The CEFC has identified a potential investment pipeline of as much as $7.8 billion to 2025 across Australia’s waste, bioenergy, recycling and resource recovery sectors.
The Clean Energy Finance Corporation (CEFC) has released its 2019-20 investment update, detailing $1 billion in funding for 23 energy projects.
The Infrastructure Sustainability Council of Australia (ISCA) has revealed that environmental, social & governance (ESG) factors are driving infrastructure upgrades in Australia.
Last year, Australia saw large loan facilities being deployed for the first time to drive ESG upgrades and improvements to major infrastructure assets.
The ISCA said in a statement that a recent development within the broader ESG movement is the rapid increase in the scale of Sustainability Linked Loans (SLLs).
SLLs offer explicit price incentives to borrowers or investors for environmental improvements.
“Companies that achieve their sustainability targets benefit from favourable interest rates, while a failure to do so will lead to higher rates. With SLLs, companies therefore have an incentive to align both financing and sustainability objectives,” the ISCA said.
“SLLs are driving significant environmental upgrades of corporate and infrastructure assets around the world.”
ANZ, Westpac and BNP Paribas banks have provided billions of dollars of SLLs to organisations such as Sydney Airport, Investa Commercial Property, Queensland Airport, Adelaide Airport and AGL.
“Communities, consumers and governments increasingly expect investors to allocate capital in a socially and environmentally responsible and ethical way, and be transparent about their investment practices,” the ISCA said.
The council stated that many organisations have developed their own internal policies and procedures to assess ESG risks and opportunities within its industry frameworks.
Research released by Bloomberg New Energy Finance in October 2019 showed that the total amount of sustainability linked debt now exceeds USD1 trillion (AUD$1.5 trillion).
The ISCA stated that infrastructure investment by superannuation funds in Australia have a particularly strong ESG focus due to the long term nature of the assets and investment mandates.
“Investors measuring and reporting ESG performance will also proactively look to improve the performance of their assets,” The ISCA said.
“SLL’s can improve quality, performance and value through their focus on upgrades of existing assets.”
The council stated it expects that ESG screened investments will continue to grow in importance as organisations look to demonstrate their environmental, social, governance and commercial sustainability.
Clean Energy Finance Corp (CEFC) is also providing loans linked to ESG performance, including AUD100 million into MIRA’s Australian infrastructure platform to target lower carbon emissions and improved energy efficiency in assets including airports, electricity, port, rail and water, and AUD150 million to the IFM Australia Infrastructure Fund.
These two investors hold a portfolio of assets including ports, electricity networks, airports and water infrastructure.
CEFC also manages the Australian Recycling Investment Fund.
According to the ISCA, investments under an ‘ESG’, ‘sustainable’ or ‘ethical’ investment umbrella have moved into the mainstream over the past decade, and particularly in the last three years.
Sustainability linked debt comprises green, social and sustainability bonds which have been around for 10 years, and the more recent green and sustainability linked loans.
The CEFC has confirmed its largest equity investment in renewables, with a $100 million commitment designed to encourage institutional investors to further lift their exposure to renewables.
The CEFC investment in the Australian Renewables Income Fund (ARIF), managed by Australian asset manager Infrastructure Capital Group (ICG), represents an almost 40 per cent increase in the CEFC’s renewables equity portfolio, which now stands at $355 million.
ARIF will focus on proven large-scale wind and solar technologies, as well as emerging opportunities in waste to energy, large-scale battery storage and pumped hydro.
The CEFC has committed more than $2 billion in debt finance to accelerate the development of almost three gigawatts of renewable energy since it began investing in 2013.
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To complement the maturing debt market for renewables, the CEFC is continuing its strategy of increasing the flow of equity finance into a diverse range of large-scale renewables opportunities, tapping into the substantial resources of institutional investors and superannuation funds.
“It’s been exciting to see Australia’s renewable energy sector achieve significant growth in recent years, delivering substantial new investment in regional Australia and producing lower cost and cleaner electricity,” CEFC CEO Ian Learmonth said.
