Department of the Environment
POLICY IMPLEMENTATION REFERENCE TABLE
This guide indicates how policy positions in the Emissions Reduction Fund White Paper will be
implemented through the Carbon Credits (Carbon Farming Initiative) Act 2011 (CFI Act) as
amended by the Carbon Credits (Carbon Farming Initiative) Amendment Bill (the Amendment
Bill).
Provision numbers in the ‘Implementation’ column refer to the Carbon Credits (Carbon Farming
Initiative) Act 2011 unless a different Act is specified.
Transitional arrangements are in the Amendment Bill only and do not amend the CFI Act. Item
numbers in the Carbon Farming Initiative section of this table therefore relate to item numbers in
the Amendment Bill.
A number of the policy positions set out in the White Paper do not require legislation and will be
implemented through the administration of the Emissions Reduction Fund (ERF) by the
Department of the Environment and the Clean Energy Regulator (Regulator). For example, the
Department will conduct a review of the ERF in late 2015 and standard contracts offered by the
Regulator will reflect the policies in the White Paper.
Comparison of key terms
The following table provides a comparison between equivalent terms used in the Emissions
Reduction Fund White Paper and in legislation.
White Paper term
Equivalent term in legislation
Contract
Carbon abatement contract
Emissions reductions
Carbon abatement
Emissions reduction provider
Carbon abatement contractor
(Project proponent)
(Project proponent)
Method
Methodology
Registered emissions reduction project
Eligible offsets project
Project report
Offsets report
Sequestration project
Sequestration offsets project
Standard contract
Carbon abatement contract
Verification
Audit
CREDITING
Methods
Policy
Implementation
Methods
Part 9 provides for methods.
Section 53 defines eligible projects and will be amended to allow
methods to cover industrial activities.
1
Policy
Implementation
Emissions Reduction
Assurance
Committee
Part 26 establishes the Domestic Offsets Integrity Committee, which will
be renamed the Emissions Reduction Assurance Committee (ERAC).
Assessing methods
The ERAC will advise the Minister on whether draft methods are suitable.
Paragraph 256(b) will be amended to increase the maximum number of
committee members from six to nine.
New section 123A sets out the matters that the ERAC must consider
when providing advice on a method, including whether it meets the
Offsets Integrity Standards and any advice from the Regulator.
New paragraph 286(d) enables the Regulator to advise the ERAC on
methodology determinations.
New section 123D streamlines existing requirements for the ERAC to
seek public comment on draft methods before advising the Minister on
their suitability.
Division 3 of Part 24 will be repealed so that the advice of the ERAC is
not subject to review by the Administrative Appeals Tribunal.
Minister makes
emissions reduction
methods
Subsection 106(4) sets out the matters that the Minister must consider in
making a determination. Subsection 106(4A) prevents a method being
made unless it covers emissions reductions that count towards
Australia’s international emissions reduction targets.
New subsections 106(10) and (11) and 114(6) and (8) will require the
Minister to ask for and publish advice from the ERAC before making or
changing methods.
Section 106 provides for methods to be legislative instruments.
Section 291 will be amended to allow the Minister to delegate the making
of methods.
Genuine emissions
reductions
Section 133 sets out the Offsets Integrity Standards for methods. A
number of standards have been amended to more clearly reflect the
original policy intent.
New paragraph 123A(5)(a) requires the ERAC to consider these
standards when providing advice to the Minister about the suitability of
methods. Subsection 106(4) requires that the Minister must also consider
these standards when making a method.
New section 123B provides for the Minister to make guidelines that the
ERAC must consider when advising on the suitability of methods.
These guidelines will assist technical working groups to develop
methods. They will reflect policy positions in the White Paper including
approaches to setting realistic project baselines, accounting for normal
variability in emissions and crediting emissions reductions from particular
types of projects.
Additionality
Section 41, which sets out the additionality (common practice) test, will
be repealed and replaced with an express additionality requirement in
new paragraph 133(1)(a) of the Offsets Integrity Standards.
New subsection 27(4A) establishes project additionality requirements.
2
Policy
Implementation
Kyoto – eligible
emissions reductions
A new definition of eligible carbon abatement, referred to in new
paragraph 133(1)(c), requires that emissions reductions count towards
Australia’s emissions reduction targets. Using methods under the
National Greenhouse and Energy Reporting Scheme will ensure that this
can occur.
Review of methods
Section 255 establishes the functions of the ERAC. This section will be
amended to include monitoring and reviewing methods.
