Legislative and government information

CEFC Act

The CEFC Act establishes the Clean Energy Finance Corporation, sets out the organisation’s purpose and functions, and establishes arrangements for the Board, CEO and staff. The objective of the CEFC under the CEFC Act is “to facilitate increased flows of finance into the clean energy sector”. The main function of the CEFC is to invest, directly and indirectly, in clean energy technologies (the investment function).

The CEFC Act also specifies a number of other functions, including:

• Liaising with relevant individuals, businesses, agencies and State and Territory governments to facilitate the CEFC investment function
• Performance of any other functions conferred by the CEFC Act or any other Commonwealth law
• Anything incidental or conducive to the performance of the investment function or the other functions.

Clean energy technologies are broadly defined in the CEFC Act to be energy efficiency, renewable energy and low-emission technologies. The Act expressly excludes CEFC investment in carbon capture and storage, nuclear technology and nuclear power.

During 2020–21 there were no amendments to the CEFC enabling legislation. On 30 October 2019 the Australian Government announced its intention to amend the CEFC enabling legislation to provide for the creation of a $1 billion Grid Reliability Fund (GRF).¹ On 27 August 2020, the Clean Energy Finance Corporation Amendment (Grid Reliability Fund) Bill 2020 was introduced into the Australian Parliament to give effect to the GRF. At the time of writing, the Bill was still before the Parliament.

1 Prime Minister, Minister for Finance, Minister for Energy and Emissions Reduction Media Release: $1 billion boost for power reliability, 30 October 2019.

Ministerial powers of direction

The CEFC Act is structured in such a way as to maximise operational independence, particularly with respect to investment decision-making.

Investment Mandate Directions

Ministerial powers to direct the CEFC Board are primarily limited to Investment Mandate Directions, issued by responsible Ministers under sub-section 64(1) of the CEFC Act. Mandate Directions provide instruction as to the policies to be pursued by the CEFC in performing its investment function, provided this does not have a purpose of directing the CEFC to make or not make a particular investment and is not inconsistent with the CEFC Act (including the object of the CEFC Act). The Clean Energy Finance Corporation Investment Mandate Direction 2020, which came into effect from 2 May 2020, remained in place throughout the 2020–21 reporting period.

CEFC Special Account directions

Ministers may also direct the CEFC to pay surplus funds to the CEFC Special Account. The Hon. Greg Hunt MP, then Minister for the Environment, and Senator the Hon. Mathias Cormann, then Minister for Finance, issued a Ministerial Direction to repay surplus monies to the CEFC Special Account on 5 May 2016. This remained in place throughout the 2020–21 reporting period. Additional information about movements into and out of the Special Account can be found in Section 3.

Government policy orders

The PGPA Act allows the Australian Government to issue directions to the CEFC by means of a Government Policy Order (GPO). No GPOs applied to the CEFC during 2020–21.

Statement of compliance

The CEFC had no instances of non-compliance with Ministerial Directions (including the Investment Mandate) or GPOs in the 2020–21 year.

Procurement

Commonwealth Procurement Rules are not applicable to the CEFC. Procurement occurs via the most efficient, effective, economical and ethical means possible, which can involve direct engagement of service providers based on quotes, select tenders, engagement of external advisors, and in some instances joining Australian Government procurement arrangements.

Under section 74 of the CEFC Act, the CEFC must specify in the Annual Report the details for each procurement contract on foot within the financial year valued at above $80,000.