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Businesses should consider participating in the first Emissions Reduction Fund (ERF) auction scheduled for March of this year, says RSM Bird Cameron.
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RSM tells businesses to consider ERF auction
29 January 2015
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8 minute read
The ERF auction process will see the Clean Energy Regulator run competitive reverse auctions to purchase emissions reductions at the lowest available cost. The Regulator will enter into contracts with successful bidders where the contracts will guarantee payment in return for delivery of emissions reductions.
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Tim Pittaway, principal, RSM Bird Cameron, said that while the ERF auctions are voluntary, there are benefits and opportunities for businesses who choose 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."
Mr Pittaway urged businesses considering participating to get moving now and to 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,” Mr Pittaway said.
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