• What does ARENA do, and how is it different from the Clean Energy Finance Corporation?
• Why should we support ARENA and a carbon price?
• Did Tony Abbott’s government cut ARENA’s budget as one of their first actions?
• Why would Tony Abbott cut the Australian Renewable Energy Agency’s budget?

What does ARENA do, and how is it different from the Clean Energy Finance Corporation?

The CEFC deals with projects which are ready for co-financing on a commercial basis. ARENA has a broader brief, to make renewable energy solutions more affordable and increase the amount of renewable energy used in Australia.

ARENA (the Australian Renewable Energy Agency) funds renewable energy projects, but it also supports research and supports activities to share knowledge. For example, it has helped fund world leading Australian research into new materials and techniques for better and cheaper solar panels. It has also funded development of systems for real time monitoring of how much power solar rooftops are contributing.

Why should we support ARENA and a carbon price?

Economists see prices and markets as great mechanisms for allocating resources in a given state of technology. But prices and markets aren’t always the whole economic story in inventing and developing new technologies.

The Internet and the Web, which are worth trillions and have transformed our world, didn’t come from markets to start with, for example: they came from governments investing in science, and scientists doing what scientists do. Those are pretty big examples for the idea that markets aren’t always all we need.

The Climate Authority, in its final report in February 2014 on Australia’s emissions reductions targets and progress, said that we need complementary measures as well as market mechanisms.  As the Grattan Institute said in its submission to the Senate inquiry on “direct action”, without complementary measures, a market-based mechanism is likely to lead to under-investment in the low-emission technologies that could be lowest cost in the future.

Did Tony Abbott’s government cut ARENA’s budget as one of their first actions?

Yes. Tony Abbott didn’t give details of his plans before the election, but in November 2013 he cut $435 million from ARENA’s budget and deferred another $370 million allocated by Labor’s 2013 Budget.

Why would Tony Abbott cut the Australian Renewable Energy Agency’s budget?

Since Tony Abbott and Joe Hockey’s claims before the election of a “budget emergency” obviously aren’t true (and even this Government has mostly given up on them, with big new expenditures on their own pet projects), your guess is as good as ours.

But Tony Abbott has been making negative comments lately about renewable energy. He’s made negative comments before about climate science.  His own “direct action” policy makes no sense to any economic or environmental experts. Perhaps he just doesn’t want effective measures about climate change at all?