02 Governance, Structure & People ENABLING LEGISLATION



CEFC Act and associated key governance events

The CEFC Act sets out the organisation’s purpose and functions, establishes arrangements for the Board, CEO and staff, and creates a system of delegations to ensure that the Corporation has sufficient resources and sufficient controls on their use. The Corporation was established by the CEFC Act on 3 August 2012.

The object of the CEFC under the CEFC Act is ‘to facilitate financial flows into the clean energy sector’.

The main function of the CEFC is the ‘investment function’: to invest, directly and indirectly, in renewables, energy efficiency and other emissions reducing technologies. The CEFC Act also specifies a number of support functions such as:

  • Liaison with relevant individuals, businesses and agencies to facilitate the 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.

In summary, the CEFC Act contains five positive duties (i.e. ‘you must do this’) and three negative duties (‘i.e. you must not do this’) in relation to the investment function.

The main positive duties under the CEFC Act in relation to investments are:

  • To perform the investment function including by investing in businesses or projects for the development of, commercialisation of, or in relation to the use of clean energy technology, or in businesses that supply goods or services needed to develop, or commercialise or in relation to the use of the same

  • To ensure investments are solely or mainly Australian-based

  • By 1 July 2018, to ensure that at least 50 per cent of the Corporation’s portfolio is invested into renewables

  • To otherwise comply with directions of the Investment Mandate, a piece of subordinate legislation described at page 109

  • To establish Investment Policies that support the above.

The main negative duties under the CEFC Act are:

  • Not to invest in carbon capture and storage

  • Not to invest in nuclear technology

  • Not to invest in nuclear power.

Clean energy technology is broadly defined through the definitions of renewable, energy efficiency and low emissions technologies (excluding the prohibited technologies above). Further restrictions on eligibility may be placed by means of the Investment Mandate, which had not occurred at the time of writing.

During the financial year there were no amendments to the CEFC’s enabling legislation. Following the change of government on 18 September 2013, Australian Government policy towards the CEFC has been to abolish the Corporation through repeal of the CEFC Act. This has remained Australian Government policy throughout the reporting period.

The Australian Government has brought forward legislation to effect its policy of abolition on three occasions, but at the time of writing none of these Bills had secured passage. Figure 30 outlines the current status of these Bills.

The duty of the CEFC Board, CEO and staff throughout this period remains to administer the law as it stands, to carry out the investment task assigned to the CEFC under law, and to be responsive to Government direction as it is given from time to time (issued principally through the Investment Mandate).

The CEFC has a professional, respectful relationship with both its Responsible Ministers and the officials of the Treasury and the Finance Departments. Throughout the period, the CEFC has been able to engage with, and work constructively with, Government and the Treasury (as portfolio department), including continuation of administrative funding and drawdown processes from the Special Account in accordance with the CEFC Act, and in providing reporting under its various reporting responsibilities.

Figure 29: Technologies the CEFC invests in


What is in scope

Renewable Energy Technologies

Renewables (including bioenergy, geothermal, hydro, ocean, solar, waste-to-energy, wind)

Hybrids of renewables with other technologies*

Technologies (including enabling technologies) that are related to renewable energy (including supply of goods or services)

Energy Efficiency Technologies

Energy efficiency (including energy conservation and demand management)

Technologies (including enabling technologies) that are related to energy efficiency (including supply of goods or services)

Low Emissions Technologies

Technologies that reduce emissions that are not renewables or energy efficiency* (including supply of goods or services)

* May involve a threshold emissions intensity test against baseline activity to determine eligibility.


Figure 30: Abolition legislation – current status


Introduced House

How Dealt With

Introduced Senate

How Dealt With

Clean Energy Finance Corporation (Abolition) Bill 2013

13 November

Passed – 21
November 2013

2 December 2013

Negatived – 10 December 2013

Clean Energy Finance Corporation (Abolition) Bill 2013 [No.2]

20 March 2014

Passed –

27 March 2014

27 March 2014

Negatived –
18 June 2014

Clean Energy Finance Corporation (Abolition) Bill 2014

23 June 2014

Not dealt with at time of writing



After the close of the 2014–15 financial year, under revised Administrative Orders of 21 September 2015, responsibility for the CEFC transferred to the Environment portfolio, under Responsible Ministers, the Hon Greg Hunt MP, Minister for the Environment, and Senator the Hon Mathias Cormann, Minister for Finance.

CEFC Investment Mandate and associated key governance events

The Investment Mandate direction is the means by which the Government of the day provides instruction as to how the Corporation can make investments, providing it:

  • Does not have a purpose of directing the Corporation to make or not make a particular investment; and

  • Is not inconsistent with the CEFC Act, (including the object of the Act).

Under the CEFC Act, the CEFC Board must be consulted on the draft of a proposed new Mandate, and any submission made by the Board must be tabled in the Parliament.

During the reporting period there were two versions of the Investment Mandate in effect. Details of these are set out in the figure below.

During the reporting period, the CEFC was provided with a consultation draft of a further new Investment Mandate by its Responsible Ministers under correspondence dated 24 June 2015. At the time of writing the consultation period was still in train.

