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Permanence obligations

11 September 2020


​Permanence obligations for area-based projects

Carbon stored in vegetation and soils can be released back into the atmosphere by man-made or natural events, thereby reversing the environmental benefit of the sequestration project. Sequestration is regarded as permanent if it is maintained on a net basis for 100 years.

For this reason, all sequestration projects are subject to permanence obligations. A permanence obligation maintains carbon stores for which Australian carbon credit units (ACCUs) have been issued.

The Emissions Reduction Fund requires sequestration projects to choose a permanence period of either 25 or 100 years. Once you have nominated a permanence period, you will not be able to vary that period.

The Clean Energy Regulator will publish information in relation to permanence periods on the Emissions Reduction Fund Project Register. Anyone buying land can check whether the land is covered by a 25 year or 100 year permanence obligation.

Permanence obligation requirements

A permanence obligation means the carbon stored by a project must be maintained for the chosen period, either 100 or 25 years.

All sequestration project proponents are required to provide the agency with an explanation of actions they have taken or will take (or ensure landholders take) to protect the carbon sequestered and credited by the project for the permanence period. For convenience, this requirement is known as a permanence plan and is required:

  • at project registration (for projects registered after June 2018)
  • as part of the first offsets report following years 8 and 24 of the crediting period
  • if the vegetation in the project has reached maximum sequestration or the permanence obligation period for a savanna sequestration or soil carbon project has ended and the proponent is applying for an exemption from the obligation to provide further offsets reports.

If a fire or other disturbance occurs in the area during the project, causing a decline in the amount of carbon stored, regrowth must be managed to allow the carbon stock to return to previously reported values. Alternatively, ACCUs equivalent to the loss of carbon caused by the disturbance can be returned, or relinquished, to the Clean Energy Regulator.

The agency has developed guidance on documentasset:Reducing the risk of fire and preserving sequestered carbon in Emissions Reduction Fund vegetation projects. It outlines

  1. the obligations ERF vegetation project proponents have to take reasonable steps to protect stored carbon on their projects
  2. the approach the agency will take in the event of a significant reversal of carbon stored by an ERF vegetation project due to fire
  3. encourages proponents to work collaboratively with local fire authorities to identify appropriate fire prevention action.

If you choose the 25 year option, there will be a 20 per cent reduction in the number of ACCUs issued for your project. This is to cover the potential cost to the Government of replacing carbon stores after the project ends. This reduction is in addition to the five per cent risk of reversal buffer (a total reduction of 25 per cent).

Examples for the 25 year permanence period

The example below shows how the relinquishment of ACCUs earned may apply to your situation.

Example 1 - starting a new project

John started a new area-based Emissions Reduction Fund project. He chose a 25 year permanence period. At the end of the first reporting period he calculated that his project achieved a net abatement of 10 000 tCO2-e.

As the project has been registered with a 25 year permanence period, John will not actually receive 10 000 ACCUs​ - they will be reduced by 20 per cent for the permanence obligation and by an additional five per cent for the risk of reversal buffer (a total reduction of 25 per cent). John will receive 7 500 ACCUs for the reporting period.

Nominating a permanence period

New sequestration projects

For a new sequestration project, you can nominate a 100 or 25 year permanence period in the application form when you apply to register your project.

Existing (already registered) sequestration projects

If you are already running a registered sequestration project, your permanence period commences once ACCUs have been issued for the project or an area of land is added to your project area. The permanence period will continue based on the period you nominated when you applied to register your project. The nominated permanence period cannot be changed after registration. However, participation in the Emissions Reduction Fund is voluntary and if you wish to cancel (revoke) your project you may do so at any time. Any ACCUs issued for a sequestration project will need to be returned before the project is revoked.

Managing property with permanence obligations

Landholders with a registered sequestration project should inform prospective buyers and property agents of any permanence obligations associated with the land when selling their property.

Prospective buyers of land can consult our ​project register to identify information about whether land of interest is subject to permanence obligations under the Emissions Reduction Fund.

We have developed the following guides to assist landholders and prospective buyers understand, and identify, land subject to permanence obligations under the Emissions Reduction Fund.

documentasset:The Emissions Reduction Fund and permanence on the land

documentasset:Identifying land subject to permanence obligations

Notification of reversal due to a fire event

Proponents have a responsibility to manage and report on fire incidences for your area-based Emissions Reduction Fund project.

In the event that you become aware that your project has been affected by fire, including burns of more than 50 hectares or five per cent or your total project area - whichever is smaller, you will need to notify the Clean Energy Regulator in writing within 60 days.

To receive Australian carbon credit units (ACCUs) under the Emissions Reduction Fund your project must comply, and continue to comply, with all eligibility requirements including any state or territory laws that affect your project.

We encourage you to work closely with your local fire agency to ensure you mitigate the risk of fire impacting your land, or your activities causing a fire risk to others. Should you have any questions regarding fire management you should contact your local fire authority.

If you want more information about your project obligations or to notify the Clean Energy Regulator of a fire event please contact us.

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