This instrument is the Clean Energy Finance Corporation Investment Mandate Direction 2023. It is made under subsection 64(1) of the Clean Energy Finance Corporation Act 2012 (the Act) (s 3), commences the day after registration on the Federal Register of Legislation (s 2), and expressly repeals the 2020 Investment Mandate Direction while preserving existing, compliant investments (s 23). The instrument sets binding rules and targets that the CEFC Board must apply when exercising the Corporation’s investment function under the Act. It does so by (a) restating the CEFC’s object and specifying how the Board must perform its investment function to deliver on that object (s 5), (b) dividing the CEFC’s activity into a General Portfolio and a set of Sub-Funds (the Rewiring the Nation Fund and four Specialised Investment Funds) and prescribing funding envelopes, benchmark rates of return, risk guidance and concessionality/guarantee limits for those streams (ss 4, 15, 16, 17), and (c) imposing governance, reporting and operational obligations (ss 6, 11, 18, 19, 21).

Mechanically, the Direction does the following.

• Reaffirms the CEFC’s statutory object to facilitate increased flows of finance into the clean energy sector and to facilitate achievement of Australia’s greenhouse gas emissions reduction targets, and ties investment activity to specific public policy outcomes such as supply chain resilience and enabling technologies (s 5).
• Requires the Board to have regard to public policy outcomes and positive externalities across all investments, while imposing a commercial rigour requirement and market effects consideration for the General Portfolio (s 6).
• Sets a benchmark return for the General Portfolio at an average of the 5‑year Australian Government bond rate plus 2 to 3 percentage points, measured before operating expenses and concession charges (s 7). Each Sub-Fund has its own benchmark and risk guidance (ss 15-16).
• Caps concessionality provided by the CEFC at $300 million per financial year, except for the Rewiring the Nation Fund and the Household Energy Upgrades Fund where the Board may deploy concessionality as it deems required (s 9; ss 15, 16).
• Limits the CEFC’s use of guarantees generally, requires them to be limited and quantifiable, and caps outstanding guarantees (other than Rewiring) at 5 per cent of the total amount credited to the CEFC Account for purposes other than Rewiring (s 10).
• Establishes four Specialised Investment Funds with funding envelopes and tailored objectives, benchmarks and risk tolerances: Clean Energy Innovation Fund (up to $200 million), Advancing Hydrogen Fund (up to $300 million, concessional finance), Powering Australia Technology Fund (up to $500 million, target private leverage) and Household Energy Upgrades Fund (up to $1 billion, concessional finance, repayment cap rules) (s 16).
• Creates a Rewiring the Nation Fund with up to $19 billion available, focused primarily on transmission and grid infrastructure, and permits higher risk and open concessionality for that Fund (s 15).
• Mandates sub-fund accounting rules that permit the Board to treat qualifying past or pre-funded investments as Sub-Fund investments for benchmark and risk purposes (s 17).
• Requires disclosure of non-financial outcomes in the annual report and recommends disaggregation of concessions by program and fund (s 18).
• Imposes corporate governance expectations including development and publication of ESG and First Nations screening policies, application of Australian Industry Participation plans and consideration of Buy Australian in consultation with Finance, and a requirement that at least half of funds be invested in renewable energy technologies to comply with subsection 58(3) of the Act (ss 11, 19, 22).

The Direction also includes a number of non-binding or "should" level obligations (for example collaboration, environmental/social considerations, and cooperation with specified agencies) which the Board is encouraged, but not strictly required, to pursue (ss 20-21).

The Direction organises the CEFC’s investment mandate around a handful of recurring legal and financial concepts that will govern the Board’s choices.

