Australia’s Finance Minister Mathias Cormann on Monday said the government has no plans to extend funding for the Emissions Reduction Fund, raising further questions over the nation’s climate policies as a report predicted emissions will continue to grow into the 2030s.
Cormann told The Australian newspaper that current budget plans do not include further funding for the A$2.55 billion ($1.8 billion) ERF once its already allocated cash has been spent, which is expected to happen by the end of this year.
“Any future funding for the Emissions Reduction Fund beyond 2024 will need to be considered through a future budget process and would hit the budget bottom line at that point,” he said.
“No funding has been allocated at this point for the period beyond 2024.”
Then-Prime Minister Tony Abbott and Environment Minister Greg Hunt said in August last year that the government was planning to contribute a further A$200 million per year until 2030.
That additional funding would only be sufficient to meet 14% of Australia’s 2030 emissions target, one report found, but unless the Ministry of Finance changes its policy before the budget is due on May 10, Australia may end its key emission-cutting policy at the end of this year.
“With no further funding be allocated, this will leave the Australian market with no policy to curb emissions growth,” said Hugh Grossman, executive director of market analysts Reputex.
A spokesperson for Greg Hunt declined to confirm Cormann’s comments.
“The Government has made a long-term commitment to funding the ERF through to 2030. At present there is over $1.2 billion still available within the initial allocation of $2.55 billion. As the ERF White Paper said, further funding will be considered in future budgets,” the spokesperson told Carbon Pulse.
In two ERF auctions so far, Australia has contracted the purchase of some 93 million tonnes of CO2e over the next decade at a cost of around A$1.2 billion, nearly half the ERF’s total budget. The remainder is likely to be committed during auctions this year. The first one is scheduled for Apr. 27-28.
NO PEAK IN SIGHT
Cormann’s comments came as Reputex published new analysis predicting that Australia’s GHG emissions would increase 6% by 2020 and would continue to rise until 2030 at least.
“As major new LNG and coal mining facilities begin to ramp up, even under lower commodity prices, we will see their demand for electricity grow, which will increase emissions from coal-fired power generation,” Grossman said in a statement.
“Under those conditions we are likely to see emissions grow close to the 2005-06 high just prior to 2020, before reaching a new record high after 2020. We project this pathway will continue to grow under current policy, with no peak in emissions within sight for the Australian market prior to 2030,” he said.
Australia’s GHG emissions rose 1.3% in 2014-15 and even though the country will meet its 2020 target of cutting emissions to 5% below 2000 levels, it will rely heavily on banked reductions that were made during the first Kyoto Protocol commitment period, as well as cheap UN offsets.
Environment Minister Hunt said in December Australia is likely to open up to buying more UN offsets next year.
“Meeting Australia’s abatement task is largely just a victory in accounting terms. We have met our target, but we used a credit to get there, so it’s not a sign of any progress to reduce emissions,” said Grossman.
“The obvious opportunity is for the government to address the demand shortfall via the Safeguard Mechanism, however the government has deferred a review of that policy until 2017, which is unlikely to be implemented until 2018-19 at the earliest,” he told Carbon Pulse.
“Without a statement ahead of the federal election, domestic climate policy is likely to again be in limbo, all the while emissions keep increasing.”
By Stian Reklev – stian@carbon-pulse.com
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