View source for Clean Energy Finance Corporation

{{Short description|Australian Government-owned green bank}}
{{Use dmy dates|date=November 2019}}
{{Infobox company
| name = Clean Energy Finance Corporation
| logo = CEFC_Logo_Pine_RGB.png
| logo_size = 150px
| industry = [[Clean energy]] investment
| founded = {{Start date and age|2012|08|03}}
| hq_location =
| location_city = [[Sydney]]
| locations = 4
| key_people = [[Ian Learmonth (financier)|Ian Learmonth]] ([[CEO]]) <br /> [[Steven Skala]] (chair)
| owner = [[Government of Australia|Australian Government]]
| location_country = Australia
| homepage = {{URL|https://www.cefc.com.au/}}
}}
The '''Clean Energy Finance Corporation''' ('''CEFC''') is an Australian Government-owned [[green bank (financial institution)|green bank]] that invests in [[clean energy]], to help achieve Australia's national goal of [[net zero emissions]] by 2050. The CEFC invests billions of dollars on behalf of the [[Australian Government]] in economy-wide [[decarbonisation]] opportunities. It aims to help transform the Australian [[energy grid]], as well as supporting sustainable housing initiatives, and climate tech innovators. It was established by and operates under the ''Clean Energy Finance Corporation Act 2012'', along with other subsidiary legislation. {{as of|March 2024}} [[Steven Skala]] is CEFC chair and [[Ian Learmonth (financier)|Ian Learmonth]] is CEFC Chief Executive Officer.
== History ==
The CEFC was established under the ''Clean Energy Finance Corporation Act 2012'' (CEFC Act), passed by the [[Parliament of Australia]] on 22 July 2012.<ref name="cefcb">{{cite web |url=http://www.aph.gov.au/Parliamentary_Business/Bills_Legislation/Bills_Search_Results/Result?bId=r4814 |title=Clean Energy Finance Corporation Bill 2012 |date=16 August 2012 |work=Parliament of Australia |publisher=[[Commonwealth of Australia]] |accessdate=19 May 2013 }}</ref> It was established on 3 August 2012<ref>{{cite web |url=http://www.cleanenergyfinancecorp.com.au/reports/annual-reports/files/annual-report-2013-14/governance-and-corporate-information/the-cefc-and-government.aspx |title=The CEFC and Government - Enabling legislation |publisher=Cleanenergyfinancecorp.com.au |date= |accessdate=2016-07-30 |archive-url=https://web.archive.org/web/20150923204642/http://www.cleanenergyfinancecorp.com.au/reports/annual-reports/files/annual-report-2013-14/governance-and-corporate-information/the-cefc-and-government.aspx |archive-date=23 September 2015 |url-status=dead }}</ref> and commenced making investment commitments from 1 July 2013.
The organisation did not always enjoy the support of Government. In 2013 Opposition leader [[Tony Abbott]] wrote to the CEFC asking it to stop making new loans and to cease assessing new projects.<ref>{{cite news |last1=Abbott |first1=Tony |title=Coalition Leader's Letter to CEFC August 2013 |url=http://static.liberal.org.au.s3.amazonaws.com/13-08-05%20Signed%20Carbon%20Tax%20Letters%20-%20TA.pdf}}</ref> CEFC chair Jillian Braodbent later told ABC radio the new government should "break an election promise" and keep the CEFC in operation, citing a 7% profit. Coalition Senator [[Arthur Sinodinos]] said that if it is making a profit, it should survive without the government and essentially confirmed the government would shut the corporation down.<ref>{{cite news |last1=Bourne |first1=James |title=CEFC fights for its life |url=https://www.abc.net.au/listen/programs/radionational-breakfast/cefc-makes-a-pitch-for-its-continued-existence/5135882 |publisher=Australian Broadcasting Corporation |date=5 December 2013}}</ref> Legislation to abolish the CEFC and transfer the CEFC's existing assets and liabilities to the Commonwealth was blocked by non-government senators. In July 2015, Abbott said he would ban the CEFC from investing in wind power<ref>{{cite web|url=http://www.smh.com.au/federal-politics/political-news/tony-abbott-has-escalated-his-war-on-wind-power-20150711-gia3xi.html|title=Tony Abbott has escalated his war on wind power|work=Sydney Morning Herald|date=11 Jul 2015|author=Adam Gartell}}</ref> and rooftop solar.