CLIMATE SPECTATOR: A budget hint for Greg Hunt

The budget deferred $341 million for clean energy grant tendering programs. It again illustrates what a poor model tendering is for supporting clean energy and driving abatement. Is Greg Hunt paying attention?

Climate Spectator

As predicted yesterday we’ve seen a huge deferral of expenditure into later years for grant tendering programs run by Department of Resources, Energy and Tourism. This funding deferral merry-go-round has been a constant feature of these types of programs. It illustrates what an incredibly bad idea it is to fund clean energy through tendering that relies on officials’ subjective judgement to predict the best projects well in advance of them ever generating a MWh of electricity or abating a tonne of CO2.

Low Emissions Technology Demonstration Fund (LETDF) – $101 million deferred (again!)

The saga of Howard Government’s 2004 LETDF program’s almost endless deferral of expenditure continues in this budget. The $101 million planned over this year and next will now be zero, with the department planning on spending $160 million over 2013-14 to 2015-16. Greg Hunt and the Coalition take note – don’t even think about using the same grant tendering model for Direct Action.

Carbon Capture and Storage (CCS) Flagships – $75m deferred

Expenditure for CCS Flagships has been pushed out again. In 2011-12 and 2012-13 expenditure has been reduced by combined total of $75 million, but expenditure in 2014-15 is planned to be $278.8 million and a whopping $450.4 million in the never never of 2015-16. I’ll believe it when I see it.

Other CCS programs were relatively untouched with the CCS Institute has maintaining its funding.

Connecting Renewables – $72 million deferred

The Connecting Renewables program has been subject to major funding deferment. Now no money will be spent in 2012-13 and half the planned expenditure for 2013-14 has been cut, making a total of $72 million shifted to later years. I’ll now predict the program will be cut altogether in next year's Budget on the basis that the CEFC can fund transmission infrastructure.

$93 million underspend in Solar Flagships and Australian Centre for Renewable Energy (ACRE)

There was a $93 million underspend in the 2011-12 financial year for Solar Flagships and ACRE. Deferral of future expenditure is hidden by the roll-over of these programs into the agency.
Australian Renewable Energy Agency needs to roll-out money fast

No sooner has the agency been established and it will have to shovel $292 million out the door in 2012-13. The only way this seems possible is if the retendering around the solar PV portion of Solar Flagships can be brought to a swift conclusion and the selected project is shovel-ready.

The year after the expenditure increases to $344.9 million, then $436.6 million in 2014-15 and $321.8 million in 2015-16. This kind of money is not large relative to the kind of capital expenditure involved in renewable energy projects. But to achieve this rate of spending will require some major improvement in how renewable energy grant programs are administered relative to the sorry history of the past.

No change to $1.2 billion Clean Technology program

As part of the Clean Energy Future package $1.2 billion in funding was committed to a Clean Technology Program to help improve energy efficiency in manufacturing industries and support research and development in low-pollution technologies. The funding for this program is unchanged from the previous budget and is managed by the Department of Industry, Innovation, Science, Research and Tertiary Education.

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