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CSIRO risks backing the wrong horse as it reacts to budget cuts

What happens to CSIRO when the federal government decides to strip away A$111 million over four years from its A$733 million annual contribution to the organisation’s budget? We are beginning to find out…

CSIRO is contending with a A$111 million hit to its budget over four years. Bidgee/Wikimedia Commons, CC BY

What happens to CSIRO when the federal government decides to strip away A$111 million over four years from its A$733 million annual contribution to the organisation’s budget? We are beginning to find out.

CSIRO, which has already suffered many budget cutbacks over the years, is reportedly set to make a series of cuts to its environmental programs, closing eight sites and reducing funding to key research areas including geothermal energy, liquid fuels, carbon capture and storage, and climate change.

At the same time, funding for CSIRO’s research on coal seam gas is likely to increase. We might speculate that the changes are a deliberate strategy of investing in programs that are likely to impress the government and head off any more future cuts. But is that in Australia’s best interests in the long run?

Australia already lags behind

Research and development (R&D) is important to countries' economies. In tough economic times, R&D can bring new innovations that can support emerging sectors.

Yet Australia invests relatively little in R&D compared with other developed countries. At 0.5% of GDP, Australia’s government spends less than the OECD average of 0.8%, and much less than Finland, Denmark, South Korea (all 1.1%) and the United States (0.9%).

CSIRO has a mandate to do R&D that benefits Australian industry, helping to bridge the gap between new research ideas and commercialisation.

It is a world-class institution with an outstanding publication record, and has developed many innovations that are used globally – most notably Wi-Fi, but also polymer banknotes and the buffalo fly trap to name just a few. (CSIRO’s inventiveness has even earned its own Twitter hashtag, #thankcsiroforthat.)

Given its past successes, it certainly seems short-sighted to cut CSIRO’s funding. But it is not a surprising move by a government that favours reducing spending and taxes to create a supposedly more efficient economy.

A more intriguing question is why CSIRO has responded by opting to cut funding to clean energy and climate change programs. We don’t know what the actual strategy is, but CSIRO is mostly publicly funded and we can assume that it will strategically orientate its research objectives to maximise its chances of maintaining government funding without any more cuts.

So perhaps we can’t blame CSIRO for scaling back its climate change and renewable energy programs. It may just be holding up a mirror to the federal government’s apparent reluctance to engage on climate change, with its pledge to repeal the current carbon legislation in favour of a A$2.55 billion direct action plan, despite many analysts saying it will be less effective.

Backing the wrong horse?

The problem with this strategy is that the technologies that most need government support are those that are still emerging or which don’t have the backing of big companies with a vested interest.

Hot rock geothermal, concentrated solar thermal and liquid biofuels are all technologies that have the potential to be competitive, but which are currently too expensive for investment companies to get on board.

While carbon capture and storage (CCS) is a very worthwhile technology to pursue, the reduction in CSIRO’s funding for CCS research is probably a sensible move. Successful demonstration of CCS will benefit existing billion-dollar companies with interests in coal mining and coal-fired power generation, which should be able to fund their own R&D.

CCS is hugely expensive, because it needs to operate at large scales and is a complex process with several steps – capture, compression, liquefaction, transport, and storage. The initial capital outlay for a demonstration plant will be vast. But if huge coal companies want to save their business, they should invest in CCS themselves.

Removing government funding for coal seam gas would also be the right thing to do for the same reason – but here CSIRO has apparently fallen into line with government policy. It is not yet clear if the optimal pathway to very low emissions is via gas – although many, including the International Energy Agency, believe it is.

Committing to using fossil gas exposes us to the risk of increasing gas prices that are likely with the expansion of the liquefied natural gas export industry. This will result in Australians paying the high international price for gas. And while gas has lower greenhouse emissions than coal, it is still a fossil fuel that emits significant amounts of carbon dioxide.

CSIRO is supposed to be investing in new technologies that, with any luck, will impress the corporate sector enough for them to start investing in more sustainable energy. CSIRO is at the mercy of government funding, and it appears that the government is forcing CSIRO’s hand towards options that are not in our long-term best interests.

Join the conversation

14 Comments sorted by

    1. Robert Tony Brklje
      Robert Tony Brklje is a Friend of The Conversation.

      retired

      In reply to Ken Alderton

      This government has a profit based focus. It wants government funded research that can be sold cheaply to favoured corporations who can on sell the patent fees for massive profits.
      CSIRO research should be all about saving money, not about generating a profit.
      Classic example rabbit control. The high cost of safely finding a virus to control the wild rabbit population and then its largely 'FREE' release means there was zero opportunity for corporate profits and thus under current policy it would…

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  1. JB Rawson

    Writer

    My guess would be that CSIRO is focussing its research in areas where it can get industry funding (the I standing for industry, as it does). There's probably more spare funding money floating around in CSG businesses than in renewables. Though you'd think you could get someone to stump up for CCS...

