Clean Energy Finance Corporation

The Clean Energy Finance Corporation (CEFC) is an Australian Government-owned Green Bank that was established to facilitate increased flows of finance into the clean energy sector.

Clean Energy Finance Corporation
IndustryClean Energy Investment
Headquarters
Sydney, Australia
,
Australia
Number of locations
4 Offices
Key people
Ian Learmonth (CEO)
Steven Skala AO (Chairperson)
OwnerAustralian Government
Websitewww.cefc.com.au

The CEFC is responsible for investing $10 billion in clean energy projects on behalf of the Australian Government. Its mission is to help lower Australia's carbon emissions by investing in renewable energy, energy efficiency and low emissions technologies across the economy, via a range of finance options.[1] The CEFC also supports innovative start-up companies through the Clean Energy Innovation Fund[2] and is investing in the development of Australia’s hydrogen potential through the Advancing Hydrogen Fund.[3] Across its portfolio, the CEFC invests to deliver a positive return for taxpayers.

The CEFC is also contributing to the Australian Government’s Technology Investment Roadmap by unlocking investment opportunities in new and emerging technologies outlined in the Roadmap.

In August 2020, legislation to create a Grid Reliability Fund (GRF) was introduced into the Australian Parliament. If passed, the GRF would add $1 billion to the CEFC investment capacity, to encourage investment to support the reliability of the electricity grid and improve affordability for energy users.[4]

The CEFC is governed by an independent board[5] which has a statutory responsibility for decision-making, performance of the Corporation's functions and managing the CEFC's investments, and a Chief Executive Officer who is responsible for the day-to-day administration of the Corporation. A system of delegations exist to aid in the performance of these functions. The Board reports to Parliament through its Responsible Ministers.

The CEFC investment objectives is to "catalyse and leverage" an increased flow of funds for the commercialisation and deployment of Australian-based renewable energy, energy efficiency and low-emissions technologies. The CEFC achieves its objectives through the prudent application of capital, in adherence with its risk management framework, its Investment Mandate and the investment policies[6] issued by the CEFC Board.

Objective and functions

The CEFC invests in accordance with its legislation, the Clean Energy Finance Corporation Act 2012 (CEFC Act) [7] and the prevailing Investment Mandate. The CEFC is a corporate Commonwealth entity under the Public Governance, Performance and Accountability Act 2013 (PGPA Act).[8] The CEFC has access to funding of $10 billion comprising annual appropriations to the CEFC Special Account of $2 billion every 1 July from 2013 to 2017 inclusive, in accordance with section 46 of the CEFC Act. The CEFC draws on this finance on an as needs basis, with non-committed funds remaining in the Special Account until required. The object of the CEFC is specified in section 3 of the CEFC Act as being 'to facilitate financial flows into the clean energy sector'. The main function of the CEFC is the 'investment function' (as specified in section 9 and subsection 58(1) of the CEFC Act), to invest, directly and indirectly, in renewable and low carbon technologies. Section 9 also specifies a number of support functions such as:

  • liaison with relevant individuals, businesses and agencies to facilitate the investment function
  • to perform any other functions conferred by the CEFC Act or any other Commonwealth law
  • to do anything incidental or conducive to the performance of the investment function or the other functions.

Pathway to lower emissions

The CEFC has stated that the pathway to lower emissions requires sustained investment and action across all areas of economic activity. It pursues investment opportunities around (1) low carbon electricity, (through the increased deployment of clean energy technologies, including storage and energy infrastructure that deliver clean, reliable and secure energy); (2) electrification and fuel switching (from fossil fuels to lower emissions alternatives in infrastructure and transport, including electrifying industrial processes, and adopting electric vehicles and switching to lower emissions fuel sources such as biofuels); (3) ambitious energy efficiency (delivered Australia-wide, to substantially lower energy intensity and improve energy productivity) and (4) bio-sequestration and non-energy emissions reduction (including through recycling and reducing the volume of waste going to landfill, along with adopting lower emissions practices across the economy).

