Sustainable progress calls for funding action

IN July last year the federal government announced the establishment of a $100 million Renewable Energy Venture Capital Fund. Details are now starting to emerge about how the fund will operate.

Questions such as how it will be administered (it is said the Australian Centre for Renewable Energy will oversee the fund), who will be eligible for the funds and what the process involves are just some of the issues that need to be addressed.

“In theory, funds for this purpose is what Australia needs,” says Katherine Woodthorpe, chief executive of the Australian Private Equity and Venture Capital Association.

“It is important that renewable energy doesn’t get used as a catch-all phrase to incorporate all the other technologies.”

Renewable energy is sustainable energy that comes from the natural environment – from sources such as solar, wind, water, biomass, wood, waste, geothermal, wind, photovoltaic, and solar thermal energy. Non-renewable energy sources include coal, oil and natural gas.

“We certainly need more money in this sector and hopefully this funding will encourage others to invest,” Woodthorpe says.

Venture capital funding in Australia has been in steady decline in Australia since 2007. In the full financial year of 2010 only $168m was raised, mostly as part of the Innovation Investment Fund and the Innovation Investment Follow-on Fund.

According to the Energy Matters website, Australians spend $50 billion on energy each year, with energy exports earning more than $24bn annually.

Domestic demand for energy is projected to increase by 50 per cent by 2020, and the energy industry has estimated that at least $37bn in energy investments will be required by then to meet our energy needs.

Hence, superannuation fund investment is needed, as are new sources of energy.

“The superannuation funds have withdrawn from venture capital funding, saying the returns aren’t good enough,” Woodthorpe says. “I think it is a disgrace that they are not doing anything [to help] build the nation, and I am sure that their members aren’t aware that they are ignoring this vital sector.”

As to how the funding will be used, a spokesperson for Energy and Resources Minister Martin Ferguson says “[it] will be used to leverage private funds to advance Australian renewable energy companies with the greatest chance of commercial success”.

Potential candidates for funds will be concerned about who is appointed to manage the venture capital fund. “It is very important that the federal government utilises people who have worked in venture capital funds before,” Woodthorpe says.

Another key issue will be the guidelines for eligibility. At the moment the Innovation Investment Fund and the Innovation Investment Follow-on Fund are closed to new applications.

“In the past we have seen a lack of consistent effort and strategy [on] investing in renewable energy because of strong resistance from carbon-based energies,” says Ray Wills, chief executive of the Sustainable Energy Association of Australia.

“Establishing a viable renewable energy sector will put a lot of people out of pocket from the traditional energy sectors.”

The SEAA is the peak body for the sustainable energy industry and for enterprises supporting sustainable energy. It firmly believes the growth of the sector will benefit all Australians.

“Creating a sustainable energy industry will see opportunities for local employment and wealth generation across the country,” Wills says. “Of course, it needs to be done in a commercial way so it is economically viable, and in order to do that we need consistent policies that will give business confidence.

“Strategic plans have been in place for a while now and what we need now is action.”

The Australian

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