Wind Industry Doomed as Smokin’ Joe Hockey Shuts Down CEFC Lending for Wind Farms

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Having killed the “carbon” tax in an eye-blink – a business killing and family punishing $23 a tonne tax on carbon dioxide gas – Clive Palmer vowed to use his ability to block legislation proposed by the Coalition in the Senate to prevent any changes to the mandatory Renewable Energy Target; and the abolition of the Clean Energy Finance Corporation.

Retaining the Clean Energy Finance Corporation and the mandatory RET makes no sense for a political party which helped to kill the “carbon” tax because of the punishment it caused to businesses and households through spiralling power bills. Since big Clive’s announcement, The Australian has produced a plethora of articles to much the same effect.

For our overseas followers, Clive’s 3 PUP Senators – plus their ally, Ricky Muir of the Motoring Enthusiasts’ Party – are able to block any legislation put up by the Coalition in the Senate, where Labor and the Greens oppose it; or, conversely, to side with the Coalition and get legislation passed where Labor and the Greens choose to block it, with the support of 2 of the cross-benchers, like John Madigan and Nick Xenophon. That leaves Palmer with the ability to throw his considerable weight against or behind Coalition backed legislation. On that matrix, with Palmer’s support, any attempt to kill the CEFC – a Green/Labor created renewables slush fund – is bound to fail.

But – in politics – there’s more than one way to skin a cat.

Treasurer, Joe Hockey and Finance Minister, Mathias Cormann had planned to sell off the CEFC to the private finance sector. The loans written by the CEFC amount to assets on its books which could be sold, at a price, to any financial institution ready to take on the risk. No doubt, the sale price would be at a considerable discount to the current face value of the loans, but Hockey and Cormann apparently took the view that it was better that some other sucker take the risk; rather than leave the Australian taxpayer exposed to the CEFC’s reckless approach to lending. A sale would have also prevented any further risk exposure.

Big Clive’s declaration that he would prevent the abolition of the CEFC has thrown a spanner in the works; but only briefly. Hockey and Cormann have identified that the Coalition has the power to direct the CEFC to lend to certain types of projects and, more importantly, to prevent it from lending to others.

Hockey has already declared his hatred of “utterly offensive” wind farms and is hip to the fact that wind power is inefficient, insanely expensive and fails in its principal claim of reducing CO2 emissions in the electricity sector (see our posts here and here).

No prizes, then, for guessing which “renewable” generation source won’t be getting any more funds from the CEFC. Here’s The Australian on the Hockey/Cormann wind farm attack.

Direct action to benefit from Clean Energy Finance Corporation funds
The Australian
Sid Maher
28 June 2014

THE Clean Energy Finance Corporation is likely to be directed away from lending to wind farms in favour of programs that support the Coalition’s “direct action” plan such as energy-efficiency schemes and leasing for solar hot water systems.

In the wake of Clive Palmer’s declaration this week that his senators will vote to retain the CEFC, it has emerged that Joe Hockey and Finance Minister Mathias Cormann have the power to alter the CEFC’s investment mandate without parliament being able to reverse the move.

Senior government sources have told The Weekend Australian the CEFC could be instructed to favour direct action-style programs such as providing leasing for households to install solar hot water systems and for energy-efficiency programs instead of wind farms. Twenty-two per cent of the CEFC’s loans in its first year were for wind projects.

The likely change of direction for the CEFC comes as funding for the $2.55 billion Emissions Reduction Fund, the centrepiece of the Coalition’s direct-action policy, was contained in an appropriation bill that passed both houses of parliament this week.

However, the mechanism for distributing the funds is contained in amendments to the Carbon Farming Initiative, which is yet to pass the Senate.

Government sources remain hopeful of having the bill passed, despite Mr Palmer’s announcement that he would not support direct action because it was a “waste of money’’.

If direct action is blocked, with the money already allocated in an appropriation bill, an alternative plan is to distribute money to the states for carbon abatement programs under Section 96 of the Constitution.

Under Section 96, the federal government is able to provide tied grants to the states.

This would enable direct-action funding to be paid to the states for programs addressing energy efficiency, boosting soil carbon initiatives and increasing the take up of solar hot water systems.

In the wake of Mr Palmer’s announcement this week that he would support the abolition of the carbon tax, it is likely to be abolished either on July 14 or soon after.

The Palmer United Party leader’s call for an emissions trading scheme rated at zero appears doomed after failing to gain government support.

Mr Palmer is also backing the retention of the CEFC and the Climate Change Authority and will not support changes to the Renewable Energy Target before 2016 – after the next election is due.

Environment Minister Greg Hunt on Thursday split the CEFC repeal bill from the main body of the carbon tax repeal bills. The former appears set to be debated by the Senate after the main carbon tax repeal bills.

Under the legislation establishing the CEFC, the Treasurer and Finance Minister can provide direction on matters of risk and return, eligibility criteria for investments, allocation of investments between different types of clean-energy technologies, the types of financial instruments that may be invested in and “broad operational matters’’.

While the government can alter the investment mandate of the CEFC, existing legislation guarantees the CEFC the ability to write up to $10 billion in loans over the next five years.

The CEFC legislation allows the corporation to write $2bn of loans every year and, if it fails to reach the ceiling, the unused portion can be carried over to the next year.

As the political debate over its future has raged, the CEFC has written to all sides of parliament, including the crossbench senators, arguing its case for survival. It has also had meetings with MPs on its operations.

While the government can change the investment mandate, its ability to change the CEFC board, whose members have been given five-year terms, is limited.

Since it began operating from July last year, the CEFC has written $700 million in loans and has mobilised more than $1.8bn of private sector investment, for a total of $2.5bn in projects.

It argues its abolition would cost the government $100m a year in lost revenue.
The Australian

STT hears that Al Gore’s presence on the podium alongside Clive Palmer last week was orchestrated (and paid for) by our favourite whipping boys over at Infigen (aka Babcock and Brown) – Gore’s “stunned-fish-out-of water” performance was heralded by Infigen’s spin masters as a propaganda coup.

After the Gore/Palmer circus of the bizarre died down – the wind industry and its parasites were crowing about their “political masterstroke” in having Palmer announce his support for the mandatory RET and the CEFC.

Talk about your all-time backfires.

The Hockey/Cormann manoeuvre could well be the killer blow we’ve been looking for.

It’s other peoples’ money that started the great wind power fraud; and its depriving wind power outfits of access to other peoples’ money that will end it.

The CEFC represents the ONLY source of funds available to wind farm developers.

Wind power outfits have been unable to obtain funds from commercial lenders, simply because retailers stopped signing Power Purchase Agreements over 18 months ago (see our post here).

In the absence of a PPA, a wind farm developer has nothing to offer by way of valuable security for their loan with a bank: commercial banks will simply not lend in the absence of the security provided by a long-term (15-25 year) PPA. That, rather significant, detail has never troubled the CEFC, which is prepared to lend on unsecured terms at rates far below those which would be demanded by commercial banks lending on the same terms (see our post here).

By preventing the CEFC from lending to wind power outfits, the Coalition have virtually guaranteed that no new wind farms will be built in the foreseeable future; at least where the wind power outfits involved do not hold a PPA.

Now that’s a “coup”!