Australian Renewable Energy Agency saved but with reduced funding – experts react

Michael Hopkin, The Conversation

The Australian Renewable Energy Agency (ARENA) has been granted a funding lifeline of A$800 million over the next five years, after the federal government and opposition came to an agreement that will save the agency.

ARENA had faced being wound down as a result of the government’s earlier proposal to strip A$1.3 billion from the agency. This was part of a wider package of measures designed to save the federal budget more than A$6 billion.

Renewable energy researchers had reacted with dismay to that proposal. An open letter to the government in defence of the agency attracted 190 signatures.

Below, our experts react to the news.

Nicky Ison, Senior Research Consultant, Institute for Sustainable Futures, University of Technology Sydney

Today the Coalition government and the Labor Party struck a deal to:

  • slash half-a-billion dollars from the Australian Renewable Energy Agency; and

  • save the Australian Renewable Energy Agency (ARENA).

These statements seem like a contradiction, but both are true. However, it is also true that the need to save ARENA exists because of the Coalition government’s efforts over the past three years to dismantle Australia’s renewable energy policy.

If the benchmark is that we keep our existing renewable energy institutions, today was a win. However, if the benchmark is that we have institutions and policies that have sufficient funding and scope to tackle the policy challenges of climate change, our changing energy system and driving innovation, then today was a loss.

Andrew Blakers, Professor of Engineering, Australian National University

The Australian research community is pleased that the government’s proposal to debilitate ARENA by removing A$1.3 billion and ending its granting function will not go ahead. At the same time, we are disappointed that yet again ARENA is subject to huge funding cuts.

The fastest and surest way to reduce greenhouse gas emissions is to accelerate the introduction of renewable energy into the electricity system. ARENA has focused heavily in this area (among others), covering the full gamut from support for early-stage research, through grants to young renewable energy companies, to acceleration of deployment of large-scale solar photovoltaic systems.

ARENA will need to heavily prune its activities to cope with a A$500 million budget cut. We look forward to restoration of ARENA funding, and to a concerted effort at the national level to move rapidly to 50-100% renewable electricity.

Tony Wood, Energy Program Director, Grattan Institute

The silver lining amid the cloud of the political compromise on ARENA funding represents a welcome return to the art of the possible. Of course it is a pity that ARENA has been cut again, given that among Kevin Rudd’s climate change children this one had bipartisan support, at least until the 2014 budget.

Grant funding to drive down the costs of renewable technologies with real potential has been ARENA’s model and the funds now secured will allow this to continue. The next challenge is to create an integrated model that connects grant funding with the recently announced Clean Energy Innovation Fund, which will provide debt and equity funding to emerging renewable technologies, and the Clean Energy Finance Corporation’s role of developing innovative financial models to
commercialise clean energy.

Living for another day is never a bad outcome.

The Conversation

Michael Hopkin, Environment + Energy Editor, The Conversation

This article was originally published on The Conversation. Read the original article.


Risky business: how companies are getting smart about climate change

Tayanah O’Donnell, University of Canberra

The divestment movement is gaining momentum – and is just one of the emerging risks from climate change that businesses face. The Paris climate agreement not only signalled social change but also sent the market a strong signal to move away from carbon-intensive investment.

The divestment movement may be seen by some businesses invested in fossil fuels as a risk. But it is not the only force shaping how companies address climate change. So, what are some of the other factors in rethinking climate risk?

Evolving social norms

The Paris Agreement recently gained more steam with ratification by the United States and China. This signalled the intent of these leading global economies to commit to helping to limit global warming to 2℃. Achieving this will require a transition to a low-carbon or decarbonised economy. China, for example, has been aware of how important this is since 2008.

Since the launch of the Low Carbon Economy Index by PricewaterhouseCoopers in 2009, companies have been better equipped to understand and measure private sector climate risk. This has flow-on effects to just about all human behaviours, and has had a particularly significant impact on private equity investments.

In particular, pension funds and the insurance sector are among the leading sectors in considering future climate risk within and across their portfolios. This is facilitating evolving social norms around climate change. These changes have long been recognised as critical for climate change mitigation and adaptation.

The role of law

Liability risk remains at the forefront in current trends. The acceptance of legal responsibility demonstrated by global leaders’ ratification of the Paris Agreement is all the more interesting when we consider recent developments in climate litigation.

Some argue that, in future, there will be parallels between tobacco and asbestos tort litigation and climate litigation, given that the consequences of a changing climate have been well known for decades, and widely cited by scholars and practitioners alike. It is therefore difficult for a legal entity to claim ignorance of climate risks.

Internationally, a decision in 2015 held Dutch public officials legally accountable in reducing emissions. In the United States, instances of litigation have increasingly focused on companies’ disclosure of known future climate risk. Pressure has also been building on Exxon Mobil as evidence emerges that the company may have lied to shareholders about this known risk.

In Australia, some recent interesting developments in coastal planning law are contributing to a more coherent body of climate law.

Fiduciary duties are an important aspect of rethinking climate risk. In law, they can require companies to disclose future risk. A failure to disclose on “the business strategies, and prospects for future financial years” under the Corporations Act may be considered a breach of the law and subject to ASIC enquiry.

While some regulatory guides exist for how to achieve general compliance, recent submissions to the Senate inquiry into carbon risk disclosure have argued that specific regulatory guidance for future climate risk is needed. Arguably, disclosing future risks includes future climate risks to assets and company investments.

