The attempts by treasurer Joe Hockey and finance minister Matthias Cormann to impose bizarre, contradictory and mystifying restrictions on the $10bn institution are designed to prolong the drought in large scale renewable energy investment and extend it to small scale renewables as well.
Much of the uproar has focused on the apparent targeting of wind technology and household solar – the two most successful renewable energy sectors in Australia to date.
But the intent of the Hockey/Cormann directive is to forbid the CEFC to invest in any “mature” technology, which it identifies as “extant wind” and rooftop solar. It could arguably include energy efficiency initiatives (such as LED lights and insulation), large scale solar PV, small hydro, land fill gas and waste to energy and numerous other technologies.
By potentially restricting the CEFC’s mandate to “big solar” – particularly parabolic troughs and molten salt storage – and as yet undeveloped technologies such as wave and tidal energy, as suggested by environment minister Greg Hunt, the government is not just confusing the CEFC’s role with that of the Australian Renewable Energy Agency, but also making its task of achieving double the government bond rate return impossible.
It is asking it to take on the riskiest technologies and put all its eggs in just a few baskets. The experienced finance team on the CEFC board, including chairwoman Jillian Broadbent, will undoubtedly tell them that is just nonsense.
It’s not really the details that count. It is the big picture and the optics that matter in global financial flows. The Abbott government has long declared its interest in technologies that are “on the horizon” – hence the interest in wave and tidal – and its horror of technologies that are being deployed in scale now, and threaten the primacy of fossil fuels.
Having tried everything else to stop renewable energy, it has now turned its focus on big financial institutions. The message it wants to send to domestic and international banks is clear: don’t finance that stuff down here.
The contradictions are endless. The Abbott government argues that it does not want the CEFC to support projects that would otherwise make economic sense. But it doesn’t apply this criteria to its proposed $5bn fund – dubbed the DEFC or dirty energy finance corporation – to support infrastructure for coal mines and coal generators in northern Australia.
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