ERF contracts underwrite the future of the domestic carbon offset industry

bradkerin Media Release

With the 2nd Auction results announced, the Clean Energy Regulator has awarded 129 contracts worth $557 million at an average price of $12.25. These results will add an additional 45 million tonnes of abatement to Australia’s emissions reduction trajectory.

The full register of projects can be found at the Clean Energy Regulator website, here.

“Australia has a world class domestic carbon abatement industry, and contracts awarded under the second Emissions Reduction Fund auction will help to secure the future of this important, maturing sector,” says Carbon Market Institute chief executive officer Peter Castellas.

“We need a viable, domestic carbon abatement sector to contribute to meeting ever increasing national emissions reduction challenges. The ERF contracts will ensure certainty for jobs and investment in carbon abatement activities that were established under the Carbon Farming Initiative and expanded under the ERF,” says Castellas.

“Innovative businesses, with great people, doing good things for the economy and the environment, have benefitted from the ERF auction,” says Castellas.

“Now with over $1.2 billion dollars in contracts and 92.7 million tonnes of abatement to be delivered, the ERF will ensure we maintain and grow the competency and capacity of the domestic carbon abatement industry,” says Castellas.

“Following the repeal of the Carbon tax the carbon market industry was looking pretty bleak. However with the passing of the ERF legislation and the awarding of contracts under the first two ERF auctions, Australian companies have been incentivised to invest in emissions reductions, offer vital carbon abatement services and build their businesses,” says Castellas.

“Member companies of the Carbon Market Institute, who have weathered a very uncertain period and invested in genuine carbon abatement activities over a long time, have won substantial contracts. In total, CMI member companies have secured contracts worth over nearly $700 million in the first two auctions.” says Castellas.

“The ERF has been critical to ensure the continuity of land based carbon abatement, which have dominated the portfolio of ERF contracts. Solid contracts with significant sums will definitely encourage other project proponents under the new ERF abatement methods to consider participating in the third and subsequent auctions.”  Castellas suggests.

“As the Government frames our national policy approach to meet international targets to be negotiated in Paris, the crediting and purchasing arrangements under the ERF are an important component of a policy suite of measures needed to achieve Australia’s emissions reduction target,” says Castellas.

“The ERF can do some of the important heavy lifting of emissions reductions in the next few years, however, limiting emissions growth in the period 2020-2030 also needs to be considered as a central part of the policy framework and, as such, the safeguard mechanism will assume great importance,” he says.

“The abatement secured under the ERF funding provides some market certainty. It will be critical that the government’s safeguard mechanism also provides certainty to 2020 and beyond,” says Castellas

“It is important that the safeguard mechanism makes an effective contribution to the emissions reduction commitments made in Paris. The generous baselines proposed for the initial period for companies covered under the safeguard mechanism will need to be tightened over time. It is critical that in the review set for 2017, the conditions and criteria for how baselines will be adjusted are determined,” says Castellas.

“Ultimately we need to shift from a predominantly public funded approach to emissions reduction to the private sector and elevate the role of a true market-based approach in Australia’s future policy mix,” says Castellas.

The full register of projects can be found here.

View full media release here.