Environment Minister Greg Hunt has released his department's white paper on Direct Action, announcing an extra $1 billion spend for the centrepiece Emissions Reduction Fund, which will pay polluters for abatement efforts.
The ERF will now be capped at $2.55 billion over the next four years, rather than the $1.55 billion over three years, vindicating the swathe of commentators which have said that the policy was insufficient to meet Australia's international climate obligations.
Late last year, a report by consultancy firm Sinclair Knight Merz, commissioned by the Climate Institute, found that even with a reduced emissions cut of just 370 million tonnes, the Abbott government would need to spend $4 billion more than planned in the Direct Action policy to meet the 2020 target.
However, the 370 million tonne figure is considered conservative, with government officials predicting then a 440 million tonnes target by 2020 would be needed.
Furthermore, carbon market analysts RepuTex said the cost blowout by 2020 would be a whopping $35 billion, using more aggressive modelling that assumed the ‘imperfect implementation’ of abatement projects, compared to SKM's 'perfect' implementation.
Mr Hunt said today that the extra billion will be added in the May budget "with further funding to be considered in future budgets".
Direct Action's abatement program has also come under fire for its planned five-year contracts, with analysts arguing the length is insufficient to attract financing from banks for what would be major undertakings by emitters.
ABC Online says the ERF auctions will begin late this year and will be run every three months.