27 JANUARY 2026

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

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ERARING AND COLLIE COAL EXTENSIONS NOT GOOD ENOUGH

Disappointing news to ring in the new year: Origin Energy plans to extend the operation of the 2.9GW Eraring coal-power clunker, Australia’s biggest, to April 2029, two years beyond its previous planned closure date. This reflects a total failure of planning by Origin to protect its customers and ensure sustainable, cost-effective and reliable power. Origin has failed to build any replacement generation capacity despite knowing for decades Eraring is due for closure. 

In WA, Premier Roger Cook, Energy Minister Amber-Jade Sanderson and Don Punch have given yet another 5 years of subsidies to foreign controlled Griffin Coal, which has been bankrupt for at least a decade, even as it has been screwing its workers so as to deliver really low quality, really expensive coal for WA consumers. It’s beyond time we stopped subsidising end of life fossil fuels and instead invested at speed and scale in permanent zero-emissions solutions. 

>>> Our CEF writeup is here.

The reality is that the permanent sustainable solution is to build distributed and utility scale renewable energy firmed by batteries at speed and scale, ignoring the small but noisy minority trying to hold back the accelerating energy system transformation. The cost of inaction on the climate science is extreme, and rising – just look to our southern neighbours this month. We need permanent solutions – new capacity – at speed and scale, not yet more bandaids on unreliable end-of-life coal plants like Eraring. A case in point is Callide C in Queensland, which recently suffered yet another outage.

NSW hit a record high 46.1% renewables share in the 4QCY2025 (catching up on our national average, which hit a record 50.1% in 4QCY2025), and the recent heatwaves proved our grid reliability is improving with greater renewables share, particularly rooftop solar and behind the meter batteries.

>>> See Tim’s commentary in Michael West Media and on ABC RN The World Today

Meanwhile, wholesale electricity prices are dropping as a result of new renewables and battery firming capacity coming on stream. And grid reliability is increasing. CEF’s discussion is available here.

CEF applauds the Albanese Government’s Cheaper Home Batteries program, which has underpinned the installation of 200,000 new home batteries with an amazing combined capacity of 4.7GWh in just over six months. That is the speed and scale of action that is being supported by Australian residences. And the proposal for a Solar Sharer tariff in the Default Market Offer (DMO), three free hours of solar power in the middle of the day (under DCCEEW consultation now). We just need to focus on the cost-competitive solutions at hand to permanently solve our fossil fuel addiction and the resulting energy-related cost of living crisis.

>>> See Tim’s Eraring commentary in ABC online, ABC Newcastle, ABC Illawarra, News Cop and Power FM on Collie Coal WA in his radio interview with ABC Perth Drive.

>>> CEF’s commentary on renewables and batteries enhancing grid reliability in The Energy.

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AUS RENEWABLES POWER AHEAD

It was excellent to see that the federal government’s $33bn CEFC intends to support more individual wind and solar energy projects this year to accelerate the pace of the firmed renewables and by enabling interstate grid transmission and REZ rollouts, as reported by Ryan Cropp in the AFR. And the National Reconstruction Fund (NRF) has likewise got the message, having reached $1.1bn of deployments by January 2026. The NRF needs to deploy, deploy, deploy - at speed and scale.

This is a massive new >$100bn investment and employment opportunity for regional Australia, essential to providing sufficient new electricity supply fast enough to sustainably reduce energy prices permanently, i.e. both to replace increasingly unreliable, polluting and expensive end of life coal clunkers and accommodate new growth from the progressive electrification and decarbonisation of everything.

Giles Parkinson in Renew Economy notes that, in a December 2025 flurry, Australia’s most powerful turbines were unveiled as a fourth wind farm reached financial close, breaking the wind drought in style.

And Australia was in the top 4 nations globally in deploying batteries and BESS in CY2025. In Australia, 9.8GWh of BESS entered operation in 2025, an increase of 216% yoy.

