The Clean Energy Fund

Archived News, Posted on 11 Jul 2011

TAXPAYERS will pump $10 billion over five years into green power and clean technology.

And they'll become part-owners and financiers of wind, solar and other renewable energy projects.

The unprecedented investment comes despite the Productivity Commission calling on the government to scrap renewable energy subsidies because they were an inefficient way to slash emissions, and warnings from Reserve Bank board member Warwick McKibbin that it could drive up the costs of abatement.

The Clean Energy Finance Corporation will start operating in 2013-14 with more than double the seed capital of its overseas counterpart, Britain's $4.5bn Green Investment Bank.

And green power projects -- excluding nuclear, biofuels from native forest woodwaste, and carbon capture and storage -- will take up at least half the fund's capital, after lobbying by the Greens.

Greens deputy leader Christine Milne said the dedicated funding represented the biggest single investment in renewable energy Australia has ever made.

"With a legislatively guaranteed stream of funding outside the budget, no future government will be able to undermine it without changing the legislation," she said.

The fund will share the remaining $5bn between the renewable energy, energy efficiency and low-emissions technology sectors and their supply chains, including manufacturers of wind turbines and solar panels. It will have a total fiscal impact of less than $1bn over the forward estimates because the investments will take the form of equity holdings and financing.

The fund, which will be independent of government and run by a board of banking, investment management, clean energy and technology experts, aims to partner with business to maximise investment in the sector.

The government believes $20bn will be spent on renewable energy projects in Australia in the next decade and $100bn by 2050. "Treasury modelling shows that with a carbon price, energy from the renewables sector is projected to account for around 40 per cent of our electricity generation by 2050, a significant increase from its current level of around 10 per cent," it said yesterday.

The Australian Conservation Foundation's Claire Maries expected the fund to shift the economy from coal and gas to renewables. "The end result is that we unlock a clean energy boom in Australia," she said.

Professor McKibbin was concerned by the scale of the package's subsidies for renewables.

"We know from the Productivity Comission report that that is a very high cost way of reducing carbon per unit . . . it has to be done in a way that is very carefully managed," he said.

"I would prefer that the carbon price system itself generates enough incentives."

The commission estimated that taxpayers have been subsidising the reduction of emissions at prices of up to $1000 a tonne through rooftop solar panels.

The new corporation is expected to make enough from its investments by July 2018 to be self-sustaining and to reinvest any dividends raised either in its own projects or those of the Australian Renewable Energy Agency.

The agency, announced last week, consolidates $3.2bn in existing federal funding programs for renewable energy technologies.

The $200m Clean Technology Innovation Program, will provide grants to business.

The renewable energy target -- to source 20 per cent of electricity from green power by 2020 -- will be maintained.

theaustralian.com.au
11/07/2011