Carbon Markets Emissions Reduction Fund

UPDATE: Behind the numbers – a closer look at ERF auction II

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The Clean Energy Regulator yesterday published its results for the second Emissions Reduction Fund (ERF) auction, with the Regulator contracting 45,451,010 million tonnes (Mt) of abatement at an average price of $12.25.

Thirty-four per cent of all registered proponents were successful at the second auction. Of the total 399 projects currently registered to participate in the ERF, 131 projects were successful in securing contracts (32 per cent) leaving 268 projects registered which did not participate, missed the cut-off date or failed to bid within the Regulator’s contracting range.

Below we discuss the key implications for the market.

The Results of the Second ERF Auction

  • The amount of abatement contracted was consistent with the previous auction, yet slightly smaller than market expectations. As we outlined in our September ERF Outlook, given the much higher level of registered projects, auction two had potential to be much larger than the first auction, despite expectations that the average abatement price would be lower as a result of increased competition.
  • While only one in three projects were successful, results indicate that larger projects and more sophisticated bidders dominated, with ‘winning bidders’ 
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