Image credit: PurpleImages. 'One Central Park' building, an apartment complex with a shopping centre called 'Central' located on the lower levels.

Australia’s Green Bank

Canada can draw lessons from Australia’s Green Bank to help the Canada Infrastructure Bank and the Canada Growth Fund define or improve their principles and approach.


Australia’s Clean Energy Finance Corporation (CEFC)—often referred to as the country’s Green Bank—provides financing to areas that help drive greenhouse gas emissions abatement. The bank is particularly focused on filling the investment gap that may limit clean energy deployment, while leveraging additional private sector investment into areas of clean growth. Since its inception over ten years ago, Australia’s Green Bank has committed some A$10.8 billion (C$10 billion) in funding across the country’s economy, targeting the agriculture, energy generation, energy storage, infrastructure, property, transport, and waste management sectors.

The Australian Parliament passed the Clean Energy Finance Corporation Act in 2012, committing A$10 billion in initial capital allocation, with the first projects funded the following year. The CEFC aims to generate a positive return on its investments, a model initially criticized by some opponents who could not see how low-carbon activities could be reconciled with profitability. Ten years later, the bank has gained support on both sides of the political aisle, with positive financial results and measurable emissions reductions, while also reporting a private-finance leverage rate of 242 per cent. That means that each dollar of public money invested has been matched with at least A$2.42 from the private sector.

Australia’s Green Bank invests in businesses or projects that develop, commercialize, or use renewable energy, energy efficiency, and low-emissions technologies, or those that help improve related value chains. Lacking a clear definition for low-emissions technologies, the Green Bank’s Board determines, on a case-by-case basis, whether an activity fits the category. Note that given political sensitivities, the Clean Energy Finance Corporation Act specifically prevents the CEFC from investing in carbon capture and storage or nuclear energy.

The CEFC does not give money away; it does not provide grants. Instead, it provides concessional loans that may include lower-than-market interest rates, longer loan maturity, or longer and more flexible grace periods before the payment of principal and interest is due. The CEFC also provides equity-based financing, taking up partial ownership stakes in businesses, often through commitments to related funds, including several growth infrastructure funds.

By accepting a higher degree of risk for low-carbon projects and enterprises, the CEFC helps to leverage private-sector investment. Beyond acting as a trusted co-financier, the bank’s financial tools include loan guarantees and other forms of credit enhancement, which help private lenders feel more assured of repayment and profit expectations. The CEFC will generally not be the sole funder of a clean energy investment, and will usually require co-financiers and/or equity partners.

The CEFC’s investment decisions are made independently of government, although an investment mandate provides general direction and is updated periodically. After initial screening to ensure a project or business will accelerate climate change mitigation, an executive committee makes recommendations to the Board based on commercial rigour and ability to provide a positive return on investment.

Description of the policy


The CEFC invests on behalf of the Australian government and has maintained its lending structure through its initial A$10 billion endowment and return on investment to date. Specifically, the organization was granted A$2 billion each year from 2013 to 2017 as mandated within the Clean Energy Finance Corporation Act. The Act ensures that the government maintains control of that endowment to a certain extent, specifying that the authorized Minister has the right to ask for partial or total repayments to the public purse when or if the CEFC’s special account reaches a A$20 billion surplus.

Recently, the CEFC was awarded the first injection of new capital since 2017. The government committed in the October 2022 federal budget to an additional A$8.6 billion for the CEFC to use towards its Rewiring the Nation policy objectives. Rewiring the Nation aims to enable renewable energy transmission across national energy markets, and the CEFC’s role will be to invest in priority grid-related projects. Expanding clean electricity generation is seen as fundamental to reaching Australia’s legislated targets of reducing emissions by 43 per cent below 2005 levels by 2030, and reaching net zero by mid-century.

Meanwhile, in November 2022 the government committed a further A$500 million to the CEFC for the “Powering Australia Technology Fund,” to support the commercialization of innovative new technologies, such as energy-efficient smart city sensors and innovations in solar arrays and battery technologies. The top-up was made possible through an amendment to the Clean Energy Finance Corporation Act as part of a treasury bill amendment process.


The 2012 Clean Energy Finance Corporation Act established the CEFC and set out the organization’s purpose, functions, and staffing arrangements, while the Australian Government Investment Mandate provides directions to the independent CEFC Board and is updated regularly. The CEFC Board is responsible for final investment decisions, and is made up of seven board members appointed by the government for renewable five-year terms. A Chief Executive Officer is responsible for the day-to-day administration of the corporation.

