HG Alert: How landowners can profit from carbon - 16 Mar 2011

The Federal Government has proposed new legislation that would allow farmers, land holders and forest growers to profit from carbon abatement.

The Carbon Farming Initiative aims to allow carbon credits to be generated for approved schemes that either reduce carbon or allow for greenhouse gas abatement. Those carbon credits can then be sold either domestically or internationally to companies that need to reduce their carbon footprint.

The Federal Government expects legislation to be introduced in the next few months - most likely by 1 July 2011.

Here, partner Michele Muscillo and solicitor Ben Ricketts outline the Initiative and explain how landowners can submit methodologies for abatement in order to gain carbon credits.

The Carbon Farming Initiative

To date, the Government has received feedback from 257 stakeholders on the Carbon Farming Initiative. The feedback indicates that businesses and the community broadly accept the Initiative. However, many recommendations have been made, including that:

  • credits should be made available for industries involved in recycling and landfill avoidance;
  • the insurance industry should make insurance available for smaller players who will lose income while developing their abatement methodologies; and
  • there should be adequate fire risk management for landowners that develop plantations.

Methodologies for carbon abatement

The Carbon Farming Initiative scheme proposes that private parties and government agencies develop methodologies for carbon abatement and carbon credits under the following broad headings:

  • Reforestation, forest management and avoided deforestation
  • Livestock and methane management
  • Landfill gas recovery
  • Reduction in fertiliser usage
  • Sequestration in soil carbon and biochar
  • Savanna fire management
  • Reduce landfill
  • Reduce the emissions from rice production
  • Reduced burning of stubble/crops

The Government has invited submissions to the Domestic Offsets Integrity Committee on the potential methodologies available for abatement. The Committee is an independent body of six experts, formed to assess draft methodologies for use under the Carbon Farming Initiative scheme.

As an example, a farmer may propose a methodology whereby less fertiliser will be used to manage crops. If that methodology is approved, and the farmer is assessed for the reduced fertiliser use and given carbon credits, the farmer may then sell those carbon credits. Alternatively, a landowner may propose a carbon sink by growing trees on his or her land, again selling the credits received.

Methodologies for applying, implementing and monitoring abatement activities and generating carbon credits will be received by the Committee over the coming months, and will be rolled out in April.

More information about the methodology submission process can be found on the Department of Climate Change and Energy Efficiency's website.

For more information on the Government's Carbon Farming Initiative process, or for assistance developing your Carbon Farming Initiative methodology for submission to the Committee, please contact HopgoodGanim's Climate Change team.