Clean energy future developments
The government is moving towards powering the nation through greater use of clean and renewable energy, in order to be more environmentally responsible and protect against rising electricity prices and gas prices.
On April 24, the federal government issued the investment mandate governing the Clean Energy Finance Corporation (CEFC) Board.
The CEFC is a $10 billion initiative forming part of the government's Clean Energy Future package.
Its objective is to overcome capital market barriers impeding finance, commercialisation and deployment of cleaner technologies.
These include various forms of renewable, low emission and energy efficient developments such as solar power and wind energy.
The CEFC will invest in firms and projects which make use of these clean technologies, and will not provide grants but instead be commercially focused with the aim of making good investment returns.
The CEFC states it will not directly compete with the private sector in clean energy sector finance, but instead will act as a catalyst to private investment that is not currently available for clean energy technologies.
Through this, it will contribute to reducing harmful carbon emissions and a greater level of energy efficiency for Australia.
"In the future the most competitive and most productive economies will be substantially powered by cleaner energy," states a joint press release from Greg Combet, minister for climate change, and Penny Wong, minister for finance and deregulation, from April 24.
"The investment mandate will ensure the CEFC develops a robust and rigorous investment process that will help Australia move towards a clean energy future.
"The intention of the fund is to encourage private investment and help overcome capital market barriers to commercialising and deploying cleaner energy technologies."
The government's recent investment mandate is intended to outline its expectations of the CEFC Board in how the funds should be invested and managed, without attempting to influence its independent decision making process.
The mandate has reinforced the significance of the CEFC's commercial focus and the goal of making a commercial return for taxpayers.
"The mandate requires the Board to meet a benchmark return calculated on a weighted average of five-year Australian Government bond rate. The benchmark return is a long-term target and is expected to be earned across the portfolio and over a period of time," said the joint statement.
As well as this, investment will be targeted towards projects in their later stages of development, so the investments are sound and risks are better managed.
Posted by Charlie Moore