EXPLANATORY STATEMENT
Carbon Credits (Carbon Farming Initiative) Act 2011
Carbon Credits (Carbon Farming Initiative—Human-Induced Regeneration of a Permanent Even-Aged Native Forest—1.1) Methodology Variation 2015
EXPOSURE DRAFT
Purpose
ThedraftCarbon Credits (Carbon Farming Initiative—Human-Induced Regeneration of a Permanent Even-Aged Native Forest—1.1) Methodology Variation 2015 (the draft Variation) seeks to amend the Carbon Credits (Carbon Farming Initiative—Human-Induced Regeneration of a Permanent Even-Aged Native Forest 1.1) Methodology Determination 2013(the Determination).
The draft Variation would implement one main change. It would require carbon stocks and fire emissions to be modelled using the Full Carbon Accounting Model (FullCAM) rather than the Reforestation Modelling Tool (RMT). It would also remove the modelling requirements forproject eligibility, and replace themwith a mandatory requirement for satellite imagery to demonstrate absence of forest cover in each year of the baseline period.
Legislative provisions
The Determination was made under subsection 106(1) of the Carbon Credits (Carbon Farming Initiative) Act 2011 (the Act).
The draft Variation would amend the Determination, and would be made under subsection114(1) of the Act which empowers the Minister to vary, by legislative instrument, a methodology determination.
Background
The Act enables the crediting of greenhouse gas abatement from emissions reduction activities across the economy. Greenhouse gas abatement is achieved either by reducing or avoiding emissions or by removing carbon from the atmosphere and storing it in soil or trees.
In 2014 the Australian Parliament passed the Act, which established the Emissions Reduction Fund (ERF). The ERF has three elements: crediting emissions reductions, purchasing emissions reductions, and safeguarding emissions reductions.
Emissions reduction activities are undertaken as offsets projects. The process involved in establishing an offsets project is set out in Part 3 of the Act. An offsets project must be covered by, and undertaken in accordance with, a methodology determination.
Subsection 106(1) of the Act empowers the Minister to make, by legislative instrument, a methodology determination. The purpose of a methodology determination is to establish procedures for estimating abatement (emissions avoidance or sequestration) from eligible projects and rules for monitoring, record keeping and reporting. These determinations willhelp ensure that emissions reductions are genuine—that they are both real and additional to business as usual.
The Determination was made on 17 June 2013 and sets out the rules for implementing and monitoring human-induced forest regeneration projects on eligible land.
Operation
The draft Variation would primarily replace the requirements to model carbon stocks and project emissions using the RMT with requirements to model these using FullCAM in accordance with the FullCAM Guidance. The descriptions of the variables havebeenamended for consistency with FullCAM outputs.
The draft Variation would ensure that all carbon estimation areas in new projects are eligible if they have a zero baseline, and that projects that transition from earlier versions of the Determination can use their existing baseline eligibility.
The draft Variation would allow projects that are already registered and using the Determination to transition to the Determination as varied by the draft Variation (the varied Determination). Proponents of projects that are already registered would need to apply to the Clean Energy Regulator (the Regulator) under section 128 of the Act to have the varied Determination apply to their project. This is because under section 126 of the Act,a determination continues to apply to projects that are already registered under it, even if the determination is subsequently varied.
If a proponent has applied to the Regulator for declaration of ahuman-induced regeneration project as an eligible offsets project, but a decision on the application has not been made when the draft Variation is made, the application would be assessed under theapplicable determination specified in the application for declaration.
Public consultation
The draft Variation has been developed by the Department of the Environment.
The exposure draft of the Variation has been published on the Department’s website for public consultation from 18 September 2015 to 2 October 2015. Details for how to make a submission are provided on the Department of the Environment website,
Determination details
Details of the draft Variation are at Attachment A. Numbered sections and items in thisexplanatory statement align with the relevant sections and items of the draftVariation and the Schedule. The definition of terms highlighted in bold italics can be found in the draft Variation or the Determination.
