Coalition restates wish to axe CEFC, then unveils its largest program

The Jekyll-and-Hyde nature of the Coalition’s clean energy policies were underlined again on Monday, with the Federal government trumpeting one of the biggest ever programs by the Clean Energy Finance Corporation, just hours after it repeated its wish to close the agency down.

On Monday, Coalition MP Jane Ruston, appearing before a Senate Environment and Communications Legislation Committee hearing, had confirmed that it remained the Coalition’s intention to dismantle the CEFC, if it could get enough votes in the Senate.

Greens Senator Scott Ludlam: Is it still government policy to abolish the CEFC?

Ruston: …Yes.

Ludlam: …Why?

Ruston: …I think the government made it pretty clear when we were elected that we didn’t believe we should be in the job of being a bank. (Ruston apparently forgot that the Coalition has proposed the $5 billion northern Australia infrastructure fund, which is to operate on the same principles as the CEFC, just in a different area).

Hours later, federal environment minister Greg Hunt trumpeted the launch of one of the green bank’s biggest investments yet, claiming credit for a $250 million energy efficiency program targeting community housing in Australian cities.

Hunt – in a media release sent while he was in Dubai, where he is attending the World Government Summit, and is thought to be a finalist in the “world’s best minister” award – said the CEFC-led program would drive the construction of market-leading energy efficient community housing project in 2016.

He said this would contribute to the greening of Australia’s cities and built environment. It will provide as many as 1,000 new energy efficient dwellings Australia wide.

Interestingly, Hunt said his department “had directed the CEFC to focus on cities and the built environment under its new Investment Mandate, which also included financing emerging and innovative renewable energy technologies as well as energy efficiency.”

Under the statute of the CEFC, the government has no power to direct particular investments at all, although it can negotiate its broader mandate.

Of course, it has been the policy of the federal Coalition to abolish the CEFC – along with ARENA, the CCA and the Climate Commission – ever since Tony Abbott was voted into power in 2013.

In December 2013, Hunt himself described the CEFC as “incredibly speculative” in its operation, and argued that it displaced effective policies such as the Renewable Energy Target (which the government was also, at the time, reviewing).

Under the leadership of Malcolm Turnbull, Hunt’s attitude to the CEFC appears to have adjusted itself – last October he described it as one of the “successes and tangible outcomes” his government had overseen, and praised it for acting as a catalyst to unlock private investment in clean technologies and for “achieving the remarkable result” of attracting $1.80 (more like $1.90 by latest estimates) of private finance for every dollar it invests.

But confusingly for the clean energy industry and for CEFC CEO Oliver Yates, the policy goal to dismantle it remains in tact.

Interestingly, Yates was also present at Senate Estimates, and himself answered a number of questions from Ludlam, on the role of the corporation, how it works, as well as on the importance of energy efficiency in cities, and more particularly in community housing.

Yates was particularly well versed on that subject, with the CEFC having today released its new Market Report: Financing Energy Efficient Community Housing, which identifies strong demand for over the next decade, with more than 200,000 approved applicants on waiting lists for social and affordable housing Australia-wide.

“This demand will require significant private sector investment, of as much as $15 billion over 10 years at current growth rates,” a CEFC media statement said on Tuesday.

And in Senate Estimates, Yates expanded on this – although this was before the $250 million program had been officially announced by Hunt.

Yates: What we’ve been noticing is that many houses – and certainly in the community housing sector –… are being built to standards which are actually relatively low.

So we were putting our low-income residents in some very high operating cost houses. So we looked together with …St George housing cooperative to work out how we could encourage them to build new homes and apartments much more highly rated.

In addition… we said well, whilst we’ll set up this ($60 million) program with you to build 200 new houses, we also want to then divert a small amount of the interest revenue that you are paying to us into a community reserve which will be used to upgrade existing houses. And they’ve got 4,300 existing houses, many of which will need significant upgrades if they are going to be efficient.

And later…

“Buildings around this country all need to be built to the highest star rating …To the extent we can encourage that it is critical
We just did a search in the property market at the moment and there are only 16 or 18 (commercial) buildings in Australia that are built to 6 stars. That’s all. We are miles behind the rest of the world.

“It’s the same in infrastructure, Senator. we’re going to be spending $200bn on infrastructure in the next four years and the ratings there don’t exist. There’s a lot of work to do.

And here are Yates and Ludlam on the subject of rentals, which Ludlam notes are mostly “crap” when it comes to energy efficiency:

Yates: “The landlord doesn’t have an incentive to care about the insulation, because he doesn’t have to pay the bill (Ludlum adds: “And the tenant can’t do anything about it.”) Correct, so there’s a real dichotomy there that we decided to step in to try and fix.

Ludlam: Well this is my favourite moment of estimates so far today… Tell us how you get this from what you describe on your website as a demo project, how do you get it to scale?

Yates: Senator, what we like to do is we like to do one demo project and then with that success we launch a program like we have the $250 million program for large-scale solar…

We will be probably likely to launch a project which is more available to housing coops right around the country who want to also build better and upgrade their houses so they too can get the benefit of government funding at a rate above the government’s cost of funds, and improve the livelihood of their own members, reduce their own energy costs and decrease our carbon emissions in one hit.

“We think that it’s an important step forward. This hopefully would be the first area…but it should apply to old age homes, it should apply to improving our hospitals… We’ve got to improve all of our buildings, and if we can do it with government finance in a way that generates a positive return for taxpayers, we’ve got to get on with it.”