Australian news, and some related international items

Australia’s Clean Energy Finance Corporation (CEFC) gets a good rap from business analysts

The CEFC: A good first step, 19 Mar 2012, Climate Spectator, Kane Thornton A recent report by Deloitte, based on consultation with over 40 senior executives in Australian banks, super funds, venture capitalist firms and major investors, has revealed that they see clean energy as a good bet.

This should come as no great surprise: last year, local investments in renewable energy totalled $5.2 billion, while globally the pool reached more than $260 billion. What was perhaps surprising about the Deloitte findings was the
overwhelming  support respondents gave to the government’s $10 billion Clean Energy Finance Corporation (CEFC), to be funded by carbon pricerevenue collected from the country’s 500 biggest polluters.

Although the design of the CEFC is still being developed by Reserve
Bank board member Jillian Broadbent, the independently-run institution
will likely provide loans for companies and projects across a range of
new clean energy technologies like large scale solar, geothermal and
ocean power. Investors are also interested in seeing the CEFC support
investments in electricity networks and energy efficiency projects.
There is an obvious question here. If the outlook for these
technologies is so rosy, why would the federal government need to
commit $10 billion to a special body to get them off the ground? The
Deloitte report showed that there are a few simple reasons why this
new institution makes good sense.
The largest barrier identified for investors in clean energy was the
risk of the unknown – in this case a technology they haven’t invested
in previously. Super funds are familiar with investing in toll roads;
banks are used to lending money for shopping centres. But the first
time a large scale solar power station is built in Australia,
investors are understandably cautious – irrespective of whether such a
project may have already been successful in Spain or California.
Secondly, few private investors are prepared to make the major
long-term investments necessary to return a profit from energy
technologies. The recent global financial turmoil and credit crunch
has only compounded this issue.
The Deloitte report shows that Australia’s finance sector agrees the
CEFC can be a catalyst to give renewable energy technologies the
leg-up they need to meet these challenges and attract serious
investment from major players….
The first hydro power station in Australia was built over 100 years
ago in northern Tasmania by the state government-owned Hydro Electric
Corporation. Almost every coal-fired power station in Australia was
built with public funds. Without government support for clean energy,
Australia will have few options but to keep burning coal.
On the balance sheet, the CEFC also makes sense: even at a modest
leverage ratio of two to one, its $10 billion can drive some $30
billion into clean energy investment over the next decade. But its
real objective should be to put itself out of a job, as banks and
super funds become familiar with renewable technologies and their
great returns on investment.
In summary, the Deloitte report showed that Australia’s finance sector
agrees that, if the government gets it right, the CEFC is a good first
step towards unlocking significant private capital into Australian
clean energy projects and technologies, and helping to ensure we
retain our competitive advantage in low cost (clean) energy.

March 19, 2012 - Posted by | AUSTRALIA - NATIONAL, energy

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