• Object-based performance. The Board is instructed to perform its investment function to deliver on the Act’s object: facilitating increased finance into the clean energy sector and facilitating Australia’s greenhouse gas emissions reduction targets (s 5). This ties investment choices explicitly to national emissions objectives and associated public policy outcomes such as industry development and sovereign capability.
• Portfolio segmentation. The Direction splits activity into the General Portfolio and Sub-Funds: a Rewiring the Nation Fund (ss 15, 17), plus four Specialised Investment Funds (Clean Energy Innovation Fund, Advancing Hydrogen Fund, Powering Australia Technology Fund, Household Energy Upgrades Fund) (s 16). Each segment has distinct funding envelopes, benchmarks and risk guidance. The monetary envelopes do not prevent investment outside them but limit which investments benefit from the Sub-Fund benchmark and risk settings (s 17(1)).
• Benchmarks and performance measurement. The CEFC is given explicit target returns. The General Portfolio must target an average return of at least 5‑year Australian Government bond rate plus 2 to 3 percentage points, measured over the medium to long term and before operating expenses and concession charges (s 7). The Innovation, Hydrogen and Powering Technology funds target 5‑year bond plus 1 percentage point (s 16(1), (2), (3)), while Household targets 5‑year bond plus 0.5 percentage point (s 16(4)). Rewiring is to target at least the Corporation’s cost of the Rewiring functions (s 15).
• Concessionality. The instrument defines concessionality as the mark-to-market valuation of loans made in a financial year, measured as the present value difference between market-rate loans and concessional-rate loans (s 9 note). There is a $300 million annual cap on concessionality across the CEFC except for Rewiring and Household funds where the Board may deploy concessionality as required (s 9; ss 15, 16).
• Risk tolerance. Risk expectations are calibrated by portfolio. The Board must seek portfolios that "in aggregate have an acceptable but not excessive level of risk" for the General Portfolio and most Specialised Funds, while Rewiring may accept a higher aggregate risk level (ss 8, 15, 16). The Board must periodically review investment practices and advise responsible Ministers of measures taken (ss 8, 15, 16).
• Limits on guarantees. Guarantees are to be avoided (except for Rewiring where a different approach is contemplated), must be limited and quantifiable, and the total outstanding guarantees (other than Rewiring) must not exceed 5 per cent of amounts credited to the Account for non-Rewiring purposes (s 10).

Directly affected parties

• The CEFC Board and management. The Board is principally regulated. It must apply the Direction when performing its investment function under the Act (s 5), design investment strategy with a medium to long term outlook (s 12), adopt corporate governance and ESG/First Nations screening policies (s 19), and report outcomes (s 18).
• Borrowers, investees and project sponsors in the clean energy sector. Their access to CEFC capital will be shaped by the funding envelopes, eligible technologies and focus areas specified for each Sub-Fund (ss 15-16). For example, applicants for Rewiring-related transmission projects, early-stage technology firms seeking Innovation Fund support, hydrogen projects aligned with National Hydrogen Strategy priorities, technology companies seeking scaling capital, and residential retrofit finance providers will be directly targeted.
• Financial counterparties and intermediaries. The Powering Australia Technology Fund requires the Board to aim to leverage at least $500 million from private capital (s 16(3)), and the Household Energy Upgrades Fund must aim to leverage an amount equal to its $1 billion funding amount (s 16(4)(b)). Intermediaries that can co-invest, originate loans or provide credit enhancement will be commercially advantaged. Guarantees are restricted and generally discouraged, so counterparties cannot rely on wide availability of CEFC guarantees outside the Rewiring Fund (s 10).
• State, Territory and federal energy agencies. The Board may seek and consider advice from the Rewiring the Nation Office, AEMO and the Australian Energy Infrastructure Commissioner for Rewiring projects (s 15), and must take into account State or Territory views on project priority when advised. The Advancing Hydrogen Fund requires taking advice of the Department of Industry or equivalent when prioritising hydrogen projects (s 16(2)).
• Manufacturers and local content providers. The Direction requires application of Australian Industry Participation Plans in accordance with government policy and consultation with Finance on the Buy Australian Plan, creating procurement and participation expectations for projects receiving CEFC investment (s 11).
• Residential homeowners and retrofit providers. The Household Energy Upgrades Fund targets concessional lending facilitating uptake of clean energy measures in existing and knock-down‑rebuild dwellings, excludes high value properties from eligibility, requires a maximum investment repayment horizon of 10 years from Fund commencement, and seeks private leverage (s 16(4)).

