Federal subsidies for renewables hit $29 billion over past 10 years
Renewable energy in Australia has grown significantly, supplying 39% of the National Electricity Market (NEM) by 2023, up from less than 1% in 2000. This growth is often attributed to technological advancements and private investments, but substantial government subsidies have been crucial. The federal government has allocated over $22 billion to boost renewables in the 2024-25 budget, aiming for 82% renewable electricity by 2030.
The Renewable Energy Target (RET) is a key federal initiative to reduce greenhouse gas emissions and promote renewable energy. It includes the Large-scale Renewable Energy Target (LRET) and the Small-scale Renewable Energy Scheme (SRES), both mandating the purchase of certificates representing renewable energy generation. From 2013-14 to 2022-23, subsidies under the RET averaged $2.6 billion annually, making it the largest source of support for renewables.
In addition to the RET, the government provides direct financial support through grants and concessional loans. The Australian Renewable Energy Agency (ARENA) and the Clean Energy Finance Corporation (CEFC) are pivotal in this effort. ARENA has committed $2.25 billion to 663 projects since 2012, while CEFC has provided $13.7 billion in debt and equity funding. These subsidies, including concessional loans and equity investments, are designed to stimulate innovation and investment in renewable energy.
Despite $29 billion in subsidies over the past decade, the expected growth in renewable energy necessary to meet Australia's net zero targets has not materialized. Investment in large-scale renewable projects has declined, prompting the introduction of the Capacity Investment Scheme in late 2023. This scheme aims to provide financial support through long-term underwriting agreements, targeting 32 GW of new renewable capacity by 2030. However, the lack of transparency regarding the scheme’s financial details raises concerns about its economic impact.
The paper calls for a critical examination of the efficacy and efficiency of current subsidy frameworks. Ensuring transparency and effective allocation of public resources is crucial as Australia continues to pursue ambitious renewable energy targets.
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In summary, while government subsidies have significantly boosted renewable energy in Australia, the decline in investment levels and the introduction of new subsidy schemes highlight ongoing challenges. A thorough reassessment of subsidy frameworks is necessary to support Australia's energy transition effectively.
Michael Wu is a Senior Policy Analyst in energy research at the Centre for Independent Studies.
Associate Professor Personal and Professional Development Domain, University of Notre Dame Australia - Posts on health, medical education, climate action. Views are my own, not employer.
5 个月Please correct me here but currently about $13b subsidies for the fossil fuel industry. How about counting that cost? Have you counted the cost of business as usual and more uninhabitable towns in Australia, the natural disasters, the health costs etc of climate inaction? The push for renewables is based on a rational policy of saving the planet for future generations. Does the CIS understand that?
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5 个月My 2010 solar panel system with 170w panels needed to be replaced in 2022 12 year lifecycle. It’s was free the government paid for it.
Marine Engineer | Captain | Maritime Trainer | Propulsion Physicist
5 个月All subsidies for renewables need to end to allow all energy mixes to compete from the same level playing field, let the market decide which emission free power generating sources consumers wish to use.