- First Australian Carbon Abatement Auction
- May 26, 2015
- Law Firm: Jones Day - Cleveland Office
- In April 2014, the Australian Federal government released a White Paper outlining the design of the Emissions Reduction Fund ("ERF"), which was covered in the Summer 2014 issue of the Climate Report. The ERF is the cornerstone of the Coalition government's Direct Action Plan, which replaced Australia's carbon price legislation (repealed with effect from July 1, 2014). The government has committed AUD 2.55 billion to the ERF, which the Clean Energy Regulator (the "Regulator") will use to purchase emissions reductions in reverse auctions from registered bidders.
The first of these carbon abatement auctions was held on April 15, 2015, with the Regulator buying approximately 47.3 million tons of emissions reductions at an average price of AUD 13.95 per ton. The total value of the contracts awarded was about AUD 660 million. Forty-three contractors made successful bids at the auction, securing funding for 144 projects running for between three and 10 years. Most of the projects involved either carbon sequestration methods, or landfill and alternative waste treatment methods. Notable initiatives include a project run by Kia Ora Piggery to capture biogas from pig manure (accounting for 120,000 tons) and a project by Olkola Aboriginal Corporation for controlled fire management across the savannas of Australia's fire-prone tropical north (accounting for 455,000 tons).
If the current price of carbon emissions holds, the ERF would acquire 180 million tons of emissions reductions by 2020. Australia's current emissions reduction target ("ERT") is 236 million tons by 2020, or 5 percent below 2000 levels.
In April 2015, the ambition of Australia's ERT was questioned in the United Nations by the United States, China, the European Union, Brazil, Switzerland, and Saudi Arabia. The Federal government has previously said that it would consider increasing the 2020 ERT to 15 percent or 20 percent depending on the extent of international action on climate change.