New $1 billion fund to back Aussie companies to develop low-emissions technology

A new $1 billion technology fund to drive investment in Australian companies developing emerging low-emissions technology will be established by the federal government as part of its efforts to slash greenhouse gas pollution and decarbonise the economy by 2050.

Prime Minister Scott Morrison, who put the Coalition on a campaign footing on Tuesday starting with a four-day tour of Victoria, will on Wednesday unveil a Low Emissions Technology Commercialisation Fund, which will combine $500 million of new capital for the Clean Energy Finance Corporation with $500 million from private sector investors.

The fund will target early stage technologies with the potential to close the gap to net zero with venture capital investments – not grants or loans – in Australian start-ups and innovative businesses to help them grow and scale up. The government expects to leverage $3 to $5 for every dollar invested – or up to $126 billion in total public and private investment.

Amid fierce criticism from the federal opposition and climate advocates that the government is not doing enough to meet its international obligations, Mr Morrison said the scheme was designed to fill a gap in the Australian market, where small technology-focused start-ups are often considered difficult to finance.

“Australia can become a world leader in creating low-emissions technology that is both affordable and scalable, helping get emissions down while creating jobs,” he said.

“We are backing Australian businesses by creating an environment for their successful ideas to thrive in contrast to Labor’s approach to always wanting to tax success.”

Prime Minister Scott Morrison says the $1 billion technology fund is designed to fill a gap in the Australian market.Credit:Wayne Taylor

Examples of technologies that could be supported include direct air capture and storage of carbon dioxide powered by renewable energy, soil carbon measurement technologies, livestock feed innovations with the potential to reduce methane emissions from cattle and improvements to solar panels.

However, the new policy could set up a fresh political fight as the additional funding will require new legislation. As part of the package, the government will enable the CEFC to invest in carbon capture and storage – a priority and controversial technology under the government’s technology investment road map.

Since it was established in 2012 the CEFC has committed $9.5 billion across 220 large-scale projects and 23,700 smaller-scale transactions, driving $33 billion in new investments across the economy.

Labor’s climate spokesman Chris Bowen said at the weekend he remained opposed to the government using both Australian Renewable Energy Agency and CEFC to fund carbon capture and storage because it was diverting money away from renewable energy installations.

“I’m a pragmatist. If it can work, fine. I want fewer emissions in the air and I’m pragmatic and practical about how that’s achieved,” Mr Bowen told the ABC. “[But] the government puts too much store in carbon capture and storage, [and] uses it as an excuse to avoid reducing emissions in other ways.

The government estimates the new investment could create more than 160,000 jobs by 2030, more than half of these in regional areas.

Energy and Emissions Reduction Angus Taylor said the fund would support Australian innovators to develop their intellectual property and grow their businesses in Australia.

“It will address a gap in the Australian market, where currently small, complex, technology-focussed start-ups can be considered to be too risky to finance,” he said.

He said the government would introduce legislation to establish the fund in this term of Parliament and he believed it would earn a positive return for taxpayers.

Labor leader Anthony Albanese said on Tuesday the government had been “shaken by reality”.

“This is a government that isn’t up to the task of governing Australia in this century,” Mr Albanese said. “And Scott Morrison is frozen in time while the world warms around him and where people actually uptake new technology.”

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