Priorities in scaling carbon, nature and investment
John Connor, CEO, The Carbon Market Institute
This 9th annual carbon farming industry forum is taking place at a time when the need for urgent action and accelerated investment is clearer than ever.
At a time when the dangers that climate change presents to communities and the natural environment are already shockingly visible.
And at a time when the health and condition of our environment and biodiversity continues to deteriorate.
It’s also a time of excitement and frustration.
Excitement as we build the capability, skills, technologies and confidence that step change improvements in land management are possible. Changes that can deliver climate, nature and history repair at scale. Changes that can preserve and boost agricultural productivity and climate resilience.
Carbon farming, sustainable agriculture, regeneration of country and the technologies to measure report and verify their climate and biodiversity results have taken massive strides forward. There is a growing catalogue of projects delivering these results and also a clear vector of success for Indigenous Australians in enabling greater access to country, management and ownership.
Frustration as we work up policies and their administration that can ensure investor and community confidence in the integrity of the crediting framework that must underpin the scale of growth necessary. Frustrations as reviews and delays on ACCU methods and FullCam modelling threaten business viability.
Frustration also at the false binaries besetting the conversation.
It’s not industrial decarbonisation or offset credits, the latter must complement not substitute the former.
It’s not emission reduction or carbon removal, it must be both as we head to more of the latter as we approach net zero.
It’s not academic analysis or industry experience, we must integrate both with greater transparency from industry as well as a recognition the former will lag the latter.
Into this urgency, excitement and frustration we have the emphatic results of Saturday which have vaporised uncertainty hanging over Safeguard Mechanism and other reforms.
There is a clear mandate for continuity in clean energy and decarbonisation policies.
The Coalition’s climate policies would have seen emissions rise this decade, gave no certainty on the Safeguard Mechanism or ACCU reform and were, well, incredible.
Ongoing credibility for the Government, though, with voters, investors, and other countries particularly in the Pacific, will soon be tested. 2035 targets are due by September and should have at least 70% reductions. That will depend on urgent action with policies and their administration.
The ALP responded to us during the campaign and highlighted how crucial to CMI election priorities were the development of a Net Zero Plan, 2035 target and six sectoral plans. As they stated, “[t]hese will be integral in setting out the important role of carbon markets and market mechanisms in supporting emissions reduction across the economy”.
The ALP committed that “the focus of these will remain on reducing Australia’s emissions, both direct emissions and enhancing the storage of carbon.”
Crucial to that will be ensuring ACCU integrity reforms, method development and amending legislation make large strides this year. The innovation that had the Assistant Minister with dedicated portfolio responsibility was working well and should continue.
On a side but related note, Assistant Minister Josh Wilson had rejuvenated a much delayed review of the government backed Climate Active, which has provided important services to non Safeguard covered companies, farmers seeking certification for export and green building certification. Climate Active is an important program for many organisations, large and small and other nations are looking to it as an example of additional policies governments can use in assisting the net zero transition.
I note that Climate Active is particularly important as a driver of demand for ACCUs generated by Indigenous carbon projects, such as managed savanna burning projects. I understand it is a demand source for almost half of the Indigenous ACCUs.
Friends, the onus is not just on government but also us, the industry, to step up in ways we will be discussing at this forum.
In the 12 months since our last carbon farming industry forum much has happened that highlights both the contribution our industry is making now and – importantly – its potential contribution in future.
Most recently, the first results from the reformed Safeguard Mechanism are in, and they show that demand for ACCUs from large emitters last year led to the delivery of 7.1 million tonnes of greenhouse gas abatement.
That’s more than five times the volume of ACCUs that Safeguard Mechanism facilities surrendered in the previous financial year. In the first, ‘training wheels’ year we have seen the start of a significant shift from an uncertain reliance on taxpayer funding to business investment as the central investment vehicle in ACCUs. The value of ACCUs traded exceeding $1 billion for the first time last year.
This also constitutes a substantial transfer of money from large emitters to the landowners that host carbon abatement projects, and to regional communities more generally, including to Indigenous landowners and communities in remote parts of Australia.
Over the last 12 months we have also seen the operationalisation of the Nature Repair Market – which is modelled closely on the carbon market and is designed to operate in tandem with it. How that, and/or other nature certification schemes take root and enhance carbon and nature investment is central to this forum and the coming 12 months
In the last 12 months, four ACCU methods have been announced by the government for development under a new proponent-led ACCU method development track. CMI has provided sandbox services already for some of these and we’ll discuss them and others here and in coming weeks.
