Results have been announced for the 13th Emissions Reduction Fund (ERF) auction, held on Wednesday 13 and Thursday 14 October 2021.
The Clean Energy Regulator committed to purchase 6.8 million tonnes of abatement on behalf of the Commonwealth (in line with Auction 12), with an average price per tonne of $16.94. 24 contracts were awarded for 24 projects, for a total value of $115.9 million. The ERF has now contracted 209 million ACCUs, 73 million of which have been delivered.
All awarded contracts were for optional delivery, providing proponents with an option to sell abatement to the Commonwealth at the agreed price, or deliver ACCUs to private buyers. Based on the current high price environment for ACCUs in the spot market ($33.50/t) versus average ERF contract prices ($16-17/t), little abatement contracted for optional delivery is expected to ultimately be delivered to the Commonwealth. Contracting under the ERF has, however, helped to provide proponents with a bankable floor price to support new project development, while supporting longer-term supply to the private market.
ACCUs issued to uncontracted projects and surplus supply issued to contracted projects remain the dominant sources of supply to the spot market, with optional delivery contracts awarded since Auction 10 yet to scale up and be issued large volumes of credits.
Of the 24 projects contracted at the 13th ERF auction, 22 were Vegetation while 2 were Agriculture projects. AI Carbon secured 9 contracts (4.6 million ACCUs), predominantly via human induced regeneration (HIR) activities in WA and NSW. GreenCollar (via Terra Carbon) secured 6 contracts (766,000 ACCUs), largely via forest protection and regeneration methods. All awarded contracts were for 10-year delivery terms.
To learn more about the current state of play in the Australian carbon market, and our expectations for price development view our recent webinar “What is driving Australian carbon offset prices, and where to next?”
The RepuTex Team
Australian Energy Markets