Australia's federal government is again facing opposition to moves to allow the Australian Renewable Energy Agency (Arena) to fund projects linked to fossil fuels.

The Liberal-National Coalition government last week introduced regulations to expand the scope of projects that Arena can fund to include “clean hydrogen”, carbon capture and storage (CCS), long-duration energy storage, measurement technologies for healthier soils and low-carbon materials, including aluminium and steel.

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The opposition Labor Party confirmed this week that it would move to disallow at least part of the regulations in the Senate.

Labor and the Greens got the government’s first attempt to introduce similar regulations disallowed in June. However, they were helped by One Nation leader Pauline Hanson’s absence from the vote, which proved decisive.

The shadow minister for climate change and energy, Chris Bowen, said Labor would support new safeguards on the implementation of 2020 Budget measures in the revised regulations, but voiced opposition to one section in particular.

Fossil fuels are now begging for public handouts to stay afloat, but public money should go to renewables instead.

Greens Leader Adam Bandt

This is the section that would allow Arena funding to be used for blue hydrogen — which is produced using fossil fuels — and CCS projects.

“Labor supports any new energy technologies like CCS where they stack up scientifically and commercially. But deserving non-renewable technologies should be supported in other ways and not allowed to dilute Arena’s funding and expertise,” Bowen said.

Legal questions

“For example, if the government had wanted to support CCS technologies, it shouldn’t have abolished the CCS Flagships programme and cut half a billion dollars of funding.”

Bowen also claimed that expanding Arena’s remit to fund non-renewables would probably be open to a legal challenge, given that the object of the Arena Act 2011 is to “improve the competitiveness of renewable energy technologies and increase the supply of renewable energy in Australia”.

“Experts say that funding other technologies would be inconsistent with the object of the Act, and would likely be subject to legal challenge,” he added.

“These concerns about the potential illegality of the previous regulation were shared by the Liberal-led [Senate] Standing Committee for the Scrutiny of Delegated Legislation.”

Bowen said the agency has created jobs and added more than A$7.7 billion (US$5.7 billion) in value to the economy with an investment of only A$1.7 billion over 10 years.

“It’s been able to do this because of its ability to focus on what it does best — creating the jobs of the future in our regions, renewables, emissions reduction in refining, electrification and others,” he said.

“Labor urges the crossbench to support this motion of disallowance, which defends the integrity and legality of Arena by striking out one section, while enabling additional funding to go towards new technologies in line with the agency’s remit.”

‘Fossil fuel bank’

The Greens confirmed on Tuesday that they will bring forward their own motion to disallow regulations that they claim would turn Arena into “a fossil fuel bank”.

“Arena was created as part of the Greens-Labor Agreement and has been a shining light of job-creating, clean and cheap energy production,” Greens leader Adam Bandt said.

“Arena creates such animosity amongst the coal-hugging Coalition because it’s been such a success. Fossil fuels are now begging for public handouts to stay afloat, but public money should go to renewables instead.”

The Australian Petroleum Production & Exploration Association, which represents the upstream industry, has implored politicians to back the expansion of Arena’s remit.

“Climate change should not be used as a political weapon and politicians shouldn’t ‘pick winners’ when it comes to protecting the environment,” chief executive Andrew McConville said.

“Supporting these measures demonstrates support for practical steps to reduce emissions and help the environment. All technology, including hydrogen and carbon capture and storage, should be on the table to help reduce emissions.”