The Climate Change Authority and the Clean Energy Regulator have taken on board feedback from a WSAA industry submission to the review of the Emissions Reduction Fund (ERF), and made several changes to the rules that will support greater water utility participation in the ERF.

The areas that have changed include rules around newness of projects and regulatory additionality.

The Emissions Reduction Fund (ERF) is a Commonwealth-led, voluntary scheme that aims to provide incentives for a range of organisations and individuals to adopt new practices and technologies to reduce their emissions.

A number of activities are eligible under the scheme and participants can earn Australian carbon credit units (ACCUs) for emissions reductions. One ACCU is earned for each tonne of carbon dioxide equivalent (tCO2-e) stored or avoided by a project. ACCUs can be sold to generate income (current spot price $16-17/tn), either to the government through a carbon abatement contract, or in the secondary market.

Water utilities wishing to offset their emissions profiles can either buy ACCUs on the market and retire them (shareholder/state regulations permitting), or generate ACCUs by investing in carbon mitigation activities.

The ERF contains a regulatory additionality test, which is intended to ensure that ERF projects to reduce emissions or sequester carbon do not receive credits if those activities are already required by law. Previously this meant water utilities could not prove their projects were additional to what would have been required anyway under their legislated or regulated emissions reduction targets.

While those rules were bound up in Federal greenhouse gas accounting, the changes to the ERF mean any ACCUs generated by a water utility project can be registered under the ERF and held in a Commonwealth escrow account in perpetuity to be able to count against their emissions profile.

These changes are expected to support utilities to have greater participation in the Emissions Reduction Fund and assist their climate mitigation programs.

WSAA's submission to the ERF review can be found here.

18 Dec 2020

Sandi Kolbe

Sandi Kolbe

Communications Manager