The new package will include more than $300 million towards pilot carbon capture projects, grants for businesses for hydrogen, electric and bio-fuelled vehicles, new microgrids in regional and remote communities and a sector-specific grant program for hotels to increase energy productivity.
Mr Morrison said solar panels and wind farms were now “clearly commercially viable” and the future deployment of mature technologies would primarily be driven by private sector investment.
“The government will now focus its efforts on the next challenge: unlocking new technologies across the economy to help drive down costs, create jobs, improve reliability and reduce emissions,” Mr Morrison said.
“This will support our traditional industries – manufacturing, agriculture, transport – while positioning our economy for the future.”
He said the investments would create jobs and bring new technologies into play, cutting emissions while driving down prices for homes and businesses.
Under current laws the CEFC can only invest in clean energy technologies and ARENA can only support renewable energy.
Mr Morrison said ARENA would be guaranteed baseline funding of $1.427 billion over 10 years in next month’s Budget with new legislation for it to be supplemented with a portion of the $2 billion Climate Solutions Fund.
It will also become a clean technology grants hub for future initiatives, with $193.4 million provided to deploy targeted programs.
The inclusion of carbon capture and storage technology in the investment plan will annoy some in the environmental lobby, who point to more than $1.3 billion in funding from Australian governments without a single commercial CCS site for coal and only one for gas.
The International Energy Agency has endorsed carbon capture along with hydrogen and energy storage as critical to global efforts to reduce emissions as economies recover from COVID-19.
While the new funding is likely to be welcomed by industry, the government has been under attack from Labor and the Greens for years for not implementing ambitious clean energy targets, a market-based emissions reductions scheme or more comprehensive energy policies to meet its international climate obligations.
But Energy and Emissions Reduction Minister Angus Taylor said getting the next generation of energy technologies right would not only help to keep prices low and the lights on, but would grow job and reduce emissions.
“We will reduce the cost of new and emerging technologies, not raise the cost of existing technologies or layer in new costs to consumers and businesses through mandated targets or subsidies,” Mr Taylor said.
“The government recognises the strong growth in emerging energy technologies that will play a role in Australia’s energy mix into the future. We need to get the balance right and our investment to re-energise ARENA will deliver that.”
He said Australia beat its Kyoto-era targets by up to 430 million tonnes and the government was “on track to meet and beat” its 2030 Paris target.
“As a nation, Australia has done far better than similar export-oriented countries with emissions now 14.3 per cent below 2005 levels,” he said.
The package is a key element of the government’s first Low Emissions Technology Statement under the Technology Investment Roadmap process, which will be released in coming weeks.
Rob Harris is the National Affairs Editor for The Sydney Morning Herald and The Age, based at Parliament House in Canberra