Coalition vows to scrap 'volatile' energy fund

The Gillard government says its $10-billion clean energy fund, which the Coalition has vowed to scrap, will be volatile but "financially self-sufficient" over the long term.

The Gillard government says its $10-billion clean energy fund, which the Coalition has vowed to scrap, will be volatile but "financially self-sufficient" over the long term.

The Clean Energy Finance Corporation, established to invest in clean energy projects and technologies, is expected to match the Australian government's five-year bond rate, now 2.8 per cent, its investment mandate has revealed.

"By adopting a commercial approach, it is expected that the corporation will invest responsibly and manage risk so it is financially self-sufficient and achieves a benchmark rate of return," according to an explanatory memorandum issued on Wednesday.

"The government is conscious of the risks inherent in investment in a large portfolio of financial assets. It acknowledges that in practice this will involve some short-term volatility in the corporation's returns, including the possibility of losses in some years."

Loans at cheaper rates will not exceed $300 million each year, it added.

The finance corporation has previously flagged plans to sign contracts with financiers and clean energy projects, such as wind and solar energy, in the coming months. The corporation is able to deliver funds to projects from July.

But the Coalition has vowed to scrap the CEFC if it wins the federal election.

It also says it will save $20 billion through scrapping Australia's carbon price and associated industry and household assistance. It says savings will also be made by merging the departments of environment and climate change, and closing the Climate Change Authority and the Climate Commission.

The Coalition plans to replace the carbon price with its "direct action" policy under which companies will bid for money to fund emissions reduction programs.

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