Analysis of the Australian Emissions Reduction Fund: A Report

This report provides an overview of the Emissions Reduction Fund (ERF) in Australia, a key environmental policy initiative. The ERF aims to reduce carbon emissions through various projects, including improving energy efficiency, capturing methane, and promoting fuel switching. The Australian go...Read More

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Name
Institution Affiliation

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The Emissions Reduction Fund
The emissions reduction fund is an environmental policy which provides incentives for the
reduction of activities that contribute to emissions across Australia. The fund provides credit,
purchasing and protects the economy against the emissions by facilitating reduction. The fund
provides a framework by which projects that aim to reduce carbon emissions get carbon credits.
The activities considered include improvement of energy efficiency, capturing methane, fuel
switching and storage of carbon. These methods highlight the rules for partaking in the project
and the framework to facilitate reduction of emissions and that the credits are valid.
The Australian government was able to allocate $2.55 billion in order to buy carbon credits using
the reverse auction process. In this way, the fund has been able to contract 189 million tonnes of
reduction in emissions using 5 auctions priced at 11.83 dollars per tonne. Eventually, the credits
are sold to private purchasers. This abatement aims to capture the interest of businessmen in the
participation of climate change policies that aim to improve the state of the environment in
Australia (Clarke and Waschik, 2014).
Budgetary allocations
Source: http://www.environment.gov.au

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The government aims to purchase the Australian Carbon credit units during a reverse auction
process or through tenders. The government must therefore acquire 421 million ACCUs by the
year 2020 in order for it to reach its goals. All businesses operating in the Australian economy
are eligible to participate in the fund if they organize certain projects. The following projects are
eligible.
Projects Expected emissions reductions
Energy Efficiency 4.6 tonnes
Protecting native forests/ planting trees 122 tonnes
Managing bushfires 13.8 tonnes
Using dietary supplements to reduce emissions from
cattle
17.7 tonnes
Reducing fugitive emissions 5.3 tonnes
Reducing emissions from air, land and sea transport 1.2 tonnes
Reducing amount of waste from landfills 24.3 tonnes
Source: http://www.environment.gov.au
The policy includes initiatives that will help in the achievement of the set targets such as the
National Energy Productivity plan, improved efficiency of vehicles, the phasing out of
hydrofluorocarbons that are in use in air conditioners and refrigerators as well as the
development of a strategy that aims to increase the level of utilization of solar power and the
development of a low emissions technology road map. Businesses are therefore encouraged to
participate in the Emissions Reduction fund since it aims to protect the environment for future
generations. It is cognizant of the fact that a healthy economy is one which has a healthy
environment. The expected benefits from the project include:

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 Reduced level of emissions
 Increased number of tree plantings
 High levels of recycling
 Clean up of power station
 Reduction in forest fires
 Preservation of natural forests
Technology is at the forefront of this policy since it requires that industrial firms develop or use
technologies which will allow them to have control over the level of emissions that their
processes generate. It is therefore important that the developers of their machines take note and
act accordingly. It is expected that with the policy the government will acquire the support of the
business community in the management of environmental issues that will bring forth positive
results (Adams and Verikios, 2014).
References
Adams, P.D., Parmenter, B.R. and Verikios, G., 2014. An emissions trading scheme for
Australia: national and regional impacts. Economic Record, 90(290), pp.316-344.
Clarke, H., Fraser, I. and Waschik, R.G., 2014. How much abatement will Australia's emissions
reduction fund buy?. Economic Papers: A journal of applied economics and
policy, 33(4), pp.315-326.