Governance

Responsible ministers

Under section 4 of the CEFC Act, the Responsible Ministers are the Minister for Energy and Emissions Reduction and the Minister for Finance. The Nominated Minister is one of the Responsible Ministers who exercises additional powers and functions under the CEFC Act. Subsection 76(1) of the CEFC Act provides that the Responsible Ministers determine between them which is to be nominated.

CEFC Board operations

The CEFC Board Charter details the Board's role and responsibilities and its relationship with Management. The Audit and Risk Committee and the People and Culture Committee are the two standing Board Committees which assist the Board in its oversight role. The charters for the three Board Committee detail the leadership, composition and responsibilities of each Committee and how they exercise their authority.

The CEFC is a statutory authority established by the Australian Government under the Clean Energy Finance Corporation Act 2012 (CEFC Act). Under the Public Governance, Performance and Accountability Act (PGPA Act), the CEFC is known as a corporate Commonwealth entity. The CEFC Act:

  • Creates the CEFC Special Account, a Special Account under the PGPA Act which is credited with $2 billion each 1 July, for five years from 1 July 2013, to enable the CEFC to invest in the clean energy sector
  • Provides the CEFC Board with statutory responsibility for decision-making and managing the CEFC's investments. The Board operates and makes its investment decisions independently of government, based on rigorous commercial assessments
  • Provides for the appointment of the CEFC Chief Executive Officer, who is responsible for the day-to-day administration of the CEFC, subject to (and in accordance with the policies determined by) the Board
  • Requires investments by the CEFC to be "complying investments" as defined in Section 59 (2).

The CEFC publishes quarterly reports on its website regarding investment commitments.[9]

Investments

Investment mandate

An Investment Mandate direction is the means by which the Government of the day provides instruction as to how the Corporation can make investments, providing it:

  • does not have a purpose of directing the Corporation to require the corporation to make or not make a particular investment and
  • is not inconsistent with the Act, (including the object of the Act).

Under the CEFC Act, the CEFC Board must be consulted on the draft of a proposed new mandate, and any submission made by the Board must be tabled in the Parliament.

The Clean Energy Finance Corporation Investment Mandate Direction 2020, directs the CEFC to make available up to $300 million to support the growth of a clean, innovation, safe and competitive Australian hydrogen industry via the newly created Advancing Hydrogen Fund.[10]

Under the Investment Mandate Direction 2019, the Australian Recycling Investment Fund was created. The Mandate was updated in 2020 and directs the CEFC to make available up to $100 million to support recycling or recycled content projects using clean energy technologies, with a particular focus on waste plastics, paper, glass and tyres.[11]

Investment performance

In an update on performance highlights since it began investing to June 30, 2020,[12] the CEFC noted:

  • Deployment of more than $6 billion to investments and projects around Australia since it began investing, including $937 million in 2019–20.
  • $1.66 billion in CEFC capital repaid or returned since inception, including a record $942 million in 2019–20, underscoring the CEFC's ability to earn a positive return on our investments and reinvest on behalf of taxpayers.
  • Since inception, CEFC investments had helped drive $27.3 billion in additional private sector investment commitments Australia-wide, including $4.24 billion in 2019–20.
  • Lifetime CEFC commitments at 30 June 2020 stood at $6.4 billion (excluding revocable commitments, repayments and cancellations on total commitments of $8 billion since inception)
  • The CEFC had delivered nearly $1.27 billion in finance for ~18,000 smaller-scale projects since inception, including $187 million in 2019–20.
  • Each dollar of CEFC finance committed in 2019-20 was matched by more than $3 from the private sector, and $2.30:$1 over the CEFC's lifetime.

