Carbon Markets Emissions Reduction Fund

IN FOCUS: What could be the impact of the variable auction rule at ERF II

The Emissions Reduction Fund (ERF) Auction Guidelines recently released by the Clean Energy Regulator contained a new rule guiding how much abatement the CER may buy at the second ERF auction, introducing a variable clearing rule enabling it to buy between 50 and 100 per cent of all abatement bid into the market below the benchmark price. This is updated from its former obligation to purchase 80 per cent of all abatement bid below the benchmark price ceiling, as specified by the government’s initial policy framework.

While the Regulator’s new clearing rule is designed to encourage bidders to bid low, analysis suggests that the rules are likely to have minimal impact. While the rules will lower market transparency, given the existing opaque nature of the market, we do not believe the rules will encourage low bids from market proponents.

Instead, we anticipate that market dynamics will continue to be the key driver of bid prices, driven by competition, supply volumes and bid-prices.

In this In Focus, we take a closer look at the operation of the Regulator’s new variable clearing threshold and step through scenarios for its implementation under high and low competition ERF auction bid-stacks.

Restricted Access

This is a subscriber report. Please login to access this content.

Become a Carbon Insider today

Unlock our latest analysis, briefings and price information with our new Carbon Insider service.

Click below to see our plans.

Sign up for regular insights

LATEST UPDATES

  • Carbon Markets

    How do international policy developments impact the Australian carbon market?

    Share on FacebookShare on Google+Tweet about this on TwitterShare on LinkedInEmail this to someone

    While Australia’s climate policy malaise continues, international climate activity continues to build, with the EU […]

    Research Insights | July 23rd, 2021
  • Carbon Markets

    ALERT: Australian CO2 spot price hits $21.50, forward activity picks up

    Share on FacebookShare on Google+Tweet about this on TwitterShare on LinkedInEmail this to someone

    The spot price for Australian carbon credit units (ACCUs) continues to break new ground, reaching […]

    Research Insights | July 21st, 2021
  • Carbon Markets

    13th ERF Auction date announced, but expectations remain muted

    Share on FacebookShare on Google+Tweet about this on TwitterShare on LinkedInEmail this to someone

    The Clean Energy Regulator has announced that the 13th Emissions Reduction Fund (ERF) Auction will […]

    Research Insights | July 19th, 2021
  • Carbon Markets

    PRICE REPORT: Australian Carbon Offset Market Report: July 5 – 16, 2021

    Share on FacebookShare on Google+Tweet about this on TwitterShare on LinkedInEmail this to someone

    Dear Subscriber, Our latest Australian Carbon Offset Market Report has now been published. The Australian […]

    Research Insights | July 19th, 2021
  • Carbon Markets

    RECORDING: Could the Australian carbon offset price eventually “do a Europe”?

    Share on FacebookShare on Google+Tweet about this on TwitterShare on LinkedInEmail this to someone

    One of the key drivers of record EUA prices is the increasing role of investors, […]

    Research Insights, Webinars | July 13th, 2021
  • Share on FacebookShare on Google+Tweet about this on TwitterShare on LinkedInEmail this to someone