Here they all are – what will they do?

Australia’s magnificent renewable energy agency, ARENA, faces extinction but a number of people who are about to kill it off desperately want it to survive.

That’s the story we’ve picked up this week speaking to a range of highly placed sources.

“It’s extraordinary,” said one man, who, like others, wanted to remain off the record.

“On the Liberal side no one wants to get rid of it. Every Liberal I speak to wants to keep ARENA. Warren Entsch loves it. Bob Katter loves it. Hunt went to a lot of effort to save it.

“Frydenberg’s staff say that they really want to keep it.

“But Frydenberg is a junior minister and he wants to be PM one day so he doesn’t want to rock the boat. So what we have is a government that’s locked in to cutting the budget deficit and away you go.”

So here’s the state of play: ARENA’s total or near total budget will be swiped, depending on whether the so-called omnibus bill opts for $ 1billion in cuts or the whole $1.3 billion. Essentially that’s to patch up the budget disaster of Abbott’s regime.

At the same time the now increasingly timid Climate Change Authority has done one good thing in recommending a carbon trading system for electricity in its report on Wednesday night. But it’s backed off making comments about how Australia could hope to meet the climate targets it promised in Paris. In fact two of its members have dissented and will publish their own report.

This, at the same time as Germany commits US$20 billion to energy efficiency and Norway is on track to go carbon neutral within 13 years and debates whether to ban the sale of combustion engine cars altogether within seven years.

Here in Oz, across the road from government in big business, we have a surfeit of investment dollars looking for a home in renewable energy projects and the biggest miners in the country desperately trying to sell their coal mines and switch to clean energy because they can see it’s the biggest game in town.

Besides there’s nothing like an existential threat to sharpen the urgency to head to the nearest exit door.

 Dr Cheong Koon Hean
Dr Cheong Koon Hean

Singapore gets it too. Our near neighbour’s chief of Housing and Development Board Dr Cheong Koon Hean, responsible for housing 82 per cent of Singapore’s residents, told Green Cities earlier this year that she was overseeing energy retrofits to one million of the nation’s public housing units. Why?

Because “when it’s about survival you get great alignment”, Cheong said.

Some people who don’t faff around.

In Australia: “The whole thing is bizarre,” one of our sources said.

The government barely knows what’s going.

“It’s promised not to axe ARENA but then takes all its money away.

“Everywhere you go the world is moving. But we need to have stable policies to drive investment. If you don’t people are going to get hurt and prices will go up.

“We need a smooth transition and policies that make sense.

“What you’ve got is crazy people in the government” who are still pushing the ridiculous debate on whether climate change is real. People like “Malcolm Roberts, Cory Bernardi, George Christensen – “a committee of idiots constantly saying coal is wonderful.”

They say we should not subsidise renewables but we subsidise coal and the car industry and fossil fuels.

“The level of debate is puerile. It is astounding.”

Labor has yet to form an official position

Where is Labor at? Officially it’s not yet formed a position but it’s been “intensively lobbied by a lot of people”.

“I’ve heard the Libs say, ‘We hope Labor comes to us with a compromise so we can meet in the middle.’”

Cognitive dissonance. Again.

And here we all were breathing a sigh of relief that Abbott had gone and taken his toxic divisive politics with him. Premature? According to another source, yes. The leadership has changed but nothing else, he said.

He said Turnbull and Frydenberg would no doubt personally support keeping ARENA.

“But the budget deficit trumps everything else. They say repairing the budget is protecting our children’s future, but how can you protect our children’s future but cutting off our research and development future, by cutting innovation?

“Frydenberg probably thinks it’s a battle he doesn’t think he can win. It’s a new portfolio, but what he’s saying here doesn’t line up with everything else he’s been saying [such as his strong support for renewables and identifying them as the future].

arena pic

“More upsetting is Labor might capitulate so they can beat their chest over the budget deficit.”ARENA is the way out of the Valley of Death

Why ARENA is so important is that it’s the only way to push out renewable technology at the early stages.

Government investment here is critical – lifeblood and oxygen – and it needs to be by way of a grant. Because there is no capital on the planet that can step in here.

What ARENA tends to do is a lot of very leveraged investment – two to three times the level of private sector commitment – enough to overcome the risk barriers so important projects can go forward.

The government argues that the money taken from ARENA will be spent in a new Clean Energy Innovation Fund.

The problem with that scenario is that the CEIF would require a return on investment, as the Clean Energy Finance Corporation does, but with differing parameters. In other words it’s not a grant.

