Prime Minister Scott Morrison unveiled on Wednesday that Australia is planning to establish a $1 billion Australian dollars ($740 million USD) fund to back low carbon technologies. The fund will be supported by the federal government with $500 million Australian dollars ($368 million USD) and the rest will be matched by private investors.
The financing will be used to support nascent green energy companies in the stage where they are considered too small and risky to secure private backing. The new fund will be administered by the Clean Energy Finance Corporation – the Australian Government-owned Green Bank, established to facilitate financing of the clean energy sector.
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Some of the low carbon technologies that are targeted to receive funding are direct air capture, carbon capture and permanent storage, materials or techniques to reduce emissions in the production of steel and aluminium, soil carbon measurement, livestock feed technologies, and improvements to solar panels and batteries.
“We’re interested in any technology that can commercially bring down emissions…We don’t want to pick and choose a technology on some kind of ideological basis – anything that can work. It’s a sensible proposal,” said Energy Minister Angus Taylor.
The Australian government also anticipates to earn a positive return of between $3 and $5 for every dollar spent and hopes the clean energy investment will create more than 160,000 jobs by 2030.
Prime Minister Morrison also expressed that the private sector, not the government, was key to decarbonizing the economy. “We believe climate change will ultimately be solved by can-do capitalism … (not) governments seeking to control people’s lives,” he said.
Changes in legislation are also needed to allow the fund to support carbon capture and storage technologies. The current Clean Energy Finance Corporation Act prohibits the agency from investing in carbon capture and storage as it has been criticized as unproven and uneconomical.
Australia wants to introduce legislation for its low carbon technologies fund before the election due by May 2022, which will challenge Labor and crossbenchers to back the changes.
The $740 million low carbon technologies fund will allow the country to deliver the necessary emissions reductions and support promising tech startups that need investment to take off their climate change solutions.
Even though carbon capture is under scrutiny for being a diversion of money from renewable energy and prolonging the life of fossil fuels, the government finds it critical to support the economy on its decarbonization path.