The Australian carbon market was established by the Carbon Farming Initiative Act 2011
(CFI Act). The CFI Act was amended to include the Emission Reduction Fund (ERF) and the Safeguard Mechanism (CFI ACT Amended 2014).
Generally, the methodologies, measurement, verification, and issuance of carbon credits are referred to as the “CFI”, and the original A$2.5 billion-dollar fund set aside to procure Australian Carbon Credit Units is referred to as the “ERF”.
To date, the demand within the Australian carbon market has been dominated by the ERF Auction and contracting procurement process through a ‘reverse auction’ for a ‘Carbon Abatement Contract’ (CAC) with up to a 10-year contract duration. The auction and the subsequent contracts awarded to successful bidders, has set the benchmark for pricing the long run marginal cost of abatement in the market.