1. business and industrial

Matthew Raymond
+61 7 3123 6786
David Bickford
+61 2 8197 0600
Michael Worcester
+61 7 3123 6768
[email protected]
[email protected]
[email protected]
April 2015
Desk Commentary
Emissions Reduction Fund results
David Bickford 27/4/2015
Emissions Reduction Fund and CO2 impacts

The Emissions Reduction Fund has accepted bids from project proponents to reduce CO2 emissions
by 47 million tons at $13.95 a ton, spending $660 million of the $2.55 billion allocated. The 47
million ton reduction in emissions from business as usual is spread over 7 year and longer contracts
from a variety of projects.

The $13.95 per ton is cheaper than the previous carbon tax. It is payable by the government but in
effect paid by consumers as taxpayers via increased taxes and / or reduced spending to fund the
payments.

The scheme is good in the sense that it assists in sequestering carbon and promotes energy
efficiency. It can easily be adapted to fit in with an emission trading scheme, but it isn’t good at
stopping growth in emissions from burning of fossil fuels The ERF is only a sub scheme, a good
one, within any overall abatement scheme.

Is 47 million tons worthwhile?

Australia’s emission history and outlook is in Table 3 below. Figure 9 presents the same data in
graphical form. Both figures are taken from the recently published government emissions
projections 2014-15.

In 2000 Australia emitted 559 million tones of CO2 as can be seen in the data, and have a
commitment to reduce emissions by 5% by 2020 from 2000 levels. We need to get down to roughly
530 mt by 2020 for that year alone to meet the target.
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Please note that any advice given by BR Securities Australia Pty Ltd or authorised representatives (BR) is GENERAL advice, as the information or advice given does
not take into account your particular objectives, financial situation or needs. Therefore at all times you should consider the appropriateness of the advice before
you act further. BR Securities Australia Pty Ltd | ABN 92 168 734 530 | AFSL 456663. BR does not stand behind the capital value or performance of any
investment you make based on this report. We are not obliged to update our report if we are not contracted to do so.
Confidentiality Notice:
This email (and any attachments) is intended only for the addressee and may contain information which is confidential and privileged. If you are not the addressee
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
For 2013-14 we emitted 548 mt CO2, as shown in the data, below the 2000 levels of 559 mt mainly
because of the impact of the carbon tax. This impact can be seen better in Figure 9.

By 2020 the government is forecasting emissions, excluding ERF activity, of 656 mt, although this is
based on many assumptions that may not eventuate.

The 47 mt bought by the ERF is spread over a number of years as said. Let’s assume 2020
reductions are 8 mt in that year, the 8 being part of the 47. You can see the government has some
way to go to get down from 656 mt to 530 mt by 2020.

They have spent a quarter of their budget on not much of a reduction as well.

In terms of global action, indications are that reductions below 2000 levels of 30% by 2025 and 80%
by 2050 are being considered.

Australia’s emissions at this stage, pre ERF activity, are forecast to grow to 724 mt by 2030 (see
data above), a growth of 30% from 2000. To reduce emissions by 50% by 2030 we would need to
target 280 mt, a long way from 724.

The 280 mt by 2030 would fit with global action to keep emissions below 450 parts per million in the
atmosphere and warming below 2C by 2100.

The Liberal government will announce targets post 2020 soon, in readiness for the conference in
Paris in December 2015 to set global emission targets post 2020. Global focus is on Australia for
not pulling its weight. Bernie Fraser recently recommended emissions should be cut, by us, by 40%
to 60% by 2030. The UK and others are comitting to 80% reductions from 2000 levels by 2050,

We think the science will always win out and Australia will be required to cut emissions.
Please note that any advice given by BR Securities Australia Pty Ltd or authorised representatives (BR) is GENERAL advice, as the information or advice given does
not take into account your particular objectives, financial situation or needs. Therefore at all times you should consider the appropriateness of the advice before
you act further. BR Securities Australia Pty Ltd | ABN 92 168 734 530 | AFSL 456663. BR does not stand behind the capital value or performance of any
investment you make based on this report. We are not obliged to update our report if we are not contracted to do so.
Confidentiality Notice:
This email (and any attachments) is intended only for the addressee and may contain information which is confidential and privileged. If you are not the addressee
you may not use, disseminate or copy this information. If you have received this information in error please notify us immediately and destroy this email and
attachments. We do not guarantee the integrity of any e-mails or attached files and are not responsible for any changes made to them by any other person.