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Carbon Farming Initiative

Deliverable: Management of the Carbon Farming Initiative through the issue of carbon credit units in relation to eligible offsets projects.

Snapshot

The Carbon Farming Initiative aims to encourage a shift in land management practices to store carbon or reduce greenhouse gas emissions on the land. Individuals and entities participating in the scheme may be eligible to earn Australian Carbon Credit Units (ACCUs), which can be sold to individuals and businesses wishing to offset liability under the carbon pricing mechanism or to offset their emissions voluntarily.

Under the initiative, activities to store carbon or reduce greenhouse gas emissions are conducted as offsets projects in accordance with a methodology determination which sets out the rules for undertaking and monitoring a project and generating ACCUs. The Domestic Offsets Integrity Committee, an independent expert committee, assesses proposals for methodologies and advises the responsible minister on their approval.

Since the Carbon Farming Initiative commenced:

  • 20 methodology determinations have been approved
  • 173 individuals and entities have been recognised as offsets entities
  • 68 offsets projects have been declared eligible
  • 1,750,179 ACCUs have been issued—1,704,164 for landfill and alternative waste projects, 11,962 for vegetation projects, 25,884 for savanna burning projects and 8,169 for agricultural projects
  • 97.31 per cent of ACCUs issued have been surrendered by entities liable under the carbon pricing mechanism
  • 22 projects have collectively prevented more than 1.75 million tonnes of carbon dioxide–equivalent emissions from entering the atmosphere.

Applications

The number of applications received for recognition as an offsets entity under the Carbon Farming Initiative declined from 106 in 2011–12 to 83 in 2012–13, while the number of applications for declaration of an eligible offsets project increased from 14 to 97. A total of 29 applications for certificates of entitlement to be issued with ACCUs were received.

The Clean Energy Regulator processed 100 per cent of eligible offsets project and certificate of entitlement applications within its legislated timeframe of 90 days. Table 3.3 provides a summary of applications received and processed in 2012–13.

Table 3.3: Applications processed under the Carbon Farming Initiative
TypeOutstanding at 30 June 2012ReceivedApprovedProcessed within 90 days Outstanding at 30 June 2013
(no.)(no.)(no.)(%)(%)
Total 90 208 230 27
Certificate of entitlement 0 29 22 100 3a
Declaration of an eligible offsets project 14 97 68 100 16b
Recognition as an offsets entity 76 82 140 91 8c

a Four applications withdrawn.

b Twenty applications withdrawn and seven applications refused.

c Six applications withdrawn and four applications refused.

Carbon credits

The 1,750,179 ACCUs issued by the Clean Energy Regulator in 2012–13 were for offsets projects under seven approved methodologies (as shown in Table 3.4). These carbon credits were sold to third parties, including banks, brokers and traders, before being sold on to liable entities which used them to acquit liability under the carbon pricing mechanism.

Table 3.4: ACCUs issued, by methodology
Methodology determination Units issued Units issued
(no.) (%)
Total 1,750,179
Capture and combustion of methane in landfill gas from legacy waste 1,512,996 86.0
Capture and combustion of methane in landfill gas from legacy waste: upgrade projects 35,386 2.0
Destruction of methane generated from manure in piggeries 8,169 0.5
Diversion of legacy waste to an alternate waste treatment facility 110,441 6.0
Landfill diversion for alternative fuel manufacture 45,341 2.6
Reduction of greenhouse gas emissions through early dry season savanna burning 25,884 1.5
Reforestation and afforestation 11,962 0.7

Stakeholder communication

The Clean Energy Regulator worked with stakeholders to support participation in the Carbon Farming Initiative, with a focus on understanding how to implement a project. Activities in 2012–13 included 16 workshops, held in regional and metropolitan areas, and three interactive webinars. The workshops and webinars covered the following methodology determinations:

  • capture and combustion of methane in landfill gas from legacy waste
  • capture and combustion of methane in landfill gas from legacy waste: upgrade projects
  • destruction of methane from manure in piggeries
  • environmental plantings.

A total of 884 people attended: 467 attended the face-to-face workshops, and 417 participated in the webinars. The events drew a broad audience, attracting participants across several sectors from large corporations to small farms, as well as legal, audit and financial service providers.

Audit

All applications for certificates of entitlement under the Carbon Farming Initiative were accompanied by independent reasonable assurance audit reports. Audits were undertaken by registered greenhouse and energy auditors and were carried out in accordance with the National Greenhouse and Energy Reporting Audit Framework.

The Clean Energy Regulator focused on the education of auditors and the continual development of audit practices in relation to Carbon Farming Initiative projects throughout 2012–13.

Feature: Fish River
Fire Project

A reduction in greenhouse gas emissions, the employment and training of Indigenous Australians and improved protection of culturally significant sites and rare and threatened species are some of the benefits delivered by the Fish River Fire Project, Australia’s first controlled savanna burning project approved under the Carbon Farming Initiative.

Located on the Fish River property 200 kilometres south-west of Darwin, the project combines traditional Indigenous burning knowledge with modern technology to protect country and cultural sites while generating Australian Carbon Credit Units (ACCUs).

Research has shown that early dry season savanna burning reduces greenhouse gas emissions that would otherwise be caused by uncontrolled late dry season wildfires. The Fish River Fire Project reduced the area burnt in the late dry season each year from an average of 36 per cent of the whole property in 2009 to approximately 1 per cent in 2012.

The Indigenous Land Corporation, which acquired and manages the property on behalf of traditional owners, is using the experience of the Fish River Fire Project to inform the development of other Indigenous savanna burning projects.

Declared an eligible offsets project by the Clean Energy Regulator in October 2012, the Fish River Fire Project was issued with 25,884 ACCUs in May 2013.

The Indigenous Land Corporation sold all those ACCUs to Caltex Australia through an expression of interest process.

Income from the sale will be reinvested by the Indigenous Land Corporation into programs that provide environmentally based jobs for Indigenous Australians and environmental management at Fish River, which is home to many rare and threatened species, such as the Northern Quoll, Gouldian Finch and Masked Owl.

Caltex Australia used the Fish River Fire Project ACCUs to acquit part of its liability under the carbon pricing mechanism in June 2013.

The sale of those ACCUs on the open market is a sound indicator of the contribution of the Carbon Farming Initiative to building a strong secondary market for the trade of carbon credits, and of the markets’ interest in ACCUs.

In fact, of the 1,750,179 ACCUs issued to Carbon Farming Initiative projects in 2012-13, around 97 per cent were sold into the secondary market, where they were purchased and surrendered by just 5 per cent of liable entities as part of their obligations under the carbon pricing mechanism.


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