The investment mandate provides updated direction on the targeted allocation of investments among the various classes of clean energy technologies, concessional term expectations, the types of financial instruments in which the corporation may invest, and the nature of any financial guarantees given.

The Clean Energy Finance Corporation Act itself mandates transparency requirements, such as publishing quarterly reports on investments made, including their value, timeline, project location, and expected rate of return, as well as an annual report with total investments made and estimated value of concessions provided.

Financial pathways and mechanisms

Depending on the size of the request and nature of the project, the Green Bank’s financial support can take different forms. These include direct investments, investments in specialized funds, and the specialist asset finance program.

The CEFC’s direct investments into large-scale projects and funds average A$20 million, but can range from A$5 million to an uncapped amount, and cover some 265 transactions to date. Technologies under this category must be ready for commercialization, meaning they have passed beyond the research and development stage and have identified a clear path to market. This includes the potential for both domestic and global market application of the technologies.

Related instruments for large-scale direct investment include flexible debt or equity finance, or a combination of both, tailored to individual projects. For example, the CEFC invested A$5 million in the 300-megawatt Blind Creek Solar and Battery Project. The agreement saw a joint venture established between the CEFC and Octopus Investments Australia, one of the world’s largest investors in clean energy.

Meanwhile, financing for smaller-scale or agribusiness projects is provided via asset finance programs delivered through co-financiers, such as major banks or specialized lenders. Project proponents must go directly to these co-financiers to apply for funding. The CEFC provides finance for these smaller-scale projects in the range of A$10,000 to A$5 million, but the co-financiers must also invest and must administer the financing for the project.

These small-scale transactions are administered under the CEFC’s Specialist Asset Finance Program, which is designed to extend the reach of the bank’s finance to tens of thousands of small-scale investors without having to increase the size of the CEFC’s in-house operations or staff. Eligible projects range from small-scale rooftop solar and battery storage, to energy efficient manufacturing and farm equipment, to improved building insulation, heating and cooling, demand management systems, and zero emissions vehicles.

Recognizing the unique nature of innovative technologies, the CEFC created the Clean Energy Innovation Fund in 2015. Technologies accessing this funding do not need to be ready for commercialization, with targeted support available at the earliest stages of development.

This support is provided through three cleantech accelerator and incubator programs—Artesian, Tenacious Ventures, and Startmate. Beyond financing, these programs provide other forms of support to help guide young companies through the first few turbulent years, and also work to match these companies with domestic and international cleantech investors.

To date, around 80 cleantech companies have received funding through the Innovation Fund, with related investment totalling A$18.3 million. This includes some debt, but mostly equity investment in emerging clean technology projects and businesses, recognising the unique characteristics of budding cleantech companies, and delivering a financial return at the later end of the innovation chain. Early-stage investment company Virescent Ventures manages the Clean Energy Innovation Fund on behalf of the CEFC, while the Australian Renewable Energy Agency (ARENA) is a co-manager of the fund.

Other CEFC programs to note include the first green home loans, which launched in 2020 in partnership with Bank Australia, and the first hydrogen sector investments in 2021. Committed investments into the hydrogen sector currently amount to A$23 million across three transactions. The CEFC is also a leading investor in Australia’s emerging green bonds market, creating new options for investors, issuers, and developers. The CEFC also leverages private investment by pooling loans into portfolios, a type of securitization that allows investors to reduce their risk by spreading investments across a range of clean energy projects.

Policy strengths and limitations


1. The Green Bank generates a positive return on investment.

In its first decade, the CEFC made low-carbon investment commitments of A$10.76 billion, from its initial A$10 billion endowment. As of June 2022, the CEFC reported that it had access to A$4.57 billion in investment capital, in addition to ongoing returns from investment. These figures demonstrate a significant return on investment to date, with additional and ongoing investments expected to see the overall size of CEFC’s assets continue to grow.

2. The Green Bank is achieving significant emissions reductions.

As of June 2022, the CEFC estimated its lifetime emissions reductions from existing investment commitments at more than 200 megatonnes of carbon dioxide equivalent. This includes more than A$3 billion in renewable energy investment, with the resulting projects generating more than 5 gigawatts of solar and wind energy. New investments in the manufacturing sector could soon boost the total figure by 0.9 megatonnes of carbon abatement annually.

