# Clean Energy Finance Corporation

The Clean Energy Finance Corporation (CEFC) is an Australian Government-owned green bank that invests in clean energy, to help achieve Australia's national goal of net zero emissions by 2050. The CEFC invests billions of dollars on behalf of the Australian Government in economy-wide decarbonisation opportunities. It aims to help transform the Australian energy grid, as well as supporting sustainable housing initiatives, and climate tech innovators. It was established by and operates under the Clean Energy Finance Corporation Act 2012, along with other subsidiary legislation. As of March 2024 Steven Skala is CEFC chair and Ian Learmonth is CEFC Chief Executive Officer.

## History

The CEFC was established under the Clean Energy Finance Corporation Act 2012 (CEFC Act), passed by the Parliament of Australia on 22 July 2012. It was established on 3 August 2012 and commenced making investment commitments from 1 July 2013.
The organisation did not always enjoy the support of Government. In 2013 Opposition leader Tony Abbott wrote to the CEFC asking it to stop making new loans and to cease assessing new projects. CEFC chair Jillian Braodbent later told ABC radio the new government should "break an election promise" and keep the CEFC in operation, citing a 7% profit. Coalition Senator Arthur Sinodinos said that if it is making a profit, it should survive without the government and essentially confirmed the government would shut the corporation down. Legislation to abolish the CEFC and transfer the CEFC's existing assets and liabilities to the Commonwealth was blocked by non-government senators. In July 2015, Abbott said he would ban the CEFC from investing in wind power and rooftop solar. Prime Minister Malcolm Turnbull lifted the ban in 2015, reportedly directing the CEFC to focus on innovative and emerging technologies, reversing the position of his predecessor Abbott.
An independent statutory review of the CEFC Act found that the CEFC had facilitated projects that would not have otherwise proceeded, attracting substantial private co-investment to projects. The statutory review was conducted by Deloitte and tabled in Parliament on 14 December 2018. The CEFC submission to the Statutory Review of the Corporation is also publicly available.

## Capital injection, expanded role

In mid-2022, the Australian Parliament approved the first material change to the CEFC Act, expanding the role of the CEFC in driving investment towards the achievement of Australia's net zero ambitions. In parallel, the Government made the first increase in the organisation's capital allocation since 2012, empowering the CEFC to drive investment across priority areas critical to the clean energy transition with an additional capital allocation of $20.5 billion.
After 10 years of investment, in 2022 CEFC surpassed lifetime investment commitments of A$10 billion. Minister for Climate Change and Energy Chris Bowen, described the CEFC as "the proud legacy of Labor in government" and said it would be essential in order to achieve of Australia's net zero emissions ambitions.
Chairman Steven Skala noted in a 2022 address at Parliament House, Canberra that the CEFC enjoyed political support, observing that the cornerstone of a strong economy was stable and affordable energy.

## Legislative requirements

The Clean Energy Finance Corporation Act 2012 establishes the CEFC, sets out the organisation’s purpose and functions, and establishes arrangements for the Board, CEO and staff. Under the CEFC Act, the Australian Government can provide directions to the CEFC by issuing it with an investment mandate on matters set out in the Act. The CEFC Board is consulted in a process set out in the Act. Directions contained in the Investment Mandate must be consistent with the CEFC Act. The CEFC is a corporate Commonwealth entity under the Public Governance, Performance and Accountability Act 2013 (PGPA Act).

## Purpose

Operating as a green bank, the government-owned financial institution invests in clean energy, alongside private investors, innovators and industry leaders, in the clean energy sector, to help achieve Australia's national goal of net zero emissions by 2050. As of 2023 the CEFC is responsible for investing more than $30 billion on behalf of the Australian Government in economy-wide decarbonisation opportunities, including renewable energy and natural capital to energy efficiency, alternative fuels and low carbon materials. It is also focused on transforming the Australian energy grid, backing sustainable housing and supporting the growth of climate tech innovators.

## Governance

The CEFC is governed by an independent Board whose members are jointly appointed by its two responsible Ministers. The Board reports to the Australian Parliament through the responsible Ministers. The CEFC Act and the PGPA Act prescribe the functions, obligations, composition and powers of the CEFC Board as the governing body and accountable authority of the CEFC, including its delegation powers and operational matters with respect to Board meetings.
The Board makes individual investment decisions independently of the Government. The functions of the Board, as prescribed under s14 of the CEFC Act, are to decide strategies and policies to be followed by the CEFC; ensure the proper, efficient and effective performance of the CEFC’s functions Perform any other functions conferred on the Board by the CEFC Act. The Board has power to do all things necessary or convenient to be done for, or in connection with, the performance of these functions.
Ian Learmonth was appointed CEO in March 2017. In August 2017 Steven Skala was appointed chair of the board.

## Investment Mandate

The Australian Government is required to issue the CEFC Board with a Clean Energy Finance Corporation Investment Mandate Direction from time to time, the most recent being the Clean Energy Finance Corporation Investment Mandate Direction 2023, enacted on 21 July 2023. This provides direction on the $19 billion Rewiring the Nation Fund, the $1 billion Household Energy Upgrades Fund, and the $500 million Powering Australia Technology Fund, all of which were created in 2023. The Mandate also provides for the continuation of the $300 million Advancing Hydrogen Fund and the $200 million Clean Energy Innovation Fund.
The Investment Mandate also adjusted the CEFC Portfolio Benchmark rate of Return (PBR) for the CEFC General Portfolio to an average of 2-3 per cent above the five-year government bond rate per annum over the medium to long term, down from 3-4 per cent previously stipulated, and established PBRs for the respective RTN Fund and the CEFC specialist investment funds.

