The Emissions Reduction Fund (the Fund) is the centrepiece of the Australian Government’s Direct Action Plan. The Fund will work together with other incentives under the Direct Action Plan and the Renewable Energy Target to help meet Australia’s target of reducing emissions by 5 per cent below 2000 levels by 2020.
Through the Fund, the Government will purchase low-cost abatement through reverse auctions - an 'abatement buy-back'.
The Fund will provide incentives for abatement activities across the Australian economy and work in conjunction with the Carbon Farming Initiative.
The Fund will have an initial allocation of $300 million, $500 million and $750 million over the forward estimates period.
Community input will be invited on potential sources of low-cost abatement and on key design features such as auctions, baselines and contract arrangements.