Jillian Broadbent

18 April 2012 – A range of property related low emissions energy technology will form part of the investment considerations under the $10 billion Clean Energy Finance Corporation, the expert review panel has recommended.

The CEFC plans to start investing from July 1, 2013, and recommends that $2 billion a year for five years from 2013-14 be specially appropriated in government legislation.

The expert review of the design of the CEFC, led by Reserve Bank board member Jillian Broadbent, has proposed a flexible mandate that would give it discretion over its investments.

Among the key recommendations of the panel is to have some flexibility in the proposed two investment streams – renewables and low-emission technologies.

Broadbent has suggested the targets be regarded as a “goal” rather than a strict target, and to modify them to “at least 50 per cent” for renewables and up to 50 per cent for low emission and energy efficiency technologies.

The panel recommends that the renewables stream be defined along the same guidelines as the Australian Renewable Energy Agency, but also include hybrid technologies and enabling technologies, such as grids or grid extensions.

The low-emissions technology stream will be defined as anything that has no more than 50 per cent of the current average emissions intensity in Australia – a limit of 0.416 tonnes of carbon dioxide equivalent for each megawatt hour of electricity produced.

This will allow inclsion of:

  • Trigeneration and cogenaration
  • fuel cell technologies
  • distributed energy
  • energy efficiency and demand management investments.

The panel suggests that the CEFC either absorbs the government-funded Low Carbon Australia, or it funnels its energy efficiency investments through that organisation.

Carbon capture and storage and nuclear technologies remain excluded.

The CEFC expects much of its investments initially to be in the form of loans rather than equity. Loan guarantees are unlikely to be considered. It also says that suggestions that it design and grant tax exemptions or raise capital in the market by issuing bonds would lie outside its mandate and legislative powers.

It proposes that generation projects it supports qualify for renewable energy certificates and will invest on the premise that existing Commonwealth policies such as the carbon price and the Renewable Energy Target continue to exist.

The CEFC was a means of ensuring Australia’s competitiveness in the 21st Century global economy, a statement from The Australian Conservation Foundation said.

The ACF called on the federal government to make this a reality as soon as possible –  a concrete step to unlocking up to $100 billion of clean energy investment, and creating tens of thousands of jobs.

“These recommendations make public what was already clear; that a strong and independent CEFC will underpin a $100 billion boom in clean energy investment that will make Australia the envy of the world,” Simon O’Connor, economic adviser with ACF said.

“According to Deutsche Bank, there are already 2.5-3 million clean energy jobs worldwide, with the potential of 30 million within 20 years. By accepting Jillian Broadbent’s recommendations and passing them quickly into law, Australia can have access to many of these.

“At $10 billion, the CEFC is a bargain compared to the $60 billion Australia is budgeted to spend on fossil fuel subsidies in the coming five years,” Mr O’Connor said.

While ACF embraces the recommendations made by the review panel, Mr O’Connor reminds the government that money not adding to Australia’s clean energy boom would be wasted.

“We must remember that both the government and opposition support increasing our renewable energy output to 20 per cent of total by 2020. That’s going to happen anyway, with or without the CEFC,” he said.

“If we’re serious about competing in a 21st century economy, the CEFC needs to support additional clean energy, rather than investment that will happen anyway.

“By making the CEFC a reality, the government can help provide business with the certainty that it craves, helping spur short- and long-term jobs growth. If business is serious about its international competitiveness in the years to come, they need to get behind these recommendations,” Mr O’Connor said.

The report has been endorsed by Greens leader Senator Christine Milne.

“Australians are famous early adopters of new technology and we love renewable energy in particular, but renewable energy has been held back in Australia by successive government. So I am sure the CEFC will prove to be enduringly popular,” Senator Milne said.