Clean Energy Innovation Fund

The Clean Energy Innovation Fund is the largest dedicated cleantech investor in Australia, created to invest $200 million in early-stage clean technology companies. It focuses on technologies and businesses that have passed beyond the research and development stage and which can benefit from early stage seed or growth capital to help them progress to the next stage of their development. To 30 June 2020.,[13] the CEFC reported that the Innovation Fund had made investments commitments of more than $85 million with total project value of more than $308 million. Operating with the assistance of ARENA, in 2019-20 the Innovation Fund added two companies to its portfolio including Soil Carbon Company, a company developing technology to improve the drought resilience of farming land and JetCharge, a specialist provider in electric vehicle charging infrastructure. During 2019-20, the Clean Energy Innovation Fund also undertook a new investment into Tenacious Ventures, Australia’s first dedicated agrifood tech venture capital firm.

CEFC Investment Insights

CEFC Investment Insights provide details on the impact and innovation of its investments. Investment Insights to date have included:

  • FarmPrint benchmarking tool – This Investment Insight provides an update of the 12 month pilot of FarmPrint, a unique tool developer by the CSIRO, MIRA and the CEFC; designed to enable Australian farmers to monitor, benchmark and evaluate their on-farm carbon footprint, an important step in identifying actions that can lift the sustainability of their farming operations.[14]
  • Clean energy and the opportunity for waste – discusses how innovative technology, finance and contracting is enabling Perth’s East Rockingham Waste to Energy facility to address the twin challenges of increasing the supply of cleaner energy and reducing landfill volumes.[15]
  • Clean energy and community housing – provides information on CEFC-financed initiatives undertaken by community housing providers SGCH and Housing Plus and outlines the energy and cost savings for tenants of up to $500 per year on new build homes.[16]

History

In August 2019, Australian Prime Minister Scott Morrison was reported in The Australian newspaper[17] as saying that: “The fact Australia leads the world in per capita investment in clean energy, we have the world’s most successful green bank in the Clean Energy Finance Corporation and that we’re on track to have around a quarter of our electricity needs met by renewables by 2020, all underscores the work underway to reduce our global emissions.”

The CEFC was established under the Clean Energy Finance Corporation Act 2012, passed by the Parliament of Australia on 22 July 2012.[18] It was established on 3 August 2012[19] and commenced making investment commitments from 1 July 2013.

In December 2018, an independent statutory review of the CEFC Act found that the CEFC had facilitated the flows of finance into the clean energy sector, with CEFC's investments successfully enabling projects that would not have otherwise proceeded, attracting substantial private co-investment to projects. The statutory review[20] was conducted by Deloitte and tabled in Parliament on 14 December 2018. The CEFC submission to the Statutory Review of the Corporation is also publicly available.[21]

On 5 August 2013 the federal Coalition Opposition led by Tony Abbott wrote to the CEFC asking it to stop making new loans and to cease assessing new projects.[22] After the 2013 federal election, on 5 December 2013, then CEFC Chair Jillian Broadbent said on ABC Radio National that the government should "break an election promise" and keep the CEFC in operation, citing a 7% profit. Coalition Senator Arthur Sinodinos said that if it's making a profit, it should survive without the government and essentially confirmed the government would shut the corporation down.[23] Legislation to abolish the CEFC and transfer the CEFC's existing assets and liabilities to the Commonwealth was put before Parliament but blocked by non-government senators in the Senate. In July 2015, Abbott announced he would ban the CEFC from investing in wind power[24] and rooftop solar.[25] On 13 July 2015, the CEFC said it was taking advice in relation to the draft Mandate.[26]

In December 2015, Fairfax media reported that Prime Minister Malcolm Turnbull had lifted the ban on CEFC investment in wind power, in his first major break from the former regime's environmental policy.[27] The Guardian reported on 24 December 2015 that the CEFC had been directed to focus on innovative and emerging technologies, reversing a mandate by the former prime minister Tony Abbott that would have specifically blocked funding for windfarms and small-scale solar projects.[28]

Mr Ian Learmonth was appointed CEO in March 2017 [29] In August 2017 Mr Steven Skala AO was appointed CEO Chair.[30] Mr Skala described the CEFC's performance in its first six years reflected its ability to independently implement Australian Government directions, supported by its pillars of good governance, responsible client selection and considered risk management.[31]