“However, renewables still represent less than 20 per cent of total electricity generation, highlighting the very large investment opportunity in order to deliver a clean energy electricity grid. Our investment in the Australian Renewables Income Fund is about creating new opportunities for institutional investors to take a larger role in our clean energy transition.
“Through ARIF, investors will have exposure to a broad range of renewable energy technologies, providing attractive options to deepen their exposure to clean energy opportunities.”
ICG Managing Director Tom Laidlaw said the unlisted Australian Renewables Income Fund has received strong initial support from institutional investors to build on its portfolio of renewable energy assets in Australia.
ARIF will invest in operating assets as well as new developments, enhancing returns for investors.
“ICG has invested in renewable energy assets on behalf of investors since 2007, over which time institutional demand has grown significantly,” Mr Laidlaw said.
“ARIF offers investors access to a high-quality portfolio of operating renewable energy assets and a platform for future growth in the sector. It is a portfolio that has been built over an extended period and is designed to provide investors with a diversified exposure across the sector.”
According to the Responsible Investment Association Australasia (RIAA), responsible investors accounted for 55.5 per cent of professionally managed assets in Australia in 2017, valued at $866 billion. The RIAA also reported that responsible investments outperformed other investments across large cap Australian and international share funds, as well as multi-sector growth funds.
In addition to the ARIF investment, the CEFC has also made renewable energy related equity investments with Palisade Investment Partners, the Foresight Group and HRL Morrison & Co.
The Clean Energy Finance Corporation (CEFC) Annual Report 2017-18 has shown the corporation has invested $127 million in waste-related projects in the past year.
The report was tabled in the Australian Senate and has found the total new CEFC commitments in 2017-18 were $2.3 billion, which is up from $2.1 billion in the previous year.
Across its entire portfolio, the corporation has contributed to projects with a total value of around $19 billion and financed more than 5500 smaller-scale clean energy projects through its partners.
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- Clean Energy Finance Corporation supports waste industry
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The CEFC is responsible for investing $10 billion in clean energy products on behalf of the Federal Government to reduce the country’s carbon emissions.
Since beginning in 2013, a total of 190 million tonnes of greenhouse gas emissions have been forecast to be cut, once funds are deployed and projects fully operation.
In the Chair’s Report, CEFC Chair Steven Skala said these investments include marquee projects and highlight decarbonisation and can be achieved profitably and effectively across the clean energy sector and waste related projects.
“This year has seen industry seizing the challenges and opportunities offered by decarbonisation and accelerating its consideration of emerging duties associated with carbon disclosure,” he said.
“The financial markets have also moved in this regard. The question now is not one of direction, but of pace. This means the CEFC will continue to have a significant number of opportunities available in its investment pipeline.”
CEFC CEO Ian Learmonth said much has changed since the CEFC began investing in 2013.
“From our early days largely focusing on renewable energy opportunities, we now see our capital working right across the economy, in an increasingly diverse range of projects,” Mr Learmonth said.
“We see clean energy technologies embraced by home owners and small businesses; essential infrastructure projects and landmark property developments; innovative start-ups and institutional investors with an eye to a sustainable future.
“In 2017-18, our most active year of investment, we see a common thread in this activity: a focus on embracing technological innovation to cut energy costs and lower emissions.”
Veolia has signed a $450 million 25-year operations and maintenance service agreement on a large-scale waste to energy facility in Kwinana, WA, capable of producing 36 megawatts of electricity – enough to power 50,000 homes.
The Clean Energy Finance Corporation (CEFC) will commit up to $90 million towards towards the $688 million and will be able to process 400,000 tonnes of household, commercial and industrial residual waste per year.
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Operations and maintenance of the facility will commence in 2021. Veolia operates 61 thermal waste to energy facilities around the world.
Macquarie Capital and Phoenix Energy Australia are co-developing the Kwinana plant, with co-investment by the Dutch Infrastructure Fund (DIF). Infrastructure company Acciona has been appointed to design and construct the facility. The project has been approved by the WA Environmental Protection Authority.
It is expected to produce cost-competitive base load power by processing household waste from local councils and contribute to grid stability in WA’s South West Interconnected System.
Technology that has been previously used in Europe will be implemented in the plant, which is expected to reduce carbon dioxide emissions by 400,000 tonnes per year – the equivalent of taking 85,000 cars off the road.
