Emissions Reduction Fund

Climate change is a global problem that requires a global solution. Countries have agreed to a collective goal of limiting global average temperature rise to less than 2°C above pre-industrial levels.

In mid-2015 the Australian Government announced its emissions reductions target of 26-28 per cent below 2005 levels by 2030 (Targets as at 11 August 2015). This post-2020 target has been announced in the lead up to negotiations for a new global climate agreement to be concluded at the United Nations Framework Convention on Climate Change (UNFCCC) Conference of the Parties in Paris in late 2015 (30 November to 11 December 2015).

Australia will meet its 2030 target through Direct Action - such as the Emissions Reduction Fund, its Safeguard Mechanism and other complementary policies.

Table: Australia’s 2030 emissions reduction target – announced 11 August 2015. Source: Commonwealth of Australia (2015)

CoA 2015

  • The Emissions Reduction Fund

    The Emissions Reduction Fund is a voluntary scheme that aims to provide incentives for a range of organisations and individuals to adopt new practices and technologies to reduce their emissions. It is enacted through the Carbon Credits (Carbon Farming Initiative) Act 2011, the Carbon Credits (Carbon Farming Initiative) Regulations 2011 and the Carbon Credits (Carbon Farming Initiative) Rule 2015. THE ERF replaces the Carbon Farming Initiative.

    In April 2015, the first Emissions Reduction Fund auction took place. More than 47 million tonnes of carbon abatement was contracted at an average price per tonne of abatement of $13.95 (Table below). Through this auction, the Government committed $660 million to 144 projects that will reduce emissions in Australia. The emissions reductions from these projects will be delivered over the next 10 years, which means that reductions purchased in the first auction will contribute not just to Australia’s 2020 target, but to our 2030 target. Tracking of Australia's emissions is made publically available here.

    Table: Results of first ERF auction in April 2015. Source: Commonwealth of Australia, 2015 

    ERF first auction 2015

    The Government has published a range of methods that help businesses, communities and landholders to plan and undertake projects. The methods explain how to carry out a project, including how you measure your emissions reductions and the reporting requirements during the life of the project.

    For more information on these methods relevant to dairy industry see myCarbonFarming - Dairy methods.

    The Clean Energy Regulator will hold the second Emissions Reduction Fund auction on 4–5 November 2015, and will hold further auctions over the coming months and years.

  • Current dairy ERF methods
    SOURCE: Information is available for landholders to participate in the Emissions Reduction Fund via the myCarbonFarming website.

    Participation in the Emissions Reduction Fund is voluntary, so there is no pressure on dairy farmers to get involved. Current dairy industry modelling suggests that well managed dairy farms have few options to profitably reduce emissions of methane and nitrous oxide.

    As new methodologies are developed for the dairy industry beyond this project, these too will be incorporated into existing industry tools, such as the Australian Dairy Carbon Calculator, as appropriate. 

    There are currently two methods available specific to dairy farmers:

    1. Destruction of methane generated from dairy manure in covered anaerobic ponds

    Dairy farmers across Australia can use this methodology to generate carbon credits by installing covers and gas capture and combustion equipment on existing manure ponds or on new ponds.Gas captured from this process can be used to generate electricity on site, or it can be burned off using a flare to reduce methane emissions.The benefits of generating electricity from a covered dairy pond are substantial and include reduced electricity costs and the ability to sell any excess electricity to the grid.

    Linkages to the Australian Dairy Carbon Calculator: After consultation, it was concluded that this methodology would not be required to be incorporated into the Australian Dairy Carbon Calculator. However, the methodology does mention the Advisor calculator to estimate volatile solids production (kg VS/milker.day). This has been included as a calculated number on the baseline and strategy farm systems.

    2. Reducing greenhouse gas emissions in milking cows through feeding dietary additives

    The methodology involves the reduction of greenhouse gas emissions from milking cows by feeding them a dietary supplement. This reduces methane produced in the cows’ rumen and emissions of nitrous oxide and methane in dung and urine. The Determination can be applied to milking cows in Australian Dairy Feeding Systems 1-3.

    Linkages to the Australian Dairy Carbon Calculator: The methodology is retrospective and computes the emissions intensity (t CO2e/cow) of three baseline years compared to the emissions intensity of the strategy year. The equations associated with the feeding dietary fats methodology has been covered in latest version of the Australian Dairy Carbon Calculator.