The Australian Government has successfully allowed the Australian Renewable Energy Agency (ARENA) to support fossil fuel technologies. 

The changes will see ARENA fund measures outlined in the 2020-21 Federal Budget including the Future Fuels Fund, Industrial Energy Transformation Studies Program, Regional Australia Microgrids Pilot Program and the Freight Efficiency Assistance Grants and the Freight Energy Productivity Trial Program.

Opposition from the Labor and Greens parties failed to disallow the passage of new regulations in the Senate. Opponents to the bill were especially concerned about a section that allows ARENA to fund blue hydrogen (which is produced using fossil fuels) and carbon capture and storage projects (CCS) - which tend to be highly expensive but show little ability to negate carbon emissions.

Under the regulations, ARENA will support ‘low emission technologies’ identified in the first Low Emissions Technology Statement including clean hydrogen, energy storage, low emissions aluminium and steel, carbon capture and storage and soil carbon.

Australia’s main lobby for the oil and gas industry, the Australian Petroleum Production & Exploration Association (APPEA), has described the passing of the regulations as a “win for common sense”.

“All technology, including hydrogen and carbon capture and storage, should be on the table to help reduce emissions. Supporting these common sense measures demonstrates support for practical steps to reduce emissions and help the environment,” APPEA chief executive Andrew McConville said.

“The global oil and gas industry is leading the world in the practical deployment of CCS and hydrogen. In Australia, the oil and gas industry has been at the leading edge of researching and deploying CCS and greenhouse gas storage technologies.”

Mr McConville also said natural gas will help establish a large-scale hydrogen industry in Australia.

“Australia’s LNG export success means the Australian upstream oil and gas industry has the technology, expertise, commercial and trade relationships to make, in particular, hydrogen exports a reality,” he said.

“Developing a local hydrogen industry could enable lower emissions both in Australia and internationally, reduce energy costs, deliver energy security, together with delivering new employment and manufacturing opportunities.”

The Climate Council says the regulations will make ARENA “prop up fossil fuels using taxpayer money”.

“The nation’s renewable energy agency should not be spending money earmarked for renewables on CCS technology. If any investment is made, it should be paid for by the fossil fuel industry. CCS is expensive, unlikely to be effective, and the industry has always over-promised and under-delivered,” says Climate Councillor and former ARENA chair, Greg Bourne.

“Gas is also a fossil fuel that powerfully drives climate change, and hydrogen from gas has no place in Australia’s zero emissions energy future. Only hydrogen made with renewable energy is worth investing in, as customers demand ‘green hydrogen’ in a decarbonising global economy.”