Duties imposed on the Board

• Duty to deliver on the Act’s object and align investments to it. The Board must perform its investment function to deliver the object of facilitating increased finance into clean energy and facilitating greenhouse gas emissions targets, including investing in technologies, supply chains and giving guarantees under s 69 of the Act (s 5).
• Duty to have regard to positive externalities and public policy outcomes. This overarching duty applies to all investments (s 6).
• Duty to apply commercial rigour and consider effects on other market participants for the General Portfolio. The Board must apply commercial discipline and have regard to market impacts when making General Portfolio investment decisions (s 6).
• Duty to target specified benchmark returns. Benchmarks are mandatory targets for portfolio construction: General Portfolio 5‑year bond +2 to +3 percentage points (s 7); Clean Energy Innovation, Advancing Hydrogen and Powering Technology funds at +1 percentage point (s 16(1)-(3)); Household fund at +0.5 percentage point (s 16(4)); Rewiring at least the Corporation’s cost of Rewiring functions (s 15).
• Duty to manage risk. The Board must seek portfolio risk levels that are acceptable but not excessive, review investment practices periodically, and advise responsible Ministers of measures taken (ss 8, 15, 16).
• Duty to limit concessionality and guarantees. A $300 million per annum limit on concessionality applies except for Rewiring and Household funds (s 9). Guarantees are to be avoided where possible, must be limited and quantifiable, and outstanding non-Rewiring guarantees must not exceed 5 per cent of the total amount credited to the CEFC Account for non-Rewiring purposes (s 10).
• Duty to apply Australian Industry Participation Plans and consult on Buy Australian. AIP Plans must apply to projects in accordance with government policy and the Board must consult Finance on Buy Australian (s 11).
• Duty to publish ESG and First Nations screening policies and follow Australian best practice corporate governance. The Board must have regard to best practice and develop policies to be published on the Corporation’s website (s 19).
• Duty to include non-financial outcomes in the annual report and, in meeting reporting obligations under the Act, the CEFC should disaggregate concession values by program and fund (s 18).

Discretion and non-binding guidance

• The instrument contains many statements of encouragement and non-mandatory guidance, including that the Board is "strongly encouraged" to prioritise certain investments (s 14) and that the Board "should, where practical" account for social licence, local employment, waste hierarchy and sustainable feedstocks (s 20), and "should, where practical and appropriate" cooperate with other agencies (s 21). These are directional but not absolute obligations.

The Direction itself does not specify statutory penalties, fines or criminal sanctions. Enforcement mechanisms derive from the underlying statutory and administrative framework:

• Ministerial oversight and political accountability. The Direction requires the Board to advise responsible Ministers of periodic reviews and specific measures taken to manage portfolio risk (ss 8, 15, 16), creating channels for ministerial scrutiny and political accountability. The instrument references responsible Ministers without specifying enforcement mechanics.
• Statutory constraints under the Act. The Direction is made under s 64(1) of the Act (s 3). Compliance is therefore enforced by the Act’s governance framework and the Board’s statutory duties; failure to comply may attract administrative consequences under the Act or give rise to scrutiny by Parliament or other oversight bodies. The instrument does not create separate civil or criminal penalties for non‑compliance.
• Reporting obligations and reputational enforcement. The Board must include non‑financial outcomes in its annual report (s 18) and publish ESG and First Nations policies (s 19). Transparency creates reputational incentives for compliance and may trigger parliamentary questions or public scrutiny where the Board departs from the Direction.
• Internal governance controls and ministerial direction. The CEFC is a Commonwealth corporation subject to ministerial direction under the Act. The Direction sets binding obligations and the Board remains accountable to Ministers. It must advise Ministers of periodic reviews and specific measures (ss 8, 15, 16). The instrument does not alter any administrative remedies or internal sanction regimes in the Act.
• Limits on guarantees and concessionality as financial controls. The Direction imposes quantitative controls (for example, the $300 million annual concessionality cap (s 9) and a 5 per cent cap on outstanding guarantees other than Rewiring (s 10(c))). Breaches of these quantitative limits would be breaches of the Direction’s mandatory terms; enforcement would likely proceed through ministerial and statutory channels rather than criminal sanction. The instrument does not set out enforcement processes or consequences; those would depend on the Act’s mechanisms and regular public and ministerial oversight.

