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Meeting the requirements of 'regulatory additionality' with conservation covenants

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29 November 2016

Scheme participants may be able to enter into a conservation covenant with their state or territory government provided they can show their project meets the regulatory additionality requirement of the Emissions Reduction Fund.

Conservation covenants are agreements entered into voluntarily, but require the land holder to carry out certain activities by law.

To meet the regulatory additionality requirement of the Emissions Reduction Fund, scheme participants must demonstrate that a reduction in emissions would not occur without their project.

Under section 27(4A)(b) of the Carbon Farming Initiative Act 2011, the regulatory additionality requirement is met when:

  • a project is not required to be carried out by or under a law of the Commonwealth, state or territory government, or
  • the method that is used by a project specifies one or more requirements that are ‘in lieu’ of the regulatory additionality requirement.

This means there are two ways participants may be able to enter a conservation covenant and run a project on the same land under the Emissions Reduction Fund.

First, the regulatory additionality requirement does not apply to activities required under a conservation covenant that has been entered into voluntarily with a Commonwealth, state, territory or local government body or authority.

Second, Emissions Reduction Fund methods may include a requirement in place (‘in lieu’) of the regulatory additionality requirement. This ‘in lieu’ requirement may allow project activities to be carried out on land where a conservation covenant is in place.

An example is the Avoided Deforestation 1.1 method. It has the ‘in lieu’ requirement that allows conservation covenants to be entered into for project land.

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