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Carbon Farming Initiative

Deliverable

Administration of the mechanism for crediting domestic land sector offsets through the Carbon Farming Initiative.

Snapshot

The Carbon Farming Initiative enables individuals and entities to earn Australian carbon credit units through a change in activities on the land to store carbon or reduce greenhouse emissions. It is enacted through the Carbon Credits (Carbon Farming Initiative) Act 2011.

Activities are conducted as offsets projects in accordance with a methodology determination, which sets out the rules for undertaking, monitoring and reporting on a project and generating Australian carbon credit units. Once issued, Australian carbon credit units can be sold to individuals and businesses wishing to offset a liability under the carbon pricing mechanism or to offset their emissions voluntarily.

Applications

The number of applications submitted to the Clean Energy Regulator under the Carbon Farming Initiative increased in all areas in 2013–14. The number of applications for:

  • recognition as an offsets entity rose to 98 in 2013–14, compared to 82 in 2012–13
  • declaration of an eligible offsets project rose to 100 in 2013–14, compared to 97 in 2012–13
  • certificates of entitlement to be issued with Australian carbon credit units (ACCUs) rose to 85 in 2013–14, compared to 29 in 2012–13.

Table 3.3 summarises the processing of applications in 2013–14.

Table 3.3: Number of applications received and/or processed under the Carbon Farming Initiative in 2013–14
TypeOn hand at 30 June 2013ReceivedApprovedWithdrawn or refusedProcessed within 90 days (%)On hand at 30 June 2014
Recognition as an offsets entity798952a998
Declaration of an eligible offsets project171008418b8615
Certificate of entitlement3858511002
Total2728326421 25

a In addition to the two applications withdrawn, one recognition as an offsets entity approved in 2012–13 was revoked in 2013–14.

b Includes one refused, one invalid and 16 withdrawn applications.

Projects

In 2013–14, 84 new projects were declared eligible under the Carbon Farming Initiative, bringing the total number of projects in the scheme to 139. Table 3.4 shows how those projects were distributed in terms of emissions abatement methodologies approved under the Carbon Farming Initiative.

The methodology categories, into which the 22 current methodology determinations are distributed, are:

  • Alternative waste—diverting legacy waste for fuel manufacture, or to alternative waste treatment or composting facilities
  • Landfill—capture and combustion of methane
  • Livestock—capturing methane from piggeries
  • Savanna burning
  • Vegetation—avoided deforestation, and environmental plantings.
Table 3.4: Number of projects declared eligible under the Carbon Farming Initiative in 2013–14, by methodology category
Methodology categoryNew projects in 2013–14Cumulative projects to 30 June 2014Percentage of total projects
Alternative waste4107.2
Landfill286748.2
Livestock475.0
Savanna burning9117.9
Vegetation394431.7
Total84139100.0

Case Study Avoided deforestation in western
New South Wales

For leasehold farmers in the Western Lands Division of New South Wales, the Carbon Farming Initiative’s avoided deforestation methodology provides an opportunity to earn additional income from land which struggles with marginal rainfall and limited business options.

The methodology, approved in June 2013, allows farmers to earn Australian carbon credit units by managing their land in a way that protects and maximises carbon storage in native forest that might otherwise have been cleared.

In 2013–14, avoided deforestation projects earned credits equal to over one million tonnes of stored carbon dioxide equivalent greenhouse gas emissions and accounted for 50 per cent of new sequestration projects under the Carbon Farming Initiative.

In addition to the environmental benefits of preserving over 250,000 hectares of native forest that might otherwise have been cleared for pasture, projects in the Western Lands Division have delivered millions of dollars to family farms, benefiting local communities as the farmers reinvest the money in improvement projects that stimulate employment and growth.

Most of the Western Lands Division, around 30 million hectares, is under perpetual leasehold agreements. The New South Wales Government has ensured that leaseholders who participate in the Carbon Farming Initiative will not be disadvantaged and has granted them exclusive rights to the carbon on their land. Announcing the decision in August 2013, the Minister for western New South Wales said:

This is about government paving the way and reducing red tape for business in rural New South Wales to continue to grow.

The successful uptake of the avoided deforestation methodology has also been supported by eligible interest holders, including several banks.

As GreenCollar Consulting Solutions, a consultancy firm that has been working with landholders to develop avoided deforestation projects, has observed:

The Carbon Farming Initiative is reinvigorating the local economy and community in western New South Wales, making it one of the most exciting regional developments in a generation.

