An Introduction to the CFI and CarbonTrading.

Direct Action Policy - state of play and

methodologies for Land Sector.

EMISSIONS, TRADING, AND THE CFI

Milestones 2006-2011 US tour: links with senior scientists & economists 2006

World’s first Carbon Farming Expo & Conference 2007

“Soil Science Summits” between farmers and scientists 2007

First sales of Australian Soil Credits to start the Australian Voluntary Market 2007

Soil Carbon Trading on platform of all parties Federal Election (except Government) 2007

PM Rudd announces soil carbon on national agenda 2008

Carbon Farming Initiative announced as election commitment 2009

Framework developed 2010.

Passed into legislation July 2011.

Bridge Consortium method submitted September 2011. In conjunction with 5th annual Conference

First Country to have a comprehensive Kyoto/Non Kyoto trading framework backed by law.

Milestones to 2014

7th annual carbon farming

conference and expo

Accepted as a ‘Registered

Offset Entity (ROE)

Accepted for AFSL

Implemented project. Sold

carbon into market

Identified partners for

others.

CLIMATE CHANGE:

Extreme weather events

“Uamby” 75mls in 35mins

“Uamby” 75mls in 35mins

Adapting to Climate Change

Enjoying the ride

“Uamby” 2 weeks after 75mls

Rested Paddocks

Sacrifice Paddocks

Sacrifice Paddocks

Conventional

Farming

Carbon

Farming

WHAT IS EMISSIONS TRADING?

• A system to help countries with legal requirements to reduce emissions or who wish to do so voluntarilyusing binding targets. Countries who have signed Kyoto have binding targets.

•Carbon emissions considered favourably for a trading system as the reductions can take place anywhere in the world. A tonne of CO2 is a uniform, international unit.

•So, if one country (A)cannot reduce its own emissions cheaply, they can pay another which can - Country (B)Country B may have more ways to reduced emissions.

•Also applies to companies within a country.

What are Carbon Offsets and where do

they fit?

• Two distinct ways to reduce your CO2 load, and achieve

your targets.

• 1. Lower emissions - via efficiencies then wind, solar,

manure flaring etc. Included under Direct Action.

• 2. REmove CO2 from the air - Trees, Soil these are referred

to as ‘sinks’.

• Sinks remove carbon from the air, emissions reductions

prevent carbon from being released into the air.

How does the ‘Trading’ work?

• Operate through the use of tradeable certificates.

• In Australia these are called Australian Carbon Credit Units (ACCU’s).

• Representing a tonne of CO2e

• The ‘currency’ in all schemes is a tonne of ‘pollution’ or Carbon dioxide equivalent.

• CO2e = Carbon dioxide equivalent = tonne of Carbon x 3.67

• Eg: Methane gas is reduced to CO2e for trading.

• “Currency” enables parties to trade between themselves to achieve the lowest cost means of achieving a target.

Coalition Policy Carbon ‘trading’ still contentious. But it won’t go away. Many

countries now taking action.

Current policy is called ‘Direct Action’ and is to be

administered via a reverse auction under the ‘Emissions

Reduction’ Fund. Essentially Voluntary.

Administered by the Clean Energy Regulator

Requires price on carbon to be removed. This is achieved.

Target is 5% by 2020 reduction. Some 450 million tonnes

Other, non Land sectors now able to enter CFI under DA.

Legislation will be introduced soon.

CFI for Groups under DA Large parcels of Carbon will be preferred under DA.

Sectors best arrangement will be to ‘aggregate’

Aggregation can be by Landcare group or other groups.

Carbon Farmers has a program called ‘The First Million Tonnes

to:

Assist aggregation – Provide necessary services. Help groups

understand. Hold necessary licences.

Sign up here or on www.carbonfarmersofaustralia.com.au

Project Methodology

The ‘Recipe’ book (in Greek!)

The methodology ‘rules’. No approved ‘meth’, no project!

Methodologies: Contain rules for measurement and verification

Methodologies: project-specific rules for monitoring, record keeping and reporting on abatement.

Paperwork requirements may be high, but software will come.

“Methodologies should be consistent with relevant scientific results published in peer-reviewed literature”

Government Departments do best efforts to also put out ‘guides’ for implementation. AND ‘tools’ for calculations.

Soil Carbon ‘Meth’ Soil carbon meth now approved. Can be viewed at:

http://www.cleanenergyregulator.gov.au/Carbon-Farming-

Initiative/methodology-determinations/Pages/Sequestration-

methodology-Sequestering-carbon-in-soils-in-grazing-

systems.aspx

25 Year Soil Carbon Unit will be available

More ‘Streamlining’ of the CFI to come.

This ‘meth’ will reward farmers for increasing soil carbon under

changed management systems in grazing systems.

Vegetation ‘Meths’ : Update. Available ‘tree’ meths

Human-Induced regeneration of a permanent even-aged native

forest

Native forest from managed regrowth

Native forest protection (avoided deforestation)

Permanent environmental plantings of native species using the

CFI reforestation modelling tool

Quantifying carbon sequestration by permanent plantings of

native mallee eucalypt species using the CFI reforestation

modelling tool

Reforestation and Afforestation

Second Generation ‘Tree’

Meths. Some of the above methodologies are undergoing their first

‘variations’.

