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
- energy consumption
- 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 (the Act) established the ERF in 2015. The department is responsible for the ERF policy development and oversight; the Clean Energy Regulator (the Regulator) is the Australian independent statutory authority responsible for administering the fund.
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
Read more about eligibility requirements for the ERF on the Regulator’s website.
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.
Methodology determinations (methods) are the rules for estimating emissions reductions to ensure they are genuine and additional to business-as-usual operations. The department develops these methods in consultation with scientists, industry, technical experts, and potential end users.
Read how methods are developed and which are available under the ERF.
Emissions Reduction Assurance Committee
The Emissions Reduction Assurance Committee (ERAC) is an independent body established under the Act. It assesses whether methods comply with the offsets integrity standards set out in the legislation. The ERAC undertakes public consultation to assist in its assessment. The Minister cannot make a method unless the ERAC has advised the offsets integrity standards have been met.
The ERAC assesses draft methods to ensure they meet the offsets integrity standards and undertakes public consultation. Public consultation can also provide the department with advice on whether projects are likely to cause any adverse social, environmental or economic impacts.
Read about the ERAC.
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.