See also

References
  1. "Where we invest - Clean Energy Finance Corporation (CEFC)". www.cefc.com.au. Retrieved 2 July 2018.
  2. "Innovation Fund - Clean Energy Finance Corporation (CEFC)". www.cefc.com.au. Retrieved 2 July 2018.
  3. https://www.cefc.com.au/where-we-invest/renewable-energy/hydrogen/
  4. https://www.aph.gov.au/Parliamentary_Business/Bills_Legislation/Bills_Search_Results/Result?bId=r6581
  5. https://www.cefc.com.au/about-us/our-board/
  6. https://www.cefc.com.au/about-us/investment-policies/
  7. http://www6.austlii.edu.au/cgi-bin/viewdb/au/legis/cth/num_act/cefca2012297/
  8. https://www.legislation.gov.au/Details/C2017C00269
  9. https://www.cefchttps://www.cefc.com.au/market-insights/statutory-reports/quarterly-reports/
  10. https://www.legislation.gov.au/Details/F2020L00552
  11. https://www.legislation.gov.au/Details/F2020L00552
  12. https://www.cefc.com.au/media/1w3l53yd/cefc_investmentupdate_2019-20.pdf
  13. https://www.cefc.com.au/media/q2kfurrx/cefc_factsheet_innovationfund_aug2020.pdf/
  14. https://www.cefc.com.au/media/wlidszyx/cefc-investmentinsights_farmprint.pdf
  15. https://www.cefc.com.au/media/c0bbqrfh/cefc-investmentinsights_eastrockingham.pdf
  16. https://www.cefc.com.au/media/2vqg5rly/cefc-investmentinsights_communityhousing.pdf
  17. https://www.theaustralian.com.au/nation/politics/morrison-to-give-500m-in-climate-change-funds-to-pacific/news-story/9624cd0d62301bc2c8b4a0f68bfd7492?btr=51b498c820d4e084dd7c7bcc6fd3622d
  18. "Clean Energy Finance Corporation Bill 2012". Parliament of Australia. Commonwealth of Australia. 16 August 2012. Retrieved 19 May 2013.
  19. "The CEFC and Government - Enabling legislation". Cleanenergyfinancecorp.com.au. Archived from the original on 23 September 2015. Retrieved 30 July 2016.
  20. https://www.cefc.com.au/media/402001/cefc-statutory-review-deloitte-october-2018.pdf
  21. https://www.cefc.com.au/media/files/cefc-welcomes-publication-of-the-independent-statutory-review-of-its-operations/
  22. Abbott, Tony. "Coalition Leader's Letter to CEFC 5 Aug 2013" (PDF). Leader of the Opposition. Retrieved 6 August 2013.
  23. Bourne, James. "CEFC fights for its life". Australian Broadcasting Corporation. Retrieved 7 December 2013.
  24. Adam Gartell (11 July 2015). "Tony Abbott has escalated his war on wind power". Sydney Morning Herald.
  25. "Government pulls the plug on household solar". Sydney Morning Herald. 13 July 2015.
  26. "Statement from the CEFC". Cleanenergyfinancecorp.com.au. 13 July 2015. Archived from the original on 16 July 2015. Retrieved 30 July 2016.
  27. Federal Politics (13 December 2015). "Malcolm Turnbull has lifted Tony Abbott's wind power investment ban". Theage.com.au. Retrieved 30 July 2016.
  28. The Guardian, 24 December 2015: New clean energy investment mandate a shift from policy proposed by Abbott
  29. https://www.cefc.com.au/media/files/cefc-board-appoints-ian-learmonth-as-new-chief-executive-officer-replacing-oliver-yates.aspx
  30. https://www.cefc.com.au/media/296276/minister-cormann-minister-frydenberg-media-release-cefc-appointments.pdf
  31. "From our Chair - CEFC Annual Report 2019". annualreport2019.cefc.com.au. Retrieved 24 October 2019.
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