First Emissions Reduction Fund auction date announced

The Clean Energy Regulator recently announced that the first Emissions Reduction Fund auction will open at 9:00 am AEST on Wednesday 15 April and run until 5:00 pm AEST on Thursday 16 April 2015.

The Clean Energy Regulator (CER) says that combined with a two-day bidding window, this notice period should allow bidders time to follow the registration steps and prepare a competitive bid.

Each auction is a single-round, pay-as-bid, sealed-bid auction format. This means that the auction contains one round, so sequential bidding is not an option.  Bids are sealed so that bidders do not see what others are bidding.

A successful bidder will automatically enter into a Carbon Abatement Contract with the CER on behalf of the Commonwealth of Australia. Successful bidders will be notified within five business days of the auction's close. If a project is not successful it can be re-bid into a subsequent auction.

Bids must be submitted through AusTender, the Government’s online bidding platform. Participants will be provided with information about how AusTender works.

Any projects that were declared and registered by the CER under the Carbon Credits Act before 13 December 2014 qualify. New projects must have the minimum total quantity offered for sale by the participant through that registration of more than 2,000 Australian Carbon Credit Units (ACCUs) per year on average over the term of the contract.

To bid, an entity will need to:

  • - have the project relating to the bid registered by the CER;
  • - be qualified by the CER to participate in auctions in relation to the project;
  • - have an account with the Australian National Registry of Emissions Units (ANREU);
  • - enter into a standardised Carbon Abatement Contract with the CER;
  • - be registered by the CER to make a bid at an advertised auction in relation to the project; and
  • ·- nominate the total volume of abatement to be delivered, the delivery schedule (dates and quantities of ACCUs), and the date when all ACCUs will be delivered.

For a bid to be successful, it must be less than the benchmark price set for that auction - the benchmark price will not be disclosed – and will be assessed under the following criteria:

  • - All bids will be ranked by price offered, with the lowest price bids being ranked first and the highest price bids being ranked last. Bids offering the same price will be ranked equally.
  • - Starting with the lowest price bid, the ACCUs offered for sale through that bid will be added to a notional pool of ACCUs. If the total number of ACCUs in the pool does not exceed 80 per cent of the overall volume, then that bid will be selected.
  • - This is done for each ranked bid in sequential order until adding the offered and bid ACCUs to the pool causes the number of ACCUs in the pool to exceed 80 per cent of the overall volume.
  • - If adding the offered and bid ACCUs to the pool causes the number of ACCUs in the pool to exceed 80 per cent of the overall volume, then that bid will be selected and no further ranked bids will be selected.
  • - If adding ACCUs (offered for sale through any of two or more equally ranked bids) to the pool causes the number of ACCUs in the pool to exceed 80 per cent of the overall volume, then all of those bids will be selected and no further ranked bids will be selected.

A bid that complies with the above will be successful for that auction.