The Carbon Market Institute says the 12th auction under former Prime Minister Tony Abbott’s Emissions Reduction Fund (ERF) – with $108 million results announced – should mark a turning point in federal climate policy.
Carbon Market Institute CEO John Connor said: “Let’s hope this is a turning point for a more evolved and sophisticated approach to carbon markets by the Morrison Government under stronger market driven climate policy that leads to more ambitious 2030 and 2050 goals.”
Mr Connor said a similar size auction due in September later this year will need to draw on PM Morrison’s Climate Solution Fund commitments of just under $2 billion over the next 15 years.
He said the average $15.99 carbon price in this auction is lower than the spot market prices of around $18 that Australian companies are paying in voluntary or compliance emissions trades.
“The ERF became a lifeline to carbon and some other emission reduction activities after the Gillard government’s emissions trading scheme was removed,” said Mr Connor.
“The Morrison Government has begun making some welcome pragmatic changes to the Emission Reduction Fund carbon market, and is seeking to expand accessibility.
“We continue to recommend strengthening the safeguard mechanism so emission intensive businesses become the primary funder cutting emissions rather than the taxpayer.
“The safeguard mechanism already requires most major emitters measure and manage their emissions, and make compliance investments if they exceed set baselines. Those baselines could, with appropriate reforms, be aligned against strengthened 2030 and 2050 Australian climate goals that provide clearer investment guidelines for business transitioning to net-zero emissions,” he said.
“US President Joe Biden’s Summit has shown us all that Australia will need to do more on climate change if it wishes to avoid penalties put in place by our trading partners – such as carbon border adjustments that are looming in Europe and Japan.”
