The Emissions Reduction Fund (ERF) is the central component of the Australian Government's Direct Action Plan. The fund will provide incentives for emissions reduction activities across the Australian economy. The recently released Emissions Reduction Fund White Paper sets out a cost-effective approach to climate change and reducing Australia’s industrial emissions.

The government is committed to meeting its target of five per cent below 2000 levels by 2020. Since the release of the Emissions Reduction Fund Green Paper in December 2013, the abatement task has been revised down from 431 to 421 million tonnes of CO2-e over the period to 2020.

In designing the ERF, the government reviewed more than 290 submissions on the Terms of Reference released in October 2013, and more than 340 on the Green Paper. The fund will help drive private sector investment to achieve measurable emissions reductions which will be additional to business as usual.

The White Paper outlines the three major elements of the ERF:

Crediting emissions reductions

Emissions reduction methods will be streamlined to simplify participation by businesses, with minimal administration.

Purchasing emissions reductions

The government will commit $2.55 billion to the fund, with further contributions to be considered in future budgets. The funds will be allocated flexibly over time.

Safeguarding emissions reductions

The safeguard mechanism will protect the values of funds allocated, creating a stable policy landscape in which businesses can make new investments. It will be restricted to facilities with direct emissions of 100 000 tonnes of CO2-e or more per year. This approach will limit the number of covered businesses to around 130.

The Department of the Environment is working to identify opportunities and methods businesses can use in their operations to reduce emissions.

The Emissions Reduction Fund White Paper is available at: