Articles, Blog

Helal Ahammad (pt 1) Carbon Farming Initiative and agriculture’s role in Australia

Thank you Chair for the
kind introduction and good morning to you all. May I thank my team at the
Bureau for the wonderful research and some of
my colleagues at the Department of Agriculture Fisheries and Forestry,
the Department of Climate Change and Energy
Efficiency and external reviews of the
work that underpins my presentation today. Through Carbon Farming
Initiative, agriculture is expected to play an
important role in Australia’s transitioning
to a low-emissions future. The government has
legislated the Carbon Farming Initiative, or CFI,
to facilitate the sale of carbon offset credits from
eligible activities within the land sector. Like all carbon offsets
around the world, the CFI should meet some
internationally recognised integrity standards. And central to these
integrity standards is the additionality test,
additional to principle. The CFI illustration
states that activities and practices which are not a
common practice will be considered additional and
may be eligible for carbon offset credits. ABARES in recent times has
done some research in this area and developed a
framework for common-practice determination,
that’s for additionality assessment under the CFI. I will present this
framework today but before that let me give you a
bit of an overview of the Carbon Farming Initiative. The Carbon Farming
Initiative is the first legislated federally
backed, land-sector based carbon offset
scheme in the world. It has commenced operation
from December last year. The CFI covers a range
of agriculture and forest carbon offset activities. The Initiative
enables farmers, landholders, land managers
to generate and sell carbon credits by
undertaking abatement projects that reduce
or avoid greenhouse gas emissions or sequester carbon
from the atmosphere. Importantly, participation
in CFI is voluntary so the success of this scheme
will depend largely on how farmers and landholders
see a clear benefit from their participation. What are the markets
for the CFI credits? Demand for CFI credits
is expected to come from domestic and international compliance
and voluntary markets. Within Australia, Kyoto-compliant
CFI treaties can be sold into Australia’s domestic
carbon pricing scheme. For non-Kyoto compliant
credits there is $250 million non-Kyoto CFI Fund
to purchase credits for six years of the scheme
and this is in addition to the domestic voluntary
market comprising, for example, airlines and banks. Internationally, buyers of
CFI credits may include foreign governments
with abatement obligations under the Kyoto Protocol
and its successors, or companies with emission
obligations under national original schemes, as an
organisation voluntarily offsetting
their omissions. CFI credits must meet a
set of internationally recognised standards and
these standards are to ensure that CFI-accredited
abatement is additional, permanent, based on
internationally consistent estimation methods,
supported by peer review to science and doesn’t
cause any offsetting emissions or emission
leakages elsewhere. The government is
approving methodologies for the CFI-eligible
activities which will ensure all these
standards are met. All CFI projects need to
be undertaken under an approved methodology. Methodologies underline the
rules by which a project proponent can be credited
for a particular practice and are assessed by the
independent Domestic Offsets Integrity
Committee (DOIC). So where are we up to regarding
CFI methodology development? So far, four methodologies
have been approved by the Minister of Climate Change
and Energy Efficiency. Land managers can now
earn offset credits for destroying methane-generated
farm manure in piggeries,
environmental plantings, capturing and combustion
of legacy landfill gas and Savanna burning. Two other methodologies
are under consideration and these are management
of large feral camels in Australian rangelands,
avoiding emissions from diverting waste from landfill for
process-engineered fuel manufacture. All these activities
involve new technologies or practices or face
significant impediments to adoption for potential
adopters and have been considered uncommon
and hence have met the additionality standard. Australian Government
continues to work with industry to develop
more methodologies. it is exploring options
for fast-tracking some methodology development
based on the research undertaken for Climate
Change Research Program, or its successor,
Filling the Research-gap Program. Private entities and the
state governments are also considering putting
forward methodologies for CFI abatement activities. For most future
methodologies, ABARES’ proposed framework that
I’m going to present is expected to be useful. Establishing additionality
is an important element of methodology development. In the next little while
I’ll be talking about additionality
for quite a while, quite some time, and
in the context of the proposed common-practice framework
that ABARES has developed. But to be very sure let’s articlulate
what we mean by additionality. For meeting additionality
standards it must be established that emission
abatement under a proposed activity would not have
happened in the absence of the initiative, that is
to generate carbon offsets credit under the CFI,
emissions reductions and sequestration must be
additional to the business as usual or BAU levels. If an activity meets
additionality criteria it will be in the
positive list. To meet the additionality
standard for CFI, the Australian Government
has legislated a common practice test. Once this test is
undertaken the practice can go on the positive
list and attract project proposals specific to
that particular practice. The Department of
Climate Change and Energy Efficiency has released
guidelines for assessing common practice. The Common Practice Test
assesses how common an abatement activity or
practice is in a specific sector or in a
particular region. This is what we call a
standardised approach. The standardised approach
is a move away from project-based approaches
that have been adopted in other offset
schemes in the past. For example, the Clean
Development Mechanism, the international offset
schemes under the Kyoto Protocol uses a
project-based approach. Under these, CDM requires
an individual large abatement project to
undertake investment and values test to demonstrate
that the proposed abatement is additional to
what would otherwise occur in the absence
of the mechanism. Standardised approaches
such as Common Practice Test are expected to
be more streamlined, transparent, and
cost-effective than project-based approaches to
additionality assessment. There is growing
recognition of the merits of Common Practice
Additionality testing in various international
schemes and relevant academically to Russia. Common practice
determination relies on specific thresholds and adoption. The threshold represents
a level of adoption for a practice, often expresses percentage
of target population. If applicable, the
level of adoption will be specific to a region
or an activity or both. For example, a 20%
adoption threshold means that if adoption is below
20% then it is not common and if it is above
20% then it is common. This may sound simple
but there are a number of factors that need to be
considered in determining an appropriate threshold
for common practice.

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