2024 Federal Budget Response
The federal government last night handed down the annual budget. Beyond the headline announcements of cost-of-living initiatives (including electricity rebates) and the Stage 3 tax cuts, the budget was a tale of two halves: a strong investment in the clean energy transition, but a devastating blow for nature conservation and repair.
A centrepiece of the budget was the detail provided to the Future Made in Australia package; a $22.7bn set of initiatives aimed at transforming Australia into a ‘renewable energy superpower’, as well as boosting Australia’s local manufacturing industry. Key planks of this strategy include:
$7bn of critical minerals Productive Tax Credits
$3.2bn extra for Australian Renewable Energy Agency (ARENA) technology commercialisation
$8bn for Hydrogen initiatives, including $1.3bn extra for Hydrogen Headstart programme and $6.7bn Hydrogen Production Tax incentive.
Other smaller programmes such as $209m to set up Net Zero Economy Authority, $168m to prioritise approval process for renewable projects, and $500m for Battery Breakthrough Initiative.
ELMRI applauds this significant national investment in the clean energy industry and technologies. This appears to be the start of the pivot in Australia’s economic and energy strategies away from fossil fuels and towards renewable energy sources, which is desperately required if we are to hit our national goal of net-zero by 2050 and limit the catastrophic effects of climate change over coming decades.
While it can be hard to predict the exact effect of government policies with a multi-year time horizon, it is clear these initiatives will provide a powerful market signal that will spur growth in renewable and clean energy development and throughout the value chain. As experienced asset manager with a long-term focus on these sectors across both our ANZ and Global funds (through holdings including Ørsted, Vestas, Calix, and Infratil), our expertise and existing knowledge will uniquely position ELMRI to seize the opportunities presented by the clean energy transition to deliver value to our investors.
Despite these positive developments, ELMRI is severely disappointed by the lack of investment in conservation initiatives that can address the immediate crisis of biodiversity loss. While government summaries point to threadbare investment in this space, such as $65.1m for further research into threatened species and $40.9m over two years to implement nature positive plan (largely administrative establishing Nature Repair Market), close analysis reveals that these are all pre-existing commitments, meaning that there is no new spending on biodiversity conservation in this budget.
This clearly falls well short of $2bn annual investment recommended by The Biodiversity Council to drive ecosystem recovery across Australian degraded lands. While the goal of Net Zero by 2050 is crucial, we cannot put all our efforts towards a goal that far in the future at the expense of the present, as many species and ecosystems are facing extinction or collapse well before that point and will not be recoverable once they are gone. That is not to mention the economic and other effects of nature-loss, as noted by ELMRI Sustainability and Biodiversity Adviser (and Biodiversity Council Lead Councillor) Professor Sarah Bekessy:
“In terms of new money, there is more spending on carbon capture and storage than there is for biodiversity recovery in this budget. This is ironic as nature is still our only viable carbon sink at scale. It is the only way for us to combat climate change by storing carbon and reducing the impacts of extreme climate impacts.
“Ignoring nature also jeopardises the many industries that rely on it. More than half our GDP depends on natural systems. For example, the dire state of the Great Barrier Reef Reef is not only a tragic loss of nature and a threat to First Peoples culture, it also jeopardises 64,000 full-time jobs and the $6.4 billion per year that it contributes to our economy.”
Our view is that this lack of government investment makes it imperative that the responsible investment industry prioritises nature-positive investments and provides the required capital to drive biodiversity recovery. At ELMRI we are proud to take a leadership role in this space, and demonstrate that it is possible to prioritise biodiversity and deliver strong returns for our investors. Our commitment in this space can be seen through holdings such as Novonesis, Veralto, Xylem, and Tomra, which all deliver essential technologies to reduce society’s environmental impact and protect nature.
For more information on ELM Responsible Investments, and how our investment philosophy focuses on balancing sustainability and profitability, please contact us at info@elmri.com or visit our website at www.elmri.com