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Another strong Auction result for the Emissions Reduction Fund

23 April 2021

The Clean Energy Regulator announced today the purchase of 6.8 million tonnes of carbon abatement for an average price of $15.99 at the 12th Emissions Reduction Fund (ERF) Auction, held on 12 and 13 April 2021.

David Parker, Chair of the Clean Energy Regulator, said that it’s great to see such a strong result from Auction 12. New ERF contracts worth in excess of $108 million will support a wide range of projects across the economy.

While the Commonwealth is still the largest participant in the market, private demand is stepping up. The Clean Energy Regulator’s most recent quarterly carbon market update found demand from other market players surged in 2020 with 4.9 million Australian units and certificates surrendered, four times the volume of 2019.

“We know many registered projects chose not to bid this time. 117 ERF projects registered after the September 2020 auction and are expected to generate tens of millions of tonnes of emissions reductions. So there is strong supply coming online to meet existing contracts and growing private demand for Australian carbon credit units (ACCUs). This bodes well for the overall liquidity of the market”, Mr Parker said.

ACCU supply reached a record 16 million in 2020, up 8 % from 2019. Supply is expected to reach over 17 million ACCUs in 2021.

Auction 12 also saw new project types coming forward. Orica received a contract for 3.4 million ACCUs for a project to improve the emissions intensity of its operations under the facilities method. A project using aerial drone technology under the afforestation and reforestation method also received an ERF contract.

Mr Parker acknowledged the optional delivery contracts, which give participants price certainty with the flexibility to sell to other purchasers at a higher price, was a key factor in the success of Auction 12. Optional delivery contracts are now a standing feature of ERF auctions, representing 98 % of purchased abatement at Auction 12. Fixed delivery contracts are still being offered but make up a diminishing share of contracts (149, 000 tonnes at Auction 12).

Through the ERF, the Australian Government has committed over $2 billion to projects that reduce emissions in rural and regional areas with more funding made available from the $2 billion Climate Solutions Fund.

Media contact: cer-media@cleanenergyregulator.gov.au | (02) 6159 3448



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