Carbon Farming Confusion

By Daniel Kandy

Watching the development of Australia's approach to achieving emissions goals has generated a fair bit of confusion, even here at the Forest Carbon Portal, where we mistakenly conflated the Carbon Farming Initiative (see the corrected news brief here), which became a law on August 23, and the Clean Energy Future legislation, which still has to pass the lower house in Australia's parliament. Below we've clearly laid out the basics of each.

 

Growing Carbon Credits on Australia's Farms

The Carbon Farming Initiative (CFI) is a voluntary program that will encourage those in the land-use and agricultural sectors to mitigate and abate carbon emissions. Certain activities, such as the capture or destruction of methane from livestock, forest protection and afforestation, will generate Australian Carbon Credit Units (ACCUs), which the land owner will be able to sell to voluntary buyers at home and abroad, as well as in compliance markets. ACCUs will be designated as Kyoto- and non-Kyoto compliant, depending on whether the project methodology used is Kyoto protocol friendly.

 

Australia's Clean Energy Future

The Gillard government has been fighting hard for this landmark legislation, which would put around 500 of Australia's top emitters of GHGs under compliance in a program that will initially set a price on carbon, then transitioning to a cap-and-trade program after 3 years. The initial pricing period will set a price of $AU23, set to rise 2.5% per year until 2015, when a flexible price period will begin, with prices set by the market (although a price floor and ceiling will be in effect). Emitters under the program will be able to offset 5% of emissions during the 2012 to 2015 stage by purchasing ACCUs. After 2015 there is no limit to the number of ACCUs that can be used to meet emissions obligations. Emitters will also be able to use acceptable credits generated outside of Australia ( to meet up to 50% of their obligations.

 

Daniel Kandy is a Research Analyst at Ecosystem Marketplace. He can be reached at dkandy@ecosystemmarketplace.com.