The government’s clean energy funds are playing it too safe
These specialist investment vehicles are meant to crowd in private finance and accelerate emerging tech, yet most money still goes to projects the market would fund anyway.
Who dares wins. Fortune favours the bold. Nothing ventured, nothing gained. The risk–return trade-off is so well understood it’s part of the common vernacular.
So why has it taken so long for the federal government to dip its toe into riskier investments, as it recently did with the Net Zero Fund, and what will it take to convince it to jump in?
The government’s specialist investment vehicles (SIVs), such as the Clean Energy Finance Corporation and National Reconstruction Fund, exist to address market failures in capital allocation by spurring economic activity that would not otherwise occur.
Their primary policy goal is not to generate returns for their own sake, but to crowd in private finance and accelerate the development of technologies needed for national priorities such as the net zero transition and building industrial capability. To do this successfully, SIVs must take on more risk than the private sector.