<ref>{{cite web|url=http://www.smh.com.au/federal-politics/political-news/government-pulls-the-plug-on-household-solar-20150712-gian0u.html|title=Government pulls the plug on household solar|work=Sydney Morning Herald|date=13 Jul 2015}}</ref> Prime Minister [[Malcolm Turnbull]] lifted the ban in 2015, reportedly directing the CEFC to focus on innovative and emerging technologies, reversing the position of his predecessor Abbott.<ref>{{cite news |title=New clean energy investment mandate a shift from policy proposal by Abbott |url=https://www.theguardian.com/environment/2015/dec/24/new-clean-energy-investment-mandate-a-shift-from-policy-proposed-by-abbott |publisher=The Guardian |date=24 December 2015}}</ref>
An independent statutory review of the CEFC Act found that the CEFC had facilitated  projects that would not have otherwise proceeded, attracting substantial private co-investment to projects. The statutory review was conducted by Deloitte and tabled in Parliament on 14 December 2018.<ref>{{cite web|url= https://www.cefc.com.au/media/402001/cefc-statutory-review-deloitte-october-2018.pdf|title=Statutory Review of the Clean Energy Finance Corporation|website= CEFC|access-date=2023-03-24|date=10 October 2018}}</ref> The CEFC submission to the Statutory Review of the Corporation is also publicly available.<ref>{{cite web |title=CEFC welcomes publication of the independent statutory review of its operations - Clean Energy Finance Corporation |url=https://www.cefc.com.au/media/files/cefc-welcomes-publication-of-the-independent-statutory-review-of-its-operations/|website=www.cefc.com.au}}</ref>
== Capital injection, expanded role ==
In mid-2022, the Australian Parliament approved the first material change to the CEFC Act, expanding the role of the CEFC in driving investment towards the achievement of Australia's net zero ambitions. In parallel, the Government made the first increase in the organisation's capital allocation since 2012, empowering the CEFC to drive investment across priority areas critical to the clean energy transition with an additional capital allocation of $20.5 billion.<ref>{{cite news |title=Legislating to end climate and energy chaos, Media release| first= Chris |last=Bowen |website=The Hon Chris Bowen MP| publisher= Australian Government|url=https://minister.dcceew.gov.au/bowen/media-releases/legislating-end-climate-and-energy-chaos |date=26 July 2022|access-date=29 September 2023}}</ref>
After 10 years of investment, in 2022 CEFC surpassed lifetime investment commitments of A$10 billion. Minister for Climate Change and Energy [[Chris Bowen]], described the CEFC as "the proud legacy of [[Australian Labor Party|Labor]] in government" and said it would be essential in order to achieve of Australia's net zero emissions ambitions.<ref>{{cite web |title=Towards Zero |url=https://www.cefc.com.au/insights/investment-insights/towards-zero-our-10-year-anniversary-magazine/ |website=CEFC |access-date=29 September 2023}}</ref>
Chairman Steven Skala noted in a 2022 address at [[Parliament House, Canberra]] that the CEFC enjoyed political support, observing that the cornerstone of a strong economy was stable and affordable energy.<ref>{{Cite web|url=https://www.cefc.com.au/media/statement/comments-from-cefc-chair-steven-skala-ao-on-our-first-10-years/|title=Comments from CEFC Chair Steven Skala AO on our first 10 years - Clean Energy Finance Corporation|website= CEFC|access-date=24 March 2023}}</ref>
== Legislative requirements ==
The ''Clean Energy Finance Corporation Act 2012'' establishes the CEFC, sets out the organisation’s purpose and functions, and establishes arrangements for the Board, CEO and staff. Under the CEFC Act, the Australian Government can provide directions to the CEFC by issuing it with an investment mandate on matters set out in the Act. The CEFC Board is consulted in a process set out in the Act. Directions contained in the Investment Mandate must be consistent with the CEFC Act.<ref>{{cite web | title=Clean Energy Finance Corporation Act 2012 | website=Federal Register of Legislation | date=24 June 2023 | url=https://www.legislation.gov.au/C2012A00104/latest/text | access-date=25 March 2024}}</ref> The CEFC is a corporate [[Australian Government|Commonwealth]] entity under the ''Public Governance, Performance and Accountability Act 2013'' (PGPA Act).<ref>{{cite web |title=Public Governance, Performance and Accountability Act 2013 |url=https://www.legislation.gov.au/Details/C2017C00269 |website=www.legislation.gov.au |language=en}}</ref>
