In today’s Australian Financial Review, NAB has vowed to continue lending to renewable energy projects despite the Australian government’s clear aversion to the sector, with a reported $1.6 billion worth of commitments to future projects globally. NAB has claimed for several years that it is Australia’s biggest lender to renewable energy, a claim we have been able to validate in our latest report, Fueling the Fire.
Indeed, NAB is not just the biggest Australian lender to renewable energy since 2008, but also has the best looking ratio of lending to renewables when compared against fossil fuels. Since 2008 NAB has loaned three times as much to the fossil fuel sector as it has to renewable energy, which is not anywhere near where we would set the bar but still a vast improvement on the likes of Commbank, who for every dollar loaned to renewable energy since 2008 has loaned $13 to fossil fuels.
NAB have been able to set themselves apart from the other major banks by providing finance to a large number of overseas projects, particularly in Europe. The AFR article notes that NAB has lent $1.4 billion to renewable energy projects outside of Australia since it began lending to the sector around a decade ago. This is approximately a third of the bank’s total renewables lending over that period, a ratio that is consistent with our findings (which cover a shorter timespan).
The fact that a third of the bank’s investment in renewable energy is going offshore highlights the massive difficulties faced by these industries locally. The Abbott government’s continued attacks on the sector have recently seen the national Renewable Energy Target (RET) cut and the Clean Energy Finance Corporation (CEFC) banned from providing finance for wind and small scale solar projects. Political moves such as these undermine the local industry and cause uncertainty, which is why so much potential investment is being directed to overseas projects.
It is a great shame that Australia, with its wealth of solar and wind resources, continues to lag so far behind when it comes to investment in renewable energy. Not only is the technology ready and waiting, the finance is too. Yet instead of taking advantage of the banks’ willingness to support local renewable energy projects, Australia’s backwards political approach to the sector is seeing that investment leave our shores.
So what is to be done? We can’t ask the big banks to fund projects in Australia that don’t exist, and certainly won’t complain about banks like NAB investing offshore. More money going to support renewable energy is important, wherever in the world it is. But there is one way we can ask for more of the banks: leadership. NAB isn’t the only bank to claim that they’re keen on renewable energy – all of them do. But if the big banks are serious about wanting to see – and finance – a renewable energy future, how about they demand it of our government? And not just behind the scenes – let’s see the big banks saying publicly that we need supportive renewable energy policy from government that encourages them to invest locally, building up Australia’s own renewable energy sector.
From now on, speaking positively about renewable energy isn’t enough from the big banks. We need to see them demanding policy action that removes the roadblocks to replacing our old and dirty fossil fuel sector with clean, renewable energy.