The budget proposed by the Australian government Tuesday contained no fresh funding for the Emissions Reductions Fund (ERF), meaning the country’s primary tool to drive carbon cuts looks likely to run out of cash at the end of the year.
Finance Minister Mathias Cormann had already signalled in February that the A$2.55-billion ($1.93-billion) ERF would not receive any further money in this year’s budget.
Even though the budget cut was expected, questions remain as to Australia’s ability to cut emissions going forward and the future of the country’s carbon project developers.
“There’s no extra funding for the government’s current principal policy tool … [It’s] now likely to be expended by the end of 2016, well before the policy review in 2017, [and] threatening jobs and growth in the carbon farming and other emission reduction industries,” John Connor, CEO of The Climate Institute, said Tuesday.
Through the ERF, Australia has so far bought nearly 93 million tonnes of CO2e cuts. A third auction was held last week, with the results due to be published later this week.
The ERF spent half its budget in the first two auctions last year, and is expected to have no further funds after the fourth auction, scheduled for Q4 this year.
“This would imply a minimum nine-month funding gap for the ERF (Nov. 2016 to July 2017), with a more likely scenario that funding may not be decided until Nov. 2017 (when the government’s climate policy review reports), creating a 12-month gap in climate policy,” analysts Reputex said in February.
The other pillar of Australia’s climate policy, the Safeguard Mechanism, commences on July 1, but most analysts say it will have little impact on limiting emissions as benchmarks for Australia’s biggest emitters are set at historically high levels.
By Stian Reklev – firstname.lastname@example.org