The courts are moving where regulation and policy may be slower to act. In April 2016, the New South Wales Supreme Court relaxed the hurdles for shareholders to bring action against a company in a case where an insurer, HIH, led the market to believe it was trading more profitably and had greater net assets than was the case. This artificially inflated the HIH share price, resulting in shareholders suffering a loss because they bought overpriced shares. This case is important for shareholder class actions because it is the first time the court has accepted the principle of indirect market based causation.

In a similar way, a failure to disclose known future climate risk in required disclosure documents could potentially amount to misleading and deceptive conduct. This is particularly the case where companies may fail to disclose their asset exposure to climate change impacts.

Technological risk

The World Economic Forum’s Global Risks Report 2016 noted that the number-one risk to the global economy was a failure to mitigate and adapt to climate change.

Some argue that technological responses, including carbon capture and storage, continue to require research and development input. Others suggest that investing in renewable energy, particularly for developing countries, will lead to more sustainable global outcomes including, importantly, social equity.

While mitigation technologies continue to compete for long-term success, investors need to be increasingly aware of where and how they prioritise their mitigation efforts.

Where to now for Australian companies?

The 2016 carbon risk disclosure inquiry was due to publish its report in June 2016 but lapsed due to the federal election. This Senate inquiry ought to recommence as a matter of priority.

Additional legal mechanisms that will have flow-on effects for evolving social norms and for rethinking climate risk could include legislative change to require the inclusion of reporting asset exposure risks, under the National Greenhouse and Energy Reporting Act.

Climate risk, the transition to a low-carbon economy, evolving social norms and the continued growth of climate law evidence a need to ensure coherence across economic, social and governance frameworks.

The Conversation

Tayanah O’Donnell, Research Fellow, University of Canberra

This article was originally published on The Conversation. Read the original article.

Climate action is the key to Australia achieving the Sustainable Development Goals

Nina Lansbury Hall, The University of Queensland; Dani J. Barrington, The University of Queensland, and Russell Richards, The University of Queensland

Australia will join the 71st United Nations General Assembly in New York this week. Some of the discussion will focus on progressing the 17 Sustainable Development Goals (SDGs), as agreed at the UN last year.

Australia is a signatory to the goals, but it is difficult to know where to begin, as the goals are further broken down into 169 targets. These range from eradicating extreme poverty to developing measurements of progress on sustainable development.

But new research from the University of Queensland reveals that actions on climate change (SDG 13) and global partnerships (SDG 17) are likely to influence all other efforts by Australia to achieve the other SDGs.

Australia’s role in sustainable development

The SDGs form part of the UN development agenda, Transforming Our World: The 2030 Agenda for Sustainable Development, released in September 2015.

Unlike the preceding UN Millennium Development Goals, which ran until 2015, the SDGs apply to all countries and citizens to create a common outlook, irrespective of the country’s level of development. The new goals are to be achieved by 2030.

The Australian government has emphasised the role of the SDGs in reinforcing economic growth, development and investment in the Indo-Pacific region, and has assigned the SDGs to the portfolios of Foreign Affairs and Trade (DFAT), and Environment.

Australia’s support for the SDGs is laudable. But the focus on international trade and investment, with responsibilities placed in only two portfolios, limits Australia’s potential for significant social, economic and environmental improvement on the SDGs at home and abroad.

But where do we start?

Part of the challenge of the SDGs is their complexity and the way they link together. This may explain Australia’s limited approach to date.

To help navigate this web of goals, we mapped the most influential goals. We found the goals that affect all the others are climate action (SDG 13) and global partnerships (SDG 17), as shown in the figure below. Without these, the other goals are very difficult to attain.

Proposed relationships between 17 UN Sustainable Development Targets
Global Change Institute, UQ

For example, the increased intensity of extreme weather events due to climate change will likely make it harder to achieve clean drinking water under SDG 6. In droughts, less water is available, and in floods, the water is often contaminated. Both events result in the proliferation of diseases.

These findings also identified that the goal for health and wellbeing (SDG 3) is the ultimate goal: every other SDG contributes towards this outcome. For example, a woman who has given birth to a daughter cannot achieve optimal physical, social and mental wellbeing for herself and her child without proper nutrition (SDG 2), access to clean water and sanitation (SDG 6), gender equality (SDG 5) and adequate financial resources (SDG 1).

We also found that within SDG 6, implementing the integrated water resources management target (6.5) enables the other SDG 6 targets to be met. Australia’s Murray-Darling Basin is a good example of this type of approach. There, states negotiated across borders to reduce salinity, minimise extractions and improve water quality.

Can we do it?

Linking together these goals will require high-level government co-ordination beyond merely the DFAT and environment portfolios.

Our policy analysis found that no single portfolio can take responsibility for the entire set of 17 SDGs – and that all 21 government departments have more than one SDG relevant to their responsibilities.

Australia’s ability to progress the SDGs in Australia and overseas is likely to be more attainable with the involvement and cross-collaboration of other portfolios.

Damaged and polluted waterways affect the ability to attain the Sustainable Development Goal for water and sanitation (SDG 6).
Sanjog Chakraborty

The UN SDGs are an opportunity for Australia’s efforts towards sustainable development to be recognised on a global stage. To achieve progress on this complex agenda we have to understand that climate action and global partnerships are crucial to sustainable development and ultimately to health and wellbeing.

The Conversation

Nina Lansbury Hall, Sustainable Water Program Manager, Global Change Institute, The University of Queensland; Dani J. Barrington, Lecturer, Global Change Institute, Honorary Fellow, School of Public Health, The University of Queensland, and Russell Richards, , The University of Queensland

This article was originally published on The Conversation. Read the original article.