The Clean Energy Finance Corporation’s Henry Anning speaks to Waste Management Review about the group’s diverse portfolio of finance options for the waste industry which support carbon abatement and energy and cost efficiencies.
In August, the Federal Government’s specialist financier, the Clean Energy Finance Corporation (CEFC), took two great leaps forward in demonstrating its ability to invest in resource recovery projects that lower the nation’s carbon emissions.
In a joint venture between ResourceCo and Cleanaway, the largest resource recovery and processed engineered fuel plant in Australia was unveiled at Wetherill Park in Sydney. In 2017, ResourceCo received $30 million in finance from the CEFC to develop the Sydney site, and one other facility still to be named. Over its lifetime, the Sydney plant is expected to abate more than four million tonnes of carbon emissions.
In the same week, it was announced that the CEFC would commit a further $38 million to a new composting facility in Melbourne which will be operational in 2019. The $65 million South Eastern Organics Processing Facility will be the most advanced of its type in Victoria and produce about 50,000 tonnes of high grade compost each year. Organic waste from eight Melbourne councils will be sent to the new facility, which will be built by international waste management company Sacyr Group. The project is expected to abate more than 65,000 tonnes of carbon emissions annually.
Since its first investment in 2013, the CEFC has financed a range of renewable energy projects across solar, wind and bioenergy. For the waste industry, this wide scope of projects spans new sources of energy such as waste to energy (WtE), processed engineered fuels and anaerobic digestion. In reducing energy use, the CEFC supports projects such as energy efficient processing and sorting equipment, smart monitoring and control devices and hybrid and electric vehicles. For emissions reduction, it can aid composting, anaerobic digestion, biogas flaring, solar rooftop PV and energy storage.
Its diverse portfolio has supported projects such as $10 million to expand bioenergy at landfill sites in Central and Southern Queensland and $90 million for Cleanaway to move away from landfill with new technologies and practices. It is also working with the Foresight Group to identify and develop opportunities to invest in a range of bioenergy and WtE projects in Australia.
In a fact sheet, the specialist financier acknowledges the waste sector is undergoing an important transition – resulting in significant investment in infrastructure and equipment, upgrading existing assets and installing new ones. It highlights that investing in clean energy not only reduces our carbon emissions through landfill diversion, but also supports an energy efficient waste sector and makes a vital contribution to supporting the sector in Australia.
Henry Anning, CEFC Bioenergy Sector Lead, says the ResourceCo-Cleanaway facility and the Sacyr organics projects are significant developments in Australia’s resource recovery sector.
“There are significant emissions reductions across both projects, which can drive more local government interest in resource recovery projects, helping projects through the development phase, policy framework and approvals process,” Henry says.
He says as an institutional investor committing funds to the two facilities, the CEFC is showing other financiers how they can invest in the sector.
Henry says the CEFC is encouraging institutional investors to look beyond solar and wind to increase the sustainability assets in their portfolios, including in the bioenergy and WtE sector.
“We are active across the whole waste hierarchy and circular economy in terms of investments which can reduce emissions,” Henry says.
“We have already invested in recycling and landfill gas across a range of projects. While avoiding and reducing is our number one priority when it comes to waste management, we recognise that Australia is a long way from being a zero-waste society.
“Where waste is created, we need to have the infrastructure and investment to deal with it in the highest order possible, including through resource recovery and reduced landfill.”
Henry says the CEFC is considering a number of WtE and waste projects and expects this to ramp up as interest in resource recovery gains momentum.
Henry notes that China’s National Sword policy has prompted public and private sector waste management operators to take a closer look at resource recovery and WtE.
“We would expect to be making a number of investments across the whole waste hierarchy in the next couple of years as the pressure to improve waste management increases,” Henry says.
“We actively encourage other investors to look at the waste industry seriously as an important investment opportunity.
“Our barrier to date hasn’t been capital allocation – it’s been project limitation. We look for projects that can deliver meaningful emissions reduction and also offer have some demonstration value to help others in the industry to consider these resource recovery investments, even without CEFC capital.”
Henry says investors want to see a pipeline of quality projects, whether it is companies like Cleanaway co-investing with other waste organisations such as ResourceCo, or other specialist investors not yet linked to the waste industry.
Henry says that the CEFC directly invests in larger projects, and also delivers tailored finance to small and mid-scale opportunities via co-financing arrangements with major banks. These can include a renewable energy component, energy efficient resource recovery operations and projects to reduce methane emissions, to name a few.
He says capital can be tailored to meet the individual needs of the project and its sponsors.
“Some corporates might need a slightly longer-term loan to help drive these investments.
“If it’s a small to medium-sized recycling business, it might be using the asset finance options we have developed with our co-financiers, which offer a tailored finance package.
“It’s enough to help them invest in some new equipment that helps them divert organics from landfill or reduce the amount of energy their equipment is using.”
Henry says that based on the current structural drivers, he anticipates increased investment in significant waste infrastructure over the next 10 years, whether it is to avoid, reuse, reduce waste or recycle or recover waste into energy.
“How we may get involved in that is likely to evolve over time,” Henry says. “As new investors come on board in the sector, there may be some projects we no longer need to be part of and we can evolve our role into the next evolution of projects, finance structure or opportunities. This is an important area for clean energy investment and can offer benefits for Australia.”