Martin Ferguson Speech CEC CEF

8/2/2019 Martin Ferguson Speech CEC CEF

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Martin Ferguson

Minister for Resources and Energy

Australia

A transcript of a speech from Martin Ferguson to the Clean Energy Council's Strategic Advisory

Forum.

We all recognise the potential clean energy can play in Australia's future energy mix.

Accordingly, the Australian Government has established a package of measures and instruments

to help realise this potential.

Central to the government's Clean Energy Future package is an ambitious target of reducing our

national emissions by 80 per cent of 2000 levels by the year 2050.

Clearly if we are to meet this target then ambitious levels of investment in our clean energy sectorwill also be required.

Id like to use todays event to clearly outline what the government is doing to provide the

necessary conditions for investment in the energy sector and the role for clean energy .

I also want to discuss the importance of managing risk in the delivery of government programs.

Specifically, if we don't carefully manage risk then we undermine the confidence that is necessary

for the clean energy sector to maintain high levels of government and community support.

The challenge of attracting investment

As you know, the Australian Government is working hard towards the introduction of a carbon price

on July 1 this year.

This is a decisive move towards lowering emissions from electricity generation and industrial

activity.

The government recognises that many companies here today face significant challenges in getting

projects off the ground.

Many companies are finding a generally risk adverse investment environment following on from the

global financial crisis.

There is also private sector reluctance to invest in clean energy technology because it needs

further refinement and greater efficiency before investors are confident of reaping sufficient returns.

The result is that the industry is confronted with a 'Catch 22' companies are reluctant to invest in

clean energy until it is technically and commercially proven, and yet it cannot be proven until

investors are willing to take the risk to invest.

All of which means that progress towards large-scale commercial demonstrations has proven

particularly slow in this environment.

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Yet there are good reasons to be optimistic about clean energy, and with more than 600 member

companies participating in the Clean Energy Council, I see clear signs of this.

The Government is creating the foundation upon which clean energy investors can build.

The carbon price and the Renewable Energy Target will be powerful mechanisms for prioritising

the development of renewable and lower emission technologies.

And through bodies such as the Australian Centre for Renewable Energy (ACRE) and the

Australian Solar Institute (ASI), the government has already been investing heavily in driving down

the costs of renewables and driving technological improvements.

This investment will continue from July 1 this year, with the establishment of the Australian

Renewable Energy Agency (ARENA), consisting of an independent board and CEO with

responsibility for administering $3.2 billion of consolidated government funding.

I will soon appoint the inaugural ARENA board, whose members will draw on skills in the

development of technology, commercialisation, business investment and governance.

A chief executive officer of ARENA will follow.

Building on ARENA's work will be the establishment of the $10 billion Clean Energy Finance

Corporation (CEFC).

An expert panel is finalising how the corporation should operate but its clear intent is to identify

gaps in the market in order to finance commercially competitive large scale clean energy

developments.

Once the expert panel finishes its work, the government will be in a position to introduce legislation

into the Parliament.

Collectively, measures in the Clean Energy Future package provide the groundwork the bedrock

to delivering new investment in clean energy.

Having established this foundation, it will now be up to industry to work within this framework to

deliver reductions in carbon emissions and to lead a technological transformation.

Building confidence and managing risk

Yet there are two important aspects of the Clean Energy Future package that cannot be quantified

by money.

Namely, how do we as a government and you as an industry manage risk and build confidence in

clean energy technology?

How we manage risk in the allocation of taxpayer funding and the administration of programs will

be crucial to the success of ARENA, the CEFC and the sector as a whole.

Public confidence is critical to continuing government support.

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With this in mind, it is vital ARENA and the CEFC are run with integrity and support robust and

sensible clean energy developments.

Industry members must also respect the independence of these new agencies.

In my view a lot of confidence in the industry can be undermined by unsuccessful grant applicants

liberally criticising the government's decision not to allocate money to them.

People are entitled to be critical of government programs they have participated in, particularly

where it leads to improvements in how we administer these programs.

But these criticisms ought to be delivered in the appropriate forums.

In terms of the direction of one particularly important clean energy program, Solar Flagships,

ARENA will assume responsibility for it from July 1 this year.

