Australia is in danger of losing investors in clean energy options such as solar and wind energy, and in carbon abatement, because of the uncertainty around environmental legislation.
Several key figures in the finance industry have told a Senate inquiry into the Abbott government’s proposed Direct Action policy that institutions, developers and bankers are turning their attention elsewhere.
South America, which is rapidly developing a large-scale solar industry, is one destination, while North America, Asia and European countries (still), are also attractive.
Nathan Fabian, the head of the Investor Group on Climate Change, also said the proposed review of the renewable energy target – and the suspension of new solar and wind developments while this is resolved appears to be another “very clear signal” that Australia will not be a market for low-carbon investing for the next few years.
“My members are looking at the United Kingdom, Ireland, the United States, France and some South American countries as having more stable investment environments for low-carbon opportunities,” he said.
Tim Buckley, a former Citigroup analyst, funds manager, and now with the US-based Institute for Energy Economics and Financial Analysis, agreed, saying the Australian clean energy industry is regressing because of the lack of clarity on policy.
“Internationally, companies and economies are building industry capacity to transition for the long term. We should be building capacity as well and we are not doing so.”
He said Australia was currently missing out on hundreds of billions of dollars that being invested every year in renewables, in energy efficiency and in development of these new technologies.
The only bright spot on the landscape is the ACT auction program, part of its plan to seek 90 per cent renewables by 2020, which has announced plans for 200MW of wind projects and a 50MW solar park, featuring new technologies.
Oliver Yates, the head of the Clean Energy Finance Corporation, said financiers are not even bothering to commit time and effort to finance large scale renewal energy projects on fixed terms.
“The market is effectively on hold, with most parties not prepared to enter into a firm contract and start construction pending the outcome of the RET review,” he said.
“There is significant uncertainty impacting the market. The legislated RET program created an environment of certainty on which developers, financiers and the market generally, could base their expectations, investing significant resources to develop and secure permits for projects. That value is now being stripped away.”