20 AUGUST 2025

Welcome to our news round-up. See previous issues here.

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$60BN IN DIESEL HANDOUTS TO MINERS IS ENOUGH!: MEGA FOSSIL FUEL SUBSIDY MUST BE SLASHED TO BOOST PRODUCTIVITY, AND FORTESCUE AGREES

Australia’s biggest fossil fuel subsidy is hiding in plain sight. The Fuel Tax Credit (FTC) Scheme – a massive $12bn annual taxpayer-funded rebate mostly benefitting big miners –  is entrenching dependence on imported high-emissions diesel to power mining operations, undermining climate targets, damaging productivity and draining tens of billions from the federal budget every year.

CEF today launched its latest report on the urgent need to reform the FTC Scheme from a transition headwind into a tailwind, incentivising decarbonisation and electrification in the mining industry at speed and scale.

>>> See the AFR article on our report here.

‘Transition Tax Incentive: Reforming Fuel Tax Credits into a Decarbonisation Tailwind’, calls for the reform of the Scheme into a ‘cap-and-reinvest’ model. Any rebate above a cap of $50m per annum per consolidated entity (e.g. major mining company) would be retained by the entity as a conditional investment tax incentive only if the funds are reinvested into diesel displacement. This could include electric haulage fleets, renewable energy generation and firming, electricity transmission and distribution networks, charging infrastructure and other decarbonisation investments into mining operations.

The cap would leave farmers, road transport operators, small and medium businesses, and sole traders completely unaffected. 

Based on 2024 financial year figures, our ‘cap-and-reinvest’ model would have mobilised $2.2 billion for clean capital investment by FTC recipients in a single year. If introduced in the 2026 financial year, over $13.6bn could be mobilised into clean investment by 2030  – without impacting the federal budget.

The reform would boost national productivity by replacing inefficient, combustion-based diesel systems with capital-intensive, electrified infrastructure. It would deepen capital investment in future-facing industries, accelerate renewable energy deployment, and position Australia to lead in high-value green exports such as green iron, while strengthening budget sustainability and economic resilience.

Fortescue – one of the Scheme’s biggest beneficiaries – has endorsed CEF’s proposal, with FORTESCUE METALS CEO DINO OTRANTO saying: “We back the work Climate Energy Finance is doing to shine a light on how Australia can cut diesel use and get serious about decarbonising heavy industry. Many miners want to make the shift, but the reality is the current system subsidises burning diesel. The Fuel Tax Credit, in its current form, encourages fossil fuel use – so it’s no surprise companies keep burning it.

“Right now, there’s a significant gap between the cost of putting carbon into the atmosphere and the reward companies get for using diesel. Under the Safeguard Mechanism, an ACCU costs around $37 a tonne, but the diesel rebate is worth the equivalent of about $191 a tonne. That’s a five-times incentive to keep burning diesel.”

JOHN GRIMES, CEO, SMART ENERGY COUNCIL, said: “Continued government handouts subsidising the use of fossil fuels to power Australia’s resources industry is wasteful, counterproductive policy that slows progress on climate goals and stifles innovation. It makes absolutely no economic sense to be disincentivising the mining sector from shifting to efficient clean energy technology. For Australia to honour its international climate commitments, accelerate the transition to zero-emissions energy, and attract investment in clean, renewable industries, it must reform incentives that make the choice to pollute more attractive than clean alternatives.”

CHARLIE CARUSO, GM (WA), SMART ENERGY COUNCIL, said: “This reform transforms a costly handbrake on progress into a powerful engine for Australia’s clean energy future. Redirecting billions in diesel tax credits into mine electrification and renewable infrastructure will cut emissions, lift productivity, and secure our position as a global leader in low-carbon exports—without costing taxpayers a cent or undermining the fiduciary duties of our heaviest diesel users.”

Great to have the ACTU endorse this proposal.

>>> Read CEF’s media release: New CEF Report Calls for Slashing of Diesel Fossil Fuel Subsidy to Decarbonise Mining, Boost Productivity; Fortescue Backs Reform, with endorsements from Fortescue Metals CEO Dino Otranto, Smart Energy Council CEO John Grimes, Smart Energy Council GM WA Charlie Caruso, and report authors Matt Pollard and Tim Buckley. 

>>> Read the full report here. 

