The Emissions Reduction Fund (ERF) is now a reality. The ERF is the centrepiece of the Australian Government's policy suite to reduce emissions and will provide incentives for emissions reduction activities across the Australian economy. With the first auction set to take place in March this year, it is time for businesses to assess their position when it comes to participating.

Tim Pittaway, Director, RSM, said, “The ERF auctions are voluntary but there are benefits and opportunities for businesses who chose to participate.

“To take advantage of this businesses need to identify projects within the organisation that could qualify now. Part of this is deciding how they plan to bid in the auction and the price they will go in at.

“For new projects that are going through business case development and capital raising, companies should consider if participation in the ERF could fund part of the project.

“Businesses that get in early on the right types of projects may find that their bid price is accepted because nobody knows what the price will be. This could be particularly beneficial for the first auction, which is unknown territory.

“Businesses wanting to participate need to get moving now and ensure they have a good risk management strategy in place.

“It is critical that businesses can deliver the project as required if they participate in the ERF as that is what they will be signing up to. If they don’t deliver as per the contract they could find themselves having to purchase carbon units through another market to address any shortfall.”