Federal Budget 2021-22

The critical point for Australia’s energy future

Jannaya James
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To say that Australia’s history with energy policy is complex is an understatement.

Highlights from the 2021-22 Federal Budget

  • $1.8b over 10 years to incentivise private investment in technologies, grow new export industries, create jobs and reduce emissions:
    • $1.2b over 10 years to create a technology co-investment facility
    • $279.9m over 10 years to establish the below baseline crediting mechanism
    • $26.4m to support Australian businesses and supply chains with more energy efficient industrial equipment and business practices
    • $10.4m to expand the range of certifications offered by the Climate Active program
  • $540m to boost domestic development of hydrogen production and carbon capture and storage
  • $566m over 8 years towards international partnerships for new energy technologies
  • $215.4m to support investment in new dispatchable generation
  • $58.6m to support gas projects
  • $50.7m to establish a new fuel security framework
  • $30m for renewable energy projects in the NT


With generation and distribution governed by the States and Territories, it’s little wonder we have a hodge podge of networks and energy generation mixes depending on where you live.

As we know with any legacy structure, change can be difficult and maddeningly slow moving. Now, established organisations will often acquire new businesses to enhance their legacy systems. To a degree we have seen similar played out in various ways by different Governments – perhaps the most effective and interesting from a business perspective are the co-investments, funding and incentives for new and alternative energy generators to set up and develop in Australia. This has all been happening against the backdrop of the changing composition of our generation network.

Despite the timing, the pace of investment and change has been slow. Certainly not fast enough for a growing consumer base demanding alternatives to coal-fired power, but wanting better stability than currently on offer from existing renewables.

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Federal Budget 2021-22
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However, the tide is turning for energy investment. In September last year the Government announced a whole slew of initiatives as part of “Energy Week”. For instance, there is the commitment for long-term funding and expanded focus for ARENA to the order of about $1.6 billion dollars, as well as the promise to expand the Clean Energy Finance Corporation’s mandate to invest in new energy technologies.

This has since been complemented by the Clean Energy and Recycling roadmap under the Modern Manufacturing Initiative. When you read the milestones in the roadmap, you are smacked in the face with just how essential energy will be to ensuring the viability of modern manufacturing in Australia. Increased production is energy intensive. Data and automation is energy intensive. Feeding domestic and international supply chains in energy intensive.
Milestones here

We are reaching a critical point where a solution to affordable, sustainable and clean energy generation must be found or all the best laid plans will come to nought.

The Government is placing their bets in a technological solution – three weeks before the 2021 Budget is announced, the Prime Minister revealed more detail around how we will reach net zero by 2050. Off the agenda (at least at the moment) is an emissions related or “carbon” tax. Instead, the onus is on a transformation of our energy mix over the next 30 years and the commercialisation of low emissions technology.

Private companies – particularly from the six priority sectors under the MMI – are encouraged to invest in this space. Fortescue Metals Group is investigating in green hydrogen. BHP is investing in carbon capture and storage, as well as introducing emission-free surface mining vehicles. AGL and Idemitsu Australia Resources have an early study to transform a former coal mine in the upper Hunter into a pumped hydro storage facility. The Government’s message: more of this, please. This certainly aligns with the broader ethos behind the modern manufacturing initiative.

I, for one, am optimistic. Our R&D and development capability in Australia is as good as anywhere else in the world. With a focus on improving the competitiveness of the heavy energy users of Australia, this creates an opportunity for clean tech companies to develop and commercialise technology that will really make Australia much more competitive on a global scale. The global focus will keep ensure energy – and low emissions energy – will remain on the agenda. For instance, the Prime Minister is expected to outline more around our short and medium term emissions targets around the Climate Change Conference in Glasgow in November of this year.

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Federal Budget 2021-22
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We have a perfect opportunity now to have a manufacturing-led recovery and that provides huge opportunities for emerging clean energy technology that will reduce cost to our manufacturing and other sectors, and make these economy stimulating sectors increasingly competitive. Things like load management technology, or behind the metre energy solutions can really increase the competitiveness of our manufacturing sector, as well as having the benefit of reducing our emissions and meeting our clean energy targets in the longer-term.

The one caveat, concern, barrier – whatever you want to call it – is the usual short-terminism of Government policy. The current investment, the milestones, the clear focus and vision for the future is welcome and a critically important step for the energy sector. However, a shift of this monumental scale – both to increase our manufacturing capabilities, but also to fundamentally reimagine our energy mix – will take longer than the decade outlined in the roadmaps. Consistent and bipartisan national policy and investment from both Federal and State is required – in this Budget, and the Budgets to come.

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