Antinuclear

The CEFC was created through legislation passed in 2012, and became operational in July 2013. It was based upon Britain’s Green Investment Bank, a model that was attractive to Milne. But Labor also promised that it would make money – and it has. This week, shadow assistant treasurer Andrew Leigh said it was making returns “3 per cent over the bond rate, by investing in things such as wind farms in Victoria, solar in Alice Springs, energy efficiency in other contexts”.

As the valley of death problem suggests, there is a spectrum of development – the CEFC was designed merely to serve the middle of it. The corporation would ultimately complement the other two levers for renewable investment – the Australian Renewable Energy Agency (ARENA) and the renewable energy target (RET). These three form the triumvirate of renewable energy policy in Australia. And each one has – for reasons of varying legitimacy – been attacked by the current government.

It is worth describing the functions of these other two pillars before looking at their treatment by the Abbott government. ARENA is a grants-based system that targets projects at the very beginning of research or development. Like the CEFC, it was established in 2012. So far, it has invested $1.1 billion in 230 projects. The other lever is the RET, first introduced by the Howard government in 2000, and which mandated electricity buyers to source an additional 2 per cent of their energy from renewable resources by 2010. This was overhauled when Kevin Rudd, during the 2007 campaign, announced his party would introduce a “20 by 2020” scheme – mandating an additional 20 per cent of electricity from renewable sources compared with 1997 levels. It was legislated in 2009.

As Wood explains, the “RET takes established technologies and puts them out to market”. It services the far end of development – commercial deployment – and does this by creating a trading scheme that confers returns to renewable energy providers that are above market price. In other words, it rewards green energy providers.

But times have changed.

A vindictive directive………

[John Grimes]  “Now, the CEFC has been making commercial returns. But now the government writes to them and says we want you to double your commercial return, but you can’t invest in wind or small solar. What planet do they live on? This is an asset class that banks haven’t much invested in before. These institutions are risk averse. Finance 101 is that you don’t get high rates of return on speculative investments, and investment is hard to source. So, this is a stitch-up. It’s part of a war the government has waged on the industry.”………

As promised, the government has tried to kill off the CEFC – twice – but both times the repealing legislation has failed to pass, which means it can now serve as a double dissolution trigger. The prime minister has also expressed disappointment that the Howard government – of which he was a part – had ever introduced the RET. He has plotted for its destruction, but failing that has introduced legislation that would lower it – it has so far passed the senate. Abbott has since said the smaller RET would reduce the number of wind turbines – to the prime minister, an unforgivable blight on our landscape. ………  “What we did recently in the senate was reduce, Alan, reduce, capital R-E-D-U-C-E, we reduced the number of these things that we’re going to get in the future.”…….

Abbott’s war on renewable energy has been protracted and aggressive. It has destabilised investment. It has been fought through an attrition of uncertainty. This week, one wonders if he has entered the final campaign. https://www.thesaturdaypaper.com.au/news/politics/2015/07/18/abbotts-campaign-kill-renewable-energy-sector/14371416002142