Energy Alert
01 Oct 2020 Backing the Future - Incentivising Australia's Low Emission Transition
Roadmap for a Low Carbon Future: Opportunities for the Energy, Agriculture and Manufacturing Sectors
The Federal Government has announced its First Low Emissions Technology Statement (Statement) as part of the Government's Technology Investment Roadmap released in May this year.
The Roadmap represents the Government's central, long-term policy designed to facilitate Australia's transition to a decarbonised economy through investment in new technologies while promoting energy affordability and security. The purpose of the Statements, which will be released annually, is to present a rolling assessment of the challenges and opportunities, priority technologies, and economic stretch goals within the context of the broader long-term Roadmap.
Key takeaways from the Statement
- Redirected investment focus – the Statement refocuses government investment via ARENA, CEFC and CER to support the priority technologies and stretch goals (outlined below).
- Additional funding – in support of the Statement, the Government announced a $1.9 billion package including $1.62 billion in new funding for ARENA over the next 10 years.
- Mature technologies – the Government has signalled that in principle it will not undertake new investments in mature technologies (ie, coal, gas, solar, wind, hydro projects) as these are now established technologies which should be driven by the private sector. Support will only be offered if the Government believes a market failure has occurred (ie, shortage of dispatchable generation or job security concerns) which justifies government intervention.
Categorisation of low emissions technologies
In the Statement, the Government has categorised technologies identified in the Roadmap into four categories.
Category | description | example technologies |
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1. Priority Low Emissions Technologies |
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2. Emerging and Enabling Technologies |
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3. Watching Brief Technologies |
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4. Mature Technologies |
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*On Electric Vehicles (EV), as part of the $1.9 billion ARENA package, the Government has announced the creation of the Future Fuels Fund. An initial $75.4 million has been ear-marked to support the adoption of EV chargers and infrastructure by businesses in key EV-infrastructure blackspots. ARENA has indicated grants will in particular focus on businesses seeking to operate fleets of EVs. The Fund will also assist other emerging transport technologies including hydrogen and biofueled vehicles.
We await further information regarding the Federal budget initiatives for EV this week.
Priority Low Emissions Technologies and Stretch Goals
Within the Priority Low Emissions Technologies category, the Government has identified five priority technologies and tied each to a stretch goal.
priority technology | stretch goal |
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1. Clean hydrogen Use of hydrogen to power vehicles, generate heat and electricity, use as an industrial feedstock, export as a commodity to global markets. |
H2 under $2 per kilogram Clean hydrogen priced at under $2 per kilogram – which will enable hydrogen to become commercially competitive. |
2. Energy storage Facilitate more low-cost solar and wind in the grid and boost system security. |
Energy storage under $100 per MWh Electricity storage for firming priced under $100 per MWh – which will enable reliable, firmed wind and solar at prices competitive with the average wholesale electricity price in the NEM for conventional mid-merit gas generation. |
3. Low carbon materials Significantly reduce emissions while promoting job creation and security. |
Steel under $900 per tonne and aluminium under $2,700 per tonne Low emissions steel production under $900 per tonne and low emissions aluminium under $2,700 per tonne to retain cost-competitiveness. |
4. CCS Decarbonisation of hard-to-abate industries (ie, oil and gas extraction and processing, cement manufacturing, etc). |
CCS under $20 per tonne Compression, hub transport and storage under $20 per tonne of C02 to position CCS as competitive with other forms of carbon abatement. |
5. Soil carbon Promoting carbon sequestration in soil by improving land management practices on crop and grazing lands. |
Soil carbon under $3 per hectare Measurement under $3 per hectare per year – a 90% reduction from today's measurements costs which would transform the economics of soil carbon projects for Australian farmers. |
Ashurst is actively involved in a number of projects that utilise the technologies above, including on structuring investments, project development, contracting and regulatory guidance.
We will continue hosting webinars that contribute to industry participation in these areas. Please contact us if you would like to participate.
Authors: Paul Newman, Partner; Cassandra Wee, Counsel; and Alex McLeish, Lawyer.
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