From a planetary point of view, yesterday’s budget escalated the exit-strategy from fossil fuels, but is it fast enough?

ABC’s AM this morning reported scientists yet again saying we need to “decarbonise” the economy if we are to survive. What does this mean and how could the carbon exit-strategy work?

A budget designed to decarbonise the economy would remove all subsidies from fossil fuels, invest heavily in energy efficiency, renewables and other shifts to a sustainable economy.

The budget this year includes a substantial Climate Change Ministerial Statement and it is interesting reading. The top line message is there are clean energy measures (including “clean coal”) worth $4.5bill, including $1.0bill in “old” money.

One of the decarbonising highlights is Solar Flagships, which will invest $1.5bill over six years in new power stations, to generate 1000MW of solar. This indicates that PM Kevin Rudd has jettisoned the Howard Government’s black armband view of renewables. Like the USA, China, Germany and other major economies, our Treasury now accepts that solar is ready to be built, turned on and plugged into the grid.

Even better, there is $100 million in 2009-10 for the National Energy Efficiency Initiative to modernise our electricity grid, so it is no longer designed to work only with big coal plants and can efficiently deliver energy from distributed and diverse renewables generation.

The most interesting opportunity is a new body called Renewables Australia. This will have an independent board, with $465 million to “invest” in “leading-edge technology research, development and demonstration projects”. It is not clear whether this literally means the Government will become an equity partner in new companies and projects or if it is a euphemism for grant money.

This is necessary, not just because of the global financial crisis, to tilt the investment playing field away from its bias towards fossil fuels and towards the new energy economy. Australia already has a reputation for leading solar research, but this is almost always lost overseas. To shift this, the budget has a small but significant $14.9m Clean Energy Trade and Investment Strategy.

The message here again, is that the Rudd Government is freeing itself from eleven years of Howard Government hostility towards renewables, which was encouraged so effectively in the media by the coal and nuclear lobby. The Budget shows faith that Australia can turn the solar inventions created by our Universities into competitive technologies and export these to the world.

Unfortunately there is still a large political faith in so-called “clean coal” technology, despite its long lead times and continued technical failures.

The CCS Flagships get serious money, $2.4 bill according to one budget paper and $2bill according to my reading of another. What is interesting is that unlike solar, which is predicted to deliver 1000MW, the CCS largesse is not predicted to deliver any energy, which signals the Government knows it is a pipe-dream.

These measures should mean Australia can develop a renewables manufacturing industry, creating jobs and export income at the same time as cutting our reliance on fossil fuels.

Unfortunately, there is no indication that the Labor Party is removing the fossil fuel subsidies left in place by the Howard Government. Australians would be alarmed to know that their taxes go to multinational oil, gas and coal corporations but the budget papers do not contain any details, or Ministerial Statements explaining these.

Greenpeace’s Julien Vincent estimates that perhaps $7bill in annual fossil fuel subsidies are still in place after last night’s budget, based on a report done in 2007 by the University of Technology Sydney.

These subsidies are “stranded capital”. Stranded capital is money given to carbon-polluting industries which will never give a good return on investment because these industries will have to be closed down to save the planet, sooner rather than later. They make no sense ecologically or economically.

Have a look at the budget summary and climate statement if you care about your future. The public response over the next few days has to embolden the Government to hasten its departure from Howard Government’s black armband approach to renewables. You are the voice of the climate on which we all depend, so speak up.