The top three methods contracted came from facilities, landfill and waste and vegetation but also included industrial fugitive emissions, transport and energy efficiency measures.
This year's auction was not as strong as the previous one in September last year which purchased 7MMt; however the latest one set the record of abating 15 million tonnes of emissions. More than 200 million tonnes of abatement has been contracted at an average price of A$12.32.
The auction round saw just one project, the Orica Kooragang Island Decarbonisation Project, secure half of the volume contracted, on behalf of explosives producer Orica.
"The ERF continues to back projects that deliver on-the-ground practical action to reduce emissions, providing benefits to our farming and Indigenous communities, and is helping business and industry to offset their emissions," energy and emissions reduction minister Angus Taylor said.
"The government is focussed on ensuring Australia's role in the global effort to reduce emissions doesn't come at the expense of our prosperity and the ERF is central to that."
The ERF was established under former PM Tony Abbot as a replacement to the Rudd/ Gillard emissions trading scheme that it axed in 2014. The scheme until now has been criticised for failing to meaningfully reduce emissions, with limited industry participation.
However CER chair David Parker said 117 projects have registered with the ERF since the September 2020 auction.
"So there is strong supply coming online to meet existing contracts and growing private demand for Australian carbon credit units (ACCUs). This bodes well for the overall liquidity of the market," he said.
Industry group the Carbon Market Institute said this year could mark a turning point in federal climate policy.
CMI CEO John Connor said a similar size auction due in September later this year will need to draw on Morrison's Climate Solution Fund commitments of just under $2 billion over the next 15 years.
He said the average $15.99 carbon price in this auction is lower than the spot market prices of around $18 that Australian companies are paying in voluntary or compliance emissions trades.
"The Morrison government has begun making some welcome pragmatic changes to the Emission Reduction Fund carbon market, and is seeking to expand accessibility," Connor said.
"We continue to recommend strengthening the safeguard mechanism so emission intensive businesses become the primary funder cutting emissions rather than the taxpayer.
Connor noted the safeguard mechanism already requires most major emitters measure and manage their emissions, and make compliance investments if they exceed set baselines.
"Those baselines could, with appropriate reforms, be aligned against strengthened 2030 and 2050 Australian climate goals that provide clearer investment guidelines for business transitioning to net-zero emissions," he said.
"US President Joe Biden's Summit has shown us all that Australia will need to do more on climate change if it wishes to avoid penalties put in place by our trading partners - such as carbon border adjustments that are looming in Europe and Japan."