Carbon credits

The 4,380,473 Australian carbon credit units (ACCUs) issued by the Clean Energy Regulator in 2013–14 were issued to 85 offsets projects under ten approved methodologies.

Since the Carbon Farming Initiative began, in December 2011, 6,130,652 tonnes of carbon dioxide equivalent greenhouse gas abatement has been delivered by projects under the scheme.

Details of ACCUs issued in 2013–14 are provided in Table 3.5, while Figure 3.1 shows the breakdown of ACCUs issued over the past two financial years.

Table 3.5: Number of ACCUs issued under the Carbon Farming Initiative in 2013–14, by methodology category
Methodology categoryProjects issued
with ACCUs
Units issuedPercentage of ACCUs issued in 2013–14
Alternative waste8153,7243.5
Landfill452,377,87254.3
Livestock439,0680.9
Savanna burning11441,65810.1
Vegetation171,368,15131.2
Total854,380,473100.0

Figure 3.1: ACCUs issued under the Carbon Farming Initiative in 2012–13 and 2013–14, by methodology category

see following table
Sum of ACCU2012-132013-14Grand Total
Grand Total175017943804736130652
Alternative waste155782153724309506
Landfill154838223778723926254
Livestock81693906847237
Savanna burning25884441658467542
Vegetation1196213681511380113

Stakeholder communication

The Clean Energy Regulator worked with stakeholders and clients to support participation in the Carbon Farming Initiative, with a focus on improving the quality of applications and reports.

Activities in 2013–14 included conducting a Darwin-based workshop for savanna burning project proponents; coordinating an auditors' workshop in Canberra; and participating in five industry events, including the Pan Pacific Pork Expo held in Broadbeach, Queensland.

In 2013–14, the Clean Energy Regulator handled 365 complex enquiries dealing with scheme entry, project management, reporting, and methodology determination interpretation. This was less than half the number of complex enquiries handled in 2012–13 (753), reflecting the newness of the scheme in 2012–13 and the Clean Energy Regulator's provision of publicly available information relating to the scheme.

The Clean Energy Regulator's site visit and monitoring programme aims to educate clients on their obligations under the Carbon Farming Initiative and to improve compliance with the requirements of the Carbon Credits (Carbon Farming Initiative) Act 2011. It also assists the Clean Energy Regulator to gather business intelligence and inform risk and client engagement strategies. Officers from the Clean Energy Regulator conducted site visits to ten eligible offsets projects across Australia in 2013–14.

The approach of the Clean Energy Regulator in developing a finely grained understanding of its clients is the key to operating effectively.

– Michael D’Ascenzo
Feature Article - Success of the CFI

Feature Success of the Carbon Farming Initiative

The Carbon Farming Initiative has continued to grow and contribute to Australia's efforts to reduce greenhouse gas emissions. Over six million tonnes of carbon dioxide equivalent emissions have been avoided or sequestered by eligible projects.

In 2013–14, the Clean Energy Regulator contributed and responded effectively to an increase in the number of projects participating in the initiative and a shift to a more diverse profile of projects.

Since the first eligible offsets project was declared, in August 2012, the Carbon Farming Initiative has experienced rapid growth, to reach a total of 139 eligible projects and 6,130,652 Australian carbon credit units issued by 30 June 2014. This is a significant contribution to Australia's efforts to reduce greenhouse gas emissions.

Provisions for the transition of projects from previous offset schemes, along with longer lead times in relation to the development of methodologies and establishment of other types of projects, saw landfill gas projects dominate the initial participation when the Carbon Farming Initiative commenced.

The Clean Energy Regulator has focused its engagement activity on assisting participation through seminars, guidance material and targeted attendance and promotion at industry events.

In 2013–14, engagement activity and assistance produced results with vegetation projects, including environmental plantings, avoided deforestation and regeneration projects, claiming an increased share of Australian carbon credit units. A marked increase in early dry season savanna burning projects, led largely by Indigenous groups, was another noteworthy feature of 2013–14.

An increase in the diversity of projects has introduced challenges for effective guidance and accurate and timely assessment, as each methodology addresses specific eligibility, abatement calculations and reporting requirements. Despite these challenges, the Clean Energy Regulator has met its performance targets.

To be able to effectively and efficiently manage continued growth in participation and diversity of project types, the Clean Energy Regulator is focused on streamlining its assessment processes and engagement activity.

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