Scrutiny of the latest mid-year budget update papers has found that ARENA will be left financially denuded if used to fund the Million Solar Roofs rebate program as currently planned.

Sustainability advocates and members of the renewable energy sector have long expressed concern over the Coalition’s intentions vis-a-vis the Australian Renewable Energy Agency (ARENA), particularly given the ambiguity of its statements with respect to future funding levels in the lead up to the election, and Tony Abbott’s avowed skepticism about anthropogenic climate change.

Budget costings released days shy of the federal election shed some long-awaited light on the Coalition’s plans for the key clean energy body, with ARENA to be entrusted with the implementation of the new government’s long-standing rebate policy to install one million more solar systems in Australia. Uncertainty remained, however, over the impact of this new remit for ARENA’s own funding.

The release of the Environment Department’s policy document A Plan for a Cleaner Environment finally  provided some concrete details on the Coalition’s ambitious million solar rebate program. Under the Million Solar Roofs program, families which install a solar PV or solar water heater system will each obtain a rebate of $500, with a maximum of 100,000 households eligible each year over the next 10 years.

Tristan Edis of the Climate Spectator has pointed out, however,that there is no mention of the policy in the mid-year budget update (MYEFO) released in December, and that if funding for the rebates is derived from ARENA as planned, the scheme will leave the renewable energy body an essentially defunct entity devoid of meaningful fiscal clout.

The Coalition scaled back ARENA’s budget from $776.2 million to $341.3 million in November, while the MYEFO further reduced funding by $40 million, leaving the body with just $160 million in unallocated funds and established commitments to 181 projects.

Simple arithmetic dictates that the Million Solar Roofs rebate program will cost ARENA $50 million each year over the course of a decade. When deducted from the body’s uncommitted funding, that leaves it with a mere $10 million over the next three years, or a paltry $3.3 million each year. ARENA will be left completely sapped under the Coalition’s current budget plans.

Leading sustainability advocates have criticized the Coalition’s decision to make solar rebates a part of ARENA’s purview, as well as its failure to clarify the renewable energy’s role going forward.

John Connor, CEO of the Climate Institute

John Connor, CEO of the Climate Institute

“The Government urgently needs to be clear about its intentions for ARENA,” said John Connor, CEO of the Climate Institute. “It would not be smart policy to use ARENA funds to give out rebates for solar panels.”

“ARENA’s role is to help emerging technologies develop and how to optimise technology use…this is a lot more important than giving discounts to get more PV on more roofs.”