This page contains information about factors to consider when planning a Carbon Farming Initiative project. Applicants should also consider seeking independent legal and/or financial advice regarding their own circumstances and requirements.
Carbon Farming Initiative eligibility flow chart
This section provides a guide to assist individuals and businesses in determining eligibility to participate in the Carbon Farming Initiative.
Do you have the legal right to undertake the project?
- In most cases, the land owner or lessee has the right to undertake a Carbon Farming Initiative project. If your project involves entering someone else's property (e.g. to remove feral animals or to manage plantings of trees), ensure you have the right to do so.
- If another business owns and/or operates the facility which generates emissions such as landfill or a piggery, ensure you have the right to capture and combust gas on that site as well as the right to generate electricity, where relevant.
- If your project is a sequestration project, you will also need to hold the applicable carbon sequestration right and have the consent of eligible interest holders.
Is the activity additional?
- Only activities that are not widely used by farmers or other landholders are eligible under the Carbon Farming Initiative. These activities are known as the 'positive list'.
- Check your activity is on the positive list.
- Information on how new activities are added to the list is available on the Department of Climate Change and Energy Efficiency website.
Does the activity cause perverse or unintended impacts?
- Only activities that do not have perverse or unintended impacts on the allocation of prime agricultural land, water availability or biodiversity are eligible under the Carbon Farming Initiative. Excluded activities are known as the 'negative list'.
- Check your activity is not on the negative list.
Is the project area in Australia?
- The project must be undertaken in Australia (this includes external territories such as Norfolk Island).
Are you legally required to do the activity?
- The activity cannot be required to be undertaken by or under a law of the Commonwealth, a State or a Territory. There are exceptions to this which apply to transitional landfill projects.
- The project area, or any part of it, cannot be used to meet an obligation under a Commonwealth, State or Territory law to offset or compensate for the adverse impact of an action on vegetation.
Carbon Farming Initiative methodologies
Offsets projects established under the Carbon Farming Initiative need to use methodology determinations. These contain the detailed rules for implementing and monitoring specific abatement activities and generating Australian carbon credit units under the scheme.
Steps for participating in the Carbon Farming Initiative
In applying to participate in the Carbon Farming Initiative there are seven key steps which you will need to consider.
Different ways to own and manage an offsets project
There are different ways to participate in the Carbon Farming Initiative, each with arrangements for sharing the costs, benefits and responsibilities for the project. These include independently, cooperatively, with multiple project proponents, with service providers and through the use of aggregators.
Landholders can undertake a project themselves and be the Recognised Offsets Entity. The landholder retains all responsibility for the project and receives all of the Australian carbon credit units.
Some landholders will choose to form informal co-operatives to share knowledge and reduce costs. A co-operative could be facilitated by a Natural Resource Management organisation or a government agency. Each landholder in the co-operative needs to be a Recognised Offsets Entity, and be the project proponent responsible for the project on their land, in order to receive the Australian carbon credit units.
Multiple project proponents
In certain circumstances, such as where a husband and wife jointly own the project land and hold the carbon sequestration right, there may be more than one person responsible for a project. In this case, both must individually seek to become a Recognised Offsets Entity. In these cases, the proponents must also nominate who will be the primary contact for the project and act on behalf of all project proponents (the nominated nominee). The nominee will also be the holder of the Registry account into which Australian carbon credit units for the project are issued. Alternatively, the couple could decide which individual is to become a Recognised Offsets Entity and transfer/sell the sequestration carbon right for the project area to that individual.
With service providers
Landholders can use professional service providers to undertake any part of their project, including obtaining approvals and reporting on the project and/or undertaking the project. The landholder would be the Recognised Offsets Entity responsible for the project and receive the Australian carbon credit units. The benefits to the service provider would depend on the contract with the landholder.
Landholders may choose to use an aggregator to participate in the Carbon Farming Initiative. The aggregator would be the Recognised Offsets Entity responsible for the project including submission of project reports and audits, and receive the Australian carbon credit units. Depending on the contract between the landholder and aggregator, the landholder or the aggregator may carry out and manage the project. When considering your project model, you should be aware of potential obligations under Australian Securities and Investments Commission (ASIC) legislation, including potential requirements for an Australian Financial Services licence as well as registering and reporting requirements for managed investment funds. More information about ASIC’s role regulating the carbon market is available on the ASIC website.
A project proponent may elect to authorise another person or organisation to act on their behalf, as an agent, in relation to Carbon Farming Initiative. An agent can make or withdraw Carbon Farming Initiative applications, provide information in relation to an application or request and give notices or submissions with respect to the offsets project. An agent does not need to be a Recognised Offsets Entity or hold an account in the Registry and would not receive the Australian carbon credit units.
A project proponent may elect to authorise another individual to act on their behalf, as an authorised representative, in relation to their Registry account. An authorised representative may view the details of the Registry account, initiate transactions in relation to the account and approve transactions in relation to an account. An authorised representative does not need to be a Recognised Offsets Entity or hold an account in the Registry and would not receive the Australian carbon credit units. The Clean Energy Regulator will only give an authorised representative access to a Registry account if satisfied of their identity and that they are a fit and proper person.