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Emissions Reduction Fund

The Emissions Reduction Fund (ERF) incentivises Australian businesses to cut the amount of greenhouse gases they create and to undertake activities that store carbon.

This can be through projects involving:

new technology
upgrading equipment
changing business practices to improve productivity or energy use
changing the way vegetation is managed to store more carbon

Eligible projects include those associated with:

vegetation management
agriculture
energy consumption
waste
transport
coal and gas production
industrial processes

Participants can earn Australian Carbon Credit Units (ACCUs) for every tonne of emissions reduced or stored through a project. Businesses can sell ACCUs to generate income, to the Australian government through an auction, and/or to other businesses.

The Carbon Credits (Carbon Farming Initiative) Act 2011 established the ERF in 2015.

Our department is responsible for:

ERF policy development
the legislation
oversight of the ERF, including advising the Minister on making the technical rules (methods)

The Clean Energy Regulator is the Australian independent statutory authority responsible for:

developing the technical rules (methods)
administering the ERF
making emissions reduction purchases on behalf of the Government

Eligibility

Emissions Reduction Fund projects must:

be new
go beyond business-as-usual activities
not be required by law
not be receiving financial support from specified government programs, such as the New South Wales and Victorian energy efficiency schemes
follow an approved method, which sets out the rules for running the project and estimating emissions reductions
not be an excluded activity listed in the Carbon Credits (Carbon Farming Initiative) Regulations 2011 under regulation 3.36 in Division 3.12

Process for participating in the ERF

To participate in the ERF you need to register your project with the Regulator.

Typically, you will follows these steps:

You register yourself and your project with the Regulator to join the ERF
You secure a contract with the Regulator by bidding at an auction
You run your project and provide project reporting and auditing when scheduled with the Regulator
You claim ACCUs for your project's emissions reductions and can be paid for any ACCUs you sell

It is not necessary to secure a contract with the Regulator to participate in the ERF. A business can register its project and commence earning ACCUs without bidding at an auction, or decide to start their projects and participate in an auction later.

Methods

Methodology determinations are the rules for estimating emissions reductions to ensure they are genuine and additional to business-as-usual operations.

The Clean Energy Regulator develops these methods in consultation with industry, potential end-users, scientists and technical experts and the Emissions Reduction Assurance Committee. The Committee assesses whether methods comply with the offsets integrity standards set out in the legislation.

Read which methods are available under the ERF and how they are developed

Aggregation agreements

An aggregated project under the ERF comprises multiple emission sources and project sites, potentially owned by multiple people. An aggregator brings together these sources into one project.

An aggregation agreement documents the rights and responsibilities of all participants and is between the project owner and the site owners. It is a commercial contract between private parties and not with the government. You should obtain independent legal and financial advice to see if participating in an aggregated project is for you.

Read about aggregation on the Regulator’s website.