The plant will use the Keppel Seghers grate technology, which has seen use in more than 100 waste to energy plants across 18 countries. Metals recovered in the process are then able to be recycled, with the facility producing an ash byproduct that is commonly used as road base or for construction.
CEFC’s funding is part of a $400 million debt syndicate that includes SMBC, Investec, Siemens, IFM Investors and Metrics Credit Partners. The Australian Renewable Energy Agency (ARENA) is contributing a further $23 million in grant funding.
Veolia Australia and New Zealand Managing Director and CEO Danny Conlon said the project is an exciting development for Veolia in Australia.
“Adding to Veolia’s existing infrastructure in NSW and QLD, where we generate enough electricity to power 35,000 homes per year from waste, the Kwinana Project is another example where we will extract value from waste materials, delivering a clean energy source,” Mr Conlon said.
At a time when Australian businesses and households are seeing energy shortages and rising costs, Veolia is proud to be working with innovative partners to help deliver new, environmentally sustainable energy from waste”.
ARENA CEO Darren Miller said the project provides a renewable energy solution for reducing waste going to landfill.
“The use of combustion grate technology is well established in Europe and North America but has not yet been deployed in Australia,” Mr Miller said.
“More than 23 million tonnes of municipal solid waste is produced annually in Australia and this project could help to divert non-recyclable waste from landfill and recover energy in the process.”
CEFC CEO Ian Learmonth said the landmark project was the CEFC’s largest investment in WA to date.
“Creating energy from waste is an exciting and practical way to reduce the amount of waste going to landfill, while also delivering cleaner low carbon electricity,” Mr Learmonth said.
“The average red lid wheelie bin contains enough waste to produce up to 14 per cent of a household’s weekly power needs. This investment is about harnessing that energy potential, while safely diverting waste from landfill.
“We are pleased to be working alongside Phoenix Energy Australia, Macquarie Capital and DIF in bringing this state-of-the art technology to Australia. We congratulate the Western Australian government and the participating councils in embracing this 21st century approach to waste management,” he said.
Macquarie Capital Executive Director Chris Voyce said the Kwinana plant is expected to employ around 800 workers, including apprentices, during its three-year construction phase, and some 60 operations staff on an ongoing basis.
“Macquarie Capital is pleased to be contributing to the supply of sustainable and secure renewable power to Australia’s overall energy mix,” Mr Voyce said.
“As an adviser to, investor in and developer of renewable energy projects around the world, we see waste-to-energy as an effective example of adaptive reuse: reducing the pressures on landfill by diverting it toward the generation of clean energy,” he said.
CEFC Energy from Waste lead Henry Anning said the CEFC is pleased to play a role in demonstrating the business case for large-scale waste to energy investments in Australia in the future.
“Australians produce almost three tonnes of waste per person per year. While the priority is always a strong focus on recycling and organic waste management, there is still a considerable amount of household waste from red-lidded bins ending up as landfill, where it produces a large amount of emissions,” Mr Anning said.
“Energy from waste investments such as the Kwinana plant are about creating new clean energy opportunities for Australia, while offering councils and households a practical and innovative way to manage waste. Just as importantly, they can significantly cut methane emissions produced by landfill.”
With the addition of the Kwinana facility, the CEFC has now made six large scale investments to reduce waste-related emissions.
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.
Packaging and resource recovery company Visy Industries plans to invest $30 million of Clean Energy Finance Corporation (CEFC) finance across a range of energy efficient, renewable and low-emissions technologies over the next four years.
Visy plans to use the funds to increase waste recycling and processing capabilities while also offsetting the impact of changes in the international recycling market.
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CEFC’s finance is part of a pipeline of potential projects to increase Visy’s manufacturing capacity to recycle waste materials by 10 per cent and improve the energy efficiency of the company’s large-scale manufacturing operations.
Visy’s pipeline includes better processing and sorting technology to increase the amount of material which can be recycled as well as increased energy generation to offset grid energy needs.
The company currently recycles 1.2 million tonnes of paper and cardboard each year and expects to increase its capacity by 10 per cent as a result of the $30 million investment program.
