The date of the first auction under the federal Government's
new Emissions Reduction Fund has finally been announced, with
bidders being given two months to prepare.
The auction will open at 9:00 am AEST on Wednesday 15 April and
run until 5:00 pm AEST on Thursday 16 April 2015.
However, despite earlier indications that the Clean Energy
Regulator would give parties guidance about a "benchmark
price" for bids in early auctions, the Regulator has now
indicated it will not do so.
Despite this the Regulator has predicted "a good field of
bidders, mainly from projects currently part of the Carbon Farming
Initiative". The minimum bid size is 2,000 tonnes of CO2-e per
year. Bidders will be notified of the outcome within five business
days of the auction and the Regulator will then publish volume
weighted average price, and update the Emissions Reduction Fund
Regulator chair Chloe Munro said disclosing the benchmark price
ahead of the auction would not promote competition. The discretion
to do so was included in the legislation as a precaution, in case
participation in the first auction was inhibited by unrealistic
expectations, the Regulator said in a written statement.
"Competition will increase in future auctions as additional
projects come forward, based on the new Emissions Reduction Fund
methods," Ms Munro said.
"Many projects have successfully delivered carbon abatement
and are in a good position to bid based on experience of running
their projects. We will accept the lowest price bids up to 80% of
the volume offered below the benchmark price. This cut-off provides
a strong incentive to bid competitively, based on the lowest price
at which it is worth their while to operate their
The Regulator will issue Australian carbon credit units (ACCUs)
for emissions reductions that are created and audited under
approved methods. These credits can then be purchased by the
Government through the Emissions Reduction Fund, used under
voluntary carbon offsetting programs or sold to other
Once a bidder is successful it will enter into a standard form
contract with the Government. Details provided by the bidder before
the auction – quantity of ACCUs to be delivered, price and
delivery schedule – will automatically become terms of the
At the commencement of the ERF there will be around 30 methods,
including those approved for the existing Carbon Farming
Participants will submit a bid specifying a price per tonne of
projected emissions reductions to the Regulator with the
lowest-cost projects being selected.
Projects must be registered before a bid can be submitted. To
register a project, participants will need to confirm their
identity and probity and propose a schedule of annual emissions
reductions estimated in accordance with an approved method.
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This legal update is an overview of existing eligible project activities and new project types proposed to be developed.
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