>>> See the article by our colleagues Professor Ray Wills and  Professor Peter Newman in Renew Economy,  The rise of battery storage, and why the grid is rapidly passing gas!

>>> See also Ryan Cropp in AFR, Big batteries oust gas in transformational grid overhaul.

Australian Renewable Energy Agency (ARENA) has a record number of tenders currently open, including: the $500m Battery Breakthrough Initiative; $2bn for the Hydrogen Headstart  Round 2; $500m for the FMIA Green Iron Investment Fund; $180m for Industrial Transformation Stream Program; $200m FMA Innovation Fund Priority; $250m Low Carbon Liquid Fuels; and $150m Solar Sunshot tender Round 2.

The urgency to get on with it is real, with the social, human, environmental and financial costs of climate science inaction are mounting, as the people of regional Victoria experienced this month – and with material opportunities now for Australia to pivot to zero-emissions energy, trade and investment leader.

CEF has tracked $81bn of new Federal Government cleantech, electrification and resource export value-add budget & capital allocations since the start of 2023 (via the likes of CEFC, NRF, ARENA, EFA and NAIF), as well as another $6bn by state governments, including via newish entities like NSW EnergyCo.

We have  tracked ~$15bn of federal & state capital deployments over CY2025, showing a serious run-rate step-up, particularly post the Federal Election. But there is a clear need to think “China Speed, China Scale” – particularly to futureproof our key mining sector exports by pivoting to green iron, steel and aluminium produced using renewable energy (20x the per tonne value of unprocessed bauxite exports).

>>> CEF’s discussion is available here.

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SGH & STEEL DYNAMICS BID FOR BLUESCOPE

A consortium of SGH Ltd & US Steel Dynamics has made an A$13bn bid proposal for BlueScope, with the associated implications for the Whyalla steelworks and wider South Australian magnetite mining and green iron and steel opportunities.

The latter represents a multibillion dollar investment opportunity to build a key strategic industry of the future for Australia, in alignment with Future Made in Australia.

Ryan Stokes, via SGH, has a 30% stake in South Australian oil and gas company Beach Energy Ltd – SA’s fourth-largest company. Unfortunately SGH might be no better than BlueScope, which proposes to use gas to power processing in Whyalla, in terms of driving the development of a modern South Australian green iron and steel industry, which requires the early deployment of renewable energy. Gas is not the solution.

Matt Pollard's recent report, "A Strategy for Whyalla: Enabling the Transformation and Decarbonisation of the Steelworks" explored the enormous potential for a first-of-a-kind capital deployment into magnetite ore value-adding into green iron and green steel (EAF) production in Whyalla.

>>> See Tim’s interview on the consortium’s bid on AusBiz and commentary in InDaily SA.

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GAS RESERVATION POLICY

Days before Xmas, the Federal Government announced that it would require exporters to reserve 15-25% of Australian gas for the Australian market, finally bowing to pressure from industry and consumers to meaningfully intervene to curtail out-of-control gas prices gutting businesses and households. CEF applauds this move, which comes not a moment too soon.

Gas plays an important but small and declining role in Australia's electricity grid. It is currently the most expensive source of electricity, with our gas sold back to us by the tax-dodging multinational gas cartel at extortionate prices. 

From implementation in 2027, this new move will put further downward pressure on electricity prices across Australia.  In tandem with reducing domestic energy prices from day one, this policy will also help ease the implementation of Australia's energy transition. Australia must continue to accelerate electrification and decarbonisation of everything – this is the only way to permanently reduce power prices and achieve our climate goals.

>>> CEF’s discussion is available here.

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RIO TINTO POTENTIAL TAKEOVER OF GLENCORE

Mining giant Rio Tinto and Swiss miner Glencore are in discussions that could see Rio acquire Glencore.  If completed, the combined group would become the world’s largest mining company, with a valuation of over US$200, dominating key metals like copper and iron ore. 

This could see Rio lumped with the coal mines it sold the Swiss firm in 2018 as it divested from fossil fuels.

