The establishment of the Clean Energy Finance Corporation is the Government’s key initiative to stimulate greater investment in the renewable, clean energy and energy efficiency sectors. The Government is also streamlining existing renewable energy programs through the creation of the Australian Renewable Energy Agency and boosting grant funding available for manufacturing and the development of low pollution technologies through the Clean Technology Program.
The Clean Energy Finance Corporation has a fund of $10 billion over five years to invest in the commercialisation and deployment of renewable energy, low emissions technology and energy efficiency technology in Australia (starting 1 July 2013).
The objective of the CEFC is to overcome capital market barriers and it is intended that it make a positive return on its investments. The capital returned from the CEFC’s investments will be reinvested.
The CEFC may only invest in energy efficiency, renewable energy and low-emission technologies that are “solely or mainly Australian-based”, including hybrid technologies which incorporate a renewable component. Investment in carbon capture and storage or nuclear energy is expressly prohibited.
The CEFC is required to publish guidelines specifying the matters that it will consider when determining whether investments meet these criteria. It is expected that these guidelines will define “low-emission technology” to include technologies with an emissions intensity of at least half the current emissions intensity of the national electricity grid.
In addition, the CEFC’s investment decisions must comply with an Investment Mandate, which is yet to be issued by the Government.
The CEFC will make investments by acquiring financial assets (e.g. loans and equity) or by providing loan guarantees and it is expected that it will focus on projects and technologies in the later stages of development.
The CEFC’s enabling legislation came into force on 3 August 2012 and will be reviewed after 1 July 2016.
ARENA has been established as an independent statutory authority and commenced operations on 1 July 2012.
A number of existing programs that support research and development, demonstration and commercialisation of renewable energy technologies are being consolidated and transferred to ARENA including the Solar Flagships Program, the Australian Solar Institute, the Emerging Renewables Program and the Australian Biofuels Research Institute (amongst others).
ARENA is charged with administering funding of $3.2 billion over nine years from 2011-12, of which approximately $1.7 billion is currently uncommitted. It will also receive future funding from discretional dividends paid by the CEFC and potentially a share of the CPM revenue. It is intended that projects funded by ARENA will provide a potential pipeline of projects for the CEFC.
The Government expects that its renewable energy initiatives will drive up to $100 billion in new investment in renewable energy between now and 2050.
ARENA has released a consultation draft of its General Funding Strategy for the 2012-13 to 2014-15 financial years. Submissions are open until 27 August 2012.
The Clean Technology Program is the main potential source of grants for businesses and is designed to help improve energy efficiency in manufacturing and support research and development in low pollution technologies. It will be allocated a fund of $1.2 billion over seven years from 2011-12.
The Program comprises the following three components: