E&OE….
Topics: Clean Energy Finance Corporation, Australian Renewable Energy Agency, Clean Energy Innovation Fund
DAVID SPEERS:
Greg Hunt, thank you very much for your time this afternoon. Now you once described the CEFC – the Clean Energy Finance Corporation – as a giant green hedge fund, borrowed in taxpayers' name for investing in speculative ventures. You've obviously had quite a change of heart on this.
GREG HUNT:
Well, we've actually changed the practices quite dramatically.
Originally it was investing in things such as purchasing existing wind farms which offered no benefit whatsoever to the environment.
We've made quite dramatic changes, including setting an expected four per cent return, which means if you borrow funds at two per cent – which is roughly the Government five year long term borrowing rate – and you then lend them at six, you turn a profit of four per cent.
So it's operating on a far more commercial (indistinct), and we've made very significant changes.
DAVID SPEERS:
Which is all good, I know that you've made changes. You have made changes. But as Minister for the Environment – as Minister for the Environment, you voted twice to scrap it altogether, not just change it. You voted to get rid of it.
GREG HUNT:
Well we have both changed its practice and changed the policy. Let me explain what has been announced today.
Keeping the Clean Energy Finance Corporation, keeping the Australian Renewable Energy Agency, or ARENA, creating a $1 billion Clean Energy Innovation Fund from within the CEFC's money which will be administered by ARENA for focusing on emerging technologies and commercialising and deploying them in the energy efficiency, solar, renewables, smart grid, space.
I could not be more delighted with this outcome or package. It's something I've worked on, and it's about transforming existing institutions and getting the best result for the Australian taxpayer and for the environment.
DAVID SPEERS:
You've been talking up today this new $1 billion fund that's going to, as you say, invest in new technology like battery storage and so on.
To be clear, though, that money is coming from the CEFC, as you say. What about ARENA's money, this unallocated $1.3 billion that's meant to be spent in the renewable energy space? What happens to that?
GREG HUNT:
So going forwards, ARENA will have $1 billion for investing which will actually come back to the taxpayer rather than losing 100 per cent of what was going in grants. Very much in line…
DAVID SPEERS:
So this is a budget saving?
GREG HUNT:
…with what Malcolm Turnbull has set out.
Actually, there's no change to the budget provisions in relation to those savings. We had always said that there would be a certain position, so no change in that.
The changes are keeping ARENA, keeping CEFC, creating a $1 billion fund, and in addition…
DAVID SPEERS:
Well hang on. I just want to clear about this, because…
GREG HUNT:
…if you let me finish, in addition there will be $130 million of grant funding that's available.
But we are unapologetically – and I think for all the right reasons – predominantly focusing on getting the taxpayers' money back rather than giving it away.
We'll get better outcomes both for the taxpayer and better outcomes in the renewables space.
DAVID SPEERS:
Look, I just want to be clear on this, because I'm looking at the sums here, you appear to be spending or cutting $1.3 billion in overall spending on renewable energy, because ARENA does have $1.3 billion to spend between now and 2022. It will no longer spend that money.
GREG HUNT:
Well with respect, that's not correct. The position in relation to those funds was made clear almost two years ago, and that was booked against the budget then.
So there is no change in the budget position – although over the next decade, the net outcome of having changed the mandate for the Clean Energy Finance Corporation and continuing it is likely to save and gather the taxpayer about $250 million of assistance to the budget, but that's through profit that the CEFC and the Clean Energy Innovation Fund will return.
DAVID SPEERS:
Okay, so that cut in ARENA's funding, that was actually announced in the mid-year budget update, as you say, about two years ago.
GREG HUNT:
Correct – so approximately two years ago. That's always been the position. What is new here is an injection of $1 billion for the Clean Energy Innovation Fund. That's…
DAVID SPEERS:
So why is the sector so alarmed today? Why is the renewable sector so alarmed today? They're calling this a $1.3 billion cut.
GREG HUNT:
Well no, they're not alarmed…
DAVID SPEERS:
They're just flat out wrong?
GREG HUNT:
The Australian Conservation Foundation, the Investors Group on Climate Change, the Climate Institute, have all welcomed it. These are not groups that necessarily always endorse the Government.
DAVID SPEERS:
Well the Australian Solar Council – the Solar Council says you're stripping $1.3 billion from renewables.
GREG HUNT:
I know that group, and there's virtually nothing we could ever do – that a Liberal Government could ever do – that would satisfy them. They reflexively endorse the ALP.
