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

To continue reading this post, register below.

Continue reading this article

To continue reading this free article, simply click “register now” to access our free insights & events.

Access is free, and instant! Sign up below.

Register Now

Sign up to receive our research alerts

Create a free account to access our free insights and event invitations, and receive our research alerts via email. Access is complimentary, and instant. Sign up below:

Sign up for regular insights

LATEST UPDATES

  • ALERT: Australian carbon offset price hits 4-year high, more price increases ahead?

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

    The price of Australian Carbon Credit Units (ACCUs) has continued its recent climb, reaching a […]

    Analyst Alerts, Research Insights | November 18th, 2019
  • INSIGHTS: How do weather patterns impact wind REZ correlations?

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

    As the Australian renewable energy market reaches a turning point in its development cycle, the […]

    Research Insights | November 6th, 2019
  • OUTLOOK: Carbon windfall gains …or losses? Long-term carbon price outlook

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

    The price of Australian Carbon Credit Units (ACCUs) has rebounded to a 5-month high of […]

    Research Insights | October 31st, 2019
  • UPDATE: Could LGCs deliver least cost external abatement for state policy design?

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

    As states continue to work with industry towards achieving net zero GHG emissions targets, policymakers […]

  • WHITE PAPER: Modelling wind resource variability and spot market value in the NEM

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

    With the rapid expansion of wind energy production in Australia, the accurate assessment of wind […]

    Insights, Research Insights | July 31st, 2019
  • Share on FacebookShare on Google+Tweet about this on TwitterShare on LinkedInEmail this to someone