The Australian Renewable Energy Agency (ARENA) may be on death row but it is certainly not staggering like a man condemned.

Having announced $2 million funding for a renewable biomass project last week, ARENA’s CEO says the organisation has no intention of stopping any time soon.

Prime Minister Tony Abbott announced in the May budget that the government would axe the statutory organisation, grab its unallocated $1.3 billion project funding and roll any of its leftover functions into the Department of Industry.

Since then, the organisation — which can only be dismantled by repealing the Australian Renewable Energy Agency Act 2011 — has been fighting for its life.

Australia’s federal Lower House voted on September 1 to repeal the act and abolish ARENA, but the ensuing stalemate in the Senate has meant a stay of execution for the ardent champion of renewable energy.

Indeed while the government’s original plan might have been to eliminate  ARENA, expectations of its death now appear exaggerated. The body was granted a last minute reprieve after  Palmer United Party Senator Clive Palmer struck a deal with the government to retain ARENA; but to cut its project funding by $435 million – which also covers some of the organisation’s operating costs – and defer $370 million, in return for backing the carbon tax repeal.

The effect is that the public service now has what amounts to zombie agency: Finance Minister Mathias Cormann has made no bones about the fact he wants to see  ARENA  scrapped, he just doesn’t have the numbers in the Senate to do it.

“It does remain the government’s policy that we are committed to the abolition of the Clean Energy Finance Corporation and ARENA. Nothing in what we have agreed on with the Palmer United Party changes the government’s policy,” Mr Cormann told the Senate in October.

“But I would also say the obvious point that Senator Milne actually made… given that Labor, the Greens and the Palmer United Party are opposed to the abolition of the Clean Energy Finance Corporation and ARENA, as long as neither Labor, the Greens nor the Palmer United Party and Australian Motoring Enthusiasts Party change their mind, it is bleedingly obvious that, even though that might be the government’s policy, we will not have the opportunity to give effect to that.”

When Government News spoke to ARENA chief executive Ivor Frischknecht, he said the organisation was still firing on all cylinders.

“We still have the money. We are still accepting applications and making grant awards,” Mr Frischknecht said.

“We’re very much in business. We are governed by a commercially orientated board and the board is very focused on making good decisions around projects but they are making decisions. We have allocated a significant amount of money since the budget announcement, it’s certainly over $100 million.”

Asked whether the federal government was putting pressure on ARENA to stop spending money, Mr Frischknecht said it remained independent from the government and was focused on carrying out its remit.

“ARENA operates under its own act … it doesn’t allow the government to direct us so they really haven’t done that.”

He said the agency had also freed up ‘a couple of hundred million dollars’ for reallocation by terminating seven large projects that have failed to achieve their goals or could not get off the ground, these included Solar Systems, Mildura and a Vic Wave project.

But Mr Frischknecht did not deny that the cloud hanging over his agency had had negative results.

ARENA has lost about 40 per cent of its 100 staff since the May budget announcement and the public sector recruitment freeze has closed down recruitment avenues, except for internal redeployments and specialist contractors, he said.

“We have had a significant reduction in staff in the last few months, some related to the Budget and some related to the uncertainty. We’ve have lost about 40 per cent. The reduction of staff really limits our ability to pursue new initiatives, having new projects and new funding rounds but we’re trying to rebuild our staff.

“It doesn’t make things easy, however we operate under the act and we are committed to fulfilling our obligations under the act.”

It also seems as well that ARENA staff are starting to feel like they may have dodged a bullet.

“We went through a period of uncertainty and upheaval and lots of people leaving but by and large people are feeling pretty good about things at the moment and there’s a lot to do so they are getting on with the job,” Mr Frischknecht said.

“There was a period when we thought we were going to be abolished imminently but it’s been more than six months since the announcement and nothing has really changed. People are getting comfortable with the status quo.”

The board too appears back to its old self after earlier reports that it was being gutted in preparation for a Department of Industry takeover.

There are currently five board members: three independent external members, Secretary of the Department of Industry, Glenys Beauchamp and Deputy Secretary of the Department of Industry, Martin Hoffman.

If the worst was to happen and ARENA was abolished the federal government has said it would  honour all existing contracts.

Mr Frischknecht said that if ARENA’s functions were rolled into the Department of Industry most staff would retain their roles, particularly those dealing with contract management for existing projects or those involved with knowledge sharing in the renewable energy sector.

But he said valuable independence would be sacrificed.

“When we are making decisions about projects then it’s critical because we are leaving political considerations out of it, you really can focus on what the best commercial projects will make renewable energy competitive. This becomes much more difficult when you are under the control of the government. However, when you’re not making any new investment decisions that doesn’t really matter.”

ARENA was set up in 2012 by the Gillard government to boost the competitiveness of renewable energy technologies in Australia, and to increase the supply of renewable energy.