For the purpose of subsections 114(2),(2A) and(7B) of the Act, in varyinga methodology determination the Minister must have regard to, and agree with, the advice of the Emissions Reduction Assurance Committee (ERAC) that the varied methodology determinationcomplies with the offsets integrity standards and that the varied methodology determination should be made. The Minister must be satisfied that the carbon abatement used in ascertaining the carbon dioxide equivalent net abatement amount for a project is eligible carbon abatement from the project. The Minister also must have regard to whether any adverse environmental, economic or social impacts are likely to arise from the carrying out of the kind of project to which the varied methodology determination applies, and other relevant considerations.
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Details of the Variation
1Name
Section 1 sets out the full name of the draft Variation, which is the Carbon Credits (Carbon Farming Initiative—Human-Induced Regeneration of a Permanent Even-Aged Native Forest—1.1) Methodology Variation 2015.
2Commencement
Section 2 provides that thedraft Variationwould commence on the day after it is registered on the Federal Register of Legislative Instruments.
3Authority
Section 3 provides that thedraft Variationwould be made under subsection 114(1) of the Act.
Subsection 114(1) of the Act provides that the Minister may, by legislative instrument, vary a methodology determination.
4Amendment of methodology determination
Section 4 provides that the Carbon Credits (Carbon Farming Initiative—Human-Induced Regeneration of a Permanent Even-Aged Native Forest—1.1) Methodology Determination 2013would be amended as set out in Schedule 1 of the draft Variation.
Schedule 1—Amendments of the Carbon Credits (Carbon Farming Initiative—Human-Induced Regeneration of a Permanent Even-Aged Native Forest—1.1) Methodology Determination 2013
[1]Section 1.1
Section 1.1 of the Determination sets out the full name of the Determination.
Item [1] amends section 1.1 of the Determination by changing the version number of the Determination from 1.1 to 2.0, and updating the year from 2013 to 2015.
[2]Section 1.3
Section 1.3 of the Determination defines a number of terms used in the Determination.
Item [2] amends section 1.3 of the Determination by inserting newdefinitions.
baseline carbon stockwas defined in section 2.4 of the Determination. As it is used in other sections in the varied Determination, the definition has been moved to section1.3.
events queue is a term used in FullCAM.
former determination refers to the two versions of the Determination that preceded the varied Determination. The term is relevant to the definition of transitioning project.
FullCAM and FullCAM Guidelines have been inserted to explain the online tools and guidance material to be used under the varied Determination to estimate the carbon stocks in a carbon estimation area. The FullCAM Guidelines are specific to the varied Determination. Projects to which the varied Determination would apply must use these Guidelines.
previous carbon stock refers to the carbon stock of a carbon estimation area or project area as determined under either a former determination or the varied Determination.
transitioning project is a project that was already declared to be an eligible offsets project under a version of the Determinationthat preceded the varied Determination. Under section128 of the Act, proponents of an eligible offsets project can apply to the Regulator to change to a different determination during a reporting period. For example, a proponent whose project was registered under the Carbon Credits (Carbon Farming Initiative) (HumanInduced Regeneration of a Permanent Even-Aged Native Forest—1.1) Methodology Determination 2013 may apply to the Regulator to change to the varied Determination. This would be a ‘transitioning project’ under the varied Determination.
[3]Section 1.3 (definition of initial carbon stock)
Item [3] amends section 1.3 of the Determination by removing the definition of initial carbon stock. The term has been replaced in the varied Determination with the term previous carbon stock.
[4]Section 1.3 (definition of maximum carbon stock)
Item [4] amends section 1.3 of the Determination by removing the definition of maximum carbon stock. The term is not used in the eligibility requirements or the test for a zero baseline in the varied Determination.
[5]Section 1.3 (definition of modelling commencement)
[6]Section 1.3 (definition of model point location)
Items [5] and [6] amend specified definitions in section 1.3 of the Determination to refer to FullCAM rather than RMT.
[7]Section 1.3 (definition of pre-existing project)
Item [7] amends section 1.3 of the Determination by removing the definition ofpre-existing project. This term is not relevant to projects that are declared as eligible offsets projects under the varied Determination.
[8]Section 1.3 (definition of project commencement)
Item [8] amends section 1.3 of the Determination by updating a cross-reference in the definition of project commencement.
[9]Section 1.3 (note to definition of project commencement)
Item [9] amends section 1.3 of the Determination by removing the note to the definition of project commencement. The information provided in the note was relevant to previous versions of the Determination.
