Australian Prime Minister Malcolm Turnbull lifted his predecessor’s ban on state investment in wind power, as the Paris climate accord looks poised to test the administration’s willingness to curb fossil-fuel pollution.
Environment Minister Greg Hunt ordered the government-backed Clean Energy Finance Corp. to cancel Tony Abbott’s directive prohibiting the A$10 billion ($7.2 billion) renewable-energy fund from investing in new wind projects, according to a Dec. 3 investment mandate obtained by Bloomberg.
The fund now can invest in clean-energy projects, including wind, that involve “emerging and innovative” technology, according to the document. The government directed the fund to focus on offshore wind projects, as commercial sources can pay for established onshore technologies.
“The new CEFC investment mandate reflects the Turnbull government’s strong support for renewables and innovation,” Caitlin Keage, a spokeswoman for Turnbull, said in an e-mail. “The mandate puts the CEFC’s focus on new and emerging renewable technologies, rather than supporting well-established technologies that are financially viable without government support.”
Shares of Infigen Energy, the Sydney-based wind farm operator, rose as much as 10 percent and traded at 46 cents as of 11:03 a.m. local time on Dec. 13, on course for the highest close since April 2011. Australia’s benchmark index fell 1.6 percent.
The move comes as envoys from 195 nations at a United Nations climate summit in Paris endorsed a package of measures on Dec. 12 limiting fossil-fuel pollution, establishing a mechanism to ensure reductions for decades, setting an ambitious goal to curb temperature increases and setting up ways to measure and verify emissions.
The Australian decision on wind power marks another policy reversal by Turnbull, who deposed Abbott as prime minister in September in a leadership ballot of the ruling Liberal-National coalition. Last month Turnbull scrapped a system of bestowing knighthoods on prominent Australians that was reintroduced by Abbott, and in October signaled his intention to reform the nation’s tax system, initiating a debate on increasing the goods and services tax.
Wind farming in Australia suffered a setback when Abbott, who considered the structures ugly and noisy, said in July that the Clean Energy Finance Corp. should be “investing in new and emerging technologies and certainly not existing wind farms.” The government had outlined plans in June to appoint a commissioner to oversee the farms and support research into whether they damage people’s health.
The mandate also honors commitments made to crossbench senators during negotiations to secure changes to the Renewable Energy Target, Turnbull’s spokeswoman said. In June, following months of disagreement among lawmakers, parliament certified a new target of producing 33,000 GWh of electricity from large-scale renewable energy projects by 2020.
Despite the change to CEFC’s mandate, there’s still legislation in place in parliament to abort the fund in line with Abbott’s previous policy, opposition spokesman for the environment Mark Butler said.
“Either Greg Hunt and Malcolm Turnbull are going to join with the enormous opportunities in the future, which lie in renewable energy and clean energy, or they are going to continue with Tony Abbott’s right-wing reactionary policies to abolish the CEFC,” Butler told reporters in Adelaide.
Foreign Affairs Minister Julie Bishop said the Paris agreement is an historic moment in the global response to climate change, but Australia – one of the world’s largest coal exporters – would have to find the right balance in adopting the proposals.
“We don’t want to damage our economy without having an environmental impact,” Bishop said, according to a transcript of her comments.
The Paris agreement and the government’s decision to restore a “common sense” approach to the CEFC sends a strong signal that renewable energy will play a big role in Australia’s economic future, said Kane Thornton, chief executive officer of the Clean Energy Council, an industry group.
Wind accounted for almost a quarter of the CEFC’s investment portfolio as of last year, and about one-third of its project proposals relate to wind technology, according to its website. Together with other lenders, the corporation has acted as a provider of debt for wind projects, including the Macarthur wind farm in Victoria state, operated by AGL Energy Ltd., it said.
“Renewable-energy investment is still recovering from the Abbott government’s attacks on wind power,” Andrew Bray, national coordinator of the Australian Wind Alliance, said. “Australia needs the CEFC to be in there breaking investment deadlocks if we are to meet our clean-energy targets.”
With assistance from James Paton.
©2015 Bloomberg News
Lead image: NOVEMBER 13, 2015 - BERLIN: Australian Prime Minister Malcolm Turnbull at a press conference after a meeting with the German Chancellor in the Federal Chanclery. Credit: 360b / Shutterstock.com