That's their right to be an entirely partisan political organisation – an utterly partisan political organisation, but that's their right. It's a democracy.
But the Australian Conservation Foundation, the Investors Group on Climate Change, and the Climate Institute have all strongly endorsed what we have done.
DAVID SPEERS:
And you're not spending a dollar less under these changes on renewable energies overall?
GREG HUNT:
No, not than the pre-existing budget position that had already been the case.
So what we are creating is a $1 billion fund. I would have thought that this is the moment where those who had wanted change in the renewable space would say – wow, they're keeping but making more effective and more commercial the Clean Energy Finance Corporation; they're keeping but making more commercial and more effective the Australian Renewable Agency, and creating a $1 billion Clean Energy Innovation Fund.
It is sort of a test of people's good faith versus partisanship, and you've seen very good faith from three significant players in the sector. There's one or two others and maybe you can draw your own judgments on their partisanship.
But what's the outcome here – a big picture where we are likely to get more energy efficiency, greater improvements in battery storage, greater improvements in solar, in particular, a very big focus on solar.
We've just opened the largest solar farm, 100 megawatt solar farm, in the Southern Hemisphere at Nyngan in central New South Wales. I want to see more Nyngans, more Broken Hills – which is a 50 megawatt solar PV farm which was opened at the same time.
These are significant outcomes, those costs are coming down and we're investing in the emerging technologies but – so instead of the taxpayer losing 100 per cent of money, the taxpayer gets the 100 per cent back and hopefully makes a small profit which is the expectation of the Finance Department and on top of that, you can then reinvest the money. So that's a pretty good deal for the taxpayer and the sector.
DAVID SPEERS:
Can I ask, on this Clean Innovation Fund, you want it to start from July this year, is that right?
GREG HUNT:
We're looking at it from July the 1st and so we'll go forwards from here.
DAVID SPEERS:
Do you need legislation for that to happen? I mean, we're looking at a pretty tight parliamentary window obviously, particularly if the Prime Minister's threat of a double dissolution happens.
GREG HUNT:
No, this fund can be created through altering a mandate of the Clean Energy Finance Corporation.
We've worked through that very carefully with ARENA, we've worked through that very carefully with the Clean Energy Finance Corporation and the fund can be created without any legislation.
DAVID SPEERS:
Alright and this does appear to mark a significant change from Tony Abbott to Malcolm Turnbull as Prime Minister.
You have been Environment Minister under both leaders, obviously. Is that how you would characterise it, something that is a hallmark of Malcolm Turnbull's shift on dealing with climate change?
GREG HUNT:
Well, this is a signature moment for Malcolm Turnbull as Prime Minister.
There are fundamental elements which have been maintained with regards to the Emissions Reduction Fund, the Safeguards Mechanism and the Renewable Energy Target breakthrough and agreement which we struck.
And then on Malcolm Turnbull's watch, we've put in place a National Energy Efficiency Program and vehicle emission standards reviews, ozone protection standards but now the most significant thing that's occurred is today the Clean Energy Finance Corporation and ARENA being maintained and then a billion dollar Clean Energy Innovation Fund – that is very much exactly what Malcolm Turnbull is about.
DAVID SPEERS:
I just want to – yeah. Okay, and just quickly, for you as Minister, of course, having served both, is this, are we to assume, what you always wanted, and were unable to achieve under Tony Abbott?
GREG HUNT:
Oh look, what I have done is, under two Prime Ministers who have been very generous and supportive, built additional elements that have put Australia in my view, in pretty close to the best place in the world to achieve our 2030 targets. They have been complementary measures. Obviously I worked on…
DAVID SPEERS:
But a signature difference as you articulate it…
GREG HUNT:
…and worked to achieve this outcome with Prime Minister Turnbull and I couldn't be more delighted with the outcome.
DAVID SPEERS:
I'm sure, and does that then signal that you weren't as delighted with the position under Tony Abbott?
GREG HUNT:
No look, I'm not going through that. He was very supportive with the Emissions Reduction Fund, a $2.55 billion fund which has not just performed well, it's beaten virtually all expectations.
Everybody accepts now that we will meet and beat our 2020 targets and today's announcement is another significant step towards meeting and beating our 2030 targets.
DAVID SPEERS:
Environment Minister Greg Hunt, we will have to leave it there. Thank you for joining us this afternoon.
GREG HUNT:
Thanks David.
(ENDS)