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A new approach to contracting under the Emissions Reduction Fund - an option to deliver

20 December 2019

Consultation window closed

Please note that the below consultation window has closed.

The Clean Energy Regulator is considering the use of an innovative new approach to contracting under the Emissions Reduction Fund.

David Parker, Chair of the Clean Energy Regulator said, “Australia’s demand for carbon abatement continues to grow as more corporations and other levels of government enter the carbon market.”

“A year or so back, I said that the Clean Energy Regulator could act as a foundation buyer of Australian Carbon Credit Units (ACCUs) rather than the sole buyer”, Mr Parker said.

The Clean Energy Regulator is interested in taking that approach further by allowing project proponents to make offers for an option to deliver ACCUs in Emissions Reduction Fund auctions. This would be on top of the current contracting arrangements, which involves offers for firm delivery of ACCUs.

“Our new approach would also allow more people to reap the rewards of participating in the Emissions Reduction Fund by helping people better manage their supply and price risks,” said Mr Parker.

The Clean Energy Regulator today released a consultation paper ‘A new approach to contracting under the Emissions Reduction Fund - an option to deliver’ seeking views on the design elements of an “option to deliver” contract, for potential inclusion in the March 2020 Emissions Reduction Fund auction.

Contracts offering an option to deliver give sellers the security of a contracted price for ACCUs in order to invest in a new carbon abatement project.

The seller can then choose whether to deliver abatement to the Commonwealth at a contracted price, or sell some or all of their ACCUs elsewhere.

Mr Parker said, “We are always on the look-out for new and innovative ways to encourage participation in the Emissions Reduction Fund and the new $2 billion Climate Solutions Fund (CSF). Our new approach underpins investment in new carbon projects by providing more opportunities for people to secure long-term, but flexible contracts with the Commonwealth.”

Dependent on the outcomes of this consultation, the Clean Energy Regulator could offer the first optional delivery contracts to bidders in the next Emissions Reduction Fund auction, which will be held on 25-26 March 2020. The Clean Energy Regulator will announce a decision on the option to deliver contracts early in 2020. In any event, the Clean Energy Regulator will offer firm delivery contracts in that auction.

People considering registering projects for the March 2020 auction are encouraged to do so as soon as possible so they don’t miss the registration deadline of 10 February 2020.

More information

Whether you are a landholder or a large firm, and you are a thinking about participating in the Emissions Reduction Fund, call or email us directly with any questions and make sure you don’t miss out. You can contact us at enquiries@cleanenergyregulator.gov.au or phone 1300 553 542.

See the consultation paper, planning a project, the tenth auction guidelines and participating in an auction for more information.



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