The Abbott Government is hailing the success of the first round of auctions under its Direct Action climate policy, with 144 projects worth $660.4 million funded.
Forty-three companies will be paid $660 million to eliminate 47 million tonnes of carbon that would otherwise enter the atmosphere under the first auction by the Abbott government’s $2.55 billion emissions reduction fund, as reported by Energy Business News.
The average price per tonne of abatement was $13.95, which federal Environment Minister Greg Hunt described as a “stunning result” that exceeded the government’s expectations. He said it was a cheaper and more effective method for reducing carbon than Labor’s carbon tax.
RepuTex executive director Hugh Grossman said it was a strong first auction for the government, but the $2.55 billion Emissions Reduction Fund may have to be topped up.
“It’s a great result but the big question is how much will be left over for subsequent auctions and the budget implications,” Mr Grossman said.
Carbon farmers and landfill operators were the bulk of the first auction’s 144 projects, with big industry, including energy companies and aluminium smelters, waiting to see the results of the first auction before applying for future auctions, as reported by the Financial Review.
Some of the biggest purchasers of the contracts include Terra Carbon for its tree forestation projects, AGL Energy and LMS Energy for its landfill projects. Other projects that signed up to the carbon contracts include soil carbon, savanna burning and methane from piggeries.
The smallest contract was for 12,000 tonnes of abatement, while the largest was for 3.5 million tonnes of abatement.
Despite Government optimism, however, deputy chief executive of the Climate Institute Erwin Jackson told The Guardian a quarter of the emissions reduction fund had been spent in the first round to secure just 15 per cent of the reduction of greenhouse gas emissions needed for Australia to meet its target of a 5 per cent cut by 2020, based on 2000 levels.
“Things might get better in future auctions but they’ve already spent a quarter of the money and all the analysis suggests that these prices won’t get significant emissions reductions,” he said.
“There is no confidence we can even meet our woefully inadequate targets with this.”