The CEFC aims to increase its investments in waste-related projects as part of its goal to reduce Australia’s overall emissions.
CEFC CEO Ian Learmonth said Visy is a leader in recycling and the use of energy efficient and renewable energy technologies and that the CEFC was proud to work with the company to respond to the waste crisis.
“As a community, we need to reduce our overall waste as well as invest in more sustainable management of remaining waste. This includes extracting energy from non-recyclable waste to replace fossil fuels, as well as increasing our ability to recycle paper and packaging waste onshore,” Mr Learmonth said.
“As a major Australian manufacturer, Visy is also leading the way in investing in energy efficient equipment and technologies to help power its 24-hour operations. We see this as a model for other manufacturers grappling with high energy prices and commend Visy on its leadership.”
According to the International Energy Agency, Australia’s manufacturers are the most energy intensive in the world and accounted for around 40 per cent of natural gas consumption in 2014-15.
Visy Chairman Anthony Pratt said the company was pleased to partner with the CEFC to improve sustainability.
“Visy has pledged to invest $2 billion in Australian manufacturing to create jobs, increase efficiencies and boost sustainability,” Mr Pratt said.
CEFC Bioenergy Sector Lead Henry Anning said with the investment into Visy, it will be able to upgrade its existing infrastructure as well as invest in new equipment.
“We see clean energy technologies playing an increasingly important role in enabling Australian industry to reduce its energy intensity and better manage its energy-related operating costs,” he said.
“Visy is already a great example of this, meeting a part of its energy needs, including heat, through its existing biomass and energy from waste investments.
“The CEFC finance will allow Visy to further complement these energy sources with new investment to lift the overall energy efficiency of its operations. These are proven technologies that can be considered right across the manufacturing sector.”
Image: Henry Anning
Organic waste from eight Melbourne councils will be sent to a new composting facility, to be built by international waste management company Sacyr Group.
The Clean Energy Finance Corporation (CEFC) will commit up to $35 million towards the new composting facility.
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The $65 million South Eastern Organics Processing Facility will be the most advanced of its type in Victoria and will produce approximately 50,000 tonnes of high grade compost each year.
The compost will be made from processed household garden and food waste from council kerbside green waste collections in Melbourne’s south-east, which will then be used on local parks and gardens.
Food and green waste makes up an estimated 42 per cent of landfill for Australia’s municipal and commercial waste streams.
The Melbourne councils include Bayside, Cardinia, Casey, Frankston, Glen Eira, Greater Dandenong, Kingston and Monash.
Sacyr expects the fully-enclosed, in-vessel aerobic composting and maturation plant will be operational by mid-2019. It will aim to operate for 15 years, with a potential five-year extension.
The new facility will have an annual processing capacity of 120,000 tonnes of waste each year, the equivalent of 12,000 truckloads of waste. It is expected to abate more than 65,000 tonnes of carbon dioxide equivalent emissions annually. This would cut the greenhouse gas emissions from landfill by 85 per cent if it were to be landfilled, which is equivalent to taking 13,900 cars off the road.
Sacyr Group has built 48 plants around the world and handles more than three million tonnes of waste each year. It currently operates in Australia through its subsidiary, Sacyr Water, which has built and operates the Binningup desalination plant.
The technology used in the plant has been developed over two decades, ensures plant storage reservoirs are completely closed, and uses efficient and reliable deodorisation systems.
Federal Government Environment Minister Josh Frydenberg said converting waste to compost can play a part in Australia’s long-term waste solutions.
“This facility alone, which will be the most advanced of its type in Victoria, can process around 12,000 truckloads of waste per year,” Mr Frydenberg said.
“It means food and organic waste produced by south east Melbourne residents will not end up in landfill and will instead produce high-grade compost for our gardens and parks.”
CEFC CEO Ian Learmonth said the corporation is looking across the economy to identify finance opportunities to reduce Australia’s emissions.
“We’re pleased to be making our first project investment to help councils and communities tackle emissions from their organic waste,” he said.
“When organic waste such as food and green waste ends up in landfill it breaks down and produces methane. With this technology, councils can avoid those emissions by turning their organic waste into reusable compost, while also reducing our unsustainable reliance on landfill as a waste disposal option.