3. The Green Bank has successfully crowded-in private sector investment.

Green banks encourage investors to back low-carbon technologies or projects that may be perceived as risky, often by assuming a portion of that risk themselves. Australia’s Green Bank also attracts co-financiers into emerging or unproven areas, convincing private investors to follow its lead. This type of “crowding-in” activity has leveraged investments of over A$37.15 billion for low-carbon projects from the initial A$10 billion endowment, according to CEFC estimates that factor in the additional investments leveraged from third-party private finance.

4. The Green Bank has successfully avoided crowding-out private-sector investment.

The CEFC is mandated to balance its objectives to deliver emissions reductions and profitability, with the imperative of ensuring that it does not provide financing where the private sector otherwise would. The CEFC says this means retreating where the private sector is operating effectively, and stepping up investment activity to fill market gaps where the private sector is absent. In practice, this means analyzing each transaction to ensure that there is really a need for the CEFC’s intervention. As a result of this policy, the bank may be less active in years of market strength, where there is a lot of private-sector certainty and investment, and more active in years with market instability.


1. There is some potential for the Green Bank to be vulnerable to political interference.

While the CEFC acts independently of government, its Board is appointed by the ruling government and the CEFC must follow the government’s investment mandate. This allows the ruling government to provide instructions on the types of investments the CEFC should pursue, as well as restrict or otherwise change the design of financial instruments, providing a degree of regulatory uncertainty to the private sector. For example, the 2020 Investment Mandate, submitted by the Liberal/National Coalition government, sought to limit the amount of public support provided to low-carbon areas. This included limits on concessionality in any one financial year to A$300 million, essentially steering the CEFC towards more commercially attractive terms and market rates. At the same time, the government limited the use of financial guarantees, noting that the CEFC should seek to avoid their use given that “guarantees pose a particular risk to the Commonwealth’s balance sheet.” The current Labor party government, led by Prime Minister Anthony Albanese since the May 2022 election, has reversed these references while also amending the Clean Energy Finance Corporation Act itself to include a specific mention to emissions abatement (in addition to the existing “clean energy” wording).

2. The Green Bank does not target or measure outcomes related to equity or climate justice.

The CEFC has limited commitments related to social or environmental justice and equity. While there is a strict policy of screening investment proposals to mitigate negative impacts on Aboriginal peoples and Torres Strait Islanders, for example, there is limited concrete effort to direct investment towards positive outcomes for these groups, despite the CEFC’s Reconciliation Action Plan including a promise to examine the issue. This is in contrast to other green banks, or similarly structured funds, that have specifically made equity considerations a key metric to be included in lending decisions. The U.S. Inflation Reduction Act, for example, created the US$27 billion federal Greenhouse Gas Reduction Fund to help finance clean energy and climate projects that reduce greenhouse gas emissions—and specifically earmarked more than half of that amount, US$15 billion, for projects in low-income and disadvantaged communities, aiming to accelerate climate justice in these regions.

Lessons for Canada

Canada has at least two existing initiatives at the federal level that aim to mirror many of the functions of Australia’s CEFC. These include the Canada Infrastructure Bank and the new Canada Growth Fund. The Canada Infrastructure Bank operates similarly to Australia’s Green Bank, as an arm’s length corporation. While the Canada Infrastructure Bank is not specifically mandated to accelerate the low-carbon transition, two of its five priority areas relate to climate change—green infrastructure and clean power—with a key objective to reduce climate pollution over the lifecycle of the activities. Many of the Canada Infrastructure Bank’s financial mechanisms are similar in structure to CEFC, aiming to leverage private capital, including through debt products targeted at private-sector market participants. Noteworthy “green” endowments include C$2.5 billion for clean power, C$2 billion to invest in large-scale building retrofits, and C$1.5 billion to accelerate the adoption of zero emission buses and charging infrastructure.

In addition to the Canada Infrastructure Bank, the new Canada Growth Fund plans to spend C$15 billion over three years, modelled broadly from green bank principles. The fund, first announced in the April 2022 budget, will make concessional investments to spur clean growth. It is prepared to shoulder investment risk to leverage private sector capital, and is prepared to accept a lower return and greater risk than traditional banks or financial institutions.

