MARKET UPDATE: Re-thinking the Direct Action Plan

A new study from market analysts, RepuTex, indicates that Australia’s 5 per cent emissions reduction target may be within reach for the government’s Direct Action Plan, with amendments proposed by independent Senator Nick Xenophon to potentially have a considerable impact on the scheme’s effectiveness.

We forecast cumulative abatement from the ERF may grow from 67 Mt CO2-e to 183 Mt CO2-e by 2020 – an increase of more than 2.5 times base case levels – should proposed amendments be incorporated into the scheme, such as contract periods aligned with the target timeframe and the design of a more effective reverse auction market mechanism.

Maximising the abatement potential of the ERF would lead to a smaller shortfall of 272 Mt against Australia’s abatement challenge (down from 354 Mt). This may be addressed via the implementation of an effective emissions safeguard scheme in July 2015, which is forecast to deliver between 196-316 Mt of additional greenhouse gas emissions abatement.

Following the repeal of the CPM and the likelihood that Clive Palmer’s ETS is unlikely to be implemented in time to play a major role in meeting Australia’s 5 per cent emissions reduction target, the improved performance of the government’s scheme may prompt a re-thinking of the role of the Direct Action Plan as a short-term gateway to a longer term climate solution.

Restricted Access

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

Not a subscriber?

To learn more about our research services for the Australian energy and emissions markets, click the button below, or email our subscriptions team.

Sign up for regular insights

LATEST UPDATES

  • WEBINAR: Where to for Australian carbon offset prices under current policy?

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

    As the federal government considers changes to its climate policy framework, including new Safeguard Mechanism […]

    Research Insights | July 13th, 2020
  • CO2 offset price of $30-100/t for Australia to reach and maintain net-zero emissions

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

    As the federal government considers major changes to its climate policy framework, including crediting Safeguard […]

    Research Insights | June 23rd, 2020
  • OUTLOOK: Long-term carbon price, supply and demand outlook (Q4 FY19-20)

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

    As the federal government considers major changes to its climate policy framework, including crediting Safeguard […]

    Research Insights | June 23rd, 2020
  • The King Review: Government steps toward a baseline and credit scheme

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

    The federal government today released the findings of its Expert Panel review (the King Review), […]

    Analyst Alerts, Research Insights | May 19th, 2020
  • UPDATE: Australia’s Expert Panel Climate Policy Review – What to Expect?

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

    2020 is shaping up as (another) key year for Australian climate policy, with the government’s […]

    Research Insights | May 13th, 2020
  • Share on FacebookShare on Google+Tweet about this on TwitterShare on LinkedInEmail this to someone
  • Quick Navigation

  • Electricity

    Learn more about our modelling and price outlooks for the NEM
  • Renewable Energy

    Learn more about our services for wind and solar developers
  • Carbon Market

    Learn more about our Australian carbon price and market analysis
  • Latest Insights

    View our latest articles, white papers, reports and publications