Proposed amendments to the Clean Energy Finance Corporation (CEFC) have been slammed by Labor and Greens senators who say they amount to an unwarranted power grab by federal energy minister Angus Taylor and were an “unacceptable attack on the financial independence and overarching purpose of the CEFC”.
The Morrison government is seeking amendments that would establish a $1 billion Grid Reliability Fund, to be administered by the CEFC. The government intends to use this fund to cover commitments being made under the Underwriting New Generation Investments (UNGI) program, designed to support new dispatchable energy projects.
However, the amendments go further than establishing the Grid Reliability Fund, and would seek to change the types of projects the entire CEFC could invest in, by establishing a new definition of “low emissions technologies” that would allow the agency invest in gas projects.
The proposed amendments would give greater powers to federal energy and emissions reduction minister Angus Taylor to direct the way the CEFC makes new investments and redirect it focus to supporting new fossil gas projects, including the use of taxpayer funds for loss-making ventures.
Taylor would be granted new powers to change the investment priorities of the CEFC via a legislative instrument, that could not be disallowed by parliament, eliminating otherwise normal processes of accountability.
The amendments were referred to the senate Environment and Communications Legislation Committee, after being introduced into parliament in August.
The majority position detailed in the final report of the senate committee, which has a majority of its membership consisting of Coalition senators, endorsed the proposed reforms the Clean Energy Finance Corporation.
But in separate dissenting reports, the Labor and Greens members of the committee slammed the amendments, with both opposing new powers being granted to the federal energy minister to effectively direct investments into preferred technologies and moves to open up the CEFC to making investments in gas projects.
In the Labor dissenting report, Labor senators Nita Green and Catryna Bilyk said that while the party broadly supports the allocation of new funding to support grid reliability projects, the extent of the proposed amendments to the CEFC’s legislation was unacceptable.
The Labor senators said that the changes should be made to the proposed amendments, and said the party would not support the amendments in their current form.
“While Labor supports those parts of the bill that are purely focused on increasing energy security and reliability through network and storage investment, two features of the current bill are sufficiently problematic to warrant amendment in Labor’s view,” the Labor dissenting report says.
“Put most broadly, as well as encouraging more transmission and security investment, this bill dilutes both the CEFC’s focus on emissions reduction and its financial independence.”
“These two characteristics—a clear commercial investment focus with a clear commitment to financial independence, and a focus on genuine emissions reduction—are the defining characteristics of the CEFC and as both are severely undermined by this bill, Labor Senators cannot support the bill in its current form,” the senators added.
Shortlisted projects under the UNGI program include a dozen new generation projects, made up of a mix of new gas-fired generators and pumped hydro energy storage projects. The shortlist of projects were announced in March last year, but progress has stalled pending the passage of the amendments.
In a separate dissenting report, the Australian Greens said that the government should establish a separate legislative arrangement for the Grid Reliability Fund program, rather than undermining the CEFC.
“There is no justified reason to interfere with the undisputed success and transparency of the CEFC, by allowing the Minister to insert himself into the decision-making process, interfere with what types of investments should be made and open up the CEFC to invest in loss-making gas projects, instead of profitable clean energy investments,” the dissenting report of Greens senator Sarah Hanson-Young says.
“The Australian Greens support additional funding available for the CEFC to invest in removing the grid constraints and driving down the prevalence of marginal loss factors that are inhibiting investment in renewable generation (alongside the intentional policy chaos and market intervention by the Liberal‑National Government).
“However, it should not occur in exchange for a loss of CEFC independence and to open up the Corporation to poor loss‑making gas projects as the bill currently allows for.”
In October, in a submission to the committee, former CEO of the CEFC Oliver Yates described the proposed amendments as “dangerous” and that they would open up the agency to making “dirty deals” in loss making gas projects.
“Any attempt to change the way the CEFC invests, making it invest in dirty deals or loss making investments, could destroy it’s very important global demonstration role and slow down global action on climate change,” Yates told the inquiry.
It is expected that further amendments to the CEFC are also forthcoming, with officials from the Department of Industry, Science, Energy and Resources telling senate estimates that the government would seek to expand the mandates of both the CEFC and the Australian Renewable Energy Agency (ARENA) to allow both agencies to provide funding to carbon capture and storage projects.
Both sets of legislative amendments will need to clear the federal senate, where they are likely to face opposition from Labor and Greens members, but could pass with the support of the crossbench.
You can listen to an interview with CEFC chief executive Ian Learmonth on this week’s Energy Insiders podcast here.