Three major lessons can be drawn from the 10-year history of Australia’s Green Bank that can help the Canada Infrastructure Bank and the Canada Growth Fund define or improve their principles and approach:

1. Define, and stick to, an umbrella mandate and principles.

For green banks and green funds to be successful, investments must be mission-driven, having a specific objective beyond financial returns, and clear guiding principles to ensure efficiency. In contrast, the broad-based nature of the Canada Infrastructure Bank mandate has meant that it is not always clear how low-carbon projects may or may not be favoured over traditional endeavours, and how the myriad programs fit together towards common objectives.

Meanwhile, the Canada Growth Fund must continually underpin every decision with its overarching principle of helping Canada reach net zero emissions by 2050, while complementing this objective with climate justice and reconciliation objectives. This means focusing on deploying well-established technologies such as renewable energy and energy efficiency, but also ensuring that new innovations are nurtured through targeted initiatives—as Australia has done with its Clean Energy Innovation Fund. It will also be important to develop a strategy that will guide the prioritization of projects, something that could, for example, be performed through modelling viable low-carbon transition scenarios, and identifying areas with comparative advantages for global markets.

The Canada Growth Fund must also ensure that it is not crowding-out private sector investment, and make this a key pillar to its mandate. Lessons can also be learned from the United Kingdom in this regard, which sold off its Green Investment Bank in 2017 after only five years, with many blaming the retreat on the bank losing sight of this element within its mandate. That is, the bank faced criticism that it stuck around in sectors after they had matured, directly competing with private investors.

Finally, these investment principles should be turned into impact metrics, or key performance indicators, in order to track and report results over time. Australia’s quarterly reports and annual summaries provide data related to funding, but also key metrics related to emissions abatement, renewable energy additions, concessional spending, and proportion of leveraged private-sector investment.

2. Identify and target the most strategic private partners.

Some of Canada’s largest institutional investors have increasingly opted to invest in projects outside of Canada. Canada’s biggest eight pension funds, for example, collectively manage over C$2 trillion in assets, but are largely invested abroad. Canada should ensure that the Canada Infrastructure Bank and Canada Growth Fund target co-financing arrangements with these types of key organizations, recognizing the supersized financial strength such partnerships can leverage.

A significant part of CEFC staff’s objectives involves establishing and nurturing strategic relationships. This includes working closely with strategic private partners on financing smaller-scale projects and working with banks and co-financiers to deliver discounted finance. Canada can learn from this experience, and instead of trying to reach smaller-scale project proponents directly, can lean on the established networks of partnering banks and specialized lenders. This will avoid many administrative and transactional costs and is likely to ultimately be a more efficient use of public funds. In this regard, it will be important to bolster partnerships with end-user support programs, for example by ensuring participating banks have dedicated asset finance channels to assist customers with eligibility and loan applications.

3. Make developing institutional knowledge and relevant expertise a top priority.

Institutional knowledge and human capital are critically important to the success of green banks and green investment funds. It is crucial to hire staff with technical knowledge related to both finance and the low-carbon transition. This will be key to assessing the viability and political impact of projects, including identifying the ultimate sources of income for low-carbon energy and technologies; as well as policy levers that are already helping to spur investment in those areas, such as carbon pricing. While consultants can be used to perform some key tasks, personnel should, at a minimum, be effective at public communication and developing partnerships. Australia’s CEFC is a small organization with a broad reach, and therefore often relies on the skillset and technical capabilities of its partners, making these attributes a key consideration when selecting co-financiers and/or investable projects.


Australia’s CEFC offers ten years of experience with investments into low-carbon projects, businesses, and technologies. It has expanded its focus from renewable energy generation to low-carbon innovations, and more recently to infrastructure to support electrification such as smart grids. All of these climate change solutions require funding, something that the CEFC is willing to offer at more generous and flexible rates than private-sector investors. The CEFC has learned to be cautious about crowding-out private-sector investment, avoiding any transaction where private actors are already filling the gap. Instead, it aims to accelerate its operations in times of uncertainty, embracing risks related to the clean energy transition. In so doing, it has a proven track record of its financed projects resulting in measurable greenhouse gas abatement, leveraging considerable sums of private-sector finance, and demonstrating a positive return on investment. Canada can learn from this model as it implements its new Canada Growth Fund and the Canada Infrastructure Bank continues to evolve. Primary lessons learned that may shape the Canadian context include articulating and following investment principles, building relationships with strategic private-sector partners, and fostering the types of knowledge and transparency that will grow the clean economy investment landscape.