Seniors’ Green Bonds Scheme

Investing in large-scale renewable energy projects can help address climate change concerns, while also boosting older Australians' retirement income. Here's how it can be done.

Older Australians' views on climate change

Australia’s future energy needs, require large-scale renewable energy production and storage.

This infrastructure is slowly coming to life with many projects, like Snowy Hydro 2.0, being built over the next few years. Several of these are being financed by government through the Australian Renewable Energy Agency (ARENA) and the Clean Energy Finance Corporation (CEFC) and require significant investment to bring them to life.

The role of older Australians

A recent survey of older Australians undertaken by National Seniors shows that 85% believe that climate change is occurring, and three quarters of them want action on climate change – even if it comes at a cost.

The research also found that 60% of older Australians have invested in one or more type of renewable energy (e.g. rooftop solar, solar hot-water renewable projects etc.).

Interestingly, a significant majority have chosen to invest in rooftop solar - eight times more than the number of older Australian investing directly in renewable energy projects.

Investing in renewable energy isn’t just about the existential threat of climate change. Older Australians also need investments to help them meet their day-to-day living costs.

The need to sustain retirement income, combined with the desire to act on climate change, provides a real opportunity to supercharge the renewable energy sector in Australia.

Green Bond Scheme

Encouraging older Australians to invest in large-scale renewable energy infrastructure could help Australia meet its climate change targets, while also providing stable investment returns for retirees.

As a result, National Seniors is proposing that the Federal Government create a Seniors' Green Bond Scheme to give older Australians the opportunity to safely invest in renewable energy production and storage capacity.

How it would work:

  • The Federal Government would issue ‘green bonds’ to raise money for existing and future commitments for renewable energy generation and storage projects.
  • Unlike existing government bonds which require a broker, green bonds would be purchased over the counter via Australia Post or with other suitable financial institutions such as a bank or building society.
  • The purchase of the bonds would be limited to Australian citizens over the Age Pension eligibility age.
  • Bonds would be sold in lots of $5,000 to allow those with limited savings the opportunity to participate in the scheme.
  • Eligible participants would be able to purchase bonds up to a maximum value (approx. $50,000 per person).
  • Green bonds would be guaranteed by the government as per the government guarantee on bank deposits.
  • A return on the bond would be provided commensurate with existing government bond rates.
  • A range of maturity options could be offered to provide flexibility and liquidity (e.g. to pay for unexpected health costs).
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Pension means test exemption

Key benefits

  • Exempting green bonds from means testing will put investment in large-scale renewable energy production and storage projects on par with rooftop solar.
  • Investment in large-scale renewable energy storage will help stabilise the electricity network, keeping electricity prices low.
  • Investment in large-scale renewable energy projects, such a Snowy Hydro 2.0, will help Australia reduce its carbon emissions and address the challenges posed by climate change.
  • Older Australians will have access to another safe and simple option to invest some of their savings, one that delivers meaningful environmental and economic benefit.

Critical to the success of ‘green bonds’ is an exemption from the pension means test. This would make it more attractive for older Australians to invest in renewable energy projects.

Investment in large-scale renewable projects do not benefit from an exemption from the pension means test as is the case with rooftop solar, which is exempted if it is part of the family home.

Given that rooftop solar attracts both subsidies and a means test exemption, it is no wonder older Australians have invested in roof-top solar eight times more than in renewable energy projects. It demonstrates the potential value of extending the means test exemption to large-scale renewable energy production and storage projects.

There are already several situations where assets outside the family home are exempted from the means test, for example, when someone has purchased a pre-paid funeral, burial plot or has a refundable accommodation deposit for aged care.

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