Department of Environment’s focus on Emissions Reduction Fund and the Safeguard Mechanism
The more insightful aspects of the Budget relate to the key deliverables outlined in the Department of Environment’s Portfolio Budget Statement.
Based on the deliverables associated with “Programme 2.1: Reducing Australia’s Greenhouse Gas Emissions”, we can expect to have legislative rules for the Emissions Reduction Fund safeguard mechanism made by October 2015, and legislative rules for the Emissions Reduction Fund made by December 2015.
The key performance indicators relating to reducing “Australia’s Greenhouse Gas Emissions” indicate ambitions to encourage the growth of the renewable energy sector, and a continued focus on progressing the ERF. Specific key performance indicators include:
Percentage of national emissions covered by Emissions Reduction Fund methods.
Increase in the number of Australian Carbon Credit Units issued.
Compliance with Emissions Reduction Fund safeguard mechanism and that covered facilities do not exceed safeguard mechanism baselines.
The uptake of additional renewable energy is encouraged and the Renewable Energy Target is achieved.
Support for a stronger market for ACCUs?
Whilst the safeguard mechanism is yet to be formally developed, and its robustness yet to be tested, the first two dot points relating to the ERF at least indicate a desire to create a stronger ACCU market in Australia. To increase the percentage of national emissions covered by the ERF, and ensure targeted and simple entry registration of projects by project proponents, a number of targeted Methods will need to be created.
There is still scope to broaden the percentage of Australia’s emissions captured by ERF Methods. Targeted stationary power generation, and increased coverage of the residential sector could improve the percentage of emissions captured.
The results of the first auction, see Energetics’ previous article, show large portions of Australia’s emissions that are yet to register for, or benefit from, the ERF.