Renewable energy agency warns companies of potential cuts in budget

Companies planning to apply for grants from the Australian Renewable Energy Agency have been warned there is a substantial risk the organisation could suffer even bigger funding cuts in the May budget. ARENA took the unusual step Wednesday of writing to “stakeholders” to advise that “given the fiscal outlook and media speculation concerning the forthcoming budget on 13 May 2014, the future of ARENA’s funding is unclear.”ARENA’s chief executive Ivor Frischknecht told Guardian Australia 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. ARENA was set up as part of the former government’s carbon pricing scheme with a budget of $3bn. Unlike most of the scheme it was originally backed by the 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 carbon pricing legislation. 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.

But 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.

Greens 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 Wednesday’s 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.

Frischknecht said ARENA had already funded 180 projects and would soon face a decision as to whether or not to make grants which would need 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.

“We could soon be in a situation where the government’s announced funding is different from the funding we have been provided under our act,” he said. “Under the legislation we have an obligation to proceed according to our objectives.”

“Dear Stakeholder,” Frischknecht wrote in the letter. “The Australian Renewable Energy Agency (ARENA) was established in July 2012 to improve the cost competitiveness and increase the amount of renewable energy used in Australia.

“The Australian Renewable Energy Agency Act 2011 determines ARENA’s funding envelope and profile; however, this legislation can be changed by the Australian Parliament. Given the fiscal outlook and media speculation concerning the forthcoming Budget on 13 May 2014, the future of ARENA’s funding is unclear.

Fonte: The Guardian