If Rio ends up buying Glencore's coal mines as part of the deal, they're probably paying more than they sold them for, having missed several years of obscene profits as the transition to clean energy slowed due to the influence of Donald Trump and prices soared thanks to Vladimir Putin, with massive windfall war profiteering after Putin's invasion of Ukraine. But since coal’s operating costs have also soared, when prices go back to anything like normal it's going to be ugly. As David Fickling of Bloomberg recently highlighted, "Unit costs at the four big miners have almost doubled over the past five years."

Glencore's coal assets are probably a sticking point for Rio's board. CEF would expect they will sell them off because there's always some billionaire who doesn't give a toss about the planet. A billionaire like Ivan Glassenberg would likely be very happy to profiteer by accelerating the externalisation of the global costs of climate crisis onto everyone else.

>>> See Tim’s commentary on ABC. 

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CEF PUSHES FOR FUEL TAX CREDIT REFORM IN PRE-BUDGET SUBMISSION

In CEF’s 2026-27 Pre-Budget submission this week, CEF proposes that the Federal Fuel Tax Credit (FTC) Scheme, a taxpayer-funded subsidy for imported, high-emission, volatile liquid fuels, be capped at $50 million per year per group claiming under the Scheme. The forgone taxation through the FTC Scheme is an unsustainable budget measure, damaging fiscal sustainability, intergenerational equity, our trade balance and massively undermining Australia’s progress towards its decarbonisation and climate ambitions.

CEF proposes a ‘Transition Tax Incentive’ (TTI) to reform the FTC Scheme. Any tax credits an entity would be eligible to receive above the $50m cap are returned to that entity on the condition the entity deploys an equal or greater investment into decarbonisation capex each year, e.g. electric trucks,  renewable energy infrastructure etc. This would reform the FTC Scheme into a ‘cap-and-reinvest’ model, turning a headwind to diesel displacement by electrification and decarbonisation into a tailwind.

Fossil fuel subsidies like the FTC Scheme cause significant environmental harm, are costly, distortive, undermine the global efforts to mitigate climate change, aggravate local pollution and place considerable strain on public budgets, draining scarce fiscal resources that could otherwise be invested in sustainable energy infrastructure, research and up-skilling of Australia’s workforce. 

CEF’s proposal to the Treasury provides significant economic and environmental benefits to the Australian budget, economy, and natural capital. Introducing ambitious policies to accelerate electrification and decarbonisation can significantly improve Australia’s national energy security, replacing volatile, inflationary fossil fuel imports with deflationary, domestically-produced renewable energy. Furthermore, CEF’s proposal provides a mechanism to mobilise the critically needed capital required to deploy the necessary renewable energy capacity and scale common user infrastructure needed to decarbonise Australia’s resources industry. 

Read CEF’s full economic, investment and environmental cases for FTC Scheme reform that aligns Australia’s fiscal and budgetary incentives with national interest objectives of fiscal sustainability, decarbonisation and domestic value-add and re-industrialisation below. 

>>> CEF’s 2026-27 Pre-Budget submission: Reforming Fuel Tax Credits

>>> CEF’s report on Transition Tax Incentives: Reforming Fuel Tax Credits into Decarbonisation Tailwinds

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CHINA CONTINUES TO BE THE BIGGEST ENERGY TRANSITION STORY ON EARTH

China's electricity demand for CY2025 was 10,436TWh, +5.3% yoy with a record high 41.5% share generated by zero emissions technologies. 🇨🇳 ✅ 

China's electricity demand in CY2025, by far the largest grid in the world and 2.4x that of the US.

Within this, it is really important to see coal power generation for CY2025  ⬇️ 0.9% yoy to 5,802TWh. So for all the China luddite comments that it is still building a record number of new coal power plants in 2025, the key outcome is generation, not capacity.

The average thermal powered plant in China was utilised a record low rate of just 47.2% of the year. Thermal capacity grew, generation declined, so utilisation rate and emissions declined in CY2025, having peaked (hopefully permanently) back in 2024.

