Although the Government has committed to repealing the Carbon Tax, it still supports the target of reducing Australia's carbon emissions 5% by the year 2020, and has grouped a number of policies designed to achieve this under the name 'Direct Action'. These include the Renewable Energy Target, efficiency standards on appliances, equipment and buildings, and the centrepiece - The Emissions reduction Fund (ERF). The ERF white paper was released today, and the Government expects to launch the ERF as soon as it can repeal the Carbon Pricing Mechanism. It will operate as follows:-
- Companies first identify opportunities to reduce their emissions below historical 'business as usual' levels, and calculate the cost and extent of the emissions reduction.
- The Government will then select the lowest cost projects by means of a closed bid reverse auction process.
- Successful projects can then secure project funding based on government payment guarantees and proceed to implementation.
- When the emissions reductions are realised, the company is issued with the equivalent number of Australian Carbon Credit Units (ACCUs), which can be cashed in with the Government or sold into the private market.
The scheme will be administered by the Clean Energy Regulator, the same body currently operating the Carbon Pricing Mechanism, and will borrow extensively from the existing National Greenhouse and Energy Reporting (NGER) scheme and the Carbon Farming Initiative (CFI).
As with any new scheme, the Government will be keen to show acceptance by industry and early results, while many companies will adopt a conservative wait and see approach. It is CCR's view that this presents a window of opportunity for proactive companies to take advantage of the relative lack of competition for funding in the early days. CCR can help you seize this opportunity by identifying relevant projects, and guiding you through the ERF process.