The Federal Government’s proposal to allow the Australian Renewable Energy Agency (ARENA) to be able to invest in carbon capture and storage (CCS) as well as hydrogen produced from gas has been voted down in the Senate. The votes by Labor, the Greens and crossbench senators mean ARENA’s investment role will not be expanded.

ARENA has funded much of Australia’s research into clean energy technologies and underpinned the emergence of a competitive large-scale solar sector, since its establishment in 2012.

Last year, there were talks that the agency was approaching the end of its funding allocation. However, a Grant King led review into Australia’s emissions reduction policies recommended that the investment mandates for both ARENA and the Clean Energy Finance Corporation (CEFC) be expanded to allow the agencies to invest in low emissions technologies. This would give the Federal Government further incentive to allocate more funding.

“Provide ARENA and the CEFC with an expanded, technology-neutral remit so they can support key technologies across all sectors and be involved in the delivery of the Goal-oriented co-investment program,” the King Review recommended.

The recommendation for ARENA’s investment role change was slammed by environmental groups, which labelled the proposed expansion of the ARENA and CEFC mandates as going against their purpose. Despite this, the Federal energy minister Angus Taylor accepted the review’s recommendation.

However, the changes would require legislation to be approved by the federal parliament, with ARENA’s legislation currently limiting the agency to only supporting renewable energy projects, and the CEFC’s legislation expressly prohibiting investment in CCS projects.

APPEA Chief Executive Andrew McConville said the decision to vote down regulations expanding the investment remit of ARENA will slow Australia’s march to reach net zero emissions targets.

“All technology, including hydrogen and CCS, should be on the table to help reduce emissions, so this is clearly a missed opportunity and pretty shortsighted,” Mr McConville said.

He said just as government investment in renewables has fast tracked projects, this would have done the same and created thousands of jobs in the process.

“Developing a local hydrogen industry could enable lower emissions both in Australia and internationally, reduce energy costs, deliver energy security, together with new employment and manufacturing opportunities.”