## Investment priorities

The CEFC works with businesses, institutional investors, and entrepreneurs to increase investment in Australia’s transition to net zero emissions. The CEFC is mandated by law to anticipate and respond to the environment and market conditions in which it operates, which may include increasing its investment activities to fill market gaps where the private sector is absent. It is obliged to operate in a way that delivers a positive return for taxpayers across its portfolio, and publishes quarterly reports on its website about its investment commitments.

### General portfolio

The General Portfolio refers to those CEFC investment commitments made alongside those under the RTN Fund and the four Specialised Investment Funds. With a total capital allocation of $9.5 billion for the General Portfolio, the Investment Mandate requires the Board to focus on clean energy technologies, and financial products and structures to support Australia’s greenhouse gas emissions reduction targets. Economy-wide investment commitments include renewable energy generation and storage, property, infrastructure, natural capital, electric vehicles, small‑scale asset finance and green/sustainability linked loans. Transactions through the General Portfolio represented the largest share of activity in the 2023–24 year, with $982 million in commitments across 14 new and 10 follow-on transactions. These commitments spurred total transaction value of $8 billion, representing leverage of $7.15 for each $1.00 of CEFC capital. The value of lifetime commitments through the General Portfolio reached $13.4 billion, with total project value of $56 billion.

### Rewiring the Nation Fund

The $19 billion Rewiring the Nation (RTN) Fund is a significant expansion of CEFC investment capacity, with a particular focus on facilitating the timely delivery of grid and transmission projects, using CEFC capital to accelerate the benefits of grid transformation to consumers, including helping to lower consumer energy costs.
In delivering on these objectives, the CEFC is working closely with governments, network operators and market participants to develop financing options for priority grid transformation projects. As fossil fuels rapidly disappear from our generation mix, the RTN Fund is focused on ensuring priority grid and transmission infrastructure is reinforced and strengthened to absorb increased output from our massive solar and wind resources. Grid and transmission infrastructure projects require substantial capital, expertise and time to bring online. For investors, these challenges are further compounded by macroeconomic factors, including global uncertainty and supply chain disruptions. As just one of many nations undergoing an energy transformation, Australia is in a race for capital, equipment and expertise.

### Household Energy Upgrades Fund

The Household Energy Upgrades Fund (HEUF) began its first year of operation in the 2023–24 year on 1 December 2023, with the $1 billion fund designed to fast-track the retrofit of greener and more sustainable homes Australia-wide. HEUF finance specifically targets energy improvements to existing dwellings, which are less likely to feature best practice building, energy efficiency, and heating and cooling options. While newly constructed dwellings on vacant land are not eligible for HEUF finance, the Fund can support knock-down-and-rebuild projects where there is a substantial improvement to the energy performance of the prior residential property.
The HEUF features a broad approach to eligible technologies, providing flexibility for borrowers, and creating scope for new and emerging technology solutions where these reduce household emissions. In assessing the eligible technologies, the CEFC has prioritised those technologies with the potential to deliver the largest benefits to households, in terms of reduced energy consumption and/or lower emissions. The scope of eligible technologies also helps extend the relevance of HEUF finance to a broad range of households, recognising that existing dwellings will have specific sustainability needs.

### Powering Australia Technology Fund

The CEFC Investment Mandate requires the CEFC to aim to leverage at least $500 million from the private sector across the Powering Australia Technology Fund (PATF) portfolio, for investments to support the growth or expansion of clean energy technology projects, businesses and/or entities (of any form including, without limitation, companies and funds) to facilitate the development, commercialisation or take up of clean energy technologies.
In its first year of investment activity in 2023-24, PATF committed $77 million across six new and six follow-on transactions in the climate tech space. New transactions demonstrate the diversity of the climate tech sector, covering transportation, hydrogen and circular economy investments. Follow-on commitments saw PATF capital allocated to continue to support the growth of portfolio companies in which the CEFC had previously invested via the Clean Energy Innovation Fund.

### Advancing Hydrogen Fund

The CEFC Investment Mandate requires the Board to make available up to $300 million in concessional finance to support the growth of a clean, innovative, safe and competitive Australian renewable hydrogen industry. The Advancing Hydrogen Fund (AHF) focuses on projects where there is state or territory government financial support or policy alignment with the National Hydrogen Strategy.
Renewable hydrogen can enable the deep decarbonisation of difficult to abate sectors of the economy, particularly in transport and industry, while accelerating the contribution of renewable energy and contributing to energy efficiency. Australia has the potential to be a global hydrogen leader, potentially exporting hydrogen as well as using it to decarbonise industry.
Concessional financing through the AHF is an important policy initiative to catalyse investment into first of kind large-scale hydrogen projects. Policy support through production credits (such as Hydrogen Headstart) and tax incentives (such as the Hydrogen Production Tax Incentive) require upfront capital expenditure to be financed and investors to take the technology, construction, operating and revenue risks.

### Clean Energy Innovation Fund

The CEIF portfolio is managed for the CEFC by Virescent Ventures, Australia’s largest and most active dedicated climate tech venture capital fund manager. Virescent Ventures also manages certain early-stage climate tech investments via the PATF. At the end of the 2023–24 reporting year, Virescent Ventures was managing more than $230 million in CEFC capital across 32 climate tech businesses, funds and innovators. Virescent Ventures, spun out of the CEFC in 2022, reached first close on its Virescent Ventures Fund II in 2024. Fund ll will invest across the key areas of clean energy transition, food and agriculture, mobility and smart cities, and circular economy and industry, as well as exploring opportunities in climate resilience and adaptation.
The CEFC publishes quarterly reports on its website regarding investment commitments.