UPDATE: The Clean Energy Investor Group (CEIG) has issued an urgent plea for reforms to foreign investment regulations to ensure a steady influx of offshore capital into Australia’s renewable energy sector. As of today, approximately 70 percent of the funding necessary for future clean energy projects is anticipated to come from international investors. The CEIG warns that without immediate adjustments, these critical financial streams could dry up.
Marilyne Crestias, representing the CEIG, articulated her concerns in a submission to the federal productivity roundtable. She stated, “Policy and regulatory barriers, particularly in foreign investment, taxation, and superannuation, are limiting capital flows into sectors critical to long-term productivity and economic resilience.” The CEIG’s latest analysis, the 2025 Clean Energy Outlook, ranks Australia as “somewhat attractive” for clean energy investment, but highlights concerns over transmission delays and slow planning processes rather than issues related to foreign investment.
The CEIG emphasizes that Australia’s foreign investment rules are more cumbersome compared to its international counterparts, such as the EU and China, which are praised for their transparency and efficiency. “Renewable energy projects often face stricter thresholds and more frequent Foreign Investment Review Board (FIRB) reviews than comparable investments in other sectors,” Crestias noted.
One significant hurdle for foreign investors is the regulatory requirement that mandates federal review for agricultural land deals exceeding $15 million. For vacant commercial land, the threshold is set at $0, meaning all transactions must undergo FIRB scrutiny. The CEIG is advocating for updated land thresholds and streamlined assessments for clean energy projects that align with national objectives.
In a potentially controversial proposition, the CEIG suggests categorizing developed renewable energy sites as infrastructure rather than agricultural or commercial land for FIRB purposes. This reclassification aims to simplify the investment process. Furthermore, the group is seeking exemptions for renewable energy projects from existing rules that prevent foreign investors from purchasing established residential properties, such as farms with dwellings designated for solar or wind farms.
The CEIG also raised alarms over proposed changes to foreign resident capital gains tax, which could deter global investors by intensifying perceptions of sovereign risk in Australia. Crestias pointed out that countries like Canada, Germany, and the US have already exempted clean energy infrastructure from capital gains taxes, suggesting that Australia must follow suit to maintain competitiveness in attracting global capital.
Moreover, the CEIG is calling for reforms to the Your Future, Your Super (YFYS) performance test, which currently penalizes superannuation funds that invest in clean energy due to outdated benchmarks favoring fossil fuel assets. Crestias argued that this bias disincentivizes super funds from investing in strategic, long-term clean energy projects, which are increasingly aligned with member interests.
The urgency of these proposed reforms cannot be overstated as Australia strives to position itself as a leader in the global clean energy race. The CEIG’s recommendations could significantly impact the flow of foreign investment into renewable energy, a sector vital for the country’s economic resilience and environmental sustainability.
As the CEIG’s submission is reviewed, stakeholders across the energy sector and investment landscape are urged to monitor developments closely. Immediate action could determine the future landscape of renewable energy investment in Australia, impacting not only financial flows but also the nation’s commitment to clean energy goals.
Stay tuned for updates as this situation evolves.
