The Clean Energy Regulator (CER) held the seventh Emissions Reduction Fund (ERF) auction on 6 and 7 June 2018. At the auction, the CER contracted a further 6.67 million tonnes of abatement in 32 transactions.

With the eighth ERF auction announced for 10 and 11 December 2018 and only $250 million in funding remaining (from the $2.5 billion committed to the ERF) the question is, where to from here?

While it was hoped that the auctions would attract bids from big industrial polluters with projects to curb their emissions, that interest does not appear to have eventuated. Instead, 29 of the 32 transactions in the most recent auction were for vegetation projects. Of the 739 ERF projects registered at 31 August 2018, 402 were for vegetation projects with 189 registered in New South Wales and 141 in Queensland. These figures show the ERF is primarily being utilised by landowners for vegetation projects (such as human induced regeneration of native forests and avoided clearing of native regrowth).

The average price at the most recent auction was $13.52 per tonne. The lowest average price was $10.23 at the third auction resulting in an average price across the seven auctions of $11.97.

It is unclear whether the funding for the ERF will be increased any time soon.

While some of our clients are starting to see the benefits of this new revenue stream, participation in the ERF and entry into a contract to sell carbon credits are not without risk. Landholders who wish to participate in the ERF should always seek legal advice before deciding whether to participate and before contracting with the CER or any aggregators this area.

Our agribusiness lawyers have assisted landholders to secure services agreements on fair terms and to understand their obligations under carbon trading arrangements.

This information is intended to provide a general summary only and should not be relied on as a substitute for legal advice.

Send To A Friend