The Challenges Ahead for the Carbon Farming Initiative. Penny Baalman, Managing Director, GHG Offset Services CEEM Annual Conference

Transcription

1 The Challenges Ahead for the Carbon Farming Initiative Penny Baalman, Managing Director, GHG Offset Services 2011 CEEM Annual Conference 16 December 2011! Contents! The Carbon Farming Initiative Designing an offset program Strengths and weaknesses of the CFI Challenges ahead for the CFI

2 The Carbon Farming Initiative! Two types of Australian Carbon Credit Units (ACCUs) from different project types Kyoto projects include those activities that are counted in Australia s commitment under the Kyoto Protocol Agricultural emission reduction projects (N 2 O & CH 4 ) Legacy/landfill waste projects Reforestation and avoided deforestation carbon stock change projects (not soil c) Non-Kyoto projects are those not included in Australia s accounting Carbon stock changes in the additional LULUCF activities (Article 3.4) Soil carbon stock changes Unmanaged lands (feral animal control)!"#$%"&'(')* +'%,"(+* 2.(3%45,4('* -'./%0*1/+,'* -?-?@>* 6#,'(3%*7'(8'#,/9"#* ;'7"('+,/9"#* :/#4('*8/#/.'8'#,* A2&"3)')B* C'7"('+,/9"#*!",*HI* ;3%'*%459&/9"#* >"('+,* :/#/.'8'#,* 2.(3%45,4(/5*+"35+* <('+%(3=')*=4(#3#.*"7* +/&/##/+* >3'5)*=4(#3#.*"7* ('+3)4'+* :/#/.'8'#,* E(/F3#.*5/#)* 8/#/.'8'#,*!"#$G0"," */#)*#",*HI*

3 The Carbon Farming Initiative! The Clean Energy Future Legislative Package includes:- Clean Energy Act ETS starts 1 July 2012 Kyoto ACCUs can be used in ETS 5% per entity limit in fixed-price period No limit in flexible period Unlimited banking and export In flexible period international project-based and LULUCF Kyoto Protocol units also accepted (RMUs, ERUs, CERs (not t and l) 50% limit until 2020 CFI non-kyoto carbon fund gov will purchase non- Kyoto ACCUs ($250 M over six years from tender process, lowest price) The Carbon Farming Initiative! 23 rd August bill passed 21 st October 2011:- Positive list guidelines and form released Negative list guidelines and form released 8 th December 2011 CFI launched, including:- Regulations released CFI Administrator operational Recognised Offsets Entity (ROE) approval process outlined and open for submission of applications Rainfall map released (for production reforestation) Salinity guidelines released (for reforestation) Spatial mapping guidelines released

4 The Carbon Farming Initiative! Currently six methodologies have been considered:- Four still under consideration Diverting waste in landfill Savanna burning Management of feral animals (camels) Non-production reforestation Two approved in the last month:- Destruction of methane in piggeries Capture/combustion of landfill gas Designing an offset program! Five core accounting requirements for GHG projects:- Additional (not what would have occurred anyway) Real (achieved reductions, address leakage) Measurable (measure reductions to a reasonable degree of certainty) Verifiable (can be confirmed by independent parties, repeatable) Long-term (addressing non-permanence through risk of reversal mechanisms)

