An Australian scheme to generate farm and forest-linked carbon credits for sale to polluting firms will start slowly when it comes online later this year, as the government struggles to garner support for a national carbon price seen as crucial to the plan’s long-term success.
The government aims for parliament to pass the Carbon Farming Initiative (CFI) in time for its expected start on July 1. Approval would usher in the world’s first nationally legislated market for carbon credits from farm projects and be a boost for carbon forestry firms.
However, for the scheme to succeed, analysts said, parliament would also have to pass matching laws that set a national price on carbon emissions from industry, to underpin demand from polluters.
Illustration: Mountain People
“The government has not explicitly said this [the use of CFI offsets] will be included in any future carbon price, but the expectation is that it will,” said Martijn Wilder, head of Baker & McKenzie’s global environmental markets practice, who helped advise the government on the draft laws.
Big polluters could buy the offsets to meet mandatory emissions cuts, giving them another way to manage their carbon risks and drive investment in projects that cut greenhouse gas emissions.
Until that happens, the initiative will only serve a small voluntary market for offsets and limited international demand for offsets from forestry projects.
“While there’s likely to be some demand from the voluntary market, I don’t think we’ll see large volumes of CFI offsets until we see carbon pricing legislation that confirms that they can be acquitted against mandatory carbon liabilities,” Deutsche Bank carbon analyst Tim Jordan said.
A major risk is the struggle to win voter and industry support for laws that would usher in a fixed price on carbon emissions as early as July next year. The fixed-price phase would last three to five years, before a switch to a floating price and emissions trading.
No price has been decided, but the nation’s top climate adviser suggests this could be between A$20 (US$20.74) and A$30 a tonne. A multi-party panel deciding the shape of the carbon pricing scheme has also not decided if CFI offsets could be included in the fixed-price phase.
Jordan expected that once Australia had a floating carbon price, CFI offsets would trade pretty close to the spot carbon price.
“Forest projects are likely to be the first to generate credits — the methodologies are well established and there are several businesses ready to generate offsets as soon as the legislation is passed,” he added.
The government sees the CFI as a crucial part of the fight against climate change. Agriculture, deforestation and burning emit more than 20 percent of Australia’s greenhouse gases.
The scheme is also a way to reach out to the nation’s influential farming community, which is strongly opposed to emissions trading and skeptical about climate change. CFI could become an important revenue stream for some farmers.
The potential volume of offsets is large, scientists say, if there’s a high enough carbon price.
Projects backed by the CFI include tree plantations that soak up carbon dioxide as they grow, cutting methane emissions from burping livestock, reducing fertilizer use and boosting carbon in the soil through better cropping and grazing methods.
“Australia could be abating something in the order of 10 to 20 percent of its current emissions with a reasonably concerted effort,” said Michael Battaglia, of the state-funded research body the Commonwealth Scientific and Industrial Research Organisation.
“But there will be a lead-up period to achieve that, five to 20 years,” said Battaglia, who leads a program studying how to cut greenhouse gas emissions from agriculture and use the land as a store for carbon.
Battaglia said reforestation could eventually generate -significant numbers of offsets for A$10 to A$20 a tonne.
That would make carbon plantation firms such as CO2 Group and Carbon Conscious potential winners.
“It elevates the role that carbon forestry can play as one of the legitimate options” to cut emissions and source offsets, said Andrew Grant, chief executive of CO2 Group, the top carbon forestry player in Australia.
“Critically, we can attract offshore capital,” he said. “For the first time for any investment in a carbon forest in Australia, the credits can be exported — it’s first time that as an Australian activity we can access international carbon markets.”
The CFI allows projects covered under the UN’s Kyoto Protocol to be issued with Kyoto compliant credits that can be traded overseas. Buyers could include New Zealand and Japan.
The Greens, a political party that provides crucial support to the government, have called for a Senate Inquiry into the CFI, fearing that some types of projects could flood the market with offsets. The party, while not opposed to the scheme, wants a deeper analysis of the numbers.
The government says it is working on estimates on the potential flow of offsets, but dismisses fears that some types of projects could flood the market.
“To actually do an offset project requires a significant amount of investment, it requires taking on legal liability, long-term monitoring,” Wilder said. “It’s not a simple thing, so there’s very limited risk that the market will become flooded.”
Farmers also need more time to be convinced. While forestry projects are well understood, steps that try to lock away more carbon in the soil are still being developed and there are no rules governing them under the CFI as yet.
Farmers are aware of the developing science of locking away more carbon in the soil, but the methods and costs are still unclear, said farming consultant Sandy Biddulph from the New South Wales town of Cootamundra.
“No one is really paying close attention to it in the mainstream at this stage,” he said during a recent visit to the fertile cropping and grazing town.
Two sets of economic data released last week by the Directorate-General of Budget, Accounting and Statistics (DGBAS) have drawn mixed reactions from the public: One on the nation’s economic performance in the first quarter of the year and the other on Taiwan’s household wealth distribution in 2021. GDP growth for the first quarter was faster than expected, at 6.51 percent year-on-year, an acceleration from the previous quarter’s 4.93 percent and higher than the agency’s February estimate of 5.92 percent. It was also the highest growth since the second quarter of 2021, when the economy expanded 8.07 percent, DGBAS data showed. The growth
In the intricate ballet of geopolitics, names signify more than mere identification: They embody history, culture and sovereignty. The recent decision by China to refer to Arunachal Pradesh as “Tsang Nan” or South Tibet, and to rename Tibet as “Xizang,” is a strategic move that extends beyond cartography into the realm of diplomatic signaling. This op-ed explores the implications of these actions and India’s potential response. Names are potent symbols in international relations, encapsulating the essence of a nation’s stance on territorial disputes. China’s choice to rename regions within Indian territory is not merely a linguistic exercise, but a symbolic assertion
More than seven months into the armed conflict in Gaza, the International Court of Justice ordered Israel to take “immediate and effective measures” to protect Palestinians in Gaza from the risk of genocide following a case brought by South Africa regarding Israel’s breaches of the 1948 Genocide Convention. The international community, including Amnesty International, called for an immediate ceasefire by all parties to prevent further loss of civilian lives and to ensure access to life-saving aid. Several protests have been organized around the world, including at the University of California Los Angeles (UCLA) and many other universities in the US.
Every day since Oct. 7 last year, the world has watched an unprecedented wave of violence rain down on Israel and the occupied Palestinian Territories — more than 200 days of constant suffering and death in Gaza with just a seven-day pause. Many of us in the American expatriate community in Taiwan have been watching this tragedy unfold in horror. We know we are implicated with every US-made “dumb” bomb dropped on a civilian target and by the diplomatic cover our government gives to the Israeli government, which has only gotten more extreme with such impunity. Meantime, multicultural coalitions of US