Http House Committee Ccea 24 March 2011 Bills Referred Carbon Credits (Carbon Farming Initiative) Bill 2011 - Em

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    2010-2011

    THE PARLIAMENT OF THE COMMONWEALTH OF AUSTRALIA

    HOUSE OF REPRESENTATIVES

    CARBON CREDITS (CARBON FARMING INITIATIVE) BILL 2011

    EXPLANATORY MEMORANDUM

    (Circulated by the authority of theMinister for Climate Change and Energy Efficiency, the Hon Greg Combet AM MP)

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    Table of contentsGlossary .................................................................................................. 1General outline and financial impact ....................................................... 3Chapter 1 Coverage .................................................................... 11Chapter 2 Recognised offsets entities ......................................... 19Chapter 3 Projects ....................................................................... 23Chapter 4 Aboriginal and Torres Strait Islander land................... 37Chapter 5 Methodology Determinations ...................................... 47Chapter 6 Permanence arrangements for sequestration

    projects ....................................................................... 63Chapter 7 Reporting .................................................................... 73Chapter 8 Audit ............................................................................ 79Chapter 9 Crediting ..................................................................... 83Chapter 10 Monitoring and enforcement ....................................... 97Chapter 11 Review of decisions .................................................. 115Chapter 12 Domestic Offsets Integrity Committee and

    Carbon Credits Administrator .................................... 119Chapter 13 Publication of information and secrecy ..................... 125Chapter 14 Miscellaneous provisions .......................................... 133Index ................................................................................................... 141

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    1

    GlossaryThe following abbreviations and acronyms are used throughout thisexplanatory memorandum.

    Abbreviation Definition

    Administrator Carbon Credits Administrator

    Australian carbon credit units(ACCUs)

    A unit issued under clause 138 of the bill.May be either a Kyoto Australian carbon

    credit unit or a non-Kyoto Australian carboncredit unit, depending whether thesequestration or emissions avoidance meetsAustralias commitments under the KyotoRules.

    bill Carbon Credits (Carbon Farming Initiative)Bill 2011

    CFI Carbon Farming Initiative

    Consequential amendmentsbill

    Carbon Credits (Carbon Farming Initiative)(Consequential Amendments) Bill 2011

    DOIC Domestic Offsets Integrity Committee

    Department Department of Climate Change and EnergyEfficiency

    Kyoto units An assigned amount unit, a certified emissionreduction, an emission reduction unit, aremoval unit or a prescribed unit issued inaccordance with the Kyoto rules

    Kyoto rules This term is defined in clause 4 of theRegistry bill. In brief, it includes the KyotoProtocol, decisions of the Meeting of theKyoto Parties, certain standards adopted bysuch a meeting and prescribed instruments

    NCOS National Carbon Offset Standard

    NGGI National Greenhouse Gas Inventory

    Non-Kyoto internationalemissions units

    A prescribed unit issued in accordance withan international agreement (other than theKyoto Protocol) or a prescribed unit issuedoutside Australia under a law of a foreigncountry

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    Carbon Credits (Carbon Farming Initiative) Bill 2011

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    Registry Australian National Registry of Emissions

    UnitsRegistry bill Australian National Registry of Emissions

    Units Bill 2011

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    3

    General outline and financial impact

    Objectives of the Carbon Farming Initiative

    The Carbon Credits (Carbon Farming Initiative) Bill 2011 fulfils theAustralian Governments commitment to develop legislation to givefarmers, forest growers and landholders access to domestic voluntary andinternational carbon markets. This will begin to unlock the abatementopportunities in the land sector which currently makes up 23 percent ofAustralias emissions.

    This commitment is reflected in the objects of the bill.

    The first objective in clause 3(2) is to help Australia meet its internationalobligations, under the United Nations Convention on Climate Change andthe Kyoto Protocol, to reduce its emissions of greenhouse gases.

    The second is to create incentives for people to undertake land sectorabatement projects. The ability to generate saleable carbon creditsprovides an investment incentive, thereby helping to channel carbonfinance into land sector abatement.

    A further objective is to achieve carbon abatement in a manner that isconsistent with the protection of Australias natural environment and

    improves resilience to the impacts of climate change. This recognises theimportant contribution that this scheme can make towards environmentalobjectives such as improving water quality, reducing salinity and erosion,protecting and promoting biodiversity, regenerating landscapes andimproving the productivity of agricultural soils.

    Climate Change and Australias mitigation policy

    Scientific evidence confirms that human activities, such as burning fossilfuels (coal, oil and natural gas), agriculture and land clearing, haveincreased the concentration of greenhouse gases (such as carbon dioxide,methane and nitrous oxide) in the atmosphere. As a consequence, the

    earths average temperature is rising and weather patterns are changing.This is affecting rainfall patterns, water availability, sea levels, stormactivity, droughts and bushfire frequency, putting at risk Australiancoastal communities, health outcomes, agriculture, tourism, heritage andbiodiversity for current and future generations1.

    1 Intergovernmental Panel on Climate Change, Fourth assessment report, Synthesis report,2007

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    Carbon Credits (Carbon Farming Initiative) Bill 2011

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    Unmitigated climate change threatens to challenge and transform regionaland rural Australia for the worse. Notwithstanding the development ofadvanced farming techniques, climate change threatens to do great harmto our grain, pastoral and livestock industries. At the same time ouragricultural sector, forests and soils present Australia importantopportunities to reduce our greenhouse gas emissions. The AustralianGovernments mitigation strategy is based upon taking action to supportrenewable energy, improve energy efficiency and introduce a price oncarbon.

    On 24 February 2011 the Prime Minister announced the framework of acarbon pricing mechanism to place an explicit price on emissions fromstationary energy, transport, fugitives, industrial processes and non-legacywaste. That framework also recognises the importance of abatement

    outside of those sectors and this bill is an essential step in creating aregime which will measure, verify and credit abatement actions in sectorswhich will not have direct liability under the proposed carbon pricingmechanism. The Government is currently consulting with the communityon this framework and the role that credits created under this bill will havein the scheme.

    The international community has long recognised the need to act to reducegreenhouse gas emissions and countries around the world are alreadytaking significant action both to reduce greenhouse gas emissions andenhance carbon sinks such as forests and soils.

    The United Nations Framework Convention on Climate Change wasratified by Australia on 30 December 1992. The Convention is aimed atstabilising greenhouse gas concentrations in the atmosphere at a level thatwould prevent dangerous anthropogenic interference with the climatesystem. It includes an obligation on Australia to adopt national policiesand take corresponding measures on the mitigation of climate change, bylimiting anthropogenic emissions of greenhouse gases and protecting andenhancing its greenhouse gas sinks and reservoirs (Article 4.2(a)). Itprovides an overall framework for intergovernmental efforts on climatechange.

    Under the Kyoto Protocol, Australia is committed to restraining itsnational emissions to an average of 108 per cent of 1990 levels over the

    first commitment period (2008 to 2012). While Australias emissionsprojections released on 9 February 2011 demonstrate that Australia is ontrack to meet this target, without additional policy action our emissionsare projected to be 24 per cent above 2000 levels by 2020 and 44 percentabove 2000 levels by 2030. As the highest per capita emitter in thedeveloped world and one of the 20 largest emitters on an absolute basis,Australia must take action.

    Australia submitted its current 2020 target range to the CopenhagenAc