==Purpose==
Operating as a [[green bank (financial institution)|green bank]], the government-owned
financial institution invests in [[clean energy]], alongside private investors, innovators and industry leaders, in the [[clean energy]] sector, to help achieve Australia's national goal of [[net zero emissions]] by 2050.<ref>{{cite web |title=Where we invest |website= Clean Energy Finance Corporation (CEFC) |url=https://www.cefc.com.au/where-we-invest/ |access-date=29 September 2023}}</ref> {{as of|2023}} the CEFC is responsible for investing more than $30 billion on behalf of the [[Australian Government]] in economy-wide [[decarbonisation]] opportunities, including renewable energy and natural capital to energy efficiency, alternative fuels and low carbon materials. It is also focused on transforming the Australian energy grid, backing sustainable housing and supporting the growth of climate tech innovators.<ref>{{cite web |title=Mission and values – |url=https://www.cefc.com.au/who-we-are/about-us/mission-and-values/ |website=CEFC |access-date=29 September 2023}}</ref>
==Governance==
The CEFC is governed by an independent Board whose members are jointly appointed by its two responsible Ministers. The Board reports to the Australian Parliament through the responsible Ministers. The CEFC Act and the PGPA Act prescribe the functions, obligations, composition and powers of the CEFC Board as the governing body and accountable authority of the CEFC, including its delegation powers and operational matters with respect to Board meetings.
The Board makes individual investment decisions independently of the Government. The functions of the Board, as prescribed under s14 of the CEFC Act, are to decide strategies and policies to be followed by the CEFC; ensure the proper, efficient and effective performance of the CEFC’s functions
Perform any other functions conferred on the Board by the CEFC Act. The Board has power to do all things necessary or convenient to be done for, or in connection with, the performance of these functions. <ref>https://www.transparency.gov.au/publications/climate-change-energy-the-environment-and-water/clean-energy-finance-corporation/clean-energy-finance-corporation-annual-report-2023-24/governance/board</ref>
[[Ian Learmonth (financier)|Ian Learmonth]]<!---self-referring redirect until article is created, to distinguish from British copper Ian Learmonth]]---> was appointed CEO in March 2017.<ref>{{Cite web|url=https://www.cefc.com.au/media/files/cefc-board-appoints-ian-learmonth-as-new-chief-executive-officer-replacing-oliver-yates.aspx|title = CEFC Board appoints Ian Learmonth as new Chief Executive Officer replacing Oliver Yates - Clean Energy Finance Corporation}}</ref> In August 2017 [[Steven Skala]] was appointed chair of the board.<ref>[https://www.cefc.com.au/media/296276/minister-cormann-minister-frydenberg-media-release-cefc-appointments.pdf Media release: New appointments to the Clean Energy Finance Corporation Board]. 20 July 2017</ref>
==Investment Mandate ==
The Australian Government is required to issue the CEFC Board with a Clean Energy Finance Corporation Investment Mandate Direction from time to time,<ref>{{cite web | title=Search results | website=[[Federal Register of Legislation]] | date=1 January 2024 | url=https://www.legislation.gov.au/search/text(%22clean%20energy%20finance%20%22,nameAndText,contains)/pointintime(Latest) | access-date=25 March 2024}}</ref> the most recent being the Clean Energy Finance Corporation Investment Mandate Direction 2023, enacted on 21 July 2023. This provides direction on the $19 billion Rewiring the Nation Fund, the $1 billion Household Energy Upgrades Fund, and the $500 million Powering Australia Technology Fund, all of which were created in 2023. The Mandate also provides for the continuation of the $300 million Advancing Hydrogen Fund and the $200 million Clean Energy Innovation Fund.
