Property and the ERF: not this time

The government’s first round ERF auction appears to have left commercial property projects out in the cold, with not one successful bidder from the property or energy efficiency sectors to be seen on the table of successful contracts at the Clean Energy Regulator’s website.

The average carbon price came in at $13.95 a tonne, with the government purchasing 47 million tonnes of carbon abatement across 107 contracts for a total price of $660 million.

Landfill gas abatement projects by companies including AGL, Veolia Environmental Services and LMS Energy gained a substantial number of contracts, as did native forest protection and forest regeneration projects, with the Australian environmental markets adviser Terra Carbon winning the largest share of forest-related project contracts.

RepuTex expressed disquiet over the domination of the auction results by these types of projects.

“The auction result indicates that landfill gas and native forest protection project developers have sought to ‘cash in’ from the first auction while industry waits to participate” RepuTex executive director, Hugh Grossman said.

“Australia requires 47 million tonnes of abatement per year to meet its 2020 target, so this is a very strong start, however it remains to be seen what happens when ERF funding is exhausted.

“On the present trajectory, the ERF budget would be eroded very quickly, so the medium-term sustainability of the scheme is a concern.

“In committing over 25 per cent of the entire $2.55 billion Emissions Reduction Fund budget, pressure is likely to build for high emitters to move quickly, or miss out on funds if they are unable to develop projects in time.”

He said the low average price – while not as rock bottom as some potential carbon farmers feared – was not high enough to make the big emitters rush to participate in future rounds.

According to RepuTex, in disclosing only the average price, the Clean Energy Regulator is seeking to foster “competitive” bids from industry.

“In disclosing only the average price of abatement, the Regulator is seeking to make prices appear to be lower than they have actually paid. An average is not a true reflection of the real clearing price that the Regulator paid, which is higher,” Mr Grossman said.

“Industry will seek to identify the “highest” clearing price, not the average price, which will give firms a better understanding of their abatement value.

“It is the ‘highest’ price which will ultimately determine whether industry participates in subsequent auctions.”

  • The full list of successful projects is here at the Clean Energy regulator’s website

2 replies on “First ERF auction leaves property out in the cold”

  1. Thanks Willow,
    I don’t think this will surprise anyone – AIRAH was involved in the government workgroups for commercial and industrial building sectors.
    I haven’t spoken to one person that thought building would get a look in.

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