About the Emissions Reduction Fund

The Emissions Reduction Fund will support Australian businesses and households to take practical, direct action to reduce emissions and improve the environment.

The objective of the Emissions Reduction Fund is to help achieve Australia’s 2020 emissions reduction target of five per cent below 2000 levels by 2020. The Government has provided $2.55 billion to establish the Emissions Reduction Fund, with further funding to be considered in future budgets.

The Fund has three elements and will be administered by the Clean Energy Regulator.

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1. Crediting emissions reductions

Crediting involves determining an amount of emissions reductions delivered by an emissions reduction project. Crediting rules will be set out in emissions reduction methods.

The Clean Energy Regulator will issue one Australian Carbon Credit Unit for each tonne of emissions reductions delivered under a method. Credits can then be sold to the Government through a reverse auction.

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2. Purchasing emissions reductions

The Clean Energy Regulator will run competitive reverse auctions to purchase emissions reductions at the lowest available cost. The Regulator will enter into contracts with successful bidders. The contracts will guarantee payment in return for delivery of emissions reductions.

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3. Safeguarding emissions reductions

The safeguard mechanism will ensure that emissions reductions paid for through the Emissions Reduction Fund are not offset by increases in emissions elsewhere in the economy.

The safeguard mechanism will commence on 1 July 2015, to provide time for the Government to consult with business on important technical details.

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Carbon Farming Initiative transition

The Emissions Reduction Fund will build on the Carbon Farming Initiative.

Existing Carbon Farming Initiative projects will be registered under the Emissions Reduction Fund automatically. This will ensure that land managers are well-placed to bid for funding under the Emissions Reduction Fund.

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