The Australian government has plans to cut or delay $498 million in funding for solar power and carbon capture, as well as storage projects, according to this Bloomberg (News - Alert) report. The government is apparently hoping to help pay for reconstruction after the nation experienced the worst floods in its history.

Coal accounts for more than 80 percent of electricity production in Australia. The nation plans to cut the Solar Flagships program and defer money from proposed grants. This information was recently released by the office of the Prime Minister Julia Gillard.

The companies that were short-listed by Australia in a competition for solar funding include BP Plc, AGL (News - Alert) Energy Ltd., and CLP Holdings Ltd., unit TRUenergy Holdings Pty. The government originally had a target of sourcing 20 percent of the country’s power from renewable energy by 2010 and must decide this year on a way to put a price on carbon emissions.

Seb Henbest, a Sydney-based analyst with Bloomberg New Energy Finance, shared in the Bloomberg piece that while imposing that cost on burning fuels needs to be the long-term economic reform for a carbon constrained future, it is also essential to develop shorter-term complementary programs.

“The government still needs to support nascent clean energy and efficiency industries and technologies,” said Henbest.

Australia also plans to delay spending that was aimed at encouraging carbon-capture ventures. The government will reduce the amount of funding in the initiative. Gillard has pledged, however, to restart an effort to curb emissions after replacing Kevin Rudd as prime minister in June.

“The key to these carbon abatement program savings is my determination to deliver a carbon price,” Gillard said in Canberra today, featured in the Bloomberg piece. “There is complete consensus that the most efficient way to reduce carbon” is to impose a cost.

Plans show that the money that would have been allocated to solar and carbon capture ventures between 2011 and 2015 will instead be spent in 2015, 2016 and beyond the office of Australian Resources Minister Martin Ferguson reported in an e-mailed statement.

Torrential rains impacted northeastern state of Queensland for nearly two months, killing as many as 32 people and affecting 30,000 properties. The disaster has shut local coal mines, cut rail lines and damaged crops.

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