Article by Editorial, courtesy of The Australian
28.01.2026
The Albanese government has made no secret of its wish to pick winners to push its green agenda, using taxpayer funds. Lessons abound in the folly of thinking government can get better value for money or do things the private sector is unwilling or unable to do. Rent seekers push to the front of the queue for funding, and government is less prepared than private capital to cut its losses when things go bad. This all makes warnings from economists that Labor’s financing vehicles for renewable energy projects are at risk of turning into slush funds without greater transparency all the more timely.
The renewable energy transition, in particular, is facing increasing costs and development headwinds at a time when special-purpose funding from government is only starting to gather a head of steam.
As the urgency builds and the amounts of money involved get bigger, the margin for error narrows. A financial tally of government industry support programs makes sobering reading. The last federal budget said the government was committing $22.7bn over the next 10 years through its Future Made in Australia plan “to maximise opportunities as we move towards net zero to secure Australia’s place in a changing global environment”. This is only a small part of the story. The opaque Capacity Investment Scheme will “support about $73bn in investment” in the electricity sector from 2024 to 2027. The aim of the scheme is to “help deliver the Australian government’s 82 per cent renewable electricity by 2030 target with an additional 40GW of capacity by 2030”. The National Reconstruction Fund will invest $15bn for the Australian government “to diversify and transform Australia’s industry and economy”. The money will be delivered in debt, equity and guarantees for businesses and projects that design, refine and make across seven priority areas, of which renewables and low-emission technologies are at the top of the list. Only $584.5m has been given out so far, with most allocated to two projects – a rare earths development in the Northern Territory, and a $200m co-investment with venture capital firm Brandon Capital to develop therapeutics, medical devices, and vaccines. The fund intends to increase its spend to $1.5bn this financial year.
The most recent annual accounts say return on investment “is being tracked … however, it will not be published until five years after the first investments”.
The Clean Energy Finance Corporation has committed $18.3bn from a pot of $33bn to “collaborate with investors, innovators and industry leaders to spur investment where it will have the greatest impact on accelerating Australia’s transition to net zero emissions”. The fund is expected to deliver a positive return.
The Australian Renewable Energy Agency, meanwhile, has supported more than 800 projects with more than $3bn in grant funding, which it says has unlocked investment of almost $15bn in Australia’s renewable energy industry.
The big picture is that vigilance is required. Neither the CIS nor NRF gives detailed pricing about the specific projects the government financed, saying only that such detail is commercial in confidence and returns to the taxpayer would not be published for years to come, if at all. The experience from overseas is that much more rigour is needed. This is particularly the case for the CIS, given the political pressure that is mounting and the fact the private sector has withheld its capital, knowing government will step in. Victoria’s determination to push ahead with offshore wind projects despite the obvious cost concerns should ring alarm bells.
The bottom line is, as hedge fund portfolio manager Jun Bei Liu has said: “Ultimately, if it’s not commercially viable, it’s not going to work.”
