The government funded Australian Renewable Energy Agency (ARENA) has taken the unusual step of posting a letter on its website warning stakeholders that its financial future is uncertain.
ARENA has indicated to companies planning to apply for grants that there is a substantial risk the organisation could suffer even bigger funding cuts in the May budget of the conservative Liberal-National federal government.
ARENA took the unusual step yesterday of writing to “stakeholders” to advise that “given the fiscal outlook and media speculation concerning the forthcoming budget on May 13, the future of ARENA’s funding is unclear.”
ARENA’s chief executive Ivor Frischknecht told Guardian Australia website there was a “substantial risk” his organisation would face more cuts.
He said companies needed to be aware of this as they considered spending money on land, permits and feasibility studies ahead of making an application to ARENA for funding.
The letter from ARENA was published on the organisations website.
ARENA was set up as part of the former Labor government’s carbon price legislation with a budget of $3 billion.
Unlike most of the legislation it was originally backed by the Liberal-National coalition.
As Labor sought budget cuts in the 2013 budget, it deferred $370m of the funding until the next decade.
The Coalition then included an additional cut of $435m in its legislation, which seeks to repeal Labor’s carbon price laws and replace them with a Direct Action plan that will pay polluters to reduce their emissions.
The agency’s letter clearly indicates more cuts are very likely.
Given that the carbon tax repeal bills have not yet passed the senate, the already-announced $435m cut has not yet occurred under the law and the government needs to include the money in the budget.
Guardian Australia reports there are strong suggestions the government may require ARENA to use almost all its remaining funding to pay for the Coalition’s election promise to pay $500 grants to one million households to put solar panels on their roof.
Australian Greens Party leader Senator Christine Milne told Guardian Australia that funding the solar rooftop promise from ARENA would leave the fund with no money, and could be the reason it had issued the warning.
ARENA could also find itself in a similar position to the Clean Energy Finance Corporation, which the government is trying to abolish, but has been unable to pass the necessary legislation to carry out the abolition.
The CEFC board has decided to continue lending from its $10bn available funds, as it is required to do under current legislation.
Mr Frischknecht said ARENA had already funded 180 projects and would soon face a decision as to whether or not to make grants that would require it to call on some of the $435mn the government is seeking to cut.
He said there was a “lively and ongoing discussion” on the board about this.
