The Australian Government’s Capacity Investment Scheme (CIS), first announced in December 2022, is an initiative designed to accelerate Australia's transition to a clean energy future. The scheme provides revenue underwriting to renewable energy and energy storage projects and explicitly excludes fossil fuel-based energy. It also aims to ensure Australia’s electricity grid remains reliable and secure as the country phases out coal-fired power and increases its reliance on renewable energy.
In August 2023, the government released a consultation paper on the proposed approach and design of the CIS. In November 2023, the Albanese government announced that it would expand the CIS to underwrite 32 gigawatts of new electricity by 2030. Following the announcement, the Australian Government released a design paper on an expanded CIS in February 2024, which focuses on the implementation design and products, and shares the findings of the August 2023 consultation. Submissions on the design paper closed in March 2024.
This policy tracker page contains details on the combined corporate engagement on both federal consultations on the CIS.
Recent Developments:
Energy Transition & Zero Carbon Technologies
Consultation process complete - Public comment period on the expanded CIS closed on 25th March 2024
Energy Transition & Zero Carbon Technologies
Consultation process complete - Public comment period on the expanded CIS closed on 25th March 2024
On 26 February, the Australian Energy Producers Strongly supporting maintenance of high GHG emissions energy mix released a plan for Australia’s Economic and Energy Security, calling for new fossil gas supply ahead of the federal election, which must be held by 17 May. The report argues that increased gas production would ease cost-of-living pressures, reduce emissions, and support continued exports. It also appears to advocate for weakening the Environment Protection and Biodiversity Conservation Act to fast-track fossil fuel approvals and for including gas in the Opposing renewable energy standards Capacity Investment Scheme, a mechanism designed to incentivize renewables.
On 12 February, the Australian Parliament reached an agreement between Labor and the Greens to ensure that the Capacity Investment Scheme includes at least 23 gigawatts of wind and solar energy and 9 gigawatts of clean storage, effectively ruling out fossil gas from the policy.
This decision follows sustained advocacy from the fossil fuel sector, which had pushed for fossil gas to be included. In response, the CEO of Australian Energy Producers criticized the move in a 13 February press release, claiming the government had 'capitulated to the Greens’ anti-gas agenda', and arguing that urgent investment in new fossil gas supply is needed.
In a media release published 16 October, the Energy Users Association of Australia (EUAA) supported the Liberal–National Coalition’s proposal to widen the scope of the Capacity Investment Scheme (CIS) to include fossil gas, stating that Australia has “an urgent need for more gas.” The CEO of the EUAA, Andrew Richards, added that fossil gas was “a critical enabler to realise a least cost transition to net zero.” The CIS, which currently excludes all fossil fuels, was launched last year as a national framework to encourage new investment in renewable and clean dispatchable capacity.
At the Australian Domestic Gas Outlook Conference, held from March 25-28, several oil and gas entities spoke strongly on the need for government policy to support fossil fuels. APA Group CEO Adam Watson was reported by the AFR to have stated that the need for new fossil gas supply is “desperate”, while Senex Energy CEO Ian Davies was quoted in RenewEconomy to have called for fossil fuels to be included in the Capacity Investment Mechanism, a renewable subsidy scheme. Woodside also stated that “new export-scale gas projects are needed, while the CEO of the Australian Energy Producers, Samantha McCulloch used her speech to criticize the lack of recognition for fossil gas in policies including the Hydrogen Headstart and Victoria’s ban on gas connections. Further, the CEO of the Energy Users Association of Australia was reported by the AFR to have criticized Victoria’s gas ban by claiming it has increased emissions by preventing the closure of coal power plants.
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