Emissions Reduction Fund

The agency continued the successful implementation and delivery of the Emissions Reduction Fund in 2015–16, including undertaking its second and third auctions in November 2015 and April 2016.

The total value of contracts under the Emissions Reduction Fund is now $1.733 billion out of the Government's total commitment of $2.546 billion, representing 143 million tonnes of abatement at an average price of $12.10 per tonne of abatement.

Carbon pricing mechanism

The carbon pricing mechanism legislation was repealed by Parliament on 17 July 2014, effective at 1 July 2014. Subsequent to the repeal there were a number of residual items accounted for during 2015–16, including the following significant items:

• $1.896 million in additional expenses relating to the refund of surplus surrender for one entity and the remission of shortfall charges for two entities, and
• $0.723 million in additional revenue relating to the re-submission of emissions numbers by two entities and a non-relinquishment order for one entity.

As a result of the closure of the scheme, two entities have made a request to the Finance Minister for an act of grace payment totalling $0.552 million. These requests remained under consideration as at 30 June 2016 and have been disclosed as contingent liabilities in the notes to the statements.

Renewable Energy Target

Seven entities incurred a shortfall charge under the Large-scale Renewable Energy Target scheme for the 2015 assessment year, resulting in the recognition of $4.450 million in revenue. A contingent liability has also been disclosed for this amount in the financial statements. This reflects the ability for entities to obtain a refund if they surrender certificates during the allowable refund period and have met their liability in the previous year. The allowable refund period ends three years after the shortfall charge is paid.

Our agency operates a Small-scale Technology Certificate Clearing House. This facilitates the purchase and sale of small-scale technology certificates between liable entities (usually electricity retailers) and individuals or agents installing small-scale solar, wind and hydro systems, at a fixed price of $44.

During 2015–16 the clearing house had gross receipts of $539.306 million and gross payments of $454.273 million, with a closing cash balance of $85.386 million. These amounts are recognised as an asset and corresponding liability in the financial statements to reflect the agency's role in facilitating transactions between third parties.

The significant volume of transactions in 2015–16 is the result of the clearing house being in deficit for most of the financial year. The deficit arises as there were more purchasers than sellers of certificates. In this situation the agency creates certificates to sell to liable entities to allow them to meet their quarterly surrender obligations.