Australia’s state budget announced late Tuesday provided A$468 million ($373 million) in funding for the Emissions Reduction Fund for the year 2018-19, taking the total funds allocated to the ERF over the next four years to over A$1.5 billion.
The fund is Australia’s primary instrument to meet its target of reducing GHG emissions to 5% below 2000 levels by 2020, but some market observers have expressed concern that the government had yet to allocate all the fund’s target amount of A$2.5 billion.
After Tuesday’s budget, around A$1.6 billion has been allocated.
The fund recently spent A$660 million buying 47 million tonnes of CO2e worth of emission cuts in its first auction.
The government says the ERF provides good value for money by using an auction process to deliver emission cuts at lowest cost. The policy has drawn fire from many climate policy observers, mainly because without other measures the government has no means of ensuring emissions don’t rise in other parts of the economy.
Frank Jotzo of the Australian National University told Carbon Pulse that creating an emissions trading system would create stronger incentive to cut emissions while bringing in government revenue.
“The government is planning to spend around A$400 million per year paying some businesses for projects that are presumed to reduce emissions. If we had emissions trading, it would bring money into the budget, in the order of A$2 billion per year. That is twice the most recent aid cut. And it would provide an economy-wide incentive to cut emissions, not piecemeal subsidies.”
Today’s budget also prolonged by two years funding to the Climate Change Authority, an independent advisory body that the government had wanted to abolish.
According to the Guardian newspaper, the Palmer United Party has put pressure on the government to ensure continued funding to the Authority.