable Energy Agency to achieve the goal of decarbonising existing industries. There should be close consultation between ARENA and the Powering the Regions Fund.

The Australian Government should consider establishing a program for private financiers, such as venture capital funds, to bid as partners in the Powering the Regions Fund. This would echo New Zealand’s Green Investment Finance or Australia’s previously established Renewable Energy Venture Capital Fund, except the Government would take a position in private funds, rather than operating its own fund. This would strengthen the long-term sustainability of the venture capital industry, with a specific focus on zero emissions technologies and projects, rather than providing one-off grants to emission reduction projects for so-called hard to abate sectors.

IF the Federal Government is planning on administering its own reverse-auction style program, it should focus on the key development themes that play to Australia’s strategic advantage: namely, solar and wind generation, energy storage, minerals and metals refining and manufacture, and (given the distance between Australia and its export markets), sustainable long haul transport fuels such as renewable hydrogen and its derivatives.

The Smart Energy Council believes the following conditions should be applied to any organisation receiving funding:

  • have emission abatement plans to achieve at least 43% reduction by 2030;\
  • have paid reasonable corporate tax over the past period (if they’ve been already operating);
  • have a limited use of offsets to meet their overall objective (if an eligible facility operating under the Safeguards Mechanism);
  • have a plan to include skills development with a view to building out the smart energy workforce for the long term, such as employing Indigenous Australians directly and via the procurement of goods and services made in Australia (or a plan to achieve this within a reasonable period); and
  • be able to report against their criteria over the period of the project or five years, whichever is longest.

 

Climate Capital Forum

The Smart Energy Council is a key player in the newly-established Climate Capital Forum, which brings together the smart energy industry, the finance and investment community, philanthropists and the climate movement to outline a powerful vision for Australia’s economic and environmental future.

Climate Capital Forum released a major report on Modernising and Decarbonising Australia’s Economy at the Smart Energy Council’s Industry Climate Action Summit on 30 January 2023. The report is directly relevant to the Powering the Regions Fund and we would encourage officials to examine that report and to discuss it further with Climate Capital Forum. This can be done through the Smart Energy Council.

Among other things, the Climate Capital Forum report states:

“Our biggest companies and our biggest polluters must reduce their emissions in Australia, and in doing so can create new jobs and investment opportunities in regional areas and provide the foundations for exciting new zero emissions industries – green aluminium, green iron and steel, electric heavy transport, lithium hydroxide, battery cathodes and anodes, renewable hydrogen and ammonia, all powered by world-scale solar and wind, the cheapest, cleanest energy in history.

Governments must create the enabling policy, regulations and public financing structures to incentivise our world leading companies and miners, as well as a multitude of new startups to collectively seize the opportunities here in Australia, creating jobs, investment opportunities and profits.

This commitment to a strong, sustainable economy and a safe climate is central to Australia’s security interests, working with our key trade and security partners. We can and should work with our Pacific neighbours on this shared journey, but also leading the way by utilising our comparative and competitive advantages.

The US Inflation Reduction Act, REPowerEU and Japan’s GX Roadmap are all about these regions onshoring their investments; this is a global technology and investment race. And it is already entirely clear that China has a near decade head start in this race. Australia’s world- scale renewable and mineral resources give us a global advantage to lead.”

 

Conclusion

The Smart Energy Council would welcome the opportunity to work with the Australian Government on the development of the Powering the Regions Fund.

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