Super funds call for policy reform to accelerate $12bn a year energy transition

Australia’s big super funds have called for policy changes to ensure the $12bn green energy revolution can be properly funded.

Big superannuation players want changes to policy on green energy, including IFM Investors and AustralianSuper.

The $1.2 trillion industry superannuation sector could become a key investor in renewable energy transmission projects, storage batteries, and a sustainable aviation fuel industry in Australia, with the right policy settings, a new paper by major funds has argued.

The paper outlines key policy measures which they say could accelerate the energy transition in Australia which the funds estimate will cost some $12bn a year between now and 2050.

The paper has been issued by industry super fund vehicle, IFM Investors, and major super funds including AustralianSuper, the Australian Retirement Trust, UniSuper, Cbus, HESTA, Hostplus, Rest Super, and CareSuper.

Its recommendations include accelerating planning processes for new energy transmission lines, encouraging greater competition in the renewable energy sector, providing more financial incentives for investment in green energy projects and encouraging the development of a sustainable aviation fuel industry in Australia.

“With the right policy settings, superannuation capital can be increasingly deployed at scale to super-power the energy transition in Australia,” IFM Investors’ chief executive, David Neal said.

“Millions of industry fund members can receive returns on their retirement savings, owning the infrastructure they rely on every day,” he said.

“That will create a prosperous, greener, more productive economy for them and their children and grandchildren.”

The paper comes as AustralianSuper appears to have blocked a proposed takeover of Origin Energy by Canadian investor, Brookfield, with the fund, which now owns 17.5 per cent of Origin, arguing that it is looking for key projects in the energy transition sector in Australia to invest in.

The Dulacca Wind Farm which will power up to 124,000 Queensland homes a year.

“AustralianSuper is a long-term investor in the Australian economy and is committed to investing in the nation’s energy transition, while delivering on our purpose to help members achieve their best financial position in retirement,” AustralianSuper chief executive, Paul Schroder, said.

“Achieving our net zero target will take bold and decisive action from governments, industry and investors.”

“The challenge we face is not a lack of capital, but a shortage of good quality investment opportunities.

“Collaboration across all sectors of the economy, underpinned by policy certainty, will deliver the outcomes we need to respond to this challenge and deliver better outcomes for all.”

The paper notes that governments across the world, including the United States, the United Kingdom, and in the European Union, are introducing incentives to attract significant investment in clean energy and accelerate the energy transition.

This has seen IFM Investors this week sign a memorandum of undertaking with the UK government to invest $20bn in UK infrastructure by 2027, with a particular focus on the energy transition.

The paper outlines policy measures to encourage the roll out of electricity transmission lines to renewable zones including the availability of concessional finance or “availability payments” for new projects.

It says investment in batteries needed for renewable energy storage can be accelerated by delivering the expanded Capacity Investment Scheme and removing regulatory barriers to investment in community batteries.

It argues for a production tax credit to help the development of a local sustainable aviation fuel industry.

Other recommendations include developing a market which enables sustainable aviation fuel credits to be recognised and traded.

The chief investment officer of CareSuper, Suzanne Branton, said the transition to cleaner energy presented “a wealth of investment opportunities for super funds and their members.”

The chief investment officer of construction industry super fund, Cbus, Brett Chatfield, said the

expansion of the Commonwealth Government’s Capacity Investment Scheme was a “key initiative to address the urgent need for energy transition in Australia.”

He said the super funds had the capacity to step up their investment in the clean energy transition but it needed more co-ordinated public policies.

HESTA chief executive, Debby Blakey, said Australia had large pools of “patient, sophisticated capital” which could help underwrite Australia becoming a global leader in the energy transition.

“HESTA has committed to investing 10 per cent of our portfolio in climate solutions by 2030,” she said.

“This blueprint provides the stable, cohesive policy settings needed to help break down many of the barriers HESTA and other investors face when seeking to invest in Australia’s energy transition.”

“As a fund representing more than one million Australians aged 30 or younger, we believe our members can reap significant long-term benefits from investments that deliver strong returns and support the energy transition, the chief investment officer of Rest, Andrew Lill said.