Minister's foreword




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CHAPTER 2: INNOVATION PROGRAM




CLEAN TECHNOLOGY INNOVATION PROGRAM



The $200 million Clean Technology Innovation Program will operate over five years. It is a competitive, merit-based, grants program. The program will provide grants of between $50,000 and $5 million and will contribute one dollar for every one dollar contributed by grantees (e.g. a Government contribution rate of up to 50 per cent of eligible expenditure).


The objective of the program is to increase research and development, proof of concept and early stage commercialisation activities that lead to the development of new clean technologies and associated services including low emission and energy efficient solutions that reduce greenhouse emissions. The program’s investment in clean technology innovation projects should help industries become more competitive and so transition to a low carbon future.

WHO IS ELIGIBLE?



It is proposed that to be eligible to apply for a grant under the Clean Technology Innovation Program the applicant must:

  • be an incorporated business in Australia5;

  • demonstrate that it will match the grant provided on a dollar for dollar basis over the life of the project;

  • demonstrate that it has access to, or the beneficial use of, any intellectual property necessary to carry out and/or commercialise the proposed project.

Applications involving collaboration between at least two incorporated businesses, or one incorporated business and one higher education institution (or a research institute affiliated with a university) will be strongly encouraged. Collaborative partners can be either Australian or internationally based. This is to stimulate more collaborative activity which has been found to be associated with novel or radical innovation.

    • in the case of collaboration, an eligible lead entity representing the consortia or group must be willing and able to commit to the legal and financial obligations arising from a funding agreement.


QUESTIONS

Should there be a restriction on the size or type of business that can access the program? If yes, on what basis (i.e. financial earnings, or energy consumption, or sector)?

  1. Are there any other issues that should be considered when determining whether a business should be eligible for support?

  2. How can collaboration be promoted and stimulated through the program?



ACTIVITIES SUPPORTED



The program will be designed to be as flexible as possible and will provide support for research and development, proof of concept and early-stage commercialisation activities.


Proposed definitions of eligible activities


The terms R&D, proof-of-concept, pre-commercialisation and demonstration activities are fairly broad in nature and encompass a wide range of undertakings including, for instance, applied research, IP protection and management, product testing and development, experimental development or prototyping.


Research and development (R&D)


The definition of R&D activities will align with the definition outlined in the R&D Tax Incentive legislation.


Proof of concept


Proof-of-concept activity is concerned with the work necessary to establish the commercial and technical viability of a product or process. The proof-of-concept process can involve different activities depending on the particular area of technology involved and it is likely that there will be no standard procedure that all projects will follow.


Early-stage commercialisation


Early-stage commercialisation activity is concerned with systematic work necessary for installing and establishing processes, systems and services that enable a new product, process or service to be produced to the stage where it can effectively be brought to market.


Eligible projects


Eligibility will broad in nature and encompass a range of project undertakings including applied research and development, intellectual property protection and management, product prototyping, testing and proof-of-concept.


Proposed project activities could include:

  • research and development and early stage commercialisation activities to develop a new innovative clean technology application;

  • development of technologies that improve the energy efficiency of appliances or industrial processes; and

  • development of new products, processes or services to support clean technologies and energy efficiency.


Ineligible activities


The following activities are ineligible for support:

  • projects that would be eligible under the Clean Technology Investment Program and Clean Technology Food and Foundries Investment Program; and

  • projects supported under the Australian Renewable Energy Agency (ARENA)6.


QUESTIONS

  1. How should ‘R&D’, ‘proof of concept’ and ‘early stage commercialisation’ activity be defined? What activities should be supported? Is there a need to be more specific about the eligibility of projects?

  2. The program will compliment existing support for clean technologies. What programs across governments do industry currently access for these activities?

  3. Should the program have an aspirational target for energy/carbon saving projects? What would be an appropriate impact (e.g. a 25 per cent saving)?



ELIGIBLE EXPENDITURE



Eligible expenditure must be directly related to project activities (R&D, proof of concept and early stage commercialisation).


It is proposed that funds may be used for:

  • salaries for researchers and support staff and direct salary on-costs;

  • the direct costs of research (consumables); and

  • capital items (such as equipment; but not to purchase, or pay for the construction
    of facilities such as buildings, laboratories etc).


Where a proportion of program funds are to be spent overseas, such expenditure must deliver demonstrably high levels of economic, environmental and/or social benefits to Australia; including the use of any intellectual property rights.


Activities paid for by the grantee using in-kind or non-cash considerations are not eligible expenditure.


The Clean Technology Innovation Program funding must not be used for activities previously funded or currently being funded by another government program. Standard clawback provisions will apply to grants made under the Program to ensure that proponents do not 'double dip'.


Program funds cannot be spent on the indirect support costs of research or staff (e.g. non-salary overheads), nor to reimburse participants for the costs associated with existing staff or other resources.


To be eligible, the grantee must incur expenditure on or after the project commencement date, which cannot be before the date the Program Delegate accepts the application for assessment, and on or before the project completion date, with the exception of final audit costs which can be incurred within three months of the project completion date.


QUESTIONS

  1. Should the eligibility of expenditure be more specific? How could this be done?

  2. Should funding from other State/Territory/Local government programs be allowed as part of the matching contribution, if directed at new activity?