The currently applicable Mandate directs that the CEFC will:

  • Mobilise investment in renewable energy, low emissions and energy efficiency projects and technologies in Australia, as well as manufacturing businesses and services that produce required inputs

  • Apply commercial rigour and make its investment decisions independently of Government

  • Achieve a benchmark rate of return based on a weighted average of the five year Australian Government bond rate plus 4 to 5 per cent, measured across the portfolio of investments over time

  • Not increase the level of exposure to credit risk above the level of the existing portfolio as assessed on 5 March 2015

  • Invest responsibly and manage risk to achieve financial self-sufficiency

  • Be expected to focus on projects and technologies at the later stages of development (while noting the Corporation may invest at the demonstration, commercialisation and development stages)

  • Use financial products and structures to address impediments inhibiting investments in the sector

  • Be limited to providing $300 million of concessionality in any one financial year

  • Take a long-term outlook when setting its investment strategy

  • Ensure that projects seeking CEFC funding of greater than $20 million comply with Australian Industry Participation Plans (AIPP) policy

  • Consider its potential impact on the operation of Australian financial and energy markets when making its investment decisions, and specifically on the market for Large Scale Generation certificates under the RET

  • Have regard to positive externalities and public policy outcomes when making investment decisions and when determining the extent of any concessionality for an investment.

  • Copies of the current Investment Mandate, and accompanying Explanatory Statement, the consultation draft and CEFC submissions on them are available on the Comlaw website at comlaw.gov.au 

Figure 31: Investment Mandates in effect 2014–15


Date Issued

Date Registered

Date of Effect

Clean Energy Finance Corporation (Investment Mandate) Direction 2013

16 April 2013

24 April 2013

25 April 2013 to
4 March 2015

Clean Energy Finance Corporation (Investment Mandate) Direction 2015

17 February 2015

4 March 2015

5 March 2015 onwards

CEFC Investment Policies and associated key governance events

Meeting the various requirements of the Investment Mandate is a difficult task, but it is the Board’s role to ensure that the Corporation takes all reasonable steps necessary to achieve these ends, and to establish Investment Policies that support the Investment Mandate. The CEFC Investment Policies are published on the CEFC’s website.

The CEFC Investment Policies set out:

  • A governance framework for the CEFC, which clarifies the roles of the Board, the Executive team, committees and external advisors in investment making

  • The investment strategy of the Corporation, including the 2018 Portfolio Vision, investment approach and guidelines

  •  Board-approved definitions of key terms it is empowered to define under the CEFC Act (‘solely or mainly Australian-based’ and ‘low emissions technology’) and guidelines as to what it will assess as ‘renewable energy technology’ and ‘energy efficiency technology’
  • Benchmarks and standards for assessing performance of the CEFC’s investments and of the Corporation itself

  • Risk management for its investments and for the Corporation itself. 

Figure 32: Credits to the Special Account under CEFC Act, section 46*

Specified date

Amount credited on specified date

Cumulative section 46 credits as at specified date

1 July 2013

$2 billion

$2 billion

1 July 2014

$2 billion

$4 billion

1 July 2015

$2 billion

$6 billion

1 July 2016

$2 billion

$8 billion

1 July 2017

$2 billion

$10 billion

*excluding surplus returned by the Corporation 

These policies are reviewed at least once annually and automatically upon issue of a new Investment Mandate. The Investment Policies were under review from the change of Investment Mandate from 5 March 2015, when a consultation draft on a new Mandate was received on 24 June 2015. In light of this, further review of the Investment Policies has been suspended pending the outcome of this most recent process.

CEFC funding and associated key governance events

The CEFC is self-funding through its investment returns on money appropriated to it under the CEFC Act.

Under the CEFC Act, $2 billion is credited to the CEFC Special Account in the Treasury each 1 July, for five years from 1 July 2013, as outlined in Figure 32.

The CEFC was not created to exercise a major cash management function. Accordingly, funds credited to the Special Account do not actually leave the Consolidated Revenue Fund created by The Constitution until they are released for investment when authorised by the Nominated Minister in accordance with the procedure outlined in the Act.

In other words, the funds depicted in Figure 32 above are a drawing right of the CEFC against the Special Account maintained by the Treasury, rather than an actual transfer to the CEFC. The funds are only actually drawn down when the CEFC has a use for them. Investments are made (both directly by the CEFC and indirectly through intermediaries) into eligible clean energy projects. Repayments and returns from these projects are paid directly to the CEFC’s operational account. Where the Board has identified funds that it considers surplus money, this surplus can then be returned to the Special Account via the Treasury. 

During the year, the CEFC and the Responsible Ministers agreed a mechanism for return of surplus cash amounts and the Corporation returned funds to the Commonwealth including amounts of repaid principal from some of the first fully-acquitted loans. Figure 33 summarises movements in and out of the Special Account.

Under the CEFC Act, and subject to ministerial authorisation, the Corporation may also make payments to ARENA. No requests were made and no payments to ARENA occurred during the 2014–15 reporting period.

Figure 33: Credits and debits to the Special Account during 2014–15


Credits ($m)

Debits ($m)

Balance ($m)

Opening balance of the Special Account



Section 46 Credit – 1 July 2014




Section 54(1) Return of Funds









Figure 34: How the CEFC’s Special Account and Operational Accounts work