The Clean Energy Finance Corporation (CEFC) is seeking legal advice after the government instructed it to halt investment in wind power and small-scale solar projects.

On Sunday the federal government confirmed that wind and rooftop solar projects would no longer be financed, instead insisting the CEFC focus on funding “new and emerging technologies”.

The CEFC was seeking legal advice on whether the government’s directive fell within its investment mandate, in line with its usual legal processes.



It will report back to the government on 24 July.

Existing investment in small-scale solar and wind projects will not be affected even if the directive goes through, but rather that it would apply to future funding opportunities.

“Receipt of the draft investment mandate does not impact on existing CEFC investments and co-financing programs,” a statement by the body said on Monday. “These and the CEFC’s investment activities, including development of new investment opportunities continues as previously, in line with the CEFC’s purpose and responsibilities.”

As an independent statutory body, it must stick to its legislated purpose, which states that the objective of the body is “to facilitate increased flows of finance into the clean energy sector”.

But the interpretation of what that means is hotly contested by the Coalition and Labor, the party that set up the bank in 2012.

The environment minister, Greg Hunt, told ABC Radio on Monday the CEFC was set up “to focus on emerging and innovative technologies, those that were otherwise not able to compete” in the private sector.

“The purpose of it was never to invest in programs that were already financed,” he said.

The finance minister, Mathias Cormann, said taxpayers’ money should not be used in an industry that was doing fine without it.

“The whole purpose of this particular initiative was to ... invest in those areas where the private sector doesn’t spontaneously invest,” he told ABC radio. “And nobody can credibly argue that the private sector is not invested in ... rooftop solar.”

Labor’s environment spokesman, Mark Butler, denied that was the original purpose of the body.

Butler argued the CEFC’s purpose “was to develop a mature lending market for renewable energy, because we know that banking institutions are very conservative by nature”.

The prime minister, Tony Abbott, was trying to “nobble” the renewables sector for “ideological purposes”, Butler said.

“What we see now is a pattern by Tony Abbott of trying to dent and damage confidence in an industry that is critical to Australia’s energy future,” he said.

Kobad Bhavnagri from Bloomberg New Energy Finance said the government’s directive had effectively “handcuffed” the industry.

“New renewable energy projects are fighting against a 500-pound gorilla in the coal- and gas-fired power stations that have been in the ring for 50 years and dominate the market,” he said.

He criticised the government for taking too long to set a renewable energy target (RET).

The government passed the 33,000 gigawatt hour target last month, after securing the support of the opposition.

But the opposition was against the inclusion of native wood waste in the target, so the government passed a separate bill, with the support of the majority of the Senate crossbenchers, in exchange for a number of provisions, including the creation of a “windfarm commissioner”.

Hunt said the government engaged in “extensive discussions” with the crossbench over the provisions.

In a letter to the crossbench senators during the negotiations, Hunt said the “government will write to the CEFC to ensure significantly increased uptake of large-scale solar and energy efficiency, and to promote the original intent of the CEFC to focus investment to innovative and emerging renewable technologies”.

Cormann said that the letter to the CEFC would not be released until after the investment directive came into play.