>>> See our media here including Tom Rabe in AFR, Jennifer Dudley-Nicholson in AAP, syndicated to Canberra Times and 100+ mastheads, our op ed in Renew Economy and Sky TV with Jaynie Seal forthcoming.

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BEYOND TIME TO ACCELERATE: CEC TRACKS CLEAN ENERGY INVESTMENT SLOWDOWN 

Time to put the pedal to the metal on clean energy project planning reforms as the Clean Energy Council’s 2Q2025 investment report shows clean energy investment slowing in the first half of 2025. 

For the second consecutive quarter in 2025, Australia has seen weaker investment in new renewable energy and storage projects, following subdued investor confidence earlier this year. Only 615 MW ($520m) of new large-scale solar and no new wind farms reached final investment decision (FID) in 2QCY2025, well short of the pace required to hit Australia’s 2030 renewable energy target.

Total renewable energy generation financially committed in 1HCY025 was just 1.17GW – only a third of the 6-7GW annual pace required to replace aging coal and meet Climate and Energy Minister Chris Bowen’s 82% renewable energy target.

Of these projects, no new wind farms were committed in 1HCY2025. Battery energy storage systems (BESS) are booming,  but we need new zero emissions replacement generation capacity if we are to close our end-of-life coal clunkers and ensure we can deliver on the reliable affordable clean energy needs of our community and downstream industries.

“Unsurprisingly, the Federal Election in May created a great deal of political and policy uncertainty which has been unhelpful to energy investors who are trying to make very large investments in assets which will be in operation for decades to come,”  CEC policy head Anna Freeman said.

It’s way beyond time for our country to accept and act on the verdict of Australians in the May 2025 climate, energy and cost of living election. Despite the disinformation propaganda of many mainstream Australian media outlets, the vast, silent majority of Australians accept and want action on the climate science.

International and local investors are ready to invest in Australia, but assessments need to be faster, clearer and more predictable to unlock projects. We must have an overriding public interest mindset to evaluate rapidly then approve infill renewables capacity while we wait for a decade for new grid transmission to be built.

Three BESS projects worth 334MW / 1,168MWh reached FID. This marks the lowest quarterly result for storage projects since 1Q2023. The investor queue has never been longer, but we need approvals expedited so we get the money off the table and out the door, fast and at scale.

Great to see the CEC appoint Jackie Trad, former QLD Treasurer and Deputy Premier as its new CEO.

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WONDERS WILL NEVER CEASE: GAS CARTEL BACKS RESERVATION POLICY

Is the Multinational Gas Cartel finally reading the room, advocating for a gas reservation policy? It appears so from this announcement by Australian Energy Producers, the stealthily named methane gas lobby.

The idea of keeping Australian gas onshore is immensely popular, with recent polling commissioned by the downstream gas industry indicating there was almost no political opposition to a reserve policy.

Resources Minister Madeleine King told Australia’s gas industry in June that its social licence to operate relied on the continued supply of affordable gas for households and businesses. “It is as clear as day that Australians are tired of seeing our vast gas resources exported overseas while simultaneously paying some of the highest gas prices in the developed world. A well-supplied domestic gas market at a reasonable price is fundamental to the social licence of this industry to operate.”

The key here is the definition of a "reasonable price". Let's ensure the foreign cartel – experts at government capture and extorting Australians – doesn't get to decide what is reasonable.

Let’s peg the domestic wholesale methane gas price at say 50% above or double the US domestic gas price. Nothing higher than this should be tolerated. For 50 years Australia consistently had some of the lowest domestic gas prices in the world, until the cartel disrupted the system to its own benefit, permanently trebling domestic energy costs for Australian consumers and downstream industries. A decade later, manufacturing is on its deathbed as a result – down to just 5.1% of Australian GDP according to Australian Industry Group. What other country is stupid enough to allow a foreign cartel to gouge industry and hollow out its economic base?

Energy cost competitiveness is the driver of enhanced productivity and international competitiveness. 

Absent definitive action now on this egregious policy failure, the horse has bolted and it is time for electrification of everything, a policy with enormous political and electoral appeal, as Energy Minister Chris Bowen is finding with the raging success of his $2.3bn home battery scheme – 1,000 new home batteries installed daily since 1 July 2025.

