The Clean Energy Regulator announced today the purchase of over 7 million tonnes of carbon abatement for an average price of $15.74 per tonne at the
11th Emissions Reduction Fund (ERF) Auction, held on 9 and 10 September 2020.
David Parker, Chair of the Clean Energy Regulator, said Auction 11 marked a welcome return to auction results that were similar to those held a few years ago with a higher number of new projects and a higher volume of carbon abatement.
“This is a great result particularly at a time when the economic impacts of COVID-19 are still very much with us demonstrating the resilience and vibrancy of the carbon market,” Mr Parker said.
A total of 35 contracts were awarded, supporting investment in carbon abatement projects across the economy. These contracts help businesses secure additional income streams while regenerating native vegetation, enhancing soil carbon, improving energy efficiency and reducing emissions from landfill gas.
The auction was highly competitive and reflects the significant uptick in new projects since the last auction with 64 new projects signing up for the ERF. The market also responded positively to some recent innovations for the auction—the optional delivery contracts are now mainstream.
The competitive nature of the auction was also reflected in the average price per tonne of abatement (APTA) for the winning contracts. Mr Parker acknowledged the average price had come off slightly since Auction 10 but noted the price is still considerably higher than previous auctions.
“I have a legal obligation to purchase the most abatement for the lowest price. The significant volume of abatement under new contracts will be a real boost to the market, with more than 90 per cent of the $110 million committed funds flowing to regional and rural areas.”
The optional delivery contract piloted at auction 10 was offered again at this auction, with 29 optional delivery contracts secured out of a total of 35 contracts awarded.
Other flexible options available at Auction 11 include immediate delivery contracts and flexibility to bid for both optional and fixed delivery contracts.
Through the ERF, the Government has committed over $2 billion to projects that reduce emissions in rural and regional areas with more funding made available this year from the $2 billion Climate Solutions Fund.
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