The next 12 months will see how this track intersects with the priorities still in the older ‘co-design’ track. The role of DCCEEW as an intermediary for both tracks needs to be clarified. There have been frustrations aplenty in the IFLM, Savanna and Landfill method development tracks and it will be important to clarify how these processes align in delivering draft methods to ERAC for their consideration as the guardian of integrity.
We have also seen the introduction of significant new transparency and integrity measures in the ACCU scheme over the last 12 months, with statutory changes last December resulting in significantly more information being publicly available about carbon farming projects. More is and should come once regulatory and legislative changes are enabled and hopefully prioritised this year.
These important developments show that our industry – established more than a decade ago – is constantly evolving and constantly improving.
The question we must face now is ‘how large a contribution can our industry make’?
We know in general terms that we need to go large and grow fast. We know we need to integrate climate, nature and history repair outcomes. But exactly how much of a contribution can we make, where and how can we best make it, what can help us get there, and what barriers need to be overcome?
Since our last Forum, Australian scientists who are experts in both nature repair and climate have made an important contribution to answering these questions.
Their contribution is in the form of a 30-year blueprint and investment program, released by the respected Wentworth Group of Concerned Scientists. The blueprint describes a path to reverse the decline of Australia’s natural environment, estimating that about 919 million tonnes of greenhouse gas could be abated across the continent between 2025 and 2055 through actions to restore native vegetation.
CMI has recently partnered with Climateworks and Deakin University to use their Land Use Trade-Offs Model v.2 to identify and explore land-use options and the synergies we may need to deliver on our national climate and nature targets.
The research will join other recent inputs, including reports with South West Queensland Region of Councils and NRM Australia, as well as your inputs at this forum, to help inform CMI’s third national Carbon Farming Industry Roadmap in 2026.
This revised roadmap will set out a refreshed vision and milestones.
A roadmap that encompasses a market that prioritises sufficient carbon sequestration to support Australia’s transition to net-zero emissions, alongside driving the pace and scale of nature restoration under Australia’s Nature Positive commitments.
A roadmap that assists mutually beneficial outcomes for landholders, enduring social licence and “right way dialogue” to ensure free, prior, informed and ongoing consent with first nation Australians, enabling expanding access to country, management and ownership.
A roadmap that improves investability while maintaining integrity.
Some early findings of the ClimateWorks research will be presented later this morning. This builds on earlier research from them which indicated that there needs to be an up to eight-fold increase in land based sequestration alongside rapid industrial decarbonisation if Australia is to help limit warming to 1.5 degrees.
Carbon farming and sustainable, climate-smart agriculture can play a critical part in achieving sequestration at this scale and can also deliver significant benefits to land managers in terms of productivity gains and resilience increases.
We also need to advance consideration of carbon service provider accreditation scheme proposed by the Chubb ACCU Review. That Review noted the role of the Australian Carbon Industry Code of Conduct in assisting integrity. The Code, alongside a more formalised education offering from CMI can play a crucial role in ensuring best practice in project management as well as stakeholder and customer satisfaction.
The Code is already seen as an important marker of quality from the demand side and we are keen to deepen that.
CMI is taking important steps following the most recent Independent Review of the Code. We are creating more focused administration of the Code and making other changes to come into effect from July.
The Code now has more than 45 signatories that account for about two-thirds of existing land-based carbon projects. And it is also supported as a third party assurance system by the Queensland, NSW and Western Australian governments.
These initiatives and recent guidance, including in ensuring Code complaints processes are not hindered by non-disclosure agreements will be discussed with Code lead Samuel Dawes joining the CER and ERAC Chairs and myself in conversation later today.
Friends, it’s almost exactly 10 years since the then Coalition government conducted its first Emissions Reduction Fund auction, marking a major shift in direction for Australia’s carbon credit scheme.
If we zoom out now and take a bird’s eye view of the carbon farming sector, it’s clear that Australia’s carbon credits value chain is transforming once again, and it’s definitely a change for the better.
But there are currently significant uncertainties over our medium- and long-term capacity to meet demand, and about the ways we should do so, to ensure integrity, social licence, environmental enhancement, and coexistence with goals such as increased food and fibre production.
We need to resolve these uncertainties, and steer our way through these complexities, and you can rest assured that CMI is doing all it can to identify the best way forward.
CMI is determined to maximise the contribution that land-based carbon projects can make to the nation’s goal of achieving a productive, prosperous net-zero and nature positive economy, and in the essential move beyond it to net-negative emissions economies.
CMI looks forward to working with the new government in Canberra, with state and local governments, stakeholders and communities in the urgent task to scale carbon, nature and investment, the theme of this forum.
And I’m pleased to say it’s the people in this room who will play a key role in making that happen.