Let’s launch a gas substitution roadmap for Australia, starting with a ban on new gas in new residential homes. Let's learn from Victoria's leadership under Minister Lily D’Ambrosio and progressively phase out our expensive and dangerous methane gas addiction permanently.

Consistent with looking after Australia's national interests, Treasurer Jim Chalmers needs to decline to allow foreign State Owned Enterprise the Abu Dhabi National Oil Company (ADNOC) to come here and buy strategically important national energy infrastructure, and then weaponise it against us. The only legitimate course of action is to ban its proposed takeover of Santos. 

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GROWING MOMENTUM ON CHINA-AUSTRALIA GREEN ECONOMY OPPORTUNITIES

Australia-China Business Council roundtable - Australia-China Green Economy Forum

This month, CEF attended the ACBC’s second meeting of the Australia-China Green Economy Forum.  

The Forum brings together senior leaders from business, finance, academia and government with the aim of identifying strategic opportunities for cooperation and providing policy and commercial insights to shape a more connected and practical Australia-China green economy agenda.

ACBC President David Olsson reflected on the outcomes of Prime Minister Albanese’s recent China mission, including insights from the CEO Roundtable and Shanghai Steel Decarbonisation dialogue led by Fortescue and Rio Tinto. 

Caroline presented a snapshot of China’s power statistics in the first half of 2025, highlighting the rapid scale-up of renewables and declining role of coal in the power system. Notably, Caroline highlighted that:

• Proportion of non-fossil power capacity reached 60% for the first time by the end of May

• Renewable electricity reaches record high of 40% of total power generation

• Over 40% of the world’s battery energy storage installations are in China.

Discussion then turned to the “Lighthouse Project” initiative, with members considering the merits of three proposed flagship collaborations that could build on the momentum of the PM’s visit. John Grimes, CEO of the Smart Energy Council, made concluding remarks on the importance of stronger storytelling to shape a cohesive narrative on Australia–China green economy engagement, ahead of the ACBC’s Canberra Networking Day on 28 October 2025.

High-Level Roundtable on China’s Energy and Climate Policy at Australia-China Relations Institute, UTS 

In August, Caroline and Tim participated in a roundtable in Sydney on China’s energy system transformation and climate policy, hosted by the Australia–China Relations Institute (ACRI) at UTS, the ANU Centre for Climate and Energy Policy (CCEP), and the International Society for Energy Transition Studies (ISETS). 

Key insights shared by esteemed experts Professor Zhang Xiliang (Tsinghua University) and Associate Professor Tang Weiqi (Fudan University) highlighted the scale and speed of China’s energy system transformation to meet its dual carbon goals. China is targeting just 30 years from carbon peaking to carbon neutrality—faster than developed countries—and by 2060, around 90% of its electricity is projected to come from renewables and nuclear. 

The presentations reaffirmed that the role of coal in China is shifting structurally from dominant supplier to security guarantor, with new plants increasingly designed as backup for renewables bases rather than main power sources. They also underscored China’s approach of integrated planning across energy, industry, and infrastructure to decarbonise all sectors of the economy, as well as the transformative role of AI, smart grids, and storage in enabling this transition.

Australia China Business Council renewables-focused forum with NSW Trade Minister 

Another excellent ACBC engagement with the Hon. Anoulack Chanthivong, NSW Minister for Industry and Trade to discuss the massive interest from Chinese cleantech corporate leaders ready, willing and able to invest in Australia, in partnership with Australian businesses, and in doing so bringing world leading technology and manufacturing capacities we so sorely need. It is critical that the NSW government pressure Federal Treasurer Jim Chalmers to accelerate the Single Front Door to assist new investment in our country from aligned partners. ‘A Fast No, or Considered Yes’, rather than indecision and opaque rules of engagement. Thanks, Patrick Mayoh and Tom Parker.

ABC feature on China’s warp-speed journey to electrostate

Caroline was quoted in a recent ABC feature on China’s spectacular road to becoming a world leading electrostate and renewables powerhouse, featuring some awe-inspiring data points and photos. 

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ENERGY MINISTER BOWEN AT CMI SUMMIT: PROGRESS BUT MORE TO BE DONE

Climate and Energy Minister Chris Bowen addressed the Carbon Market Institute (CMI) Australian Emissions Reduction 2025 Summit, noting that "A lot has been done, but there is a whole lot more to do. Headwinds remain, but the opportunities are a lot bigger."

