Energy transition a bright spot in global investment environment
Net Zero Exceptionalism: Accelerating foreign investment explores the emergence of a new attitude of ‘exceptionalism’ in Australian policy, regulatory and investment settings, which aim to facilitate the speedy development of energy transition infrastructure. The report focuses on the perspectives of global investors and businesses assessing these opportunities in the Australian market. It is particularly relevant to the work of the CEFC, as a leading investor in Australia’s clean energy transition, and with responsibility for investing $19 billion through the Rewiring the Nation Fund.
CEFC Chief Investment Officer – Renewables and Sustainable Finance, Monique Miller was pleased to contribute to the report, noting that: “Offshore investment is playing a significant role in backing Australian renewable generation and energy storage, and we’re now seeing private sector interest in our massive grid transformation". Ms Miller said foreign investment had underpinned development across the Australian economy, a trend that was now reflected in the clean energy transition. “Our job is to draw in much needed capital as we try to achieve the cheapest overall energy transition for the Australian consumer,” she added.
The report was written by Australian leading law firm Clayton Utz in partnership with The Action Exchange, a thought leadership and stakeholder engagement agency.
Clayton Utz media release
'Net zero exceptionalism' drives foreign interest in local energy transition
22 March 2024
Efforts to make Australian energy transition deals more attractive to offshore investors are having profound impacts on foreign private capital decision-making, according to a study by law firm Clayton Utz.
A new attitude of 'net zero exceptionalism' has emerged in Australia's policy, regulatory and investment settings, giving confidence to international investors that some expect will lead to clearer investment paths by mid-2024.
The study shows that international investors are buoyed by signals from state and Federal governments, with some of the world's largest institutional renewables investors planning to increase their Australian investments over coming years.
Clayton Utz Chief Executive Partner Emma Covacevich said the energy transition is a bright spot in a tough global investment environment.
'Australia's financial and political stability make it an attractive market to foreign investors, but tax implications and lagging Foreign Direct Investment approvals have dissuaded some in recent years,' Ms Covacevich said.
'Demand for bankable renewable energy investments has grown, and new government funding, expedited regulatory approvals and incentives to attract more private capital for energy transition projects are starting to turn the tide.'
'We're witnessing the emergence of 'net zero exceptionalism', whereby governments, regulators and industry are supporting or expediting decisions to benefit the energy transition and decarbonisation projects. We think the trend is here to stay.'
Clayton Utz Partner David Wilkie said economies around the world are racing to decarbonise at the same time, and creating an environment that make investment in such projects achievable for foreign investors is key to ensuring Australia meets its net zero objectives.
'We've seen an insufficient level of capital investment in decarbonisation opportunities in Australia over recent years, partly due to some of the hurdles associated with deploying capital here,' Mr Wilkie said. 'But we'll need a greater mix of foreign capital if we are to meet our emissions reduction and renewable energy targets.'
'The actions of policymakers, regulators and industry players are changing the landscape. The path to returns is only set to become clearer for investors.'
Mr Wilkie said Australia has several government-sponsored programs that are incentivising private investment by providing up-front capital and reducing risk. These include the Clean Energy Finance Corporation – the world’s largest green bank – and the Federal Government's Rewiring the Nation program, which bridges the cost gap in transmission projects connecting renewables to the grid.
'While these efforts must continue to ensure we reach the investment outcomes we need, foreign investors can rest assured Australia is ramping up financial and policy support for the transition and investors can expect a clearer path to realising returns.'
