RSM Australia

Emissions Reduction Fund auction – what’s next for Australian businesses looking to participate

New methodologies likely to be approved before the next Emissions Reduction Fund auction will open up opportunities for more businesses and industries to participate, but they must act now, according to RSM.

Tim Pittaway, Principal, RSM, said, “The first Emissions Reduction Fund auction has now taken place. This means that businesses are now better-informed about how the process works, and how they can get involved.

“The first auction saw just over half of projects succeed in the auction; the winners largely from land-based projects such as farming, waste management and forestry.

“However, there are currently other methodologies under review, which are likely to be approved before the next auction. This will make way for other industries to participate. This includes energy efficiency and transport methodologies, which will mean opportunities for manufacturers and other supply chain companies.

“This will have a two-fold effect. It will mean those in land-based activities will need to have a stronger business case when bidding in the next auction to be successful. It also means other industries looking to get involved need to start preparing now to compete against those that have participated in the first round, learning from the experience.

“Ultimately it all comes down to the business plan and the price companies are willing to go in at”. 

RSM expects this extra activity in the space may drive down the carbon abatement price slightly from the average of $13.95 in the first auction.

Any business wanting to bid needs to register the project with the Clean Energy Regulator (CER) ahead of the auction deadline and be prepared to comply with the reasonable assurance audit requirements involved in being awarded a contract as bids in the auction are legally binding. 

Businesses will need to factor in these costs when budgeting for the project. While not excessive, these types of projects can require three to five reasonable assurance audits in their lifecycle, depending on their size and expected abatement. 

Tim Pittaway said, “It is important for businesses to seek out a registered greenhouse and energy auditor and talk to the CER, as they dictate the audit requirements.

“RSM suggests engaging an auditor early in the process and understand the methods and records which need to be kept for each method and ensuring those undertaking the project can produce the required records. This will help businesses demonstrate compliance with the chosen method, and provide documentation on the project and how abatement will be achieved”.