Council participation in the Emissions Reduction Fund
Survey results
Background
In October 2014 the MAV emailed a briefing paper to all councils regarding the Federal Government’s
proposed Emissions Reduction Fund (ERF). The purpose of the brief was to provide an overview of
the scheme in order to enable councils to start considering the possible opportunities and risks of
participating. A number of councils had contacted the MAV seeking information about the ERF and
asking whether the MAV or ICLEI or another organisation could possibly administer a process to
enable local government participation.
In addition to the briefing paper, the MAV also distributed a short survey prepared by Ironbark
Sustainability in consultation with the MAV and ICLEI Oceania. The survey sought to determine
whether there was scope for the MAV and/or ICLEI Oceania to play a role as an "aggregator" of
abatement for Victorian councils.
As noted in the briefing paper to councils, Victorian councils are eligible to participate in the ERF if
they have projects that offer low cost abatement and will result in significant amounts of greenhouse
gas reduction. Given the transaction and compliance costs involved, it is unlikely that small projects
(for example, those that result in 2,000-10,000 tonnes of greenhouse gas reduction over 5 years)
would be viable. In addition to the actual capital cost of a project, there is a range of administration,
auditing, compliance, legal and technical costs associated with participating in the ERF.
If councils were to participate in the ERF they would be "competing" against other businesses and
sectors to provide the lowest cost abatement. It is likely that for councils to participate there would
need to be a degree of collaboration between councils in order to aggregate emissions reductions. By
aggregating emissions reductions from large groups of councils, transaction costs could be reduced,
although it’s likely that other costs, including administrative costs, would increase.
Council survey: Results
There were 33 respondents to the survey, representing 30 councils and one greenhouse alliance.
Eleven metropolitan councils and 19 rural or regional councils provided responses. Twenty-three
respondents were officers or team leaders/coordinators, six were managers, and four were directors,
general managers, CEOs or councillors.
Around three-quarters of respondents said they understood the basics of the ERF:
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One third of respondents indicated that they’d investigated ERF opportunities for their council:
The survey sought details about any planned* projects over the next five years that could potentially
result in more than 2000 tonnes of greenhouse gas abatement. Councils were asked about internal
council operations or “corporate” projects – such as major upgrades to council-owned leisure or civic
centres, and energy efficient street lighting retrofits – as well as external or “community” projects –
such as energy efficiency programs for residents or local businesses and facilitating energy
performance contracting for local industry.
* Note: “planned” means that the project is in a council strategy or plan but does not necessarily mean that funding has been
allocated.
Seventeen councils reported that over the next 5 years they have planned corporate projects that
could result in greenhouse gas abatement of more than 2,000 tonnes:
Fifteen of these 17 respondents provided further detail about these projects. Examples provided
included Energy Performance Contracts (EPCs) for council facilities; projects at major buildings
including leisure centres and swimming pools; and “bulk changeover” of residential street lighting to
more efficient alternatives.
Further analysis of the 15 responses revealed that only five respondents had nominated projects that
would be eligible under the ERF. Council building solar installations and renewable energy projects
are excluded under the ERF, as are street lighting projects that have already commenced or that were
funded through previous Federal Government funding programs (such as the Community Energy
Efficiency Program).
These results suggest that in all probability there are only a small number of council projects that may
result in at least 2,000 tonnes of greenhouse gas abatement over the next five years. The fact that
council responses included ineligible projects also indicates that councils possibly have less of an
understanding of the ERF than was first thought.
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Six councils reported that over the next 5 years they have planned community projects that could
result in greenhouse gas abatement of more than 2,000 tonnes:
Further analysis of these projects indicate that the majority were either in the very early planning
stages; had already begun and would therefore be ineligible under the ERF; or again involved solar
projects that have been excluded from the ERF. Two of the projects in the planning stages have the
potential for large-scale emissions reduction (i.e, over 100,000 tonnes).
Conclusion
Based on the responses provided, it appears that councils have few projects that would be eligible and
would generate sufficient greenhouse reductions in order for participation in the ERF to be financially
viable. At this stage there doesn’t seem to be any scope or need for the MAV and/or ICLEI Oceania to
play a role as an "aggregator" of abatement for Victorian councils.
It’s important to acknowledge that the survey of councils was undertaken prior to the Carbon Farming
Initiative Amendment Bill, which established the ERF, being passed by parliament. Pending
finalisation of the various rules and methods for the scheme, and completion of the first auction,
there’s still much about the operation of the ERF that remains unclear
Thirty-one of the 33 respondents to the survey indicated that they would like to receive further
information about the ERF. MAV, ICLEI Oceania and Ironbark Sustainability intend to keep a
watching brief on the ERF and will provide councils with further information if and when it looks like
there might be opportunities for councils.
Useful links/resources
Australian Government Department of Environment ERF page
ERF White Paper
Ironbark Sustainability article on ERF and local government
Norton Rose Fulbright presentation re the ERF and opportunities for local government
Carbon Market Institute
February 2015
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