Slow start planned for Clean Energy Finance Corp

Ian Rogers
The Australian Government may take over year to work out a detailed investment mandate for its proposed Clean Energy Finance Corporation, and funding will not begin until the 2013/2014 financial year.

Most of the corporation's planned funding may only be provided over the 2016 to 2018 period, analysis of Treasury budget projections, and the weekend release of the Government's policy program on curbing carbon emissions, suggests.

In an interview with Climate Spectator, Greg Combet, Minister for Climate Change and Energy Efficiency, said that the CEFC will "provide loans, loan guarantees or equity investments".

On Sunday, the Government said it "will invest $10 billion" in renewable energy through the CEFC, though it is not clear whether the whole $10 billion will be in the form of equity in the corporation; whether it will borrow some of its required funding, or even whether the entity will operate like a fund or more like a financier that ploughs repayments back into further lines of credit.

Combet told Climate Spectator that the CEFC will foster "coordination and investment… The CEFC's role will really be to coalesce with private financiers to help try and make sure that the investment or lending occurs that gets that through the commercialisation.

"It will be a commercially oriented body and is expected to earn returns on its investments.

"'It's not a grants body… We want to see it make decent returns."

The proposed chair of the CEFC's board of directors - whom the Government has yet to nominate - will help devise the investment mandate and target rate of return, both these will likely take until well into 2012 to resolve.

The Greens senator, Christine Milne, told the Sydney Morning Herald that Treasury had not had time to properly assess the funding model the CEFC will manage.

"They didn't get that information in time to model it. Treasury modelling takes a long time to do, the nitty gritty of this agreement was really worked out in the last couple of months and Treasury have not modelled it," Milne told the SMH.

Analysis by investment bank Goldman Sachs of the carbon policy package concluded that "less than $1 billion of the announced $10 billion is accounted for in the Government's fiscal planning, leading us to believe much of the support will be made available in the last three years of the initiative."