Australian Government Emissions Reduction Fund

Central component of the Government's Direct Action Plan Funding of $2.55 billion Additional funding to be considered in future budgets Design based on 3 principles: – lowest cost abatement – genuine reductions – streamlined administration The Emissions Reduction Fund Overview

Project process Register project Estimate reductions and submit bid Enter into contract Report and receive payment 1. ERF Process

Project registration Approved method New project Legal right Fit and proper person Clean Energy Regulator 1. ERF Process

Auction process Commercial readiness History of compliance Credible estimate Pre- qualification Minimum bid size One bid for each project Bids can include multiple projects Successful projects cannot re-bid Submitting a bid 1. ERF Process

Contracts Standardised Price Quantity Delivery schedule Contract period Five year preference Market testing Make good Other ERF projects Market testing will occur prior to the first auction to: - ensure contract arrangements are right for business - assess whether alternative contract lengths are required 1. ERF Process

Reporting and verification Consistent with method Flexible period Reporting Assurance reports Risk-based approach Verification Pre-calculation for some activities, with credits issued as reductions occur over time 1. ERF Process

Aggregation Removing barriers –No property interest required –Streamlined project information Bundling of different methodologies Single bid and contract The ERF will facilitate the aggregation of emissions reductions across projects and activities 1. ERF Process

The Clean Energy Regulator is well positioned to administer the scheme Will build on existing infrastructure and programs –Carbon Farming Initiative –National Greenhouse & Energy Reporting scheme CER consultation will commence on a range of implementation processes after legislation is passed Consultation on the auction purchasing process –timing, rules, benchmark price, pre-qualification requirements Governance 1. ERF Process

Method development and approval 2. Method development – Future methods

Current methods under development Landfill gas collection on existing site Engineered biodigester to treat wastewater Combustion of coal mine methaneProject Impact Assessment Methods Aggregated Metered Baseline MethodNABERS Metered Baseline Method Reduction of emissions in transportAlternative waste treatment Facility MethodIncreasing soil carbon in grazing systems Expanding opportunities for environmental and carbon sink plantings Expanding opportunities for avoided deforestation Farm forestry Reducing methane emissions from beef cattle Savanna burning 2. Method development – Future methods

Potential uptakeLikely volume of emissions reductionsCertainty and cost of estimateAdverse impactsPromotion through other means Method priorities 2. Method development – Future methods

Emissions Reduction Assurance Committee (‘ERAC’) Advises on priorities Assesses draft methods – Genuine reductions – Practical – Cost-effective Reviews methods Replaces the Domestic Offsets Integrity Commission 2. Method development – Future methods

Transitioning to the Emissions Reduction Fund The CFI will transition to the Emissions Reduction Fund. What is likely to change? Opportunities for farmers will continue to expand. Methodology development is a priority. 5 Opportunities for land sector projects

What is proposed to change? Credits to be purchased by Government Risk-based auditing Streamline assessment process Prioritise methodology development through consultation Permanence options for sequestration projects 5

Streamline approvals process Additionality covered by the methodology Consult on the draft determination Reduce barriers to aggregation What is proposed to change? 5

CFI projects become ERF projects CFI methodologies will continue to apply until varied, revoked or replaced Transitional CFI applications will be assessed under current CFI rules CFI transition CFITransitionERF 3. CFI transition

New 25-year option under the ERF Credits discounted by 20 per cent 5 per cent risk of reversal buffer Permanence 3. CFI transition

Questions?