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Clean Energy Regulator’s latest report shows Australia is on track for a low carbon future

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Australia’s progression towards a low carbon future is gaining momentum, with the latest government estimates showing that emissions reduction schemes are on track to deliver bumper growth this year.

The Clean Energy Regulator’s latest Quarterly Carbon Market Report predicts that the schemes will provide 57.1 million tonnes of emissions savings in 2021. That figure would represent an increase of more than 7% on the result delivered in 2020, when the schemes produced 53.1 million tonnes of emissions savings. The “conservative” estimate is based on the average emissions intensity of generation from all fuel sources.

However, the report notes that this emission intensity from all fuel sources is falling as the country continues to move towards more renewables. The March Quarter 2021 report also shows the continuing success of the Emissions Reduction Fund (ERFThe 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.).

Key Takeaways from the quarterly report are:

The report also showed the Large-scale Renewable Energy Target of 33,000 gigawatt hours (GWh) was met by the end of January and that Australia has added a record 7.0 GW of renewable energy capacity in 2020. This is expected to result in an increasing oversupply in Large Scale Generation Certificates (LGCs) and may result in a softening of the LGCLarge-scale Generation Certificate under the Australian Renewable Energy Target. More wholesale price over time.

No major large-scale renewable energy projects reached final close in the first quarter of the calendar year, but the Regulator expects between 2 and 3 GW of capacity will come online by the end of 2021 amid strong indications of healthy investment.

Voluntary private and state and territory demand for Australian Carbon Credit Units (ACCUs) and large-scale generation certificates (LGCs) reached record highs, rising 39% compared to the same quarter last year to 532,000 units and certificates.

Part of this was attributed to significant corporate commitments, with Coles Group becoming the latest major supermarket to commit to a target of net-zero emissions by 2050, joining Woolworths Group and ALDI.

The three major supermarket chains were responsible for a combined 1% of Australia’s reported emissions in 2019-20.

The Clean Energy RegulatorThe Clean Energy Regulator is the Australia Government body responsible for accelerating carbon abatement for Australia through the administration of the National Greenhouse and Energy Reporting scheme, Renewable Energy Target and the Emissions Reduction Fund. More is now assessing expressions of interest for the development of an Australian carbon exchange, with predictions that the implementation of such a program could slash business costs by as much as $100 million by 2030.

The exchange would make trading of Australian carbon credit units simpler and reduce transaction costs to support the rapidly increasing voluntary demand from the corporate sector. 

More information on the Clean Energy Regulator’s March Quarter 2021 Quarterly Carbon Market Report can be found in the highlights video below or here.

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What does the Clean Energy Regulator's latest Quarterly Carbon Market Report predict for emissions savings in 2021?

The Clean Energy Regulator's Quarterly Carbon Market Report (March Quarter 2021) predicts that emissions reduction schemes will provide 57.1 million tonnes of emissions savings in 2021, an increase of more than 7% on the 53.1 million tonnes delivered in 2020. This is described as a 'conservative' estimate based on the average emissions intensity of generation from all fuel sources.

What were the results of Auction 12 held under the Emissions Reduction Fund?

Auction 12, held on 12 and 13 April 2021, contracted 6.8 million tonnes of forward carbon abatement from 10 contracts at an average price of $15.99 per tonne, for a total commitment of $108 million.

How many Australian Carbon Credit Units (ACCUs) does the Clean Energy Regulator expect the Emissions Reduction Fund to deliver in 2021?

The Regulator expects the Emissions Reduction Fund (ERF) to deliver ACCUs representing 17 million tonnes in 2021, an increase of more than 6% on the record 16 million tonnes delivered in 2020.

What is the projected emissions reduction from the Large-scale Renewable Energy Target (LRET) in 2021?

The Large-scale Renewable Energy Target (LRET) is on track to drive down emissions by 24.3 million tonnes in 2021, also a 6% increase over the prior year.

What growth is expected from the Small-scale Renewable Energy Scheme (SRES) in 2021?

The Small-scale Renewable Energy Scheme (SRES) is expected to provide the largest growth in emission reductions among the three key government programs, with 15.8 million tonnes of savings representing a 12% increase from 2020. Rooftop solar was the strongest growth area, with 792 megawatts installed in the first three months of 2021, up 28% on the same period the previous year, and total rooftop solar capacity added across the country in 2021 is expected to be between 3.5 and 4 gigawatts.

Did Australia meet its Large-scale Renewable Energy Target, and what capacity was added in 2020?

Yes, the report showed the Large-scale Renewable Energy Target of 33,000 gigawatt hours (GWh) was met by the end of January 2021, and Australia added a record 7.0 gigawatts (GW) of renewable energy capacity in 2020. This is expected to lead to an increasing oversupply in Large-scale Generation Certificates (LGCs) and may soften the LGC wholesale price over time.

What renewable energy capacity is expected to come online by the end of 2021, according to the report?

While no major large-scale renewable energy projects reached final close in the first quarter of the calendar year, the Regulator expects between 2 and 3 GW of capacity will come online by the end of 2021 amid strong indications of healthy investment.

How did voluntary demand for ACCUs and LGCs change in the quarter, and what drove this?

Voluntary private and state and territory demand for Australian Carbon Credit Units (ACCUs) and large-scale generation certificates (LGCs) reached record highs, rising 39% compared to the same quarter last year to 532,000 units and certificates. Part of this was attributed to significant corporate commitments, including Coles Group joining Woolworths Group and ALDI in committing to net-zero emissions by 2050. The three major supermarket chains were responsible for a combined 1% of Australia's reported emissions in 2019-20.

What development is the Clean Energy Regulator pursuing regarding an Australian carbon exchange?

The Clean Energy Regulator is assessing expressions of interest for the development of an Australian carbon exchange, with predictions that implementing such a program could slash business costs by as much as $100 million by 2030. The exchange would simplify trading of Australian carbon credit units and reduce transaction costs to support rapidly increasing voluntary demand from the corporate sector.

Who is the author of this article about Australia's low carbon future report?

The article is credited to Northmore Gordon and was published on July 1, 2021, in the News section of the Northmore Gordon website.

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