Founded 2012 | ||
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Industry Clean Energy Investment Key people CEO Oliver YatesChairperson Jillian Broadbent Owner Commonwealth of Australia Website www.cleanenergyfinancecorp.com.au | ||
Abbott scraps clean energy finance corporation that makes a profit
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. The CEFC invests in accordance with its legislation, the Clean Energy Finance Corporation Act 2012 (CEFC Act) and the Clean Energy Finance Corporation Investment Mandate. The CEFC is a corporate Commonwealth entity under the Public Governance, Performance and Accountability Act 2013 (PGPA Act). 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.
Contents
- Abbott scraps clean energy finance corporation that makes a profit
- Senator ludlam asks the clean energy finance corporation about the renewable energy boom
- History
- Commercial approach
- Investment commitments
- Object and functions
- Responsible ministers
- Investment Mandate
- Offices
- References
The CEFC's Investment Mandate, issued by the Australian Government as a Ministerial Direction on 3 December 2015, provides the CEFC with high level policy direction from the Government and articulates the Government's broad expectations of how the CEFC will invest and be managed. The Investment Mandate and accompanying Explanatory Statement and the response of the CEFC Board were tabled in Parliament and are available on the ComLaw website. In its response to the December 2015 Investment Mandate, the CEFC said it represented an appropriate approach that would allow the CEFC to support Australian Government policy priorities while still allowing a measure of investment flexibility.
The CEFC is governed by an independent Board 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’s investment objectives are 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, the December 2015 Investment Mandate and the CEFC investment policies issued by the Board.
In October 2016, the CEFC announced its founding CEO, Mr Oliver Yates, has advised the Board of his decision to step down. CEO Chair Ms Jillian Broadbent AO said Mr Yates had made a significant contribution to the sector and departs on excellent terms. In accordance with the CEFC Act, the new CEO will be appointed by the CEFC Board, following consultation with the responsible Ministers.In the interim, Mr Yates will remain CEO.[1]
Senator ludlam asks the clean energy finance corporation about the renewable energy boom
History
The CEFC was established under the Clean Energy Finance Corporation Act 2012, passed by the Parliament of Australia on 22 July 2012. The CEFC was established on 3 August 2012. It commenced funding investments on 1 July 2013.
The Abbott Government announced its intention to abolish the CEFC. Mr Abbott and then Assistant Treasurer Senator Arthur Sinodinos confirmed the Government would scrap the CEFC. Legislation to abolish the CEFC and transfer the CEFC’s existing assets and liabilities to the Commonwealth was before Parliament but blocked by non-government senators in the Senate. The CEFC is not supported by the Coalition Government. Then Opposition Leader Tony Abbott wrote to Jillian Broadbent, chair of CEFC on 5 August 2013 asking it to stop making new loans and to cease assessing new projects.
On 5 December 2013, CEFC Chairperson Jillian Broadbent complained to ABC Radio National, begging the government to "break an election promise" and keep the CEFC in operation citing a 7% profit. Senator Sinodinos said that if it's making a profit, it should survive without the government and essentially confirmed the government will shut the corporation down. In July 2015, Tony Abbott announced he would ban the corporation from investing in wind power and rooftop solar. On 13 July 2015, the CEFC said it was taking advice in relation to the draft Mandate.
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. 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.
Commercial approach
The CEFC applies a commercial approach when making investment decisions and seeks to develop a portfolio across the spectrum of clean energy technologies that in aggregate must have an acceptable but not excessive level of risk relative to the sector. The Corporation applies a commercial filter when making its investment decisions, focussing on projects and technologies at the later stages of development. The filter is not as stringent as the private sector equivalent, as the Corporation has a public policy purpose and values any positive externalities being generated. Consequently, it has different risk/return requirements. For a given return, the Corporation may take on higher risk and, for a given level of risk, due to positive externalities, may accept a lower financial return. In line with its policy intent, the Corporation considers the positive externalities and public policy outcomes when making investment decisions and when determining the extent of any concessionality for an investment.
Investment commitments
The CEFC said on 26 July 2016 that it had committed a record $837 million to new investments in the Australian clean energy sector in the 2015-16 financial year, contributing to projects with a total value of $2.5 billion. At June 30, 2016, the CEFC’s investment commitments since its inception in 2013 reached $2.3 billion, contributing to projects with a total value of $5.7 billion. The CEFC said it's investment commitments were centred on transforming Australia's clean energy investment, including three strategic priority areas: cleaner power solutions (including renewable energy); a better built environment (such as property, manufacturing, infrastructure and community housing) and creating new sources of capital for clean energy, such as climate bonds and investment funds. Investment commitments in 2015-16 included the following:
Object and functions
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:
Responsible ministers
Under section 4 of the CEFC Act, the Responsible Ministers are the Environment and Energy Minister and the Finance Minister. 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.
Investment Mandate
An Investment Mandate direction [2] is the means by which the Government of the day provides instruction as to how the Corporation can make investments, providing it:
Under the 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. [3] A revised Investment Mandate was issued by the Australian Government as a Ministerial Direction on 3 December 2015. [4]
The Australian Government is providing $2 billion per year in funding to CEFC on 1 July for five years commencing in 2013 (Clean Energy Finance Corporation Bill 2012)[5] The CEFC will be exempt from tax in order to overcome capital market barriers.
Offices
CEFC is headquartered in Sydney with offices also in Brisbane and Melbourne. In the 2013 Australian federal budget the organisation had a forecast budget of $19.5 m.
The chief executive officer is Oliver Yates. Yates was a former Macquarie Group investment banker.