- If we get a carbon price back, do we still need a Clean Energy Finance Corporation?
- How does the Clean Energy Finance Corporation work?
- What projects is the Clean Energy Finance Corporation financing?
- What’s the difference between the Clean Energy Finance Corporation and Tony Abbott’s “Direct Action”?
- Does the Clean Energy Finance Corporation make a profit for the budget and the public?
- Why do Tony Abbott’s government want to abolish the Clean Energy Finance Corporation?
Carbon pricing uses the power of markets to bring about change. But in the real world, there are all sorts of market imperfections to deal with (from entrenched interests, who understandably want to defend their position, to imperfect access to information that can happen for completely innocent reasons). New technologies take time to diffuse, and we need all the action we can get on climate change right now, or sooner. So the Clean Energy Package supplemented carbon pricing with measures including the CEFC .
The Climate Authority in its February report on Australia’s targets and progress said that we need complementary measures as well as market based approaches. Governments and economists around the world are looking at different approaches to complementary measures that work alongside carbon pricing.
In the Senate inquiry into “direct action”, for example, submissions like the one from the Grattan Institute argued that instead of being involved in direct financing into the future, the CEFC should work to bring into being a green bond market for superannuation funds to participate in. The CEFC and others, by contrast, have pointed to the outstanding success of the CEFC’s existing co-finance investment model.
But no-one is seriously arguing, or at least no-one serious is arguing, that we don’t need a carbon price, or that a carbon price itself will do the whole job.
As the Climate Change Authority said in its submission on the “Direct Action” policy, the policy toolbox
should comprise ‘market’ measures (including various forms of explicit carbon prices, emissions trading schemes, auctions and reverse auctions) and ‘non-market’ measures (including regulations, efficiency standards, grants/subsidies and education programs).
The CEFC isn’t a slush fund like Tony Abbott’s “direct action”. It uses a co-financing investment model, not grants. It applies rigorous commercial criteria to funding, and is delivering real results. For every $1.00 the CEFC invests, $2.90 of private sector investment is attracted.
The CEFC is funding projects in renewables, energy efficiency and lower emissions technologies. Over 500 megawatts of electricity generation has been financed. It is supporting 21st century jobs in regional and rural Australia. Co-financed projects include loans for business energy efficiency measures, wind farms and solar farms.
What’s the difference between the Clean Energy Finance Corporation and Tony Abbott’s “Direct Action”?
The CEFC is funding real direct action on climate. They are delivering abatement at a negative cost (or profit) of $2.40 per tonne of CO2 abated (annually over 3.88 million tonnes), compared to what would be $80 or more cost for every tonne under “direct action”.
Yes. As at December 2013 the CEFC portfolio of $536 million has an average return around 7% and has delivered $2.2 billion in value. Despite coalition claims, CEFC returns to the budget more than cover the cost of funds.
Since the reasons Tony Abbott and people like his Senate leader Senator Abetz have forward don’t stand up, your guess is as good as ours. Perhaps they still really think that “climate science is crap” and don’t want effective action on climate change – but (except for a few like Senator Cory Bernardi) aren’t prepared to admit it?