A number of the forestation/re-afforestation meths above are

being re-developed, to use FullCam as their calculations model,

not the RMT (reforestation modelling tool).

This is as a result of incorporating more up-to-date calculations

for sequestration.

In many cases this would lead to increased sequestration

calculations.

Good example of the ‘evolution’ of methodologies.

TWO further potentials for

Beef Producers. Up coming methodologies for beef producers include:

1. Feeding Beef Cattle Nitrate supplements. This meth

involves substituting nitrates for urea as a non-protein

nitrogen supplement for beef cattle. Fed instead of Urea

blocks.

Early Finishing of Beef Cattle . For those who can

manage their property to increase the rate of liveweight

gain of their herds. They reduce the average age of

animals, thereby reducing methane.

‘Farm Forestry’ Meth This is the ‘agroforestry’ methodology.

At time of writing, it is awaiting endorsement from the

Minister, after which it will be approved for use.

From previous discussion, the guiding principles have

been:

To avoid the issues around MIS schemes.

Likely therefore to include relatively small blocks –

100ha maximum.

Upcoming Non Land Sector

‘Meths’ Coal Fugitive Emissions: Methods for converting methane

coming out of coal mines to CO2e.

Building Energy Efficiency: The Department is building on

several existing NSW Energy Savings Scheme (ESS)

methods.

Industrial Energy Efficiency: The Department is also building

on existing work to develop industrial energy efficiency

methods.

Transport: A transport method is being developed for

efficiencies.

Various new and Streamlined ‘waste management’ meths.

Farmer

Farmer

Farmer

Farmer

Farmer

Farmer

Farmer

Farmer

Farmer

Farmer

Farmer

Farmer

Farmer

Farmer

Farmer

Farmer

Farmer

Farmer

Aggregator

Retail/Farm Gate Market

Carbon Farmers of Australia Market Mechanism

Database*

Buffer Pool

Soil

Carbon

Units

Pool

Auditor

Australian

VoluntarySo

il Carbon

Standard

Brokers

Carbon

ExchangesCorporate

Market

*Web-based system for tracking environmental counters across a large group.

Steps to a “Project” Source: http://www.cleanenergyregulator.gov.au/Carbon-

Farming-Initiative/How-does-it-work/Pages/default.aspx

Absolute outline here. There is much ‘detail’ in these

steps.

1. Plan a project - Choose an available and appropriate

‘meth’

2. Apply to participate in the Carbon Farming Initiative

3. Apply for approval of your Carbon Farming Initiative

project

4. Reporting and crediting 5. Participating in the market

Multiple Roles of the Aggregator

Parcelling orders

Pool manager

Registry Maintenance

Oversee measurement

Trader

Educator

“Middleman”

Role of Aggregator

Who is likely to Aggregate?

Councils? Suppliers?

Farmer Organisations eg. In the USA, Pacific Northwest Direct Seed Association, Iowa

Farm Bureau, The National Farmers Union, Aggregate (North Dakota Farmers’ Union)

Private Companies eg. In the USA- NCOC, Flatlander Environmental Services, CROP

Suppliers eg. N/C-Quest (Bio-Agtive), CRT, Elders.

NRM agencies Eg., LandCare Groups.

Legal obligations will apply - need to be well aware of these.

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Price Expectations – 2 Markets.

There are two carbon markets which have different price dynamics.

“Compliance” or mandatory market

for companies who must pay for offsets to comply with their country’s Kyoto target or other National targets.

want the lowest price possible., but largest volume.

Our former ‘price on carbon’ was mandatory.

“Voluntary“ market

used by those who want to go beyond their target, or who are not ‘mandated’ to make a change.

buying enough units to ‘cover their carbon footprint’

can claim they are carbon neutral.

Higher price, much lower volume.

Anomaly with Direct Action While the above slide applies MOST of the time, Direct Action

is actually an exception to the rule!

Why? Because it is essentially a VOLUNTARY market –

potentially with a ‘safeguard mechanism’

But it wants high volume, at a low price – normally the domain

of the Mandatory Market.

Essentially, under DA, the Government is the only buyer, not

the polluters. Essentially voluntary.

Price not known due to reverse auction.

Voluntary offsets need not be

low quality/low value

Domestic offsets

were selling in

Switzerland for 130

Euro while CDMs

fetched only 15

Euros during 2011

Why Buy Australian

Farm Credits?

Buys us time

Soil health

Landscape restoration

Drought buffer

Support family farming

Build your brand

What can Carbon Farmers of Aust. do?

Project identification, methodology identification or development and project feasibility analysis

Assist in the documentation and application process for becoming a recognised offsets entity

Assist in obtaining a declaration that project is a eligible offsets project

Provide project planning and management services

Provide services for obtaining certificate of entitlement

End result: ACCUs issued to Client’s Registry account

Phase

2

Phase

1

TAKE CARE! Don’t commit your entire property to any one scheme

Put a toe in the water

“Baseline” as soon as a methodology is approved

Sign up at www.carbonfarmersofaustralia.com.au for updates

Get advice from people who have a track record

If it sounds too good to be true, it probably is

Learn about the CFI - rules, rights etc.

Learn about Emissions

Urgency