Third auction secures high volume at low prices

solar, sterling and wilson, Echo Group

The Clean Energy Regulator (CER) has awarded contracts for 50.5 million tonnes of abatement at an average price of $10.23 per tonne.

This result represents an increase in the volume of abatement purchased and a decrease in the average price per tonne, continuing the trend set by the previous auctions.

“Ahead of this auction we informed the market we would not chase volume at the expense of price. The market response resulted in an exceptional outcome on both fronts,” CER chair Chloe Munro said.

Abatement committed at this auction will be delivered under 73 Carbon Abatement Contracts for a total value of $516 million.

“Our objective is simply to purchase as much abatement as we can with the funds available. All three auctions have exceeded our expectations in this regard,” she said.

“It’s clear the market is maturing, and finding new opportunities to offer substantial volumes of abatement at lower costs.

“We purchased 77 per cent of the volume of abatement offered below the benchmark price at this auction, in line with the variable volume threshold. This is comparable to the last auction when we accepted 72.3 per cent.”

Across the whole portfolio from the three auctions, the CER has now committed a total of $1.7 billion to 309 contracts covering 348 projects, which will deliver more than 143 million tonnes of abatement at an average price of $12.10 per tonne.

All projects and contracts, including those announced today, can now be viewed on an interactive map of Australia, available on the CER website. The new map provides an ‘at a glance’ view of the location, Australian carbon credit units issued and method type of registered projects.

Around $816 million of the $2.55 billion allocated to the Emissions Reduction Fund remains available for future purchases.

“We have already stated our intention to hold another auction in the final quarter of the 2016 calendar year and we will advise the market of the details closer to the time. We will consider adjusting the format for this auction in order to pursue exceptional value in the context of our already strong portfolio and to maintain momentum into the future,” Ms Munro said.

“The results of this auction provides great encouragement for future participation and reinforces the benefits of vigorous competition.”