Practical enforcement risks and gaps

• The Direction leaves substantial discretion to the Board on classification of investments to Sub-Funds (s 17(2)), on what level of concessionality to deploy for Rewiring and Household funds (ss 15, 16(4)), and on acceptable risk levels (ss 8, 15, 16). The lack of prescriptive enforcement procedures in the Direction creates a reliance on internal governance, ministerial oversight, reporting, and political review to deter departures from the Direction. The instrument does not stipulate audit or sanction procedures specific to breaches of the Direction.

Express references to the Act and other statutory instruments

• Made under the Act. The Direction is issued under subsection 64(1) of the Clean Energy Finance Corporation Act 2012 (s 3). The Direction must be read and applied in the context of the Act’s investment function, powers and duties.
• Cross-references to the Act. The Direction refers to multiple provisions of the Act: guarantees given under section 69 are an authorised activity (s 5(c)); reporting references to paragraph 74(1)(d) of the Act (s 18); and the obligation to ensure compliance with subsection 58(3) of the Act is stated as a task for the Board in s 22. The Direction also references amounts credited to the CEFC Account under section 46 of the Act when prescribing guarantee limits (s 10(c)). Those Act provisions determine the legal footing for guarantees, reporting, the CEFC Account and the Board’s underlying powers.
• Legislation Act exemptions. The Direction contains an explicit note that section 42 of the Legislation Act 2003 (disallowance of legislative instruments) and Part 4 of Chapter 3 (sunsetting) do not apply to this instrument, citing relevant exemptions in the Legislation (Exemptions and Other Matters) Regulation 2015 (s 2 note). That affects parliamentary scrutiny and automatic expiry processes applicable to other legislative instruments.

Interaction with government policies and other agencies

• Australian Industry Participation and Buy Australian policies. The Direction requires application of AIP Plans in accordance with the Government’s AIP Plan policy, and consultation with the Department of Finance in relation to the Government’s Buy Australian Plan (s 11). This imports external procurement policies into investment decision-making.
• Coordination with energy market bodies for Rewiring. The Board may seek and consider advice from the Rewiring the Nation Office, the Australian Energy Market Operator and the Australian Energy Infrastructure Commissioner for Rewiring investments, and may take into account State and Territory Energy Ministers’ views on priorities (s 15). Investments in transmission and grid infrastructure therefore interact with federal and state energy regulation and planning instruments, including Integrated System Plan processes referenced in s 15(a).
• Consultation requirements with ARENA and the Department. The Clean Energy Innovation Fund requires the Board to take account of ARENA’s advice on recommendations, technical and commercial feasibility and competitive environment (s 16(1)). The Advancing Hydrogen Fund requires the Board to take account of the Department’s advice (s 16(2)).

The Direction as provided is the Clean Energy Finance Corporation Investment Mandate Direction 2023. The instrument contains the following amendment and repeal history points.

