Investors urge government to let private capital do its work on clean energy transition

The Clean Energy Investor Group (CEIG) and the Investor Group on Climate Change (IGCC) have released a joint report urging governments to collaborate with private capital in the clean energy transition, rather than attempting to compete.

The new report, Collaboration to Support Transition, highlights the role of governments in reducing transition risk for emerging technologies like offshore wind, long-duration storage, and renewable hydrogen.

But it also argues that the private sector is “best positioned” to be a majority owner of established technologies such as onshore wind and solar.

“Including a diverse range of investors, governments can tap into a wide range of expertise, resources, and networks, building scale and competitive market forces,” the two groups said in a joint statement released today.

“In contrast, seeking to partner with a narrow group of investors may send negative signals to the market and reduce investor confidence, slowing down the energy transition.”

The paper stresses the importance of supportive policies, funding, and incentives from government to accelerate the transition to a low-carbon future while reducing associated risks – for example through contracted revenues.

“The electricity sector has a critical role to play in this transition. By decarbonising the electricity sector, we can enable the decarbonisation of other sectors, including transport and manufacturing. This transition will require collaboration between governments and private capital,” said Simon Corbell, CEO of the CEIG.

“Governments are currently planning public investment in the transition to achieve specific policy outcomes and CEIG recognises that this is a legitimate policy choice, but we need clarity around how it will work.

“Investors are ready to work together with governments on the design of policy to support the transition. This collaboration will be critical to achieving the decarbonisation of the NEM, and the broader economy, and will also result in reduced risk and lower cost to consumers.”

Rebecca Mikula-Wright, CEO of IGCC, added, “Achieving deep, rapid and sustained cuts to emissions in Australia is in the national interest and will require high up-front capital deployment from both public and private investors.

“For Australia to remain an attractive market for investment in clean energy, unprecedented levels of co-ordination and close collaboration will be required: International markets, including the EU and USA, are moving ahead at pace, setting incentives that provide attractive risk and return profiles for clean energy investors.”

The Clean Energy Investor Group has a combined Australia portfolio value of over $38 billion, with 76 clean energy assets under management. The Investor Group on Climate Change is a collaboration of Australian and New Zealand investors focused on the impact of climate change on investment.