UPDATE: Riding the ACCU Wave at ERF Auction II

The Clean Energy Regulator recently announced that the second Emissions Reduction Fund auction (ERF II) will take place on November 4 and 5, in approximately 10 weeks. The ‘cut-off’ date for new projects to become registered is Friday, 18 September 2015, in around four weeks.

Applicants have registered 126 projects since the first ERF auction – with 87 projects registered in July alone – as land sector proponents sought to mitigate the risk of a possible ‘early’ auction (in line with the quarterly schedule initially proposed by the government). Including the overhang of projects that failed to win contracts at the first ERF auction, approximately 236 projects are currently registered for ERF II. RepuTex estimates 75 per cent of available Australian Carbon Credit Unit (ACCU) supply to be registered from the land-use sector, notably regeneration, savanna burning, and grazing systems projects.

While just seven projects are currently registered to industrial sector proponents, analysis indicates these projects are likely to supply considerable volumes of ACCUs into the market, with potential for this supply to grow substantially over the next four weeks should existing low-cost industry abatement projects be advanced by the Property, Materials, Metals & Mining, Oil & Gas, Power and Transport sectors.

These volumes stand to impact the shape of the next auction bid-stack and influence ACCU pricing at ERF II. Even if total registrations from industry remain moderate, analysis indicates that large volumes of short-term abatement derived from industry projects may still place competitive pressure on the land-use sector, with cost constrained projects at the high end of the bid stack likely to be displaced by low-cost projects upon the formation of the CER’s 80 per cent clearing threshold.

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

  • Scenarios for the replacement of the Liddell power station

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

    RepuTex has been engaged by Greenpeace Australia Pacific to analyse the impact of scenarios to […]

    Research Insights | November 27th, 2020
  • INSIGHTS: What is the current Australian carbon spot price?

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

    Amid a recent surge in carbon neutrality pledges, many businesses are looking to offset the […]

    Research Insights | November 25th, 2020
  • OUTLOOK: Long-term Australian carbon price, supply and demand outlook

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

    The price of Australian Carbon Credit Units (ACCUs) climbed back above $16/t in early September, […]

    Research Insights | November 2nd, 2020
  • Aligning Australian industry with net-zero emissions under the Paris Agreement

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

    While the government continues to reject calls for a net-zero emissions target, policymakers are unlikely […]

    Research Insights | October 27th, 2020
  • Could LGCs boost carbon offset liquidity, and support renewable energy investment?

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

    The Large-scale Renewable Energy Target (LRET) requires liable entities to meet their compliance obligations by […]

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