Emissions Reduction Fund

Australia's carbon crediting scheme, the Emissions Reduction Fund (ERF) offers landholders, communities and businesses the opportunity to run projects in Australia that avoid the release of greenhouse gas emissions or remove and sequester carbon from the atmosphere.

This can be through projects involving:

new technology
upgrading equipment
changing land or business practices to improve productivity or energy use
changing the way vegetation is managed to store more carbon

Eligible projects include those associated with:

vegetation management
agriculture
energy consumption
waste
transport
coal and gas production
industrial processes

Participants can earn Australian Carbon Credit Units (ACCUs) for every tonne of tonne of carbon dioxide equivalent (tCO2-e) emissions stored or avoided by a project. ACCUs can be sold to generate income, either to the Australian Government through a carbon abatement contract, or to companies and other private buyers in the secondary market. Government purchasing of ACCUs occurs through the Powering the Regions Fund.

The Carbon Credits (Carbon Farming Initiative) Act 2011 established the ERF in 2015.

Our department is responsible for:

policy development
the legislation
oversight of the ERF, including advising the Minister on making the technical rules (methods)

The Clean Energy Regulator is the Australian independent statutory authority responsible for:

developing carbon crediting methods under the ERF (the technical rules for carrying out a project) through a co-design process
administering the ERF
making emissions reduction purchases on behalf of the Australian Government and managing carbon abatement contracts
the Secretariat to the Emissions Reduction Assurance Committee (ERAC)

Eligibility

Projects must:

be new (not have begun to be implemented),
go beyond business-as-usual activities,
not be required by law,
not be receiving financial support from specified government programs, such as the New South Wales and Victorian energy efficiency schemes,
follow an approved carbon crediting method, which sets out the rules for running the project and estimating emissions reductions, and
meet the eligibility criteria and not be an excluded activity listed in Division 2 of the Carbon Credits (Carbon Farming Initiative) Rule 2015.

The person or entity responsible must have the legal right to carry out the project activities and a lawful and exclusive right to be issued all ACCUs generated by the project. All project participants must undergo a fit and proper person assessment.

Process for participating

To participate in the ERF you need to register your project via the Clean Energy Regulator Client Portal.

Typically, you will follow these steps:

Apply to register yourself and your project under the ERF
Deliver project
Report on your project at regular intervals (certain intervals may require an ERF audit report) and claim ACCUs for the carbon abatement achieved in each reporting period
Hold your ACCUs or sell your ACCUs to generate income, either to the Australia Government through a carbon abatement contract or to private buyers
ACCUs may be voluntarily retired (cancelled) or surrendered to meet other obligations.

Methods

Methodology determinations are the rules for estimating emissions reductions to ensure they are genuine and additional to business-as-usual operations.

The Clean Energy Regulator co-designs carbon crediting methods with industry, potential end-users, scientists and technical experts. The Emissions Reduction Assurance Committee (ERAC) releases draft methods for public consultation to ensure they are fit for purpose and assesses whether methods comply with the Offsets Integrity Standards set out in the legislation. On consideration of the ERAC's advice, the Minister decides whether to make methods as legislative instruments.

Read about how carbon crediting methods are developed