Finance Minister Mathias Cormann, speaking to The Australian on Monday, stated that the budget allocation for the government’s Emissions Reduction Fund (ERF) would not be extended beyond the initial $2.55 billion commitment made in 2014-15, of which $1.2bn has been contracted over two auctions.
The office for the Environment Minister has confirmed that the government will not top-up funding for the ERF at the 2016-17 Federal Budget on May 10, with a spokesperson for Environment Minister Greg Hunt telling Fairfax that a decision on further allocations for ERF II will be made “over the next 18 months”.
While the government is “relaxed” about the future availability of funds, the lack of transparency over forthcoming allocations is likely to cast doubt over the government’s long-term support of the ERF, while increasing concern that Australia will again enter a period of climate policy limbo.
As we noted in our December Analyst Update, with $1.3 billion remaining in the first tranche of the government’s ERF, we continue to assume that auctions three (April 27-28) and four (final quarter of CY16) will be the final rounds of the ERF, with the final auction likely to take place in November 2016.
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