Landholders, as well as Government’s compliance and voluntary carbon markets to be impacted

The Carbon Market Institute (CMI) has today made a formal submission in response to proposed carbon credit rule changes, which have seen a short consultation period over the Christmas holidays. CMI opposes the proposal for reasons including the volume of projects affected, the lack of supporting evidence, inadequate consultation, constraints on landholder decision making, additional administrative burden and stifled confidence among investors and service providers.

The changes would allow additional consideration and potential veto from the Agriculture Department and Minister for new or expanded projects under the human-induced regeneration (HIR) and native forest from managed regrowth (NFMR) carbon farming methods. The changes are a response to undocumented concerns about adverse impacts on agricultural production or local communities.

CMI warns that the thresholds proposed, and uncertain decision-making criteria, will have potentially arbitrary impact on most, if not all, HIR and NFMR projects. These accounted for 95% of contracted abatement at the last Emission Reduction Fund (ERF) auction and have generated over half of the total abatement generated from all vegetation projects under the scheme to date.

If approved, the amendments risk stifling critical investment into the supply of Australian Carbon Credit Units (ACCUs) both for the Government’s flagship ERF carbon market auctions but also corporate compliance and voluntary market investment, at a time when rising demand and limited supply has seen ACCU spot market prices rise to nearly $60 from $16.50 this time last year.

Uncertainties about the proposal, and its proposed timelines, are also risking participation in the forthcoming ERF Auction, with the Agriculture Minister’s potential 75-day period for consideration of adverse findings jeopardising many projects in the pipeline for the bid window of 5-6 April.

CMI CEO John Connor said:

“Unsupported by any firm evidence, this is an extraordinary double whammy proposal from a Liberal National government. It is a direct intervention into landholder decision making and imposes excessive red tape.”

“The proposals risk supply to the Government’s flagship climate market, the Emission Reduction Fund, and to corporates investing in the Safeguard Mechanism compliance as well as the voluntary markets the government has been encouraging.”

“Rather than being beneficial for regional Australia, the restrictions would have a disproportionate impact on landholders, particularly smaller farmers, and their decision making. They add unnecessary administrative burden, potentially delaying investment into regional areas, sustainable agriculture and drought resilience as well as goals for emission reduction and to reverse deforestation by 2030.”

“Detailed research has already commenced into these concerns, and until this is complete, along with the reviews set to be undertaken by Climate Change Authority at the request of both major parties, the proposal’s consideration should be postponed.”

CMI also asks that these reviews be considered in the context of extensive existing regulations at Commonwealth, state and local levels that already provide for ongoing agricultural activity as well as management of weeds, pest and fire management.

Should the proposal proceed, CMI strongly recommends further measures to reduce market uncertainty, including:

  • Postponing potential implementation until after the forthcoming April ERF auction process and after an adequate consultation process
  • Clear published guidelines and criteria for assessment by the Agriculture Department and Minister
  • Publication of adverse impact assessment reports as well as rights of appeal and review
  • Earlier notification to the proponent that a project may proceed if it is found to have no adverse impacts
  • Projects in Indigenous Protected Areas and Indigenous-owned or managed land should be excluded from the potential operation of the Ministerial veto
  • Areas of high carbon and biodiversity conservation value should be excluded from the operation of the Ministerial veto, specifically, areas that enhance ecosystem function for high conservation value habitats, highly-intact ecosystems and sites critical to biodiversity
  • Higher thresholds triggering notification

Finally, it is important to note that the proposed changes in no way question or seek to impact the integrity of carbon credits generated under the HIR and NFMR methods.

CMI’s full submission can be viewed here.

The Carbon Market Institute is the independent industry association for business leading the transition to net zero emissions. Its over 120 members include primary producers, carbon project developers, Indigenous corporations, legal and advisory services, insurers, banks and emission intensive industries developing decarbonisation and offset strategies.

To interview John Connor please contact Thomas Hann on 0408880536 or via email:

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