The Investment Mandate also adjusted the CEFC Portfolio Benchmark rate of Return (PBR) for the CEFC General Portfolio to an average of 2-3 per cent above the five-year government bond rate per annum over the medium to long term, down from 3-4 per cent previously stipulated, and established PBRs for the respective RTN Fund and the CEFC specialist investment funds.<ref>{{cite web | title=Clean Energy Finance Corporation Investment Mandate Direction 2023 | website=[[Federal Register of Legislation]] | date=21 July 2023 | url=https://www.legislation.gov.au/F2023L01023/asmade/details | access-date=25 March 2024}}</ref>
== Investment priorities ==
The CEFC works with businesses, institutional investors, and entrepreneurs to increase investment in Australia’s transition to net zero emissions. The CEFC is mandated by law to anticipate and respond to the environment and market conditions in which it operates, which may include increasing its investment activities to fill market gaps where the private sector is absent.<ref>{{cite web |title=How we operate - CEFC |url=https://www.cefc.com.au/who-we-are/governance/how-we-operate/ |website=CEFC |access-date=29 September 2023}}</ref> It is obliged to operate in a way that delivers a positive return for taxpayers across its portfolio, and publishes quarterly reports on its website about its investment commitments.<ref>{{cite web |title=Compliance - CEFC |url=https://www.cefc.com.au/who-we-are/governance/compliance/ |website=CEFC |access-date=29 September 2023}}</ref>
=== General portfolio ===
The General Portfolio refers to those CEFC investment commitments made alongside those under the RTN Fund and the four Specialised Investment Funds. With a total capital allocation of $9.5 billion for the General Portfolio, the Investment Mandate requires the Board to focus on clean energy technologies, and financial products and structures to support Australia’s greenhouse gas emissions reduction targets. Economy-wide investment commitments include renewable energy generation and storage, property, infrastructure, natural capital, electric vehicles, small‑scale asset finance and green/sustainability linked loans. Transactions through the General Portfolio represented the largest share of activity in the 2023–24 year, with $982 million in commitments across 14 new and 10 follow-on transactions. These commitments spurred total transaction value of $8 billion, representing leverage of $7.15 for each $1.00 of CEFC capital. The value of lifetime commitments through the General Portfolio reached $13.4 billion, with total project value of $56 billion. <ref>https://www.transparency.gov.au/publications/climate-change-energy-the-environment-and-water/clean-energy-finance-corporation/clean-energy-finance-corporation-annual-report-2023-24/where-we-invest/general-portfolio</ref>
=== Rewiring the Nation Fund ===
The $19 billion Rewiring the Nation (RTN) Fund is a significant expansion of CEFC investment capacity, with a particular focus on facilitating the timely delivery of grid and transmission projects, using CEFC capital to accelerate the benefits of grid transformation to consumers, including helping to lower consumer energy costs. <ref>https://www.cefc.com.au/document?file=/media/5ehf3lsf/cefc_poweringnetzeroeconomy.pdf</ref>
In delivering on these objectives, the CEFC is working closely with governments, network operators and market participants to develop financing options for priority grid transformation projects. As fossil fuels rapidly disappear from our generation mix, the RTN Fund is focused on ensuring priority grid and transmission infrastructure is reinforced and strengthened to absorb increased output from our massive solar and wind resources. Grid and transmission infrastructure projects require substantial capital, expertise and time to bring online. For investors, these challenges are further compounded by macroeconomic factors, including global uncertainty and supply chain disruptions. As just one of many nations undergoing an energy transformation, Australia is in a race for capital, equipment and expertise.<ref>https://www.transparency.gov.au/publications/climate-change-energy-the-environment-and-water/clean-energy-finance-corporation/clean-energy-finance-corporation-annual-report-2023-24/where-we-invest/rewiring-the-nation-fund</ref>
=== Household Energy Upgrades Fund ===
The Household Energy Upgrades Fund (HEUF) began its first year of operation in the 2023–24 year on 1 December 2023, with the $1 billion fund designed to fast-track the retrofit of greener and more sustainable homes Australia-wide.  HEUF finance specifically targets energy improvements to existing dwellings, which are less likely to feature best practice building, energy efficiency, and heating and cooling options. While newly constructed dwellings on vacant land are not eligible for HEUF finance, the Fund can support knock-down-and-rebuild projects where there is a substantial improvement to the energy performance of the prior residential property.
