Emissions Reduction Fund auction delayed to April, no benchmark set

The date for the first auction of the Abbott government’s “spearhead” climate policy, its Emissions Reduction Fund, has been revealed as Wednesday, April 15 – four weeks later than expected.

The new date – the auction was previously expected to take place in March – gives participants an extra month to prepare a competitive bid for funding for their proposed carbon abatement methods.

“This first auction is an early opportunity for participants who have a registered project to secure future revenue” said Chloe Munro, Chair of the Clean Energy Regulator.

“We expect a good field of bidders, mainly from projects that have transitioned from the Carbon Farming Initiative. Competition will increase in future auctions as additional projects come forward, based on the new Emissions Reduction Fund methods.”

The Clean Energy Regulator has also decided not to publish the benchmark price – although discretion to do so was included in the legislation – in case participation in the first auction was inhibited by unrealistic expectations.

“Disclosing the benchmark price would not promote competition,” Munro argued, adding that many projects had already successfully delivered carbon abatement and were in a good position to bid.

“We will accept the lowest price bids up to 80 per cent of the volume offered below the benchmark price. This cut-off provides a strong incentive to bid competitively, based on the lowest price at which it is worth their while to operate their project,” she said.

As industry analysts RepuTex have noted, only three new emissions reduction methods have been formally declared, to date, by federal environment minister Greg Hunt – commercial buildings, alternative waste treatment and landfill gas – making the commercial buildings method the only non-Carbon Farming Initiative method available to industry.

Fourteen other draft methods – including aggregated small energy users, beef cattle management, coal mining and carbon sequestration – are closed for comment, pending final determination, which is now expected to take place before the April auction.

In a statement to media in November, Hunt said the pipeline of projects was greater than his department had expected.

“We’re developing methodologies which will be released shortly. There are 26 out there, another more than 20 under development for things such as aggregated household energy efficiency, for cleaning up power stations, for cleaning up waste coal mine gas, for cleaning up emissions from waste water and sewerage farms.”

RepuTex also notes that the new date for the first ERF auction suggests just one auction is likely to be held in FY14-15, down from the two that were initially expected by the market.