Australian business is losing interest in the conservative Liberal-National government’s Emissions Reduction Fund (ERF), while the cost of the program is rising and the budget is almost exhausted, with no new funds on offer.
The second-last auction under the fund saw 47 contracts awarded, down from 73 at the previous auction, and $367 million committed compared with $516 million last time.
AAP Newsagency reports the Clean Energy Regulator contracted 34.4 million tonnes of carbon credit units, down from 50 million tonnes at the third emissions reduction fund auction.
Land use and waste projects made up 86 per cent of all funding.
With about 83 per cent of the fund now spent, the federal government’s central climate policy is almost exhausted, with no further funding committed to the program.
AAP reports market analyst RepuTex director Hugh Grossman said it showed companies were losing interest in the ERF, also known as the “direct action” plan.
“The administrative complexity of the scheme, the diminishing budget and the low price of carbon have dampened interest in the ERF. This is unlikely to change until compliance obligations are placed on industry to offset their emissions” Mr Grossman said.
The CER said the abatement had been achieved at an average price per tonne of $10.69, below the average to date of $11.83.
The final ERF auction is expected to be held in April 2017, with $440 million remaining in the government’s initial $2.55 billion funding pool.
The government is planning a major review of climate policy in 2017.
The scheme is also occurring alongside skyrocketing land clearing by other farmers in Queensland and New South Wales.
According to Reputex, Australia’s emissions are likely to rise despite the money spent through the ERF.
Despite the direct action policy, national emissions are expected to rise from 534 million tonnes in 2015 to 577 by 2020, three per cent above 2000 levels, and well short of the government’s target of a five per cent reduction.
However, the government plans to meet its target by using about 130 million tonnes in credits for Australia’s performance under the former United Nations Kyoto Protocol between 2008 and 2012.
In a media release, minister for energy and the environment Josh Frydenberg said: “The ERF provides a broad range of opportunities to reduce emissions right across the economy while generating income and employment for rural and Indigenous communities and improving biodiversity.”
Erwin Jackson, deputy chief executive of the Climate Institute said the ERF was only effectively addressing emissions in the land sector, which is a “tiny fraction of Australia’s contribution to climate change”. “Emissions from the burning of coal, oil and gas are the real drivers of escalating climate change impacts,” he said.
“As the world switches to clean energy, global emissions from fossil fuels have now been flat for the last few years, and falling in major economies like China and the United States.
“But they’re rising in Australia, because we have no national strategy to replace our ageing coal plants with clean energy.
“This highlights how crucial it is that next year’s federal policy review produces a credible and scalable decarbonisation strategy that can get Australia to net zero emissions.”