Some of the work ARENA has done is improving grid integrations of renewables but it’s also doing a large scale solar product at the moment, one of our sources said.

“What it’s achieved in previous large scale solar is to drive down the prices.”

It’s also accelerated technology transfer of international best practice, which is about enabling global developments to be deployed in this country.

It’s also enabled the installation of controlled batteries into 1000 houses in South Australia to create a “virtual power plant” in a project with AGL.

One man who would go on the record about this renewable climate right now was Martijn Wilder, head of Baker McKenzie’s Global Environmental Markets and Climate Change practice, who also happens to chair ARENA and is director of the Clean Energy Finance Corporation.

“The position in Australia is very different to the rest of the world,” he said. “Many of our clients also recognise that there is clear change of momentum since Paris and that when they make investments they evaluate the risk of climate change very carefully and what they will do is ultimately not invest the areas at risk.

“The real change at the moment is that there is so much money for renewables but not enough product to invest in. Millions of dollars are mobilised, the industry is still growing.

“Every time someone develops a solar project there is a whole range of competitors.”

But all that money is waiting around to jump into the second stage of initiatives. The first stage where ARENA works is the critical first step.

“ARENA is the way out of the Valley of Death.”

Turnbull has made promises in Paris, but no delivery mechanism is in sight

The threat to ARENA and the lack of will or gumption in Canberra makes it really hard to see how Turnbull can meet the commitments made in Paris and its targets including to double green energy and investment by 2020. That’s just three years away, it’s frightening to remember, as we start to see global warming take root.

And yes, all the talk is about targets but not the “architecture to get there”.

Certainly buildings are starting to attract attention – the meeting of energy ministers recently included buildings in its scope and there is talk about mandating higher energy standards in the building code – but not nearly enough compared with the contribution they could make.

John Thwaites
Profesor John Thwaites

More focus on buildings, John Thwaites says

Meanwhile from Victoria, which is still cooing over the return of the Greener Government Buildings program, Professor John Thwaites says momentum on energy efficiency nationally is moving along.

Thwaites is chair of ClimateWorks Australia the Monash Sustainability Institute and the Australian Building Codes Board and a director of the Green Building Council of Australia.

The main drive, he said, was to strengthen energy efficiency and energy productivity standards in the National Construction Code.

“What we want to see is not just more energy efficient housing but more comfortable housing and housing that delivers much better lifestyle for people.”

Thwaites said there were big opportunities in residential but that biggest potential carbon savings are in commercial buildings.

The challenge now in commercial is whole building performance, “not just the building envelope”, so the potential for renewables on site.

(That’s a topic we’ve focused on strongly in our recent ebook, Renewable Energy: Joining the Zero Carbon Revolution)

On strengthening the building code, he says, “The Commonwealth and the states are working on this and it’s consistent with the National Energy Productivity Plan.”

There’s clearly an imperative for the building code to be “substantially upgraded”.

So what can we expect by way of opposition to those goals? This  used to be quite strong and hugely vitriolic every time improvements in sustainability were proposed (especially for housing).

According to Thwaites it’s a different story these days.

“I would hope we’ve moved on from that. If you look at the actual provisions, they’ve been cheaper to implement than expected and saved more money than predicted.

“The only problem we’ve seen is that in a number of cases buildings are not performing the levels they purport.

“Some builders have not properly complied, but most try.”

We need now ways to measure performance and ensure buildings are built to the specifications indicated.

“That’s why performance rating tools are critical,” and why we should be looking at a methodology such as NABERS that can be applied to the performance of housing, he said. (Well, they’ve done it in Canberra.)

“And that then drives performance.”

So, let’s be blunt, what does the Housing Industry Association and the Master Builders Association say these days on sustainability  issues?

“I would hope that people have moved on and that the public want more comfortable housing and that the costs are nothing like what those who are opposed claim. In fact in some cases energy efficient housing can be cheaper to build. The CSIRO showed that.”

Energy efficiency

One of the barriers we’ve just picked up in this round of conversations is that apparently we’ve got a tax problem in energy efficiency.

A lot of corporates, it seems, like the idea that energy efficiency providers offer to provide equipment, service it and deliver savings for a fee, but this form of “off balance sheet” investment where the asset is not on the books is frowned on by taxation departments.

So the tax regime makes it really difficult for corporates to enter into these contracts.

It’s not just Australia’s problem, it’s a global issue, the legacy of the accounting standard harmonisation work of a few years, we understand.

Another unintended consequence. But surely one easier to solve than the crazy politics in Canberra right now, right?

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