The ninth Emissions Reduction Fund auction marks an important milestone as the carbon market gears up to the new $2 billion Climate Solutions Fund.
The Climate Solutions Fund is part of the Government’s $3.5 billion Climate Solutions Package, which maps out how Australia will meet its 2030 Paris emissions reduction target. The Climate Solutions Fund will build on the success of the Emissions Reduction Fund.
Since the scheme began in 2015, the Clean Energy Regulator has registered more than 780 projects and purchased over 192 million tonnes of abatement, which is a significant achievement.
The Clean Energy Regulator held the ninth Emissions Reduction Fund auction on 24–25 July 2019, purchasing 59 thousand tonnes of carbon abatement for approximately $840,000.
This auction cycle ran over the election period, which constrained project development and auction registration.
Abatement was purchased at the average price of $14.17.
The Clean Energy Regulator rejected a number of high priced bids that were well above the current spot price of around $15 per tonne of abatement. These bids could not be seen as value for money in the current environment.
Some auction participants have registered projects that are expected to deliver more abatement than they bid at auction. Over time, much of this abatement may be made available to the private market or to future auctions.
“The Clean Energy Regulator’s focus is to run a substantial portfolio of genuine carbon abatement as we look ahead to the market responding to the significant new incentive offered by the Climate Solutions Fund,” Mr Parker said.
The Clean Energy Regulator generally holds two auctions a year to give scheme participants regular opportunities to register projects and reap the benefits of long term, secure government contracts. The July auction followed this pattern.
“We look forward to working closely with participants and industry to explore new and innovative ways to implement the Climate Solutions Fund.”
Interested participants do not need to wait for an auction and can
register a project at any time to reduce emissions and capitalise on the ongoing business opportunities available.
The $2 billion Climate Solutions Fund is part of the Government’s $3.5 billion Climate Solutions Package, which maps out how Australia will meet its 2030 Paris emissions reduction target.
The Climate Solutions Fund builds on the foundation of crediting and purchasing abatement that was established by the Emissions Reduction Fund.
The Climate Solutions Fund will partner with industry to reduce emissions, and increase productivity and efficiency across the economy, as well as continuing to give farmers, small businesses and indigenous communities the chance to improve the local environment and benefit from new revenue streams.
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