• Repeal of the 2020 Direction. Section 23 expressly repeals the Clean Energy Finance Corporation Investment Mandate Direction 2020. The repeal is immediate on commencement subject to the transitional saving that the repeal does not require divestment of investments that were in place before commencement nor require investments that are not "complying investments" (s 23). This protects live portfolios established under the previous Direction from a forced divestment obligation created by the new instrument.
• Commencement mechanics. The Direction commences the day after registration on the Federal Register of Legislation (s 2). The note under s 2 records that both the disallowance provisions and the sunsetting provisions of the Legislation Act 2003 do not apply to this instrument because of regulation-level exemptions. That has the practical effect that the 2023 Direction will not be subject to the usual automatic parliamentary disallowance or sunsetting scrutiny processes that apply to many legislative instruments.
• Funding envelopes introduced by the new Direction. The instrument establishes monetary limits for Sub-Funds: Rewiring up to $19 billion (s 15); Clean Energy Innovation Fund up to $200 million (s 16(1)); Advancing Hydrogen Fund up to $300 million concessional finance (s 16(2)); Powering Australia Technology Fund up to $500 million (s 16(3)); Household Energy Upgrades Fund up to $1 billion (s 16(4)). Those are new allocations and represent the primary policy change introduced by the 2023 Direction.
• Retrospective treatment permitted. Section 17(2) allows the Board to treat investments made before the relevant funding was credited to the Account as investments in respect of a Sub-Fund, including for the purpose of applying the Sub-Fund’s benchmark and risk arrangements. That is an internal accounting and classification flexibility rather than a retroactive legal conferment of Commonwealth money.
• Authority preserved. The Direction is made under subsection 64(1) of the Act (s 3). The instrument does not itself amend the Act; it operates as a direction under the statutory power. Any future amendment to the Act or to the Direction would require the processes those instruments prescribe.

No further amendments are recorded in the text provided. Any subsequent amendment history would appear in later legislative instruments, ministerial directions, or amendments to the underlying Act.

The Direction text as provided does not record any litigation history. It contains no lists of cases and does not cite judicial decisions. The instrument references the Act and certain public policy instruments, but provides no record of court proceedings.

Possible litigation and judicial review avenues (grounded in the text)

• Administrative law review of Board actions. Because the Direction imposes mandatory duties on the Board as to how it must perform its investment function under the Act (s 5), a person with standing could in principle seek judicial review of a Board decision alleging failure to comply with a mandatory provision of the Direction or the Act. The Direction itself does not create private causes of action, but Board decisions remain subject to review for jurisdictional error, failure to take into account mandatory considerations or misapplication of a statutory instrument. The text expressly leaves discretion to the Board in areas such as acceptable risk levels and concessionality for certain Funds (ss 8, 15, 16), making judicial review fact-sensitive and contingent on whether a decision is so irrational or outside the Direction that it amounts to jurisdictional error.
• Statutory interpretation disputes. The Direction contains qualitative and sometimes open-ended terms, for example "must not act in a way that is likely to cause damage to the Australian Government’s reputation" (s 13), and "acceptable but not excessive level of risk" (ss 8, 15, 16). Disputes about the meaning of these phrases could in theory be litigated if relevant decisions cause justiciable legal effects.
• Contractual and procurement disputes. Projects financed through the CEFC will generate commercial contracts. If those contracts contain disputes, litigation will proceed under general contract and equity law. The Direction’s procurement overlays (AIP Plans, Buy Australian consultation) may also generate disputes if procurement conditions are not correctly applied, though the Direction itself defers to existing government procurement policy rather than creating new statutory procurement obligations (s 11).
• Financial and consumer law litigation. Household Energy Upgrades Fund lending will operate in areas subject to consumer credit and financial services laws. Non-compliance with those laws would be litigable under the relevant statutes irrespective of the Direction’s internal constraints like the 10-year repayment cap (s 16(4)(c)).

Limitations on parliamentary scrutiny may affect political rather than judicial remedies

Several provisions contain drafting features, discretionary powers or measurement rules that create practical pitfalls for implementation, oversight and for third parties engaging with the CEFC.

