Contracts awarded under the first Emissions Reduction Fund auction means certainty for continued investment in carbon abatement activities, according to Australia’s peak body for carbon market participants.
“Following the repeal of the carbon tax, Australia’s domestic carbon offset market – the Carbon Farming Initiative – was set to stall completely with no purchaser for Australian Carbon Credit Units,” says Carbon Market Institute chief executive officer Peter Castellas.
“However with the transition of these projects to the ERF and awarding of contracts under the first ERF auction, Australian companies that offer vital carbon abatement technologies and services can continue to build their businesses,” he continues.
“We need to continue to build the competency and capacity of the domestic carbon abatement industry to meet ever increasing national emissions reduction challenges,” says Castellas.
“The administration role of the Clean Energy Regulator has been critical to preserve the well-designed, well-governed domestic carbon offset scheme. The market participants have great confidence in the Regulator,” he says.
“Solid contracts with significant sums will definitely encourage other project proponents under new ERF abatement methods to consider participating in the second and subsequent auctions,” Castellas suggests.
“The crediting and purchasing arrangements under the ERF are, however, only one important component of a suite of policy measures needed to achieve Australia’s emissions reduction target,” says Castellas.
“The abatement secured under the ERF funding provides some market certainty. It is now critical that the third component of the government’s ERF, the proposed safeguard mechanism, also provides certainty,” says Castellas.
“With the funds allocated, the ERF can do some of the important heavy lifting of emissions reductions in the next few years but limiting emissions growth in the period 2020-2030 also needs to be considered as a central part of the initial policy framework and, as such, the final design of safeguard mechanism will assume great importance,” he says.
“Through consultation, the government has the opportunity to set the rules around the safeguard mechanism so it is designed and implemented as an enduring measure that provides long-term policy certainty, drives demand for domestic abatement and is a market-based approach to limit emissions growth in the economy and meet emissions reduction targets,” says Castellas.
“Now that the ERF is operational, it’s time we revisited a mature bipartisan debate on the consideration of a role of a comprehensive market-based approach to emissions reduction in Australia’s climate policy mix,” says Castellas.
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