Antinuclear

Expert panel reviews the Clean Energy Finance Corporation

the panel has recognised the significance and the potential for new technologies to transform Australia’s energy system and ensure it remains competitive with other countries.

Now, however, just watch the Opposition attack it, along with the usual suspects among the established energy generators and emitters. The key themes of this report – investment for long-term gains over short term costs, the “external” benefits which are overlooked by banks and statutory authorities, and the issue of future competitiveness – will no doubt be lost in the shouting.

Ten things you should know about the CEFC REneweconomy, By Giles Parkinson  17 April 2012 The long-awaited “experts review” into the proposed $10 billion Clean Energy Finance Corporation has been delivered to – and accepted by – the federal government.

The CEFC is seen as one of the most critical elements of the Clean Energy Future package by large parts of the clean energy industry, particularly those trying to introduce new technologies. It will certainly be one of the political hot potatoes going into the next election. The federal Government says it intends to introduce legislation into the Budget sittings of parliament which begin in May. The Opposition calls it a “slush fund.”

Here are some highlights from review by the team led by Reserve Bankboard member Jillian Broadbent, and supported by funds manager David Paradice and former banker Ian Moore.
1. Australia is behind the rest of the world

One of the key points made by the CEFC panel is that Australia is a
“late starter” in the transformation to a low-carbon economy, thanks
to its reliance on low-cost fossil fuels. The challenge for Australia
is further complicated

2. There are many barriers to clean energy in Australia

The CEFC panel noted that the Australian energy market was highly
concentrated, was focused around centralised power generation and
meeting peak demand, and that the structure of the national grid
inhibited distributed generation.

3. Other countries do this and it works well

The panel noted that major economies such as the US, China, Brazil,
Germany and the UK had a similar mechanism to the CEFC. The UK has a
£3 billion Green Investment Bank, Germany’s KfW provides banks with
liquidity for clean energy loans and will commit €100 billion over the
next five years, China has already allocated $30 billion in credit to
the top five solar manufacturers alone, Brazil is providing $1.8
billion in financing to help deploy wind farms, and the US Department
of Energy is deploying around $35 billion in loan guarantees, and
nearly all – notwithstanding the high-profile failures of Solyndra and
some others – have performed well.
4. It is possible some of the CEFC projects will fail

Broadbent says it is impossible to guarantee that an investment will
not fail – in any sector.
5. Which technologies will they target?

The Greens insisted that on defined targets for “renewables” and a
separate stream for low-emission technologies. The CEFC has proposed a
subtle change, and wants instead “goals” that suggest a minimum 50 per
cent for the renewables stream, which will include “hybrid
technologies” (which might include solar boosters for gas, coal or
diesel plants) and “enabling” technologies (such as grid
extensions)……
6. What criteria will they use?

The CEFC proposes to use a “case-by-case” approach to investments,
rather than a sector-by-sector approach – and the investment must be
developed beyond the R&D stage and have the capacity to repay
capital…….
7. How the CEFC fits in with the Renewable Energy Target
8. The CEFC will favour loans over equity

The CEFC will likely be particularly cautious in its early stages.  It
says that the majority of the CEFC’s early investments will be in the
forms of loans and not equity.
9. How much they will invest and when

Broadbent says that while $2 billion a year will come into the CEFC
from 2013/14, it will not necessarily be disbursed at the same rate.
10. Broadbent and her team have done an excellent job

This is a very skillful document, nuanced by the expert panel’s understanding of the investment industry and its recognition that a path to a low-carbon economy needs to be found at lowest cost, notwithstanding the political and industrial rhetoric. Broadbent has been careful not to pick winners, or to be too prescriptive with investment choices or mechanisms, and the panel have recognised the significance and the potential for new technologies to transform
Australia’s energy system and ensure it remains competitive with other countries. Now, however, just watch the Opposition attack it, along with the usual suspects among the established energy generators and emitters. The key themes of this report – investment for long-term gains over short term costs, the “external” benefits which are
overlooked by banks and statutory authorities, and the issue of future competitiveness – will no doubt be lost in the shouting.
http://reneweconomy.com.au/2012/ten-things-you-should-know-about-the-cefc-98295

April 19, 2012 - Posted by Christina Macpherson | AUSTRALIA - NATIONAL, business, energy