Joe Hockey

18 December 2013 — Environment Minister Greg Hunt’s office has promised that there’s been no cut to the funding for the Emissions Reductions Fund in the mid-year budget forecasts and that a green paper on how the ERF will work will be out this week, hopefully by Thursday.

But while that’s good news for the property industry, which hopes to reap an environmental retrofit bonanza from the ERF, if its recommendations are taken up, the news for local councils, community groups and energy efficiency advocates and consultants ranges from dreadful to devastating.

Rob Murray-Leach, chief executive of the Energy Efficiency Council, said his members were “livid” at the “bizarre” announcement that came out as part of the Mid-Year Economic Forecast cutting support for the Energy Efficiency Opportunities Program after June 2014.

“People are confused and very, very angry,” Murray-Leach said.

Environmentalists were devastated at the loss of funding for the Environmental Defenders Office.

Those who hoped for a reprieve for the Clean Energy Finance Council were also disappointed. Treasurer Joe Hockey told media that it would be axed despite making money for the government because there was still a cost of funds involved.

It took some direct confirmation with Hunt’s office though to work out whether funding for the ERF was still in place because for some reason Treasurer Joe Hockey has bundled all climate related budgetary items into a generic “climate spending” category.

Mr Murray-Leach said the moves on energy efficiency were regressive for the economy. Energy savings were a net gain, he said.

“The Abbott Government has just created huge uncertainty in a fragile economy; people are absolutely livid,” Mr Murray-Leach said.

“The Government hasn’t scrapped the Energy Efficiency Opportunities Program, because its legislated, but they’ve cut funding to administer the program after June 2014.”

A review of the Energy Efficiency Opportunities Program in 2013 found that it had helped participants find “well over a billion dollars in energy savings every year, and participants had voluntary implemented projects to save $808 million a year”, Mr Murray-Leach said.

“With manufacturing on a knife edge and energy prices rising, the government should be doing everything it can to help businesses save energy. Every dollar invested in the program has delivered $2.90 of benefits to Australian business.”

A recent survey by the Energy Efficiency Council, CHOICE and the Brotherhood of St Laurence found that 79 per cent of households wanted governments to help homes and businesses save energy, with just two per cent against government action on energy efficiency.

Total funding for the ERF is in the forward estimates at $300 million, $500 million and $750 million, a total of $1.55 billion over the next three years.

This is well down on the $3.2 billion over four years initially flagged during the election campaign and then scaled back to $2.55 billion. Even so these figures reconfirmed by Hunt’s office would require a full $1 billion in the fourth year to meet the election promise amount.

A Summary of the “climate spending” in 2013-14 include:

  • the free permit buyback facility provided as part of the Jobs and Competitiveness Program and the Energy Security Fund
  • funding for investment by the Clean Energy Finance Corporation;
  • the Australian Renewable Energy Agency, which supports research and development of renewable energy and related technologies
  • spending across a range of programs that formed part of the carbon tax package, including the Clean Technology Programs, the Biodiversity Fund and the Coal Sector Jobs Package.

From 2014-15 onwards, the key drivers of climate spending are:

  • the Direct Action Plan, primarily the Emissions Reduction Fund
  • the Australian Renewable Energy Agency
  • departmental funding for the Clean Energy Regulator
  • previously committed expenditure in the Biodiversity Fund and the Clean Technology Programs, noting these programs will no longer be eligible for new applications beyond 2013-14.