[10]Section 1.3 (definition of Reforestation Modelling Tool or RMT)
Item [10] amends section 1.3 of the Determination by removing the definition of Reforestation Modelling Tool or RMT. The RMT cannot be used under the varied Determination.
[11]Section 2.3
Item [11] replaces the requirements in section 2.3 relating to project land with an updated set of requirements.
The effect of Item [11] is to clarify the characteristics that the land in the project area must have when the project is declared as an eligible offsets project.
Item [11] also adds a new evidentiary requirement relating to the absence of forest cover on project land. Item [11] requires that a project proponent must provide to the Regulator remote sensing satellite imagery to show that there was no forest cover on project land in each year of the baseline period.
[12]Section 2.4
Section 2.4 of the Determination sets out the process for determining whetherthe baseline carbon stock of the project area is zero.
Item [12] replaces section 2.4 of the Determination with rules for determining the baseline carbon stock of a carbon estimation area. Subsection 2.4(1) sets out the general rule that the baseline carbon stock of a carbon estimation area will be taken to be zero. Subsection 2.4(2) provides an exception to this general rule. Under the exception, the baseline carbon stock of a transitioning project will be the value that was determined under a previous version of the Determination.
Item [12] also clarifies that eligibility for a zero baseline is determined at the level of carbon estimation areas, not project area.
[13]Subsection 3.3(1)
Section 3.3 of the Determination sets out the requirements for stratifying a carbon estimation area in order to model abatement in the area.
Item [13] updates the requirements for carbon estimation areas in subsection 3.3(1).
[14]Paragraph 3.5(1)(a)
Item [14] corrects a typographical error.
[15]Division 3.3
Item [15] updates the operational requirements for a project to which the varied Determination applies. The amendment clarifies that carrying out a human-assisted regeneration activity in a carbon estimation area is an ongoing eligibility requirement for such projects.
[16]Section 4.3
Item [16] updates the table of gases accounted for in the abatement calculations in the varied Determination by removing the reference to carbon dioxide (CO2) for fire.
[17]Paragraph 4.4(b)
Item[17] changes ‘Methodology’ to ‘Determination’.
[18]Subsection 4.5(1)
Section 4.5 in the Determination provides that the carbon stock of a carbon estimation area that does not yet have forest potential is taken to be zero. Item [18] ensures the section’s modelling requirements are consistent with FullCAM and the varied Determination.
[19] Section 4.7
Item [19] replaces the RMT requirements in section 4.7 with updated requirements that reflect the use of FullCAM.
[20] Divisions 4.3, 4.4 and 4.5
Item [20] replaces the requirements in Divisions 4.3–4.5 in the Determination to model project emissions in RMTwith requirements to model these emissions in FullCAM. The amendments in Item [20] also update equations for calculating emissions. The amended equations align with FullCAM inputs.
[21]–[31]Various provisions in Part 5
Items [21]–[31] in the draft Variation:
- replace requirements relating to RMT with requirements relating to FullCAM; and
- remove or update references to ‘initial carbon stock’ which is not used in the varied Determination.
Attachment B
Statement of Compatibility with Human Rights
Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011
Carbon Credits (Carbon Farming Initiative—Human-Induced Regeneration of a Permanent Even-Aged Native Forest—1.1) Methodology Variation 2015
This Legislative Instrument is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.
Overview of the Legislative Instrument
Carbon Credits (Carbon Farming Initiative—Human-Induced Regeneration of a Permanent Even-Aged Native Forest—1.1) Methodology Variation 2015 (the Variation) amends the Carbon Credits (Carbon Farming Initiative—Human-Induced Regeneration of a Permanent Even-Aged Native Forest 1.1) Methodology Determination 2013. The Variation requires carbon stocks and fire emissions to be modelled using the Full Carbon Accounting Model (FullCAM) rather than the Reforestation Modelling Tool (RMT). It also replaces modelling requirements for project eligibility with a mandatory requirement to demonstrate with satellite imagery the absence of forest cover in each year of the baseline period.
Human rights implications
This Legislative Instrument does not engage any of the applicable rights or freedoms.
Conclusion
This Legislative Instrument is compatible with human rights as it does not raise any human rights issues.
Greg Hunt, Minister for the Environment
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