“We strongly endorse the principle of avoiding and reducing waste at the source. Our finance is about effectively manage the remaining waste, so that it doesn’t end up as landfill and we make a meaningful difference to our greenhouse gas emissions,” Mr Learmonth said.
CEFC Bioenergy Sector lead Henry Anning said the CEFC finance model for the Melbourne project was an industry first, providing councils with access to a project financing structure that has rarely been leveraged across local government.
“Australia’s waste sector is facing enormous challenges, because of the growing amount of waste we produce as well as increasing community concerns about the way we handle that waste. This new Melbourne facility provides us with a practical and proven way to turn organic waste into a reusable commodity at the same time as avoiding harmful emissions,” Mr Anning said.
“We expect to see more councils and communities consider innovative ways to manage all forms of waste. This innovative project finance model offers opportunities for other groups of councils considering investing in substantial waste management infrastructure to reduce landfill waste.”
The largest resource recovery and Processed Engineered Fuel (PEF) plant in Australia has been unveiled at Wetherill Park in Sydney.
Owned in a joint venture between resource recovery company ResourceCo and Cleanaway, the plant is licensed to receive up to 250,000 tonnes a year of dry commercial and industrial, and mixed construction and demolition waste, to recover commodities including metal, clean timber and inert materials, with the balance converted into PEF.
Over its lifetime, the plant is expected to abate more than four million tonnes of carbon emissions.
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Cleanaway’s customer base and waste supply in NSW will help drive volume to the facility to divert waste from landfill.
PEF is used as a substitute for fossil fuels in both domestic and offshore markets in the production of cement.
The plant will supply Boral, Australia’s largest construction material company, with PEF for its Berrima cement kiln as a substitute for coal.
Chief Executive Officer Sustainable Energy at ResourceCo Ben Sawley said the new plant will divert up to 50,000 truckloads of waste from landfill, while also reducing reliance on fossil fuels such as coal and gas.
“It will replace over 100,000 tonnes of coal usage per year alone and will take the equivalent of 20,000 cars annually off the road in terms of greenhouse gas emissions,” Mr Sawley said.
“We’re committed to playing a key role in Australia’s future sustainable energy mix, by reducing waste and lowering carbon emissions through production of a commercially viable sustainable energy product,”
“The opportunity to tap further into this market is huge and it makes good sense, both environmentally and economically,” Mr Sawley said.
Cleanaway Chief Executive Officer Vik Bansal said this is an important new resource recovery solution in New South Wales that creates a landfill diversion option for commercial and industrial, residual recycling, and some construction and demolition waste.
“Investment in resource recovery and innovative waste to energy solutions is essential to making a sustainable future possible, and one of the ways we’re delivering on our Footprint 2025 strategy,” Mr Bansal said.
The project was supported by a funding from the Clean Energy Finance Corporation (CEFC), which had committed $30 million in debt finance to support development of the plant, as well as an additional plant at a second Australian location still to be identified.
CEFC CEO Ian Learmonth said the priority in managing waste must be to reduce the amount waste produced in the first place.
“With what remains, we need to invest in proven technologies to repurpose it, including as alternative fuels. By turning waste into PEF, this facility is showing how industrial processes can reduce their reliance on fossil fuels,” he said.
“We can also reduce the amount of waste materials going into landfill, an important factor in cutting our national greenhouse gas emissions,” Mr Learnmouth said
CEFC Bioenergy and Energy from Waste Sector lead Henry Anning said the CEFC was working with the waste management sector to increase energy efficiency and energy generation, as well as reduce carbon emissions.
“With Australia’s waste sector facing considerable disruption, now is the time to adopt new ways of doing business,” Mr Anning said.
“With the right investment in proven technologies, companies can turn our urban and industrial waste into new energy sources, creating an important revenue stream while also reducing landfill gas emissions.
“In Australia there is a growing commercial opportunity for resource recovery, reinforced by tightening state government landfill regulations. We are working alongside waste companies to invest in long-term infrastructure that can make a lasting difference to the way we handle our waste,” he said.