The Minister will ask the ERAC to review methods, at a minimum, every
four years.
Priorities for method
development
Section 255 will be amended to enable the ERAC to advise the Minister
on priorities for method development.
Issuing credits
Policy
Implementation
Australian Carbon
Credit Units
Part 2 outlines how the Regulator issues Australian Carbon Credit Units
(ACCUs).
Section 15 provides for credits to be issued following the receipt of a
project report.
The proposed legislation does not change the treatment of ACCUs for
the GST or other tax purposes, or the use of ACCUs to meet liabilities
under the carbon tax.
Project registration
Section 27 outlines the requirements for project registration.
Division 5, Part 12 establishes the Register of Offsets Projects. This will
be renamed the Emissions Reduction Fund Register.
Project proponents
Section 5 redefines project proponent to remove the requirement that
proponents for sequestration projects must hold the carbon sequestration
rights to land areas under the project.
New Part 4 establishes a fit and proper person test, with details to be set
out in the legislative rules. This test will replace the requirement in
section 27 that participants become Recognised Offsets Entities.
Eligible projects
Section 27 sets out the requirements for project registration, for example
that projects must use an approved method.
New sections 27(4)(d) and 27(4A) require that projects are new, not
required by law, and will not occur as a result of another government
programme.
Crediting periods
New subsection 69(3) requires that projects can have only one crediting
period.
New subsections 69(1) and 69(2) provide for a fifteen-year crediting
period for sequestration projects and seven-year crediting period for
emissions reduction projects. They also allow methods to provide
crediting periods of different lengths.
Reporting emissions
reductions
Section 76 will be amended to reduce the minimum reporting period from
12 months to six months.
3
Policy
Implementation
Verifying emissions
reductions
Division 2 of Part 19 enables the Regulator to check the accuracy of
project reports through audits.
Sections 76 and 13 will be amended to provide for the Regulator to
determine audit requirements for different types of projects based on risk.
Voluntary action
ACCUs can be used under the National Carbon Offset Standard.
Section 64B of the Australian National Registry of Emissions Units Act
2011 enables ACCUs to be voluntarily cancelled.
Temporary
restrictions on export
Section 154 will allow for future regulations to be made to enable the
export of ACCUs.
PURCHASING
Policy
Implementation
Conduct of auctions
New Division 3 of Part 2A will enable the Regulator to conduct reverse
auctions or other procurement processes.
New subsection 20G(3) sets out the principles that will guide the conduct
of purchasing processes. Legislative rules may set additional matters that
the Regulator must have regard to in its purchasing processes.
Contracts
New sections 20B and 20D enable the Regulator to enter into contracts
for the purchase of emissions reductions and exercise the powers and
responsibilities of the Commonwealth under the contract.
Publication of
information
New sections 163 and 163A will require the Regulator to publish
aggregated information about auctions and purchased emissions
reductions.
New subsection 168(5) lists the information about individual contracts
that will be included in the Emissions Reduction Fund Register.
CARBON FARMING INTIATIVE (CFI)
Policy
Implementation
CFI projects
Item 388 provides that CFI projects continue to be registered under the
ERF.
Items 387 and 388A preserve the application of CFI crediting
arrangements for native forest protection projects approved under CFI
rules.
Item 388B allows for other existing CFI projects to be granted a second
crediting period.
CFI methodologies
Item 392 enables CFI methods to apply under the ERF until they are
varied or revoked.
Transitional
Applications
Items 382 and 389 allow new project applications to be lodged until
1 July 2015 under the CFI legislation, including CFI methods, in operation
before the commencement of the ERF.
4
Policy
Implementation
Permanence
Section 23 will be amended to allow proponents of sequestration projects
to nominate a permanence period of either 100 or 25 years in their
project application.
Section 16 will be amended so that credits issued for a project with a
25-year permanence period are subject to a 20 per cent discount.
Item 390 will allow proponents to convert their existing sequestration
projects, within 2 years, to a 25-year permanence period.
Land Title
Proponents, including those of aggregated projects, will not be required
to own carbon sequestration rights relating to project areas. Instead,
section 43 will be amended to ensure they obtain the consent of the
holders of these rights.
Native forest
protection projects
Section 17, which distributes credits for avoided deforestation and
avoided harvest projects evenly over 20 years, will be repealed. Instead,
the timing of crediting will reflect the timing of abatement.
Item 387 preserves the current crediting arrangements for projects
approved under the existing method for avoided deforestation.
5