This article is more than 3 years old

This article is more than 3 years old

The Turnbull government will move to overhaul the rules governing the Clean Energy Finance Corporation (CEFC) to allow the so-called “green” bank to invest in carbon capture and storage technology.



After telegraphing its intention to overhaul the CEFC’s rules for some months, the government on Tuesday secured party room support for the change.

While the overhaul will be greeted with alarm by environment groups, the energy and environment minister, Josh Frydenberg, said the proposed change was a “demonstration of the government’s commitment to a technology neutral, non-ideological approach to national energy policy”.

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“Removing the prohibition will allow the CEFC to support a wider range of low-emissions technologies and thereby reduce emissions at lowest cost,” Frydenberg said on Tuesday.

The government’s move to overhaul the CEFC’s rules comes as industry sources are expecting the looming Finkel review to float a new low-emissions target along the lines John Howard proposed back in 2007. Such a scheme would work in practice as a technology neutral renewable energy target (RET).

The final review of the national electricity market by the chief scientist, Alan Finkel, is due to be handed to the Council of Australian Governments on 9 June.

The Turnbull government has boxed itself in by refusing to countenance the scheme the chief scientist, industry and environment groups say would be the best policy option in the national electricity market to reduce emissions at least cost to households and businesses – an emissions intensity trading scheme.

Some elements inside the Coalition are implacably imposed to carbon pricing in any manifestation. A technology neutral RET would give the Turnbull government another policy pathway for emissions reduction.

The CEFC’s investment function is spelled out under its legislation, which says the organisation should invest in the development, commercialisation and use of clean energy technologies.

The CEFC is currently required to invest at least half of its funds in renewable energy technologies, with the remainder left available for low-emission and energy efficiency technologies.

The organisation is currently prohibited from investing in carbon capture and storage and nuclear technologies. Labor has already ruled out supporting any legislative change to the CEFC rules.

In February, Labor’s climate change spokesman, Mark Butler, said the opposition would not be a party to transforming the CEFC into the coal finance corporation.

A key Senate crossbencher, Nick Xenophon, has also expressed concerns about a change that would allow more investment in coal technologies.

Frydenberg told reporters in Canberra on Tuesday carbon capture and storage was “proven technology that should be made to work in Australia.”

He said the amendment being proposed by the government would only apply to carbon capture and storage, not to other forms of coal technology.

But the minister said if anyone proposed a high efficiency, low emission (HELE) coal fired power plant, with carbon capture and storage, “that would absolutely be a project that could be funded.”

“There’s nothing wrong with attaching CCS to a HELE plant of a gas fired generator,” Frydenberg said.

The move to overhaul the CEFC’s rules came as the prime minister, Malcolm Turnbull, told Tuesday’s party room meeting that government would not adopt emissions trading in its response to the Finkel review.

Industry sources have told Guardian Australia Finkel is more than likely to stick with the implicit endorsement he gave to an emissions intensity trading scheme for the electricity sector in his preliminary report, which was given to state and federal ministers six months ago.

Frydenberg repeated Turnbull’s position on Tuesday, and declined to say whether the government would support a technology neutral RET, if that’s what Finkel recommends next week.

But while stepping around specifics, he said the government was of the view that “something does need to change, and we will consider his recommendations.”

The Greens expressed outrage on Tuesday about the CEFC proposal. “The Liberals are taking money out of renewables and giving it to coal,” said the party’s climate spokesman, Adam Bandt.

“Only the Liberals would think that coal counts as a clean energy source.”

Bandt said even “coal loving Donald Trump” had cut funding for carbon capture and storage.

The Australian Conservation Foundation had a similar view. “Ordering the CEFC to invest in coal technology is like telling the health department to invest in tobacco,” said the ACF chief executive, Kelly O’Shanassy.

“This is a reckless move from a government that is captured by big fossil fuel companies. It doesn’t have any kind of plan for energy and climate policy.”

“There is no such thing as clean coal. This is a massive blow to CEFC, a fantastic initiative that has been helping to create new jobs and tackle carbon pollution.”

But the Minerals Council of Australia welcomed the move. “The Australian coal industry supports the government’s sensible policy which recognises the role of our high quality coal in helping to curb emissions,” said the Greg Evans, the MCA’s executive director, coal.

“If the policy intent is all about reducing emissions we should have a technology neutral approach and that means considering the opportunity coal offers when utilising both high efficiency low emission (HELE) and carbon capture and storage (CCS).”