Auctioned abatement

Methods of abatement selected for subsidies. Image: Commonwealth of Australia (Clean Energy Regulator) 2016 published under (CC BY 3.0)
24 November 2016

The fourth auction of the $2.55 billion Emissions Reductions Fund (ERF) scheme has resulted in 47 contracts worth $367 million. The supported projects are expected to deliver 34.4 million tonnes of abatement at an average price of $10.69 per tonne of abatement.

Since April 2015, the Clean Energy Regulator has awarded 397 contracts, of which almost 80% are with organisations located in New South Wales (181) and Queensland (133).

The four ERF auctions have resulted in 177 million tonnes of abatement at an average price of $11.84 per tonne.

According to Dr Paul Burke's article in Economic Papers, questionable projects that could find funding through the ERF include:

Critics of the scheme, however, have pointed out that the ERF scheme may subsidise projects that would have proceeded anyway.

Examples for this were recently provided in an research article by Economist Dr Paul Burke from the Crawford School of Public Policy at the Australian National University.

In The Conversation he comments that some contracts awarded in the first three auctions will result in genuine emissions reductions. "Unfortunately, however, some project categories are rather questionable."

This includes projects that will lead to upgrades to lighting in supermarkets and to the fuel efficiency of vehicles. Dr Burke says that these are supposed to happen anyway.

And contracted projects to reduce tree clearing may have gone to farmers that did not actually plan to clear.