One of the distinguishing features of the National Climate Bank Act is that it funds an independent, nonpartisan non-profit to operate as the country’s national green bank. It does not create a new agency or government owned-corporation. This is a very intentional and critical design element, and last week the Australian government shows us why.
In a new “Orwellian” proposal, the Australian Energy Minister introduced legislation that will provide its national green bank with AUD 1 billion in new capital to finance an expanded list of eligible technologies that now includes natural gas and coal-fired generation.
The green bank, the Clean Energy Finance Corporation (CEFC), has driven nearly $20B into renewable, efficiency, transmission, and sustainable agriculture projects, among many other innovative solutions. It is the world’s largest and most successful national green bank, proving out the model, expanding clean energy markets, lowering GHG emissions, and mobilizing private investment.
Unfortunately, the CEFC was established as a government-owned corporation, with the national government in control of its charter and investment mandate. The result has meant that since the day it was created, it has been fighting for its continued existence and climate-focused mission.
As politics and control of government has changed in Australia, so too have attitudes towards the CEFC. Opponents have tried to shut it down, change its mission, sell it and increase its required rate of return so as to shrink the market for viable investments. The fact that the organization has persisted and continued to invest effectively is a testament to the CEFC’s leadership and professional staff.
But it’s also a huge warning sign to those in the U.S. hoping to implement lasting climate finance policies. A government-owned corporation or agency within government can easily be dismantled, shut down or countermanded as politics change. Look at the DOE Loan Programs Office, for example. This kind of political interference is particularly harmful to any finance-based policy solution like a green bank, where long-term stability and reliability is essential for partnership from market actors.
This is precisely why the National Climate Bank must be an independent nonpartisan non-profit. If we want it to survive the inevitable political change that comes and goes over the next decade, any financing solution placed within the federal government itself just won’t cut it.