Emissions Reduction Fund

TALKING POINTS: Spotting the Price After the First ERF auction

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The Clean Energy Regulator has maintained a laissez-faire approach to the Emissions Reduction Fund by limiting price transparency as it seeks to foster a ‘competitive’ market – albeit by undercutting market sentiment.

In keeping with its ‘less is more’ approach, the Regulator is likely to disclose only the average price of all bids after the first ERF auction, with this price to be keenly observed by the market as the only available public abatement price.

While the publishing of the average price of abatement will impact market sentiment, in practice, it will be of little help to business as a price signal to apply to abatement decisions, as it will not reflect the market price of emissions reductions being paid by the Clean Energy Regulator.

Nor will the price signal reflect the value of ACCUs – and in this way, should not be mistaken for a traditional carbon spot, or clearing, price.

In this Talking Points, we examine how proponents may identity a robust price signal following auction one, and analyse the factors that will drive the clearing price as firms seek to assess the current market value of ACCUs after the first ERF auction.

Please view our Talking Points briefing slides below

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