Steps to participate

Changes to the Carbon Farming Initiative

The legislative rules governing the Carbon Farming Initiative have changed. The Carbon Farming Initiative has been integrated with the Emissions Reduction Fund from 12 December 2014.

Content on this website will be progressively updated to reflect these changes. More information can be found on the Emissions Reduction Fund and other schemes page.

Step 1: Plan a project

Investing in the Carbon Farming Initiative is an important business decision. Before investing, you should undertake research so you can make an informed assessment of the potential benefits and risks of participating in the Carbon Farming Initiative.

There are two types of projects that you can implement under the Carbon Farming Initiative – emissions avoidance and sequestration. All methodologies are either emissions avoidance or sequestration project types. All projects must use an approved methodology, also called a methodology determination. Methodology determinations set out the rules for implementing your project.

Step 2: Apply to participate in the Carbon Farming Initiative

Before you can conduct a Carbon Farming Initiative project, you need to become a recognised offsets entity. A person who is granted recognition as an offsets entity has been assessed as a fit and proper person. This assessment is a requirement of the Carbon Credits (Carbon Farming Initiative) Act 2011 and is one of the safeguards designed to prevent non-compliance, deceptive or unfair conduct and fraud.

Participation is open to individuals, sole traders, businesses, local, state and territory government bodies and trusts.

When you apply to become a recognised offsets entity, we recommend that you nominate to open an account in the Australian National Registry of Emissions Units (ANREU). The ANREU is a secure electronic system designed to accurately track the location and ownership of Australian carbon credit units (ACCUs) issued under the Carbon Farming Initiative. Any credits you earn under the Carbon Farming Initiative will be issued into your ANREU account.

Step 3: Apply for approval of your Carbon Farming Initiative project

You will need to apply to have your project declared as an eligible offsets project. When applying for a project to be declared as an eligible offsets project, you will need to demonstrate that the project meets all of the eligibility criteria set out in the methodology determination you have chosen as well as the Carbon Credits (Carbon Farming Initiative) Act 2011.

Projects must comply with all federal, state, territory and local government laws and requirements and obtain all necessary approvals.

Step 4: Undertake your project - reporting and crediting

Once your project is declared an eligible offsets project, you must carry out your project, estimate abatement, and comply with the monitoring, record-keeping and reporting requirements according to the rules and instructions set out in the methodology determination for your project. You must also comply with the general reporting and notification requirements in the Carbon Credits (Carbon Farming Initiative) Act 2011.

Your obligations include collecting, maintaining and retaining accurate and complete records, undertaking quality assurance measures, providing specific information in an offsets report for the project and submitting the offsets report to the Clean Energy Regulator.

To apply for ACCUs, you submit an application for a Certificate of Entitlement, along with a project offsets report and an audit report. The audit report must be completed by a registered National Greenhouse and Energy Auditor. The Clean Energy Regulator will assess applications for a Certificate of Entitlement to ensure the abatement can be verified and the unit entitlement figure is correct. Successful applicants will be issued with a Certificate of Entitlement which advises of the number and type of Australian carbon credit units that the offsets project is entitled to receive for the reporting period. The Australian carbon credit units will be issued into your specified Australian National Registry of Emissions Units account.

Step 5: Participate in the market

In Australia, the voluntary carbon market is made up of individuals and organisations making voluntary commitments to offset carbon emissions or producing carbon neutral goods and services under the National Carbon Offset Standard.

To access the voluntary carbon market, project proponents and willing buyers of ACCUs may establish a commercial relationship and deal directly with each other or use the services of a financial services provider. These include brokers who arrange the sale of ACCUs, banks and other traders who can buy ACCUs, and organisers of collective pools of ACCUs to access wholesale market prices. When dealing with any of these service providers, you should make sure that your contact has an Australian financial services licence.

Another market, called the compliance market, will only be available until 2 February 2015. The compliance market is underpinned by the requirement in the Clean Energy Act 2011 for certain entities, known as liable entities, to surrender one eligible carbon unit for each tonne of carbon dioxide equivalent emissions they have produced in a year.

The repeal of the Clean Energy Act 2011 and the termination of the carbon pricing mechanism established by that Act, means the compliance market for ACCUs under the carbon pricing mechanism will end on 2 February 2015.

Liable entities can continue to use ACCUs to meet their 2013 - 2014 compliance year obligations under the carbon pricing mechanism until 2 February 2015.

The voluntary carbon market will continue to operate in Australia; facilitating the buying and selling of ACCUs.

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