Average price likely to fall at third ERF auction, yet upside potential remains

RepuTex today released its outlook for the third Emissions Reduction Fund (ERF) auction, presenting our ‘reference case’ estimates in line with our ERF Auction Simulation Tool.

290 projects are currently registered for the third ERF auction, with the land-sector continuing to dominate the make-up of the market, accounting for three out of four projects, led by significant Environmental Plantings and Regeneration project types. While industry makes up only a small number of projects – just one quarter of all projects registered to participate – potential remains for industrial projects to secure a larger number of ACCU contracts, with very low-cost projects such as commercial buildings, and commercial & public lighting able to bid at prices below land-use sector projects.

Subsequently, industrial projects may be more successful at the third ERF auction, however the land-sector once more appears set to contract the majority of of all ACCUs.

Increased competition from industry, the impact of the variable volume threshold and budget scarcity, is likely to place downward pressure on contract prices, with the willingness of some industrial firms and larger land aggregators to bid lower in this auction potentially resulting in the average price of ACCU contracts being dragged down.

While the average price of