The HEUF features a broad approach to eligible technologies, providing flexibility for borrowers, and creating scope for new and emerging technology solutions where these reduce household emissions. In assessing the eligible technologies, the CEFC has prioritised those technologies with the potential to deliver the largest benefits to households, in terms of reduced energy consumption and/or lower emissions. The scope of eligible technologies also helps extend the relevance of HEUF finance to a broad range of households, recognising that existing dwellings will have specific sustainability needs. <ref>https://www.cefc.com.au/where-we-invest/special-investment-programs/household-energy-upgrades-fund/</ref>
=== Powering Australia Technology Fund ===
The CEFC Investment Mandate requires the CEFC to aim to leverage at least $500 million from the private sector across the Powering Australia Technology Fund (PATF) portfolio, for investments to support the growth or expansion of clean energy technology projects, businesses and/or entities (of any form including, without limitation, companies and funds) to facilitate the development, commercialisation or take up of clean energy technologies.
In its first year of investment activity in 2023-24, PATF committed $77 million across six new and six follow-on transactions in the climate tech space. New transactions demonstrate the diversity of the climate tech sector, covering transportation, hydrogen and circular economy investments. Follow-on commitments saw PATF capital allocated to continue to support the growth of portfolio companies in which the CEFC had previously invested via the Clean Energy Innovation Fund. <ref>https://www.cefc.com.au/where-we-invest/special-investment-programs/powering-australia-technology-fund/</ref>
=== Advancing Hydrogen Fund ===
The CEFC Investment Mandate requires the Board to make available up to $300 million in concessional finance to support the growth of a clean, innovative, safe and competitive Australian renewable hydrogen industry. The Advancing Hydrogen Fund (AHF) focuses on projects where there is state or territory government financial support or policy alignment with the National Hydrogen Strategy.
Renewable hydrogen can enable the deep decarbonisation of difficult to abate sectors of the economy, particularly in transport and industry, while accelerating the contribution of renewable energy and contributing to energy efficiency. Australia has the potential to be a global hydrogen leader, potentially exporting hydrogen as well as using it to decarbonise industry.
Concessional financing through the AHF is an important policy initiative to catalyse investment into first of kind large-scale hydrogen projects. Policy support through production credits (such as Hydrogen Headstart) and tax incentives (such as the Hydrogen Production Tax Incentive) require upfront capital expenditure to be financed and investors to take the technology, construction, operating and revenue risks. <ref>https://www.transparency.gov.au/publications/climate-change-energy-the-environment-and-water/clean-energy-finance-corporation/clean-energy-finance-corporation-annual-report-2023-24/where-we-invest/advancing-hydrogen-fund</ref>
=== Clean Energy Innovation Fund ===
The CEIF portfolio is managed for the CEFC by Virescent Ventures, Australia’s largest and most active dedicated climate tech venture capital fund manager. Virescent Ventures also manages certain early-stage climate tech investments via the PATF. At the end of the 2023–24 reporting year, Virescent Ventures was managing more than $230 million in CEFC capital across 32 climate tech businesses, funds and innovators. Virescent Ventures, spun out of the CEFC in 2022, reached first close on its Virescent Ventures Fund II in 2024. Fund ll will invest across the key areas of clean energy transition, food and agriculture, mobility and smart cities, and circular economy and industry, as well as exploring opportunities in climate resilience and adaptation. <ref>https://www.cefc.com.au/media/media-release/cefc-westpac-back-first-close-of-new-virescent-ventures-climate-tech-fund/</ref>
The CEFC publishes quarterly reports on its website regarding investment commitments.<ref>{{cite web |title=Statutory reports - Clean Energy Finance Corporation |url=https://www.cefc.com.au/market-insights/statutory-reports/quarterly-reports/ |website=CEFC |language=en}}</ref>
==See also==
{{Portal|Australia|Renewable energy}}
*[[Australian Renewable Energy Agency]] (ARENA)
*[[Energy policy of Australia]]
*[[National electricity market]]
*[[Project finance]]
*[[Power purchase agreement]]
*[[Renewable energy in Australia]]
== References ==
{{Reflist}}
==External links==
*{{official|https://www.cefc.com.au/}}
{{Authority control}}
[[Category:Climate change organisations based in Australia]]
[[Category:Energy organizations]]
[[Category:2012 establishments in Australia]]
[[Category:Energy in Australia]]