RepuTex today released its submission to the government’s Emissions Reduction Fund (ERF) consultation, containing its initial forecasts for the supply of abatement and auction prices under Australia’s proposed Direct Action Plan from FY15-18.
Unlike a carbon price, which is the amount paid by companies for the right to pollute, an ‘abatement price’ under Direct Action refers to the price paid by the government to purchase one tonne of emissions abatement.
The Coalition had previously announced that businesses that bid into the ERF would likely be paid between A$10 and A$15 for each tonne of carbon they saved, until the expiry of the government’s $2.55 billion in funding over four years.
RepuTex’s abatement price forecast is the first independent analysis to be released on pricing expectations for the government’s proposed ‘baseline and penalty’ and reverse auction abatement scheme, analysing likely FY15 prices within the fund, and longer term price trajectories (FY15-18) based on projected supply of abatement projects into the fund, and the total amount of funding available from the government ($2.55 billion in funding over four years).
The submission is derived from RepuTex’s Market Update, “Abatement Supply Into the Emissions Reduction Fund: Medium-term Auction Price Forecast“. Please refer to the adjacent menu to access the full report.
- We forecast that the Australian government will pay an average of A$13 in FY15 for each tone of emissions abatement under its Direct Action Plan, which is within the range originally expected by the government, of A$10-15.
- Over the course of the scheme (FY15-18), we forecast an average abatement price of A$20 per tonne, with potential for prices to rise to $40 on average over the same period should more stringent emissions baselines be set.
