THE government’s direct action scheme is likely to see little interest from new carbon emission reduction projects in its first few rounds of auctions, which could limit the total amount of carbon savings gained in the early stages of the scheme’s operation.
Nanjing Night Net

The Clean Energy Regulator is due to conduct the first auction for projects bidding for money from the ­$2.55 billion Emissions Reduction Fund (ERF) in early 2015, with no firm date yet announced.

The first auction may be conducted without the publication of a ­”benchmark” price, below which bids will need to be priced in order ­to succeed.

Elisa de Wit, partner and head of ­climate change at law firm Norton Rose Fulbright, who has been advising ­clients interested in ­participating in the Fund, said she did not expect much activity from projects that were not already part of the ­pre-existing Carbon Farming Initiative.

“Because there is still a large amount of uncertainty about what that priority is going to be, in the first auction, I think a lot of people are just going to wait and see,” Ms de Wit said.

Many of the approved methodologies that are eligible for money from the ERF depend on so-called aggregation – where a number of small projects are gathered together by an external party in a ­single bid.

The National Farmers’ Federation president Brent Finlay said many of his members were wary of signing up to the aggregation schemes.

“There are lots of costs involved and financial risks for farmers.

“Those risks include the problem of encountering unscrupulous ­aggregators, the snake oil salesmen. “Under the rules of the ERF, farmers must partner with an aggregator.”

Many of the technologies the ­government is hoping the agriculture sector will employ, including so-called “soil carbon” where emissions are sequestered in the ground, are not yet ready for deployment, Mr Finlay said.

“They’re still in an embryonic phase of research and development.

“If the government is serious about ensuring that the ERF will provide opportunities for agriculture, we need ongoing funding for the research and development of cost-effective ­methods,” Mr Finlay said.

A 2014 Climate Change Authority analysis of the Carbon Farming ­Initiative, which is the predecessor of the Emissions Reduction Fund, found the most common methodology was landfill and waste treatment projects, followed by forestry.

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