Labor’s carbon price legislation includes the establishment of a Clean Energy Finance Corporation (CEFC). The government claims this means $10 billion in funding for renewables, but a quick look at the scheme reveals what a farce this really is.
For starters, while the carbon tax will take effect in mid-2012, the CEFC will not see a dollar of funding until a year and a half later. Secondly the CEFC is, as the name suggests, not a government funding scheme but a corporation to make investments and loans in the renewables industry. It may also end up borrowing money, and like a bank will have to make a commercial return on those investments. This means investing only in profitable projects.
But large-scale renewable projects are presently unattractive for those only interested in profits. Baseload concentrated solar thermal plants are currently four times more expensive to build than coal-fired power stations.
These kinds of investments may well be deemed too risky by the CEFC. The government has already been grilled about the fact that a similar scheme in the US saw $535 million of public money evaporate when solar company Solyndra went bankrupt.
On top of this, at least half the money in the CEFC is not even for renewables, but will be frittered away on energy efficiency measures and “low emissions” technologies.
The government has also appointed corporate heavyweights with no climate change credentials, like Jillian Broadbent, member of the Reserve Bank board, the Woolworths board and the ASX board, to chair a review into how the scheme will work.
The CEFC is set up so that investment in renewable energy is conditional on whether renewable companies can make the same grotesque profits as fossil fuel giants. But our future should not hinge on their profits. Instead of a climate corporation, we need unconditional government funding for renewables.
By Erima Dall