Australia to invest AU$1.1bn on emissions reduction

Out-Law News | 29 Apr 2021 | 5:34 am | 1 min. read

The state government of South Australia and the Australian federal government have signed an AU$1.08 billion ($851m) state energy and emission reduction agreement.

The Commonwealth government will contribute AU$660m ($511m) and South Australia government will provide AU$422m ($326m), according to a statement issued by the prime minister’s office.

Under the agreement, the two governments will take initiatives to create additional dispatchable generation to provide affordable and reliable electricity, unlock gas supplies to prevent market shortages, launch a new interconnector between South Australia and New South Wales, and invest in major emissions reduction projects.

The deal aims at delivering an additional 50 petajoules of gas each year by end of 2023 and an expansion target of 80 petajoules each year by 2030, which it is said will increase reliable and affordable gas supplies to customers in South Australia and the broader East Coast gas market.

AU$400m ($309m) in Commonwealth funding will be invested in areas such as carbon capture and storage, electric vehicles and hydrogen projects in South Australia.

The deal includes joint support of up to AU$100m ($78m) for EnergyConnect project through a 50/50 joint offtake of key early works to facilitate the flow of electricity between South Australia and New South Wales.

Additionally, it also includes up to AU110m ($86m) in discounted financing for solar thermal and other storage projects in South Australia.

The South Australian government set goals to reduce South Australia’s greenhouse gas emissions by over 50% below 2005 levels by 2030, and to achieve net zero emissions by 2050.

Eliza Danby of Pinsent Masons, the law firm behind Out-Law, said: “The statement was issued just days before the prime minister was due to attend the climate summit of 40 world leaders convened by US president Joe Biden. The deal has been criticised for failing to more specifically address or set emissions targets.”

“The investment is consistent with the Morrison government’s promise of a ‘gas-led recovery’ from the coronavirus, which the government says is the best way to transition from coal. Environmental groups are increasingly opposed to gas, however, and consider investment in infrastructure for renewable energy sources should be preferred,” said Danby. 

“At the virtual climate summit, US committed to cut emissions in half by the end of this decade. Other countries like Canada and the UK also announced more ambitious emissions targets. In Australia’s address to the virtual climate summit, the prime minister avoided putting a timeframe on when it would achieve net zero, or otherwise improve on its pledge to achieve a 26% to 28% cut below 2005 levels by 2030. It will be interesting to see whether Australia will increase its ambition on emissions targets before the Glasgow climate talks which will take place later this year,” she said.