About the Emissions Reduction Fund

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12 August 2022

ERF

Independent review of the integrity of Australian Carbon Credit Units

The Clean Energy Regulator welcomes the Minister for Climate Change and Energy, the Hon Chris Bowen MP's, announcement on 1 July 2022 of an independent review of the integrity of Australian Carbon Credit Units. The panel will be led by former Chief Scientist Professor Ian Chubb and three other independent experts. The Terms of Reference are available here. More information will be available on the Department of Climate Change, Energy, the Environment and Water's website.

The Emissions Reduction Fund offers landholders, communities and businesses the opportunity to run projects in Australia that avoid the release of greenhouse gas emissions or remove and sequester carbon from the atmosphere. It is enacted through the Carbon Credits (Carbon Farming Initiative) Act 2011 and the Carbon Credits (Carbon Farming Initiative) Rule 2015.

A number of activities are eligible under the scheme and participants can earn Australian carbon credit units (ACCUs). Each ACCU represents one tonne of carbon dioxide equivalent (tCO₂-e) emissions stored or avoided by a project. ACCUs can be sold to generate income, either to the Australian Government through a carbon abatement contract, or to companies and other private buyers in the secondary market.

To ensure these emissions reductions are not displaced significantly by a rise in emissions elsewhere in the economy, the Emissions Reduction Fund also includes a safeguard mechanism, which requires Australia's largest greenhouse gas emitters to keep their net emissions below an emissions limit (a baseline). The government will gradually reduce emissions limits under the Safeguard Mechanism to help Australia reach net zero emissions by 2050.

The Clean Energy Regulator is in the process of developing an Australian Carbon Exchange that will make the trading of ACCUs simpler, supporting rapidly increasing demand from the corporate sector. It will help foster the growth in Australia’s vibrant carbon markets, where ACCUs credited from approved Emissions Reduction Fund projects can be traded among individuals and businesses.