04/07/2016

Climate Change: Big Four Banks' Lending To Australian Renewables Projects Falls

The Guardian - 

Market Forces finds only two financing deals closed in first half of 2016 despite banks' purported support for sector
The National Australia Bank lent money to a windfarm in South Australia and both NAB and Westpac helped finance one in New South Wales. Photograph: Angela Harper/AAP
Australia's big four banks' lending for Australian renewable energy projects has tumbled in the first half of 2016, despite all of them spruiking their continuing support for the sector.
Based on public announcements from the banks and their customers, the activist group Market Forces has found only two financing deals were closed this year in the Australian renewables sector.
The National Australia Bank lent money to a windfarm in South Australia and both NAB and Westpac helped finance one in New South Wales.
Although more financing could be revealed in the second half of the year, the figures seem to show the banks have slowed their flow of money to the renewables sector in Australia.
"This is what you see when you have years of stagnation and cutting into renewable energy policy," said Julien Vincent from Market Forces.
The group has been collecting the data on financing for Australian renewable energy projects for the past eight years.
The first six months of 2016 have seen the big four banks lend only $162m to renewable projects. That is less than half the average amount loaned in all previous six-month periods since 2008 and the fifth-worst half-yearly figure in the dataset.


So far this year, according to public announcements, both the Commonwealth Bank and ANZ have not closed any deals for renewable energy projects in Australia.
Market Forces data previously showed the big four banks lent $5.5bn to the Australian fossil-fuel sector in 2015 and that the amount lent to the fossil-fuel sector was six times more than lent to the renewables sector since 2008. One bank had a ratio of 13 to one, favouring lending to fossil fuels over renewables.


When approached in February and then again in May to comment on their continuing lending to fossil-fuel projects in Australia, all four banks responded to the Guardian's questions by emphasising their lending to the renewables sector.
But Vincent said the lack of local investment wasn't entirely the banks' fault.
"This is what you get when you have years of debate about whether the renewable energy target should be cut and you have a carbon price that is cut and then you have a billion dollars taken out of the [Clean Energy Finance Corporation] to paper over cracks, trying to protect the reef," he said. "There is so little going on and so little to invest in now."
That analysis was confirmed by a spokesman for the Commonwealth Bank, who told the Guardian: "The limited number of renewable energy developments, and therefore financing opportunities in Australia, has resulted in the majority of CBA renewable financings being offshore in the last year and we have been active in both Europe and North America."
However, Vincent said the banks all had commitments to invest in renewable energy and, if government policy wasn't allowing them to do that, they should be publicly calling for change.
"They're getting credit and applause for carbon reduction and renewable energy – so where are they in the public debate?" Vincent said. "Why aren't they saying 'hey we're doing our best but there aren't enough opportunities being created'?
"They're four of the biggest and most powerful companies in Australia and if they want policies that would let them unlock this finance – which is in the tens of billions of dollars ready to deploy – then they could get them."
Vincent said it was bad news for the Australia economy, because this money was flowing overseas, with the big four banks lending to overseas renewable projects more than they were to local ones.
"We're missing a trick, where there is a huge amount of funds sitting there that the banks would certainly be able to get a lot of benefit from, in terms of reputation, if they were able to deploy that in Australia," he said.
In 2015, global investment in renewable energy grew to more than twice that in coal and gas-fired power generation, according to UN environment program figures.
In the 2014-2015 financial year, an all-time record of about US$320bn was invested in renewable energy worldwide but in Australia investment fell by 31%, with government plans to cut the renewable energy target blamed.
The Market Forces database was built from public statements and could be missing deals. But Vincent said the group had spoken with key players in the renewables sector and nobody had found financing deals that had been missed.
The banks all said they were unable to comment on specific deals that could be in the works, due to client confidentiality.
Westpac emphasised their lending to a broader category called the "CleanTech and environmental services sector", to which it lent $6.3bn in the six months to March 2016. They also pointed to their work on climate bonds and discounted loans offered to business seeking to improve their energy efficiency.
NAB told Guardian Australia they would continue to work towards their commitment "to invest $18bn over the next seven years to support the transition to a low-carbon economy".
ANZ declined to comment.

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