Abbott’s wonky meddling in Clean Energy Finance Corporation

The Age Editorial, 14 July 2015

You might think a government that espouses free-market ideals, innovation and modernisation would embrace the Clean Energy Finance Corporation and its efforts to identify commercially viable, sustainable energy technologies. But when it comes to the Abbott government, you would be very wrong.


It is led by a prime minister who hails coal as “good for humanity” and “essential for the prosperity of the world”, and who blithely suggests wind turbines are “visually awful”, noisy and somehow unhealthy – though there is not a scintilla of evidence to support it.

And there, backing up Abbott, is a menagerie of ministers and a barrow-load of backbenchers who are too miserably timid to contradict the voodoo nonsense their leader espouses. What would it take for one of them to speak the truth, to cite the comprehensive science that shows carbon emissions are having a dramatic and potentially dire effect on our climate?

Mr Abbott whines that his government does not get sufficient credit for its efforts to reduce carbon emissions. Well, no wonder. It could have done so much more, yet it did so much damage. It has repealed the carbon tax that would have penalised heavy polluters; it has wound back Australia’s target for the amount of energy that must be derived from renewable sources; it has approved huge new coal mines; and it has sharply curtailed the work of the Clean Energy Finance Corporation.

While the corporation’s task is to provide funding for renewable forms of energy, the Abbott government views it as little more than a lumpen addendum to the carbon tax legislation, a tainted orphan of Labor’s green years. Unable to legislate the CEFC out of existence when it repealed the carbon tax last year, the government has deliberately reset the rules to make the agency’s work almost impractical. It has gone about this in two ways.

First, it changed the corporation’s investment mandate so that it must now achieve a rate of return (before expenses) of at least 400 to 500 basis points above the five-year government bond rate (currently 2.17 per cent). The previous mandate required performance in line with the bond rate (after expenses).

CEFC directors told the government this new goal implied a shift away from the corporation’s normally conservative and commercially oriented risk profile, and “all evidence suggests” it would be “highly challenging” to achieve the higher return without taking on riskier investments. In any case, “achieving these increased returns would require CEFC to consistently outperform the market by a large margin”.

The second rule change, which has been reported by Fairfax Media but not yet publicly released, specifically bars the corporation from investing in wind farms of all sizes and small-scale solar and directs it away from “mature and established” clean energy technologies.

This is high-handed and irrational ideological interference by the government. Combined with the demand for CEFC to hit a higher return on investments, it represents a deliberate effort to curb the agency’s activities.

Mr Abbott says his government does not really want CEFC to exist at all, “but while it’s there it really should do what the private sector won’t do and invest in new and emerging technologies”. We suggest he has badly misread the politics on this. Australians do not understand why he harbours such irrational abhorrence of wind farms, for example.

The CEFC should be freed of this government’s unscientific meddling. Its investment strategy should be agnostic. The success or otherwise of clean energy technologies should be determined not by politicians’ bizarre and emotive diatribes but by reference to their energy efficiency, low rate of emissions, renewable capacity and by their commerciality – as the legislation dictates.

The Age Editorial: 14 July 2015

The Age: And Another Thing: 14 July 2015

Screw renewable energy? Is this a scientifically based approach or an ideology driven by donors? Bill Burns, Bendigo

Key Words: OzPolitics

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