Since 1 July 2025, >30,000 home batteries installed, 1,000 per day. This policy is working at scale and speed. ✅ Some worry we will run out of government funding, but $2.3bn phase 1 + $1.2bn phase 2 gives plenty of firepower, and this great policy will enable and drive a sustained acceleration of our rooftop solar deployments. Let's target 100GW rooftop solar nationally by 2040, a decade ahead of AEMO’s 2050 modelling!

In conversation with The Guardian's Lenore Taylor, Minister Bowen committed that the National Risk Assessment and Six Sector Decarbonisation Plans will be released *BEFORE* he sets the 2035 emissions reduction target, our nationally determined contribution (NDC) under the Paris Agreement. It is critical all Australians be informed as to the massive and rising cost of failing to collectively act at speed and scale in response to the climate science.

The Climate Change Authority advice is yet to land on the minister's desk but it will be key to our Government putting out an emissions reduction target that is "ambitious and achievable". Unfortunately, no mention of 'and aligned with the climate science and the International Court of Justice (ICJ) advisory opinion our legal obligations’.

The CIS has been upgraded to deliver on our 82% Renewable Energy by 2030 target. The minister said the CIS upgrade was made as "a sign of strength because there are a lot of well priced approaches at a scale that allows this upgrade. Doable, particularly given the support of the home batteries. And there is a lot of community confidence in the transition which clearly isn’t reflected in certain media outlets."

As to if we should expect to see more ambition on the Safeguard Mechanism, the minister cautioned that it has only been in operation for just a year. The 2026 review gives more time and data. In response to a question, the minister said the review would give consideration to the threshold being lowered to say 25ktpa (CEF would strongly support this, phased in by say 2030, but flagged now to give time to prepare).

It was great to hear the minister reference consideration of a CBAM (Carbon Border Adjustment Mechanism), saying that he would take advice from ANU Professor Frank Jotzo on this (his final report on the Australia’s Carbon Leakage Review is now on the minister's desk). The minister noted progress in the EU CBAM and increased discussion on this from South Korea and Canada. 

See CEF net zero transformation analyst Matt Pollard’s recent report on the critical necessity of an Asian CBAM "A Price on Carbon: Building Towards an Asian CBAM - A focus on the harmonisation and integration of carbon pricing mechanisms in Asia-Pacific for the steel, aluminium and cement value chains."

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NEED TO DEPLOY NRF FUNDING THAT’S STILL SITTING ON BENCH

Interesting to see Minister Tim Ayres' National Reconstruction Fund Corporation taking a $50m equity stake in Liontown Resources Limited to support the development of the Kathleen Valley lithium mine in Western Australia. This is part of the wider $316m equity raising.

The NRF has a $15bn war chest but by the end of June 2025 it had only deployed $550m, leaving way too much capacity idling sitting on the table. As such, it is great to see the NRF accelerating its capital deployment in support of new projects across Australia.

The Climate Capital Forum's top recommendation is to rapidly accelerate the rate and scale of capital deployment in pursuit of the energy system transformation and the Future Made in Australia (FMIA). Strategic public equity support is definitely an additional valuable tool for public private partnerships. CEF’s “Ten Ideas to Grow Australia's Productivity” report. 

This follows Australian Renewable Energy Agency (ARENA) deploying $45m in the Solar Sunshot, with $35m of this invested into Tindo Solar to expand and modernise its manufacturing capacity in South Australia.

This past month also saw ARENA deploy $45m into Calix Limited in support of a 30,000tpa green DRI demonstration plant.

Time to get the public capital support off the table and out the door, crowding in aligned private capital to drive decarbonisation and new investment capacities. Time to think ‘China Speed, China Scale’!

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This newsletter is not intended to provide, and should not be relied on for, tax, legal, investment or accounting advice, nor is it an offer or solicitation of an offer to buy or sell, a recommendation, endorsement, or sponsorship of any security, company, or fund. CEF is not responsible for any investment decision made by you. Unless attributed to others, any opinions expressed are our current opinions only. Certain information presented may have been provided by third parties. CEF believes that such third- party information is reliable, and has checked public records to verify it wherever possible, but does not guarantee its accuracy, timeliness or completeness; and it is subject to change without notice.