Coalition's CEFC absurdity; ARENA axe still hovers

Federal Parliamentary Secretary for Industry, Bob Baldwin, gave an almost defiant speech today to members of the clean energy industry at the Clean Energy Week conference.

He stated that they were determined to press on with abolishing the Clean Energy Finance Corporation and the Australian Renewable Energy Agency (ARENA) and refused to provide any reassurance about the government’s commitment to the Renewable Energy Target. This is in spite of Palmer United joining with the Greens, Labor, and Xenophon to block changes to these initiatives.  

Baldwin restated that, given the need to address what he suggested was a budget deficit emergency, the government could not support the CEFC providing what he believed was “concessional” finance to projects that he termed “too risky for the private sector”.

This comes in spite of the CEFC reporting in its annual results today that:

– it has incurred no bad debts to date;

– it is delivering a profit, achieving an average of a 3.5 per cent premium on its loans over the government cost of funds;

– it finances projects in a partnership with private sector financiers which includes all four major banks and more than 10 other domestic and international banks, and;

– its current portfolio of loans involves an average of $2.20 of private sector investment to every $1 of money lent by the CEFC.

In relation to ARENA, while the Senate appears set to block any moves to abolish and defund the agency, Baldwin has said the government's recent reappointment of chair Greg Bourne and board member Judith Smith for 12 months is purely for a “transition period”. The intention, according to Baldwin's words, appears to be that they are refusing to accept the position of the majority of senators that the ARENA Act remain as law.

Baldwin also refused to provide any reassurance about the RET, while complaining about the Senate’s obstruction of the government’s agenda. He told the conference that the government would not pre-empt any of the findings from the current review of the RET being led by Dick Warburton.

This comes as Warburton has effectively spilt the beans that his review will recommend cutting back the target. He has been reported today in The Australian Financial Review, complaining that if Palmer United were to block changes to the RET, as party leader Clive Palmer has promised, “it would be disappointing, it would be frustrating, but that seems to be Clive Palmer”.

Perhaps the one point of reassurance for investors in renewable energy is that Baldwin stated without any ambiguity that any existing contracts struck by the CEFC and ARENA would be honoured.

Climate Spectator caught up with ARENA’s chair Greg Bourne to better understand the nature of this “transition period” Baldwin referred to. Bourne explained that as the ARENA Act remains in place, he and other board members are obligated to follow it. This meant that ARENA would continue to administer its existing programs, including awarding funding to new projects such as under its off-grid Regional Renewables Program, for which there are a significant number of project proposals.

Given any funding agreements struck during this transition period will be honoured, the industry probably needs to make hay while the sun shines.