This paper argues that the federal government’s plans to establish a Clean Energy Finance Corporation should be scrapped.

As a commercially oriented company, it competes with private investors. As a company with a public mandate, it nevertheless aims to serve a public policy goal. These dual purposes are hard to reconcile. However, its place under an emissions trading framework is even more problematic. As a carbon emissions trading scheme sets a ceiling on overall emissions, the Clean Energy Finance Corporation will not achieve any additional emissions cuts but only result in lower prices for emissions certificates. $10bn of public funding will thus yield a zero emissions effect.