• Measurement of concessionality. Concessionality is to be measured as the present value difference between loans at market rates and loans at concessionary rates, taken as the mark-to-market valuation of loans made in the financial year (s 9 note). The Direction requires consistency in measuring concessionality but does not prescribe discounting methodology, market rate definition, or treatment of multi-instrument deals. Different accounting or valuation approaches will materially affect reported concessionality and whether the $300 million cap in s 9 is triggered for the General Portfolio.
• Benchmarks measured before operating expenses and concession charges. Benchmarks for portfolio returns are explicitly to be measured before operating expenses and concession charges, such as impairments or mark-to-market adjustments resulting from any concessional component (ss 7, 15, 16). This measurement choice can make a portfolio look closer to target on a headline basis while concealing net costs after expenses and concessions. Boards and auditors need clarity on which line items are excluded from benchmark calculations.
• Retroactive classification and accounting flexibility. Section 17(2) permits the Board to treat investments made from amounts available before funding was credited as investments in respect of a Sub-Fund and to apply the Sub-Fund’s benchmark and risk arrangements to them. That gives the Board substantial discretion to allocate past investments to Sub-Fund accounting treatments, which affects both internal performance reporting and public disclosures. This flexibility creates potential governance and transparency issues if used opportunistically.
• Broad discretion on concessionality for two large Funds. The Rewiring Fund ($19 billion) and the Household Energy Upgrades Fund ($1 billion) are specifically permitted to receive unconstrained concessionality at the Board’s discretion (ss 15, 16(4)). Those two Funds thus sit outside the $300 million annual concessionality cap (s 9). The scale of Rewiring in particular concentrates public capital and may raise questions about state exposure and fiscal risk; the Direction leaves the level of concessionality to Board judgment without prescriptive limits.
• Guarantee cap tied to Account credits and exclusion for Rewiring. Guarantees (other than Rewiring) must not exceed 5 per cent of the total amount credited to the Account under section 46 for purposes other than the Rewiring Fund (s 10(c)). That requires precise accounting of Account credits and careful tracking of the denominator, which may be administratively complex and could constrain use of guarantees where they might be economically justified.

This section maps concrete compliance steps the CEFC Board and its executive should take to satisfy the Direction’s mandatory requirements and manage discretionary areas prudently. Where the Direction uses "should" or "is encouraged", the steps are design choices to reduce implementation risk.

Governance and policy

• Formalise Board-level policy documents. Develop and publish corporate governance policies, an ESG policy and First Nations investment screening procedures on the Corporation’s website as required by s 19. Ensure policies explicitly map to direction provisions (AIP application, Buy Australian consultation, social licence, local employment). Assign clear ownership of these policies within executive functions.
• Document the Board’s medium to long term outlook. Prepare and publish an investment strategy that demonstrates a medium to long term outlook in line with s 12, showing how the General Portfolio and each Sub-Fund will meet benchmarks and risk tolerances.

Sub-Fund design and operationalisation

• Sub-Fund envelopes and accounting. Implement Sub-Fund accounting as required by s 17. Maintain ledgers that track investments by Sub-Fund, the amounts benefiting from each Sub-Fund’s benchmark/risk settings, and clearly record any retrospective treatment of pre-funded investments under s 17(2), including rationale and ministerial advice where appropriate.
• Rewiring Fund procedures. For the $19 billion Rewiring Fund (s 15), create a dedicated investment process that incorporates advice channels from the Rewiring Office, AEMO and the Australian Energy Infrastructure Commissioner. Document how projects align with Integrated System Plan priorities or other Board-identified transmission priorities and record engagement with State and Territory Ministers where relevant.
• Specialised Fund eligibilities. For each Specialised Investment Fund (s 16):
  • Clean Energy Innovation Fund: set application and due diligence processes that incorporate ARENA advice on recommendation, technical and commercial feasibility, and market competition.
  • Advancing Hydrogen Fund: set prioritisation criteria aligned with the National Hydrogen Strategy and procedures to record Department advice.
  • Powering Australia Technology Fund: establish deal origination and co-investment channels aimed to meet the $500 million private leverage aim, with regular tracking reported to the Board.
  • Household Energy Upgrades Fund: draft eligibility criteria excluding "high value properties" (preferably with a clear, published numerical definition), design lending product terms no longer than 10 years from Fund commencement for any expected repayment, and set procedures for targeting lower energy performance housing stock.