Australia’s green bank has plunged $100 million into Macquarie Bank’s growing agribusiness without a plan on how to generate a public benefit from its unprecedented cash-splash.
The Clean Energy Finance Corporation (CEFC) says its first foray into corporate farming will deliver a “clean energy model” for the family farmers who make up 95 per cent of the country’s ag sector.
But it is yet to develop an extension program, to generate uptake across the sector of the best practice energy efficiency and carbon emissions methods Macquarie aims to develop.
Focusing on grains and permanent plantings, Macquarie Infrastructure and Real Assets will expand its operations and infrastructure to farms in seven regions across the country.
CEFC transaction leader Rory Lonergan said the project centered on a benchmarking methodology that farmers can use yo rate their energy consumption against production output.
This system was inspired by the successful rating system used in the property sector.
“Benchmarking energy use in agriculture would have many differences to the property sector, but that system drove significant change and improved emissions. We want to see something similar come to farming,” Mr Lonergan said.
“The cropping sector is an important part of Australian agriculture and has the potential to lead the way in adopting new technologies and evolving farm practices to reduce overall sector emissions.
CEFC said in a statement it was in the early stages of the project and an extension program would be developed by a committee “as the technologies and processes are tested” on farm.
The challenge will be to determine whether the learning’s from the initiative is replicable in smaller farms
The extension committee will be comprised of people from CEFC, Macquarie and CSIRO – which is also contributing data analysis to develop the emissions benchmarking model.
CEFC’s investment could help Australia meet its international commitments under the Paris climate change agreement, which requires participant countries to develop sector-specific pathways to emissions reduction.
The benchmarking system will also be consistent with the Science based Targets initiative, a program backed by the World Wide Fund for Nature (WWF) and the United Nations Global Compact to promote “ambitious corporate climate action”.
Generating uptake of new agricultural techniques and technology is a notoriously difficult.
Australian farmers are among the world’s most advanced, but the huge variations in conditions and climate across the country is a significant challenge requiring careful design for successful extension programs.
NSW Farmers chief economist Ash Salardini said his association welcomed public investment in energy efficiency and reduced emissions.
He said the scale of Macquarie’s operation offered some advantages in terms of large investment across a vast scale of enterprises, but questioned the benefit to the majority of the farm sector.
“The farming sector is diverse and dispersed, so simply having a discussion paper won’t suffice. You need to have boots on the ground attending local forums, speaking to farmers on their property,” Mr Salardini said.
“The challenge will be to determine whether the learning’s from the initiative is replicable in smaller farms.
“If the solutions this initiative generates can only be undertaken by corporate farmers, we are leaving the majority of the farming community behind, which would be a missed opportunity, and potentially a misallocation of taxpayer monies.”
Mr Lonergan said Macquarie was selected for the scale in operations it could provide, and access to capital, required to lead the market in modern farming systems.
The processes and outcomes will be transparent. CEFC regulations require a minimum rate of return on its investments.
Mr Lonergan was confident the project’s benefits would “filter down” to all farmers, despite the gulf in farm systems and investment capacity.
Agriculture generates about 15 per cent of Australia’s carbon emissions, according to the federal Environment Department.
Energy efficient loans hit the spot
The Clean Energy Finance Corporation (CEFC), founded in 2012, has issued $200 million of loans to more than 790 Australian agricultural projects.
The CEFC supports investment up to $5 million into a variety of initiatives including energy efficient equipment and facilities, low-emission energy generation, solar power and methane capture.
Funds are made available in partnership with banking institutions offering a 0.7 per cent discount on standard equipment lending rates.
Coupled with low interest rates and rocketing power prices, the loans have become extremely popular among family farmers.
The CEFC promotes emissions reduction through energy efficiency as an investment not just in reduced emissions as well as water and fertiliser use, but also as a way to reduce power bills.
Commonwealth Bank of Australia recorded a 400 per cent jump in business loans specifically for energy efficient equipment in the first six months of last year.
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