The revelation of a government direction to the Clean Energy Finance Corporation to slash investment in wind and small-scale solar PV because the CEFC shouldn’t be investing in “mature and established clean energy technologies” plainly rattled the government. The Australian was briefed to rush into print to explain that there was no Coalition war on renewables — indeed, nothing to see here at all, just a left-wing fiction. The government merely wanted the CEFC to invest in emerging technologies. The Coalition, apparently, is the best friend renewable energy ever had.
It’s a hastily fabricated narrative, and it shows. The explanatory memorandum for the Clean Energy Finance Corporation Act 2012 is painfully clear on the issue. The CEFC is not an R&D grants body, but a commercial body expected to generate a substantial return on taxpayers’ investment. As the EM says:
“It is expected that the Corporation will apply a commercial filter when making its investment decisions, focussing on projects and technologies at the later stages of development. By adopting a commercial approach, it is expected the Corporation will invest responsibly and manage risk so it is financially self-sufficient and achieves a target rate of return.”
But the Hockey-Cormann mandate, revealed by Fairfax’s Adam Gartrell, is that it should avoid technologies at “the later stages of development” like wind and small-scale solar PV — completely contradicting its founding purpose.
When it was established by the Gillard government as a condition of Greens support for its carbon pricing scheme, the CEFC should have been entirely redundant. A fully effective carbon price would have negated the need for a government-funded vehicle to drive renewable energy investment — especially one operating under a Renewable Energy Target. The RET itself, in fact, should also have been redundant, if carbon emissions had been priced correctly: the private sector would have invested in renewables without any need for either regulation or government investment. But because the carbon price was a compromise tailored to minimise its impact on industry, the RET was left in place and the CEFC established.
Now the carbon price is gone and the RET has been reduced. The CEFC is no longer redundant but pretty much the only thing still standing in the smoking ruins of Australian climate change policy. And, oddly enough, it’s Tony Abbott himself who believes that. Despite trying to abolish the CEFC and passionately loathing renewable energy, Abbott boasted about the CEFC at a media conference with French President Francois Hollande last November as a “a $10 billion institution which is in the business of funding various projects which have economic and environmental outcomes” and one of the government’s three key funding measures to address climate change.
Now, it seems, Abbott doesn’t want the “economic outcomes” from the CEFC. Indeed, it’s still the government’s position that it wants to get rid of the CEFC. And, with talk of an early election once again circulating, it’s worth noting the government already has a double dissolution trigger — the bill to abolish the CEFC. If Abbott is so keen to go to an election and so despises renewables, he could go to an election this afternoon.
While Abbott’s malice toward renewable energy is partly ideological — coal is “good for humanity,” he said last year, and he was eager recently to explain to Alan Jones how he’d curbed investment in wind farms — it’s also driven by something far more pragmatic: the interests of the Coalition.
According to Australian Electoral Commission’s donation disclosure data, the energy sector donates about $2 to the Coalition for every $1 it gives to Labor. Power companies like Energy Australia, resources companies like Woodside and Santos and fuel companies like Caltex together donated just short of a million dollars to the Coalition’s state and federal divisions in 2013-14, while donating just under $385,000 to Labor. In 2012-13, they gave $538,000 to the Coalition and $384,000 to Labor; in 2011-12 it was $658,000 to the Coalition and $332,000 to Labor.
That’s not as extreme a disparity as the mining industry — in the same three-year period, the mining industry gave the Coalition almost exactly $1.5 million in donations, and $149,500 to Labor, but it illustrates why the fossil fuel sector gets such strong and reflexive support from the Coalition. And the disparity has grown over time. In 2011-12, for example, Santos gave around $67,000 to the Coalition in total, and $55,000 to Labor. The following year its donations were almost even — a total of $85,000 for the Coalition and $80,000 for Labor. But in the election year 2013-14, Santos gave $185,310 to the Coalition compared to $108,841 to Labor
Santos, of course, is the company that prompted Abbott to abuse the Australian National University as “stupid” as part of a concerted attack by senior Coalition figures on the university’s fossil fuel divestment strategy last October. Given Santos’ performance since then, Abbott might need to pause before making similar remarks again in the future — since October, the company’s share price is down 40%, and it announced a $935 million loss for 2014. Quite a contrast with the CEFC, which last year forecast a return on investment ranging from 5.2% to 8.5%.
But of course the salient numbers aren’t the ones in the CEFC’s and Santos’s annual reports, but on the AEC website.