That means it will not be a decision for the government as to whether a second round of Solar

Flagships funding occurs.

Rather, it will be for ARENA to determine, through the independent board's own funding strategy,

what further support exists for large-scale solar projects.

I want to be clear that ARENA and the CEFC will be independent not only from the government

but also from short-sighted misinformation campaigns run by interest groups that think they alone

know the answer to Australia's energy security challenges.

Just recently we have seen a campaign, using grassroots environmental groups across Australia,to pressure the CEFC into funding 2000 MW of large scale solar.

This kind of misinformation campaign ignores and misrepresents the governments substantial

commitment to large-scale solar, not least through the Flagships program but also through the

Australian Solar Institute.

And I say to the energy autodidacts making these kinds of unreasonable calls: if you want the

community to continue their significant investment in renewable energy then you should respect

the independence and expertise of ARENA and the CEFC.

Indeed, from July 1 it simply won't be credible for these groups and their political bedfellows to

construct conspiracy theories about the government deliberately undermining the administration of

renewable energy programs.

Building confidence in the industry means that we need to honestly engage with the broader

community about the challenges and benefits of developing the clean energy industry.

We are committed to addressing the challenges of delivering clean energy which is a long way

removed from the cheap criticisms of minority party politicians more interested in generating

donations and recruiting members.

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When you lay out the Clean Energy Future package a $23 a tonne initial carbon price, $17 billion

of investment in clean energy, and a $20 billion cross-subsidy through the RET it becomes pretty

clear that support for clean energy is at historically high levels.

I think all of you will appreciate that this significant support, administered with independence and

integrity, will go some way towards reducing the risk in investing in these technologies and buildingcommunity confidence.

But the government cannot do this alone.

The clean energy industry needs to stand on its own two feet.

New options for clean energy technology must continue to face market forces so that only

commercially sustainable business models are developed.

There are two good reasons why we leave it to the market to determine the best technologies for

Australia's energy mix:

-- Firstly, it selects which technologies are the most cost effective, which is important for

maintaining our economic competitiveness whilst minimising cost of living pressures on

households; and

-- Secondly, because markets test how a technology operates in practice and then improves their

utility through further research and development.

That's why it is irrational for governments to pick winners and promote one technology over

another.

We will support demonstration projects that familiarise investors with new technologies, and the

private sector can then develop the successful business models.

The Renewable Energy Target

Turning now to an issue I know is on the minds of many in the renewable energy sector the

future of the bipartisan Renewable Energy Target.

To date, the RET has been successful in bringing forward renewable energy projects, particularly inwind and household solar PV.

As you would be aware, a legislated review of the RET is due later this year.

I am aware that many of you here today are advocating for no changes to be made to the RET.

I recognise the importance of investor certainty to this sector and the implications changes could

have in terms of investor confidence.

However, it is importantly to remember that, like the institutional arrangements I have outlined

earlier, this will be an independent review conducted by the Climate Change Authority.

I encourage you to make your views known to the Authority.

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Energy White Paper

Just as I also know a lot of you have shared your views on the Draft Energy White Paper.

Since the draft paper was released last year, a series of consultations have occurred in state and

territory capitals, and the government has received a large number of submissions from industry

and bodies like the Clean Energy Council.

Consistent with our Clean Energy Future package, one of the four priority areas indentified in the

draft is accelerating clean energy outcomes.

As the draft White Paper highlights, and as I have emphasised today, this will require ongoing

support for research and development, as well as removing barriers to new investment and

identifying market gaps that interfere with the uptake of clean energy.

An exciting period

In closing, ladies and gentlemen, building confidence in government support and private sector

investment in clean energy is crucial to its commercialisation in Australia.

In return, industry must work with government to carefully manage the risks involved in large-scale

public investment in clean energy programs.

With the government lowering the risks and increasing incentives for investment, we are on the

cusp of an exciting period of activity.

Ultimately, under the Clean Energy Future package, it will be up to industry to get out there andtake advantage of this vastly improving environment, to promote your skills and technologies and

to attract the investment needed to make your vision a reality.

I wish you the best of luck in this endeavour.

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Martin Ferguson Speech CEC CEF