But the costs of abatement are uncertain, just as are the costs of failing to abate.
At the moment it "meets the government's objective that the mechanism will not be a driver of abatement towards the 2020 target", AIG said.
These investments will deliver a positive return to the CEFC, with a cost of abatement in the order of negative $2.40 per tonne CO2e.
In 2013, the CEFC's investments of $536m mobilised on average $2.90 of private sector investment for every $1 of CEFC investment and will achieve abatement of 3.88m tonnes of CO2e per annum.
And that is even before taking into account that much of the abatement bought in this first auction will not happen until after 2020.
The initial auction under Direct Action's $2.55bn emissions reduction fund was revealed last week to have purchased 47m tonnes of carbon dioxide abatement at $14 per tonne – a result environment minister Greg Hunt claimed was "stunning" and proved Australia would easily meet its 2020 target of a 5% reduction compared with 2000 levels by 2020.
That task now requires less than one third of the abatement originally thought necessary because emissions have fallen without government action – partly because of the closure of manufacturing industry.
The report does not produce new modelling or quantify the costs associated with structural adjustment or abatement, but it synthesises a body of existing research to highlight the fact that it is becoming cheaper to cut carbon emissions.
According to the AI Group's calculations, which assume an abatement cost of $35 a tonne, maintaining Australia's emissions at 5% lower than 2000 levels until 2025 would require at least $19bn to be spent on Direct Action.
Calculations by Peter Christoff, associate professor at the University of Melbourne, indicate that even if the fund can continue to buy abatement at $14 a tonne it will fall at least 23% short of the 2020 target, or require almost $750m more.
So European consumers, who are paying for greenhouse-gas abatement through their electricity and other bills, are contributing billions of dollars to the Chinese government's coffers via the CDM.Easy options HFC-23 and options HFC-23ly dirty (ie, profitande) industrial gases—will sotherun out.
