By Peter Roberts
The Clean Energy Finance Corporation – which styles itself as Australia’s green bank – is to receive $20.5 billion in new capital from the federal government to accelerate progress towards net zero emissions by 2050.
This acknowledgement of the success of the CEFC model comes as the corporation survived efforts to abolish it under the coalition as well as attempts to force it to invest in polluting fossil fuel sectors.
Despite these headwinds the CEFC pioneered and proven a model for government intervention in industry which provides co-investment capital alongside the private sector – in the expectation of achieving a financial return.
The model is widely seen as a more prudent and transparent method of backing industry rather than through discredited direct grant funding.
The new funding is the first increase in the capital allocated to the CEFC since it was established in 2012 with $10 billion.
Parliament passed the Treasury Laws Amendment (2022 Measures No. 4) Bill 2022, providing for the CEFC to receive the first $11.5 billion and allowing for a further $9 billion to be added by other new appropriations.
The additional funding provides for the creation of three new investment priorities to be delivered by the CEFC:
The additional capital allocation will be invested alongside ongoing CEFC investment activities including in renewable energy and energy efficiency, emerging cleantech and hydrogen opportunities, among others.
CEFC Chair Steven Skala AO said the new capital was the most significant support by the government for the CEFC’s work work as Australia’s ‘green bank’ in investing in a low emissions future.
Skala said: “The additional funding recognises the success of the CEFC model in investing to lead the market, proving up investment opportunities and operating with commercial rigour.
“The Rewiring the Nation programme, Household Energy Upgrades Fund and Powering Australia Technology Fund substantially expand the role of the CEFC, alongside its ongoing core businesses.
“New large-scale investments in priority grid infrastructure projects complement our existing work in transforming our energy system and bringing the benefits of decarbonisation to key sectors of our economy.”
At 31 December 2022, the CEFC had made lifetime investment commitments of $11.7 billion.
After repayments and returns on its investments, the CEFC had $4.6 billion available for ongoing investment activities from its original $10 billion funding allocation from the government.
The CEFC’s track record of providing positive returns was a model for the federal government’s $15 billion National Reconstruction Fund which also uses the co-investment model.
It is no exaggeration to say that without the CEFC, Australia would not be as far down the decarbonisation road as we are today.
Its role has been particularly important in seeding investment in higher risk areas and new technologies that the private sector would simply not have backed.
CEFC CEO Ian Learmonth said the CEFC expected to make substantial grid-related investment decisions within the next 12 months.
Learmonth said: “While these transactions are often large and complex, we must move quickly to invest in the expansion and augmentation of our grid and related infrastructure to deliver on Australia’s net zero objectives.”
Image: Clean Energy Finance Corporation