Clean Energy Finance Corporation
The Clean Energy Finance Corporation is an Australian Government-owned Green Bank that was established to facilitate increased flows of finance into the clean energy sector.
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. The CEFC also supports innovative start-up companies through the Clean Energy Innovation Fund. Across its portfolio, the CEFC invests to deliver a positive return for taxpayers.
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, its Investment Mandate and the investment policies issued by the CEFC Board.
Objective and functions
The CEFC invests in accordance with its legislation, the Clean Energy Finance Corporation Act 2012 and the prevailing Investment Mandate. The CEFC is a corporate Commonwealth entity under the Public Governance, Performance and Accountability Act 2013. 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', 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.
Decarbonisation strategy
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 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 arethe 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. Under the Public Governance, Performance and Accountability 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 the Board
- Requires investments by the CEFC to be "complying investments" as defined in Section 59.
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,.
Investment performance
In an update on performance highlights since it began investing to June 30 2019, the CEFC noted:- Deployment of more than $5 billion to investments and projects around Australia since it began investing, including $1.3 billion in 2018–19.
- $718 million in CEFC capital repaid or returned since inception, including a record $321 million in 2018–19, 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 more than $24 billion in additional private sector investment commitments Australia-wide, including $6.3 billion in 2018–19.
- Lifetime CEFC commitments at 30 June 2019 stood at $6.2 billion ''
- The CEFC had delivered nearly $1.1 billion in finance for more than 11,300 smaller-scale projects since inception, including $400 million in 2018–19, with an average investment of $95,000.
- Each dollar of CEFC finance committed in 2018-19 was matched by more than $3 from the private sector, and $2:$1 over the CEFC's lifetime.
- CEFC investments were aiming to reduce Australia's greenhouse gas emissions by an estimated 260 million tonnes of CO2-e over their lifetime.
Clean Energy Innovation Fund
History
The CEFC was established under the Clean Energy Finance Corporation Act 2012, passed by the Parliament of Australia on 22 July 2012. It was established on 3 August 2012 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 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.
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. 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. 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 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.
Mr Ian Learmonth was appointed CEO in March 2017 In August 2017 Mr Steven Skala AO was appointed CEO Chair. 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.
In August 2019, Australian Prime Minister Scott Morrison was reported in The Australian newspaper 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.”