The Clean Energy Regulator today published its results for the first Emissions Reduction Fund auction, with the Regulator contracting more than 47 million tonnes of abatement at an average abatement price of $13.95. 36 per cent of all registered proponents were successful at the first auction.
Below we discuss the key pricing implications for the market.
The moderate success rate suggests that high volume bidders took a “cash-in” approach to the first auction, preferring to obtain the certainty of long-term contracts, over maximising the value of their abatement. In parallel, the large volume contracted at moderate prices also suggests a price mismatch between the market and the Regulator, with proponents understating the Regulator’s benchmark price.
