Ten years on, Australia’s green bank still has $4.6 billion to spend on clean energy

A decade after it was created through a landmark deal under the Gillard Labor government, Australia’s green bank, the Clean Energy Finance Corporation, has emerged largely unsullied by partisan politics and still has nearly $5 billion to spend on clean energy and other technologies.

The CEFC stands unique among the suite of policies and institutions created by the minority Gillard government back in 2012 and its deal with the Greens and country independents.

Others were not so fortunate. The Coalition killed the carbon price when it got into government, slashed the renewable energy target, defenestrated the Climate Change Authority and slashed funds and sought to change the mandate of ARENA, but could never quite get its hands on the CEFC.

The CEFC has been armed with $10 billion, and has already made some $10.6 billion of commitments and spent some $9.1 billion, catalysing more than $37 billion in 276 different investments along the way.

Thanks to the recycling of $3.2 billion of its loans, it still has $4.7 billion in its kitty, and may have a lot more than that if, as expected, it becomes the conduit for the current Labor government’s Rewiring the Nation strategy.

“We’ve evolved as the clean energy transition has evolved,” CEO Ian Learmonth tells RenewEconomy in an interview marking its latest annual report and its 10th anniversary.

“And I guess, I feel like we’re on the brink of something even bigger and bolder, where we sit today with a Labor government and its Rewiring the Nation plan.”

That policy, a $20 billion commitment to ensure that the infrastructure needs of a rapid shift to renewables, and Labor’s target of an 82 per cent share by 2030, is likely to be managed through the CEFC, although exactly how is yet to be finalised.

The CEFC is already deploying big licks of capital to some of the nation’s key transmission projects, including most recently $160 million helping connect the nation’s biggest wind farm and creating a new renewable energy zone around it.

In the last financial year, it committed $465 million to the big Project EnergyConnect link between South Australia and NSW, and another big transmission project in Queensland, and Learmonth is eyeing other key links identified in AEMO’s Integrated System Plan.

“Certainly over the next two or three years, there are some very big, lumpy pieces of infrastructure that we would,  anticipate investing in,” Learmonth says. But there are other new areas too, in hydrogen, agriculture, carbon markets and others that will require smaller amounts, but may involve more risk.

And Learmonth says it is still important work to be done to support wind, solar and storage projects, particularly given the growing problems of inflation, interest rates and supply chain challenges.

Since its inception, the CEFC has committed $5.9 billion to renewable energy, $3.8 billion to energy efficiency, and $878 million in other low emission technologies.

Most have been in the form of some sort of debt, although there has been an increasing amounts of equity. Most have worked out fine, but not all.

“You have wins and losses, particularly around your equity investments, and we have had a significant uptick in quite a number of equity, investments this year …. even in our Innovation Fund, which has made some terrific investments,” he says. “They are early stage companies, but some of those have had some significant write ups.”

The CEFC’s renewable energy investment portfolio has included 42 wind and solar projects, and Learmonth says the recent energy crisis underlines the need for much, much more, and the CEFC will need to play a key role.

“We recognise these investments are just the start of what is required,” Learmonth says, referencing AEMO’s forecasts of a nine-fold increase in grid-scale wind and solar capacity, a three-fold lift in firming capacity and a near five-fold growth of distributed solar.

Learmonth says the CEFC will be around for a lot longer, and he is optimistic that the transition will deliver the necessary climate and economic benefits.

“While the scale of the investment requirement is seismic, so too are the opportunities,” he says.

“The natural resources which powered our economy in the past century will be replaced with new resources for the next century, where we have world-leading potential in renewable energy, green hydrogen and critical minerals.

“Our strong and stable financial system is giving us vital access to domestic and global capital, including the fast-growing pool of green capital seeking to preference sustainable investment.

“Equally, a commitment to innovation is transforming the way we farm, manufacture, recycle and travel, addressing some of our toughest emissions challenges while reshaping future growth.”

In the last year, the CEFC made another $1.4 billion of new debt and equity commitments.