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  2. Craig Myatt

    Industrial Designer / R&D

    The problem seems to be with renewable energy research like solar thermal, that once perfected, there is no 'consumable" left to sell, so if you think of what are called "razor blade" businesses, where they sell the initial product for not much and make much on the consumable, then renewable energy products are not very attractive to industry, who essentially are looking to the CSIRO for research.

    Selling intellectual property, however, as a nation, is not really as profitable as say coal: Wifi made $430 million in royalties for the CSIRO, really at the end of its patent life. Could we sell solar thermal technology to other countries? Could be some novelty around fluids or processes like energy storage for solar thermal, but we would need lots of IP to sell, to match the income from "consumable" energy...

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    1. Gordon William Francis Young

      Lecturer of Professional/Applied Ethics at RMIT University

      In reply to Craig Myatt

      Good point Craig. This underscores the importance of government funded research institutions that can pursue technologies that contribute to public and environmental good, but may not be commercially profitable.

      This is not to argue that market-run research is not also a good thing, but the market focusses solely on profit in determining the value of a technology - it is the role of government to ensure social, environmental and other 'market externality' concerns are promoted.

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  3. Robert Molyneux

    Citizen at Drehmex Sales and Services

    " We might speculate that the changes are a deliberate strategy of investing in programs that are likely to impress the government."
    How do you impress a COAL government of lawyers and ideologues that demonstrates every day that it has a very slight grip on reality and rationality? Hockey's comments about the "ugliness" of wind farms? Abbott's disregard for the simplest facts of history, that "tough budgets" always incur voter displeasure? Shepherd's claim of 11 visits a year to GPs on average to justify taxing something that, being free, will always be overused and abused?
    There is a slogan among salespeople - "Sell wants, not needs". Look forward to research projects along this lines.
    Mind you, the dopey Carbon Capture and Storage scheme was probably always a government-promoted idea, and dropping it makes eminent sense.

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  4. Jay Wulf

    Digerati at nomeonastiq.com

    That this government is putting roads (and many other things) before science is a proof manifest that they are not competent to govern Australia.

    Destruction of the future income streams and life changing ideas that this bunch of fundamentalist troglodites can encompass with their minds. Its roads, 50's values and holes in the ground. The rest of the world would be laughing at us if they were not rubbing their hands with glee. We are making it easy for them to compete with us.

    Shameful example of fundamentalist myopia.
    Anti-intellectualism has come home to roost.

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    1. Janice Russell

      retired

      In reply to Jay Wulf

      The sooner they go the better. No ideas on how science works nor any ideas that will actually bring progress in anything of a scientific nature. They are following the dictates of fossil fuel producers etc because they are their supporters with buckets of money to channel their way at the moment. What will happen when it all becomes uneconomic and there are no new ideas? I guess it will all be the fault of Labor & Greens.

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  5. Paul Richards

    integral operating system

    Appreciate the article as my field of study is strategic foresight.
    One serious issue that is missed and yet is front and centre. Even with many warnings from statesman who are qualified, telling us framing our country with economic theory is just wrong, illogical and uncivilised.
    Firstly the "globalisation theory is dead" and has been for more than a decade as an economic theory. Thatcher and Reagan were wrong as political leaders in 'backing this horse', as were Paul Keating and Bob Hawke's…

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  6. Eden Ukrivljen

    Principal Retro-encabulator at Sinusoidal Deplenurators

    CSIRO has been seriously toadying upt o government for about a decade now. Check out the self-confessed strategy of restructuring to meet the Howard governments expectations as described in "CSIRO and Icon in Crisis".

    The tragedy is that CSIRO's recent corporate inspired leadership, by abandoning the example of it's earlier governance that resisted ill-informed governmental meddling, is failing not just the thousands of committed rank and file scientists who sincerely strive from within CSIRO to produce excellent science for the public good but also damaging it's incredible (and hard earned) reputation with the public.

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  7. Sandor von Kontz

    farmer

    " Committing to using fossil gas exposes us to the risk of increasing gas prices "
    Not to mention the majority of the people don't want it, not to mention the risks to our water...

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  8. Brad Farrant

    logged in via email @hotmail.com

    Massively disappointing that Simon McKeon and the rest of the CSIRO leadership have decided to pull funds from research into solutions to help prevent dangerous climate change (renewables) and are instead directing more funds to research activities that will accelerate us towards dangerous climate change (CSG etc).

    How will they explain these decisions to the kids of today and tomorrow?

    I am yet to come across anyone who can show how the massive expansion of unconventional gas (CSG etc) that is proposed by its advocates is at all compatible with the massive emission reductions that are required to even have a decent chance of preventing dangerous climate change.

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