5 Designing an offset program! Key features or criteria of a GHG offset program affecting credibility and uptake include:- Additionality Leakage Measurement uncertainty Methodology approval process Materiality or de minimis thresholds Addressing non-permanence (for GHG reservoirs) Other features are also important but not key to ensuring a tonne is a tonne!"#$%&"' (")%*&"+",$-'."#/,"--"-' Strengths and weaknesses! 2))39"#/53,0* <5/%'8'#,*"#*D"+39&'*53+,*,J("4.J* %"88"#*D(/%9%'*/++'++8'#,*K*=0* C@@66*"(*,J("4.J*D4=53%* +4=83++3"#+*!"*"D9"#*7"(*D("L'%,$+D'%3M%*/++'++8'#,+* A37*.('/,'(*,J/#*NO*D('&/5'#%'B*#",*%5'/(50* '&3)'#%'$=/+')P*CQI@*#",*7(''*7("8* %"#R3%,*"7*3#,'('+,* -'/S/.'* :'/+4('8'#,*4#%'(,/3#,0* I#)3%/,')*3#*'/(50*)"%48'#,/9"#* =4,*#"*('T43('8'#,+*'+,/=53+J')* AC@@66*.43)'53#'+UB* I#)3%/,')*3#*'/(50*)"%48'#,/9"#* =4,*#"*('T43('8'#,+*'+,/=53+J')* AC@@66*.43)'53#'+UB*!",*/))('++')*3#*%4(('#,*8',J")"5".3'+*K* 38D"(,/#,*/#)*%/#*='*%"#+3)'(/=5'*3#*5/#)$ =/+')*D("L'%,+*!",*/))('++')*3#*%4(('#,*8',J")"5".3'+*K* 38D"(,/#,*3#*D("&3)3#.*3#%'#9&'*7"(*."")* 8'/+4('8'#,*/#)*."")*8/#/.'8'#,* 2))('++3#.*#"#$D'(8/#'#%'* -"#.$,'(8*"=53./9"#P*/&'(/.'* %(')39#.P*(3+S*=4V'(* ;3+S*=4V'(*#",*D("L'%,$+D'%3M%*A&/(3'+* =',1''#*D("L'%,+*/#)*,0D'+*/#)*#"* 3#%'#9&'*,"*8/#/.'*(3+SB* :/,'(3/53,0W)'*83#383+* :',J")"5".0*/DD("&/5* I#)3%/,')*3#*'/(50*)"%48'#,/9"#* =4,*#"*('T43('8'#,+*'+,/=53+J')P*#"*,J('+J"5)*+D'%3M')*AC@@66*.43)'53#'+UB* :/#)/,"(0*D4=53%*)3+%5"+4('*/#)* "D'#*4+'* "#+*+J"45)*='*!"#$%&!'*37*#",* $()*&(+!'*A7("8*)/,/*+D'%3M%*,"*,J'* D("L'%,B*4#5'++*'T43&/5'#,*"(*5'++*3#*D("L'%,* XJ"45)*%"#+3)'(*%"88'(%3/5*3#,'('+,+*$** 3##"&/9"#*/#)*J3.J'(*T4/53,0*,J("4.J* %"88'(%3/5*/)&/#,/.'+P*"D'#* 8',J")"5".3'+*&'(0*=/+3%*

6 Challenges Ahead! The core objective in designing a GHG offset program is to establish requirements that:- Maximize the credibility of the GHG reduction certificate, while; Allowing incentive to participate Additional important considerations include:- Minimising investment risk Providing incentive for good behavior by project proponents Reducing subjectivity and technical burdens for project proponents, auditors and administrators Challenges Ahead! Important to set high standards for projects early and not allow poor projects through Most significant current problem is leakage:- Can vary from small impact to 10,000% affect (certainly 100% - that is no reduction in GHGs) Has potential to make certain projects unviable Especially important for biomass projects (reforestation, revegetation, forest management and avoided deforestation) Measurement uncertainty is important for two reasons:- Can impact final amount of issued units (project viability) Can provide incentive for good management and hence long-term outcomes

7 Thank You! Carbon Farming Initiative! Addressing non-permanence/risk of reversal mechanisms:- 100-year maintenance obligation Risk buffer 5% for all terrestrial carbon pool projects Average crediting 250! Average Crediting - Reforestation! Carbon stock (tc/ha)! 200! 150! 100! 50! Forest! Average! 0! 0! 10! 20! 30! 40! 50! 60! 70! 80! 90! 100! 110! 120! Age (years)!