The Climate Change Authority (CCA) has released its first review of the Australian Government’s Emissions Reduction Fund (ERF).
The review found that so far the fund is performing well and is playing an important role in helping Australia meet its climate goals.
The CCA also made a number of recommendations. These include measures to enhance and enforce compliance and attract new participants.
The Government’s Emissions Reduction Fund (ERF)
The ERF was established in 2014 to assist Australia in meeting its international emissions reductions commitments and climate objectives. This includes helping the country reach its emissions reduction target of 26 to 28 per cent below 2005 levels by 2030.
The fund is voluntary and provides incentives for Australian businesses to reduce greenhouse gases and earn carbon credits. Participants can earn one carbon credit for each tonne of emissions reduced or stored. They can then sell credit units earned to the Australian Government through an auction process.
To date, 189 million tonnes of emissions reductions have been secured.
Businesses can participate in a variety of ways. Examples include farming practices to store carbon such as reforestation and soil health improvements, and the use of solar power for irrigation pumping.
The fund works in tandem with other programs such as the Renewable Energy Target, the National Carbon Offset Standard and various energy-efficiency standards. It also supports the uptake of renewable energy and practices to improve energy efficiency.
The fund is required to be reviewed every three years. The current review looked at how well the fund is meeting its objectives and also at its administrative processes and found no systematic problems.
It also found that in some ways the fund has “surpassed expectations” through the volume of emissions reductions achieved.
Recommendations by the Climate Change Authority
The CCA made several recommendations for the future of the ERF.
They included the following:
- Measures to help participants become more aware of their obligations.
- New tools for the Clean Energy Regulator to enforce obligation breaches.
- Enhancement of the effectiveness of ERF contracts with participants.
- Strengthening of signals for new project investments.
- Securing of the permanence of carbon stored in soil and vegetation to reduce the risk of reversal.
The CCA also noted that when the ERF was set up the expectation was that emission reduction methods would be refined over time.
As such, it recommended a submission process for stakeholders to propose new methods of reducing emissions.
