One of the key changes Reputex see as improving the scheme is to concentrate the allocated budget funding towards purchasing abatement delivered in the period prior to 2020. "At present, the operational timeline of the Direct Action Plan is disjointed," said RepuTex executive director Hugh Grossman. "For instance, Australia's 5 per cent emissions reduction target must be met within six years, by 2020, however the $2. 55 billion ERF will purchase abatement over a much longer 10 year period to 2024, while companies that are credited for seven years of abatement will only win funding for five-year contracts.
In addition, the report indicates that with further amendments, such as establishing a more robust reverse auction process which removed the benchmark price cap on the abatement auctions, as proposed by Senator Xenophon, the scheme's effectiveness would grow further. "Should a more robust reverse auction process be established, with transparent abatement objectives tied to the emissions target, and a market price set by supply and demand, industry would view the scheme as a true market mechanism, and that confidence would lead to significant uptake from project developers" Mr Grossman said.
According to RepuTex, should ERF contracts be aligned with Australia's 2020 emissions target timeline, with full funding for the scheme spent by 2020 (rather than 2024), greenhouse gas emissions abatement purchased by the ERF could grow from 67 million tonnes of CO2-e by 2020, to 130 Mt, an increase of over 90 per cent.
Read more here: Business Spectator