Key solar programs affected by the funding cuts include the Solar Flagships program, which was initially cut by $250 million; the Solar Hot Water Rebate, which will be cut by $160 million; and the Solar Homes and Communities Plan, which will have a cap on any further funding.

Following a loud response from the clean energy industry and concerted effort by the Australian Greens party, it was announced that $100 million will be returned to the Solar Flagships program.

The Prime Minister’s department said that the Government had agreed to return the previously announced funding cut of $60 million to the Solar Flagships program over the next four financial years (the period to 30 June 2015).

The Government also agreed to re-phase $40 million across the same period that was previously allocated to the period beyond 30 June 2015.

˝The timing of actual expenditure will be determined by project requirements following the outcome of the merit-based competitive selection process,˝ the Government said.

The Government said that it expects to announce the outcome of Round 1 of the Solar Flagships program in mid-2011, and that it has agreed to continue to engage with solar industry stakeholders as Round 2 of the program is developed.

Various other clean energy programs are also affected by the funding cuts.

The Cleaner Car Rebate Scheme will not proceed, and the Green Car Innovation Fund has been abolished. Spending on the Carbon Capture and Storage Flagships Program will be reduced and deferred.

Prime Minister Julia Gillard, who announced the funding cuts on 27 January, said ˝The key to these carbon abatement program savings is my determination to deliver a carbon price.

˝There is complete consensus that the most efficient way to reduce carbon is to price carbon. Some of these policies are less efficient than a carbon price and will no longer be necessary – others will be better delayed until a carbon price’s full effects are felt,˝ she said.

Responses to the funding cuts The initial extensive funding cuts and cancellation of planned programs initiated a plethora of concerned responses from various clean energy leaders and associations, which subsequently resulted in some funding being returned to the Solar Flagships program.

Australian Solar Energy Society CEO John Grimes said ˝We thought that we had seen it all, but once again industry is shocked to learn of [the] slashing cuts to solar programs.˝

The Climate Institute CEO John Connor said ˝Slashing investment in utility-scale solar or carbon capture and storage technologies, let alone solar hot water programs, is extremely short-sighted.

˝These public investments are crucial to develop cleaner energy industries even with a price on pollution,˝ he said.

The Sustainable Energy Association of Australia (SEA) said that while it did not want to see any axing or delaying of solar programs, if the Federal Government ensured that the salvaged funds were targeted to rebuilding ˝green˝, then the flood reconstruction package ˝may be an effective market mechanism to deliver a stimulus to a green housing market, and to more climate-ready infrastructure.˝

SEA said that as a business chamber, the association ˝would not countenance taxpayer funds wasted on ineffective programs, and some of the programs targeted have been characterised and criticised as being unlikely to deliver the results claimed anyway.˝

Clean Energy Council Chief Executive Matthew Warren said that the Gillard Government was in danger of losing its way on delivering an effective climate change strategy for Australia by assuming that a carbon price would be the ˝silver bullet˝ to address the problem.

˝Cutting funding for clean energy projects that will ultimately mitigate [the impact of climate change] is as bizarre as it is counterproductive.˝

Australian Greens Acting Leader Christine Milne said ˝It beggars belief that the Government would choose to cut climate change programs like Solar Flagships, energy efficiency and the solar hot water rebate to fund disaster relief when such disasters will be made worse by climate change.˝

While the Australian Greens said that it was ˝open˝ to the idea of a levy, the party sees ˝establishing a long-term, well-resourced disaster relief fund as a high priority in the face of climate change.˝

The Alternative Technology Association Energy Projects and Policy Manager Damien Moyse also criticised the cuts to climate change funding.

˝Unfortunately, the Gillard Government is increasingly making a name for rolling back and retreating from environmental reform,˝ Mr Moyse said.

Mr Moyse also commented on the New South Wales Government’s announcement to scrap a number of clean energy projects from the Climate Change Fund to pay for its $1.5 billion Solar Bonus Scheme.

Mr Moyse said it made no sense to target environmental projects, including the long-standing rainwater tank rebate, in a bid to save money on the Solar Bonus Scheme.

˝Now we are faced with a situation where the New South Wales Government is retreating from important environmental commitments to pay for its previous mistakes.˝

Overall, the Federal Government plans to make $2.8 billion in spending cuts to Government programs, $1 billion by delaying key infrastructure projects and $1.8 billion from a progressive levy, in order to create the $5.6 billion recovery package.