MERIT CRITERIA



As the grants are not “entitlements”, eligible applications will be assessed against merit criteria and the most competitive will be funded. Applications should aim to demonstrate a strong case against each of the criteria.


Applicants will need to demonstrate that the proposed project and activities would not take place (or might be significantly delayed) without public support.


Complete sets of guiding questions for merit criterion will cover the following:

Criterion 1 - The extent of the reduction in carbon or energy intensity associated with the proposed project


  • A proposal should contribute towards addressing the transition to a carbon constrained economy, particularly by investing in innovative clean technology and associated services projects. The applicant must describe what success will look like. Merit can be demonstrated through either; reduced carbon emissions or energy savings of the technology, product, process or service developed under the project.




  • Claims made by applicants must be measurable and capable of being reported during the project period and after the project is completed for program evaluation purposes. To demonstrate the benefit, it is proposed the applicant use a ‘calculator tool’ (of recognised quality and standard) that shows how the outputs will make a measurable impact and environmental benefit.




  • The benchmark for measuring any significant improvements in energy consumption or carbon emissions should be beyond the 'business as usual' scenario.




  • Applications should also outline economic benefits that would accrue to Australia associated with national productivity and economic growth in a future low carbon economy. Economic benefits could include increased employment, creation of new jobs, knowledge and skill spill-overs, and diffusion of technologies, products and processes across industry, and social, community and/or environmental benefits. The benefits may be direct or indirect.




  • Plans including overseas activities to be assessed in terms of likely benefits to Australia.


Criterion 2 –Calibre of innovation (including applicant capabilities)


  • An application to demonstrate its merits and describe the nature, extent and calibre of the innovation that will occur in Australia through the proposed project.




  • An application must demonstrate the potential added value of the project to be provided by the grant funding. For example, an application to explain either why the applicant is not funding the whole project, why the grant funds would allow the project to be undertaken differently and why this is beneficial to Australia.




  • Applications should also describe the level of associated risk with the project, and strategies to manage the risk. An appropriate level of innovation evident in the project should be described in terms of it is: new to the industry; or new to Australia; or new to the world.




  • The applicant must demonstrate that it has the capacity to undertake and complete (in the time required) the agreed project. It must have the technical and business capabilities as well as the staffing, financial and administrative capabilities for the project. The budget must be realistic. The applicant must be able to describe the strength of proposed collaboration.


Criterion 3 –Potential uptake of innovation


  • The product, process or service for which a grant is being sought must have the potential to be developed, and commercialised or have the knowledge diffused to the benefit of Australia in the transition to a low carbon economy. The applicant should describe the industry need for the new technology, product, process or service proposed. An application must include a clear route to market plan that identifies how and when the innovation will be commercialised and/or diffused to the benefit of Australia. The ability to achieve a greater leveraged technology application or knowledge diffusion to be demonstrated.


QUESTIONS

  1. Could, for example, the National Greenhouse and Energy Reporting System (NGERS) Calculator (https://www.oscar.gov.au/Deh.Oscar.Extension.Web/Content/NgerThresholdCalculator/Default.aspx) be used to calculate applicant’s benchmark data and predicted improvements in energy and carbon intensity? Are multiple tools comparable or should one tool be the standard? Is use of such a tool, or calculator, too difficult to apply to innovation projects on clean energy solutions?

  2. What other measures of ‘impact’, or success, could be used?



GRANT DURATION



The programs will support projects to a maximum of two years duration. If successful, extensions of time of up to an additional six months may be considered if the need for the extension could not have been anticipated prior to the project commencing.


QUESTIONS

  1. Is the proposed funding period of 2 years appropriate/sufficient?


APPLICATION AND ASSESSMENT PROCESS

The program will be administered and delivered by AusIndustry, a specialist program delivery division of the Department. The applicant must meet all costs associated with preparing applications and providing information to AusIndustry.


Applications will be lodged electronically with AusIndustry.


The eligibility of applications will be assessed by AusIndustry and decided by the Delegate. Only eligible applications will proceed to the merit assessment stage. Applicants will be referred to other government support programs if deemed more suitable by AusIndustry.


Applications may be lodged at any time and eligible applications will be assessed on a continuous basis, by a committee, formed under Innovation Australia. Innovation Australia will provide expert independent advice to the Department and Government in respect to the merit and rank order of applications.


Applicants will be informed in writing of the success or otherwise of their applications. Unsuccessful applicants may re-apply to the program.


AusIndustry will enter into funding agreements with successful applicants and monitor the performance of grantees.


Customer reporting requirements (at start of project/application, during the project, end of project and post project) will include collection of data to inform on the performance of the program against its KPIs/targets.


QUESTIONS

  1. Could the application and timing of assessments be flexible in line with the size of the grant requested and the needs of the company – if yes, how?

  2. Do applicants prefer an online application (e.g. use a smart form)?

  3. How long after completion of the project should applicants provide post project reporting? In addition to written reports, are there other means by which data can be collected to monitor the impact of the grant funding on innovation, growth and productivity activities of the firm?


OTHER ISSUES

  1. The Department welcomes comments on other issues that should be considered in the design of the Clean Technology Innovation Program.



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