Prime Minister Tony Abbot has flagged massive cuts to funding for renewable energy which the sector's peak body says could spur an exodus of companies overseas.

The Clean Energy Council (CCEC), Australia’s peak body for the renewable energy sector, said that the Abbot government’s proposed legislation for the repeal of the carbon tax contains a provision which will reduce funding for the Australian Renewable Energy Agency (ARENA) by $435 million over the next three years.

Kane Thornton

Kane Thornton

In an official statement Kane Thornton, CEC’s deputy chief executive, said that the cuts to ARENA funding threaten to roll back the tremendous progressive achieved by Australia’s clean energy sector over recent years, in areas including large-scale solar, marine, geothermal and energy storage.

“It is disappointing that the agency is now facing a significant budget reduction,” Thornton said.

According to Thornton the slated changes to funding for ARENA could spur many renewable energy companies to relocate abroad, to jurisdictions where government support for renewable energy is more clear-cut and consistent.

“This unstable policy environment has had a clear impact on major technology innovators, developers and financiers, who will understandably be questioning their future in Australia,” said Thornton.

Long standing concerns amongst renewable energy players about the impact of a Coalition government on the sector would appear to be vindicated by the proposed funding cuts.

Members of industry expressed trepidation about a Coalition victory in the run up to the Federal election, with uncertainty surrounding the fate of the renewable energy target (RET) bringing many large-scale renewable energy projects to a stand-still.

The proposed cuts for renewable energy are in line with the Abbot government’s general tenor on issues of climate change and the environment.

Abbot recently decided to refrain from sending any ministers to the United Nations climate change negotiations being held in Warsaw, opting instead to dispatch Australian climate change ambassador Justin Lee.

While Justin Lee is a veteran diplomat, many have interpreted the decision as a further sign of the Abbot government’s indifferent or skeptical attitude towards climate change, and the scant likelihood of firm support for renewable energy during the Coalition’s current tenure in office.