Currently, around three quarters of investment in Australia’s renewable energy industry comes from overseas.
That figure is part of the reason why some politicians, like Bradfield’s Nicolette Boele, have come out in support of a policy that is relatively tough to sell: handing out tax breaks to international energy companies.
What happened: Part of Labor’s sweeping reforms to Capital Gains Tax (CGT) originally included an expansion of the tax to foreign owned renewable energy assets, which had previously been exempt.
While the proposed tax came with a temporary discount to soften the blow, clean energy groups pushed against the change, claiming it would cripple the country’s growing renewable industry.
Bradfield MP Nicolette Boele was among crossbench figures and the Greens pushing for Labor to repeal the changes. They saw some success last week, when Labor extended the discount period to 2040.
What they said: Speaking to the Lorikeet, Boele said she pushed against the tax changes because they “threatened the international investment Australia relies on to build the solar farms, wind projects and batteries that keep our power affordable”.
“Three quarters of our clean energy investment comes from overseas, so changing the rules after the fact makes investors wary”.
“The design could've triggered a sell-off of renewable projects before 2030, then a freeze on new ones”.
In Australia, around 75 percent of investment into renewable projects — wind farms, solar farms, large-scale batteries — comes from foreign companies. The remaining amount comes primarily from the government and domestic investors.
A tiny amount of that investment also comes from Australian superannuation funds.
Show me the money: To shut down costly and polluting coal plants, Australia needs to keep foreign investment flowing into new renewable projects.
For those who want both a healthy planet and fair tax on massive energy companies, it raises the question: is there a way Australia could finance new energy projects without relying on tax breaks for foreign companies?
Who can fund? Energy analyst Tim Buckley argues Australia’s super funds could play a much bigger role in our pursuit of cleaner, cheaper energy.
Buckley has 30 years of experience in finance and runs an independent think tank. He said that if we want to start taxing foreign renewables, we need to first be fostering local investment.
According to Buckley, Australia has trillions of dollars worth of potential investment tied up in superannuation funds, but proportionally, a very small amount of that goes toward clean energy projects.
Tempting investors: As superannuation funds abide by strict standards set by the government, they also have the power to incentivise more of this capital to go toward projects that align with the interests of Australians.
Boele has also been supportive of superannuation reform to bolster domestic investment in clean energy, and has met with the Assistant Treasurer Daniel Mulino to advocate for it.
“The laws governing Aussie superfunds makes an already cautious industry even more risk adverse”, she told the Lorikeet.
“International investors have been doing these types of investments for decades and their participation in our market reflects that confidence … with project lead times, energy security threats and cost of energy impacting business and households, we can’t afford the delay”.