The fifth Emissions Reduction Fund (ERF) auction will take place on April 5–6, with $440 million in remaining in the government’s initial funding tranche. Just 17 new projects have been registered since the last auction, down from 28 ahead of ERF IV, and well below the average project registration rate (90) ahead of auctions 1-3.
While the Clean Energy Regulator (Regulator) notes that the fifth ERF auction is expected to be “smaller and more representative of business as usual”, we believe that low levels of participation are reflective of negative market sentiment, with the low average price of ACCUs, and the commercial and administrative complexity of the scheme, creating a significant barrier to participation for many firms, particularly high emitting companies.
In this context, even if funding for the ERF is topped up at the forthcoming policy review, we believe that we are unlikely to see the ERF abatement profile – concentrated in the land sector – align with Australia’s emissions growth profile, which is driven by the industrial sectors. While additional funding may enable ACCU prices to rise, the bigger issue for policymakers therefore remains the failure of the ERF to achieve Australia’s absolute 2020 emissions reduction target, with emissions projected
Unlock our award-winning research insights
Request access to learn more about our research services, or click here to register for free access to our articles and price information.