The Clean Energy Regulator has bought up 50.5m tonnes of carbon abatement but there are doubts over how effective this will be in reaching Paris agreement targets

This article is more than 4 years old

This article is more than 4 years old

The government has now spent two-thirds of its emissions reduction fund but has only achieved 7% of the emissions cuts it would need to reach its 2030 target, according to analysts.

Today the Clean Energy Regulator announced the results of its third Emissions Reduction Fund auction, the centrepiece of government climate policy by which it pays polluters to pollute less.

In the auction, it bought 50.5m tonnes of carbon abatement for an average of $10.23 per tonne – a drop from $13.50 it paid in its first auction in April 2015.

“Our objective is simply to purchase as much abatement as we can with the funds available. All three auctions have exceeded our expectations in this regard,” said the chair of the Clean Energy Regulator, Chloe Munro.

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Between the three auctions, 67% of the money has now been spent, leaving $816m left.

“This is an outstanding result,” the environment minister, Greg Hunt, said. “The policy is not just working and reducing emissions, but we are hitting our targets and tackling climate change without Labor’s electricity tax.”

To reach the government’s 2020 target of 5% below 2000 levels, the government would not need to cut domestic emissions. Instead it would rely on accounting rules for “carry-over” from an earlier period and international carbon credits. It estimated that avoiding just 186m tonnes by 2020 would be enough, leaving just another 43m tonne for the ERF after today.

But to meet its 2030 targets agreed to in Paris, which are 26 to 28% below 2005 levels, the Climate Institute estimated the three auctions amount to only 7% of the task.

But the 2030 targets themselves aren’t enough to keep the world under 2C. If Australia were to act on that objective, the auctions only account for 3% of the abatement needed by 2030, said the Climate Institute CEO, John Connor.

In the latest auction, the vast majority of carbon reduction came from vegetation projects such as avoiding land clearing and revegetation schemes – they accounted for more than 93% of the carbon abatement bought in the auction.

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Recent analysis from the Wilderness Society showed that a land-clearing surge going on in parallel – particularly in Queensland – was completely undoing the ERF’s abatement work. That analysis came before the NSW government released a draft of its overhauled land-clearing laws, which aimed to cut red tape for farmers wishing to clear their land.

“At the current rate of tree clearing, the entire 98.5m tonnes of abatement from tree projects bought in the latest ERF auction will be wiped out in just under two years,” said the Wilderness Society national director, Lyndon Schneiders.

And Hugh Grossman, from energy analysis firm RepuTex, said national emissions were mostly rising as a result of the biggest industrial emitters, which weren’t engaging with the ERF.

“In isolation, it is doing a really good job – it’s doing what it’s expected to do and purchasing abatement,” Grossman said. “But what we’re seeing is that national emission are growing in parallel, despite the ERF.”

Munro said another auction was expected to be held before the end of the year, with details to be announced in the coming months.