So zero emissions electricity generation covered >100% of the total growth of China's electricity system in CY2025, even as China pursues an ongoing progressive electrification of everything, particularly transport, so as to permanently cut its imported fossil fuel addiction.

Variable RenewableEnergy generation (wind, on- and off-shore) and solar (distributed and utility scale) in CY2025 was 2,321TWh, ⏫ 26.2% yoy, taking a record high 22.2% share of China's total (add in hydro, and renewables generated a record 35% share of China's CY2025 electricity generation). Add in nuclear, and zero-emissions electricity generation was record high 41.5% share in CY2025.

☀️ solar generation in CY2025 1,193TWh, ⏫ 41% yoy (overtaking wind)

🌬️ wind generation in CY2025 1,128TWh, ⏫ 13.6% yoy

And for the Australian nuclear nutters, solar generation in China was 2.5x that of nuclear generation.

BMI reports that in the single month of December 2025, China installed 65GWh of grid scale BESS, +135% yoy. It goes without saying – another world record.

China’s NEA reports cumulative installed capacity of new energy storage in CY2025 reached 144.7GW, ⏫ 85% yoy.

>>> CEF’s discussion is available here and here.

>>> See Tim in Stockhead on China’s energy transition wins 

>>> Also see FT, How the west fell behind in the green tech race

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State Grid Corporation of China released its investment plan for the 15th Five-Year Plan period (2026–2030) that assumes fixed-asset investment of Rmb4.0 trillion (US$600bn) over the period, up 40% from the previous five-year plan.

State Grid projects average annual additions of around 200GW of wind and solar capacity across its service territory. This means ~250GW renewable energy annually for the whole of China, well below the ~400GW installed in 2025 (+37% yoy). China likes to do, then talk about it, so we see this as a low-ball estimate likely to be handily exceeded, given the power and momentum of the Chinese economy, its world leadership in zero emissions industries of the future, and its need to reduce its addiction to imported fossil fuels (given the US trade war).

State Grid aims to lift the share of non-fossil energy consumption to 25% while supporting the rollout of “zero-carbon” factories and industrial parks and enabling access for 35 million charging points. It plans to optimise the layout of pumped hydro storage (PHS) sites and support the large-scale development of new energy storage technologies. China is world #1 in PHS and BESS installations (=> dispatchable solar), just as it is world #1 in distributed and utility solar, onshore wind and offshore wind installs – as well displacing Tesla as #1 in EV sales in CY2025, at >50% of the global total. 

Meanwhile in India…

India added 48GW of renewables in CY2025 (including 3GW of hydro), up 70% yoy from 28GW in CY2024.  Great to see 6.3GW of wind added in one year, a record for India after a number of years of wind investment drought, and a record 38GW of new solar capacity added in 2025. This is likely to be understated given the Indian CEA stats exclude rooftop solar (unlike China's capacity reporting).

By comparison, Australia added just 7GW of renewable capacity, including 3GW of rooftop solar. Australia was a top 4 global installer of batteries (behind China and the US, and roughly equal to Saudi Arabia) in CY2025.

PM Narendra Modi has long targeted India deploying 50GW pa of renewable energy, and it is great to see this now on-track. While CEF does not formally cover India, it is very encouraging to see an emerging world power, the largest functioning democracy, and a geopolitical counterweight to both the US and China, embracing renewable energy for all its benefits: low cost, clean, and key to energy independence and onshoring clean manufacturing opportunities. 

Around the world…

Globally, as the US doubles down on its fossil fuel addiction, BloombergNEF estimates world installs of solar and wind exceeded 800GW last year — an all-time record and a tripling in yearly deployments since 2021. There is plenty of negativity driven by the US fossil fuel industry's capture of the Trump administration, but the world is getting on with electrification and decarbonisation. Follow the money, not the rhetoric.

Global investment in the energy transition grew by 8% to a record US$2.3 trillion in 2025, according to BloombergNEF. CEF’s write-up is available here. 

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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.