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Feasibility and project planning

06 June 2016
ERF

Contents

Potential revenue from projects under the Emissions Reduction Fund can vary depending on a range of factors. Considerations include decisions on who will own and manage the project, the type, scale and location of a project, investments costs, the crediting strategy (how frequently you want to and are able to receive credits), audit and reporting costs and the potential of the project to generate additional benefits and revenue streams.

Some things to consider when assessing the feasibility of a project might include:

  • whether there is a method that applies to your project idea
  • assessing relevant technology options, quality assurance requirements and warranties
  • finding out what state and territory regulatory approvals are required to undertake the project
  • determining what systems you will use to monitor the project and collect, collate and record all relevant data
  • expected costs to implement and maintain the project over time
  • budget for audit costs and other requirements
  • deciding what equipment to install, or species to plant
  • availability of suitably qualified or experienced personnel
  • anticipated abatement, and certainty of the estimates
  • whether the project can realise other benefits such as the sale of electricity and renewable energy certificates
  • expected risks associated with the project's implementation.

The Clean Energy Regulator recommends that you seek independent technical, legal, audit and/or financial advice regarding your circumstances and requirements.​

The information below has been developed to assist potential participants to identify some issues that should be considered when deciding whether the Emissions Reduction Fund is right for you.

Financial feasibility

A financial feasibility analysis of a proposed project will help you to get a sense of the return on investment you can expect.

Emissions Reduction Fund projects will typically require an initial investment as well as ongoing capital expenditure. Examples of upfront costs in implementing the project may include purchasing technology, preparing land for planting and engaging service providers (for example, legal advice, engineering services, carbon accounting). You may find that your project could be more viable if you work with a service provider or aggregator.

In determining whether the Emissions Reduction Fund is right for you, you should take into consideration all of the costs associated with operating a project to determine a value per tonne of abatement achieved. These costs will inform the price you bid into an auction or sell into the voluntary market.

Organisational capability

You should consider various management and governance arrangements available to see whether your project may be more viable under one approach or another including, for example, work health and safety obligations.

Method considerations

Projects established under the Emissions Reduction Fund need to use methods approved by the government. These contain the detailed rules for implementing and monitoring specific abatement activities and generating carbon credits.

More information about methods is available from the Department of the Environment.

Technological requirements

You will need to consider whether you need specific technology or equipment for effective implementation and ongoing management of your project. Keep in mind that different methodologies may require you to use a specific technology to be eligible to earn credits. Such technologies may include methane gas capture equipment, metering equipment or biomass surveys.

Commonwealth, state and territory regulatory requirements

Emissions Reduction Fund projects will not be registered to participate in the Emissions Reduction Fund if they are required to be carried out by Commonwealth, state, or territory law, unless a method specifies otherwise. For example, some tree planting and landfill gas capture is mandatory and so cannot be credited under the Fund.

You will need to consider the work health and safety laws associated with your project as part of your preparation and implementation​. Contact the relevant authority in your state or territory before you undertake your project.

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