The Carbon Market Institute facilitated a workshop in Melbourne this week where practitioners in the Emissions Reduction Fund and representatives from the Commonwealth were present. The workshop focused on issues relating to engaging in the ERF, method development and the future of emission trading. Highlights included:
The development of methods is continuing, being led by the Dept of Environment. A version 2 of the measured soil carbon method is being developed that will include the use of sensor technology being developed by the CSIRO to measure soil carbon, plus a range of other soil physical (including bulk density) and chemical attributes. The CSIRO have developed a in-situ paddock version of the technology that can take cores down to 1.2m and measure soil attributes every 2cm, which can then be used to create 3D paddock maps. The number of sample that can be taken improves the accuracy and repeatability of the results.
Methods are legislative driven, making them difficult for potential project developers to interpret and understand. The legislative process is necessary to ensure the process is transparent and covers off on other legal requirements. Industry technical working groups assist in the develop of methods which can take up to two years to develop. Because of this, and the resourcing to do the work in the Dept of Environment, it is important that only methods that are likely to be used in the ERF are developed. There are a number of methods that have undergone extensive development but have still not been used (for a variety of reasons!).
The ERF has been effective at finding the price of carbon in Australia – averaging $11.83 per tonne of CO2, with 189M tonnes of carbon abated in 387 contracts awarded mostly to vegetation projects (122MT). There is still $300M left in the fund, with smaller auctions envisaged in the future. The timelines for the next auction have not been released yet.
The was discussion on developing a whole of farm method that combined a range of emission reduction and soil carbon storage options. It was generally felt that methods should be outcomes based, freeing up the options that can be put in place to reduce emissions / store carbon in the landscape.
There was also a lot of discussion about the multiple benefits of emissions reduction / carbon storage in agriculture (production, environment, health and climate), and how these benefits should be better sold to policy makers in supporting increasing soil carbon in particular. There were a few participants at the workshop pushing the soil biology angle and the use of amendments to increase soil carbon.
The latest FulCam modelled estimates of carbon emissions in Australia indicated that there were 523 mega tonnes of CO2 equivalent emitted across Australia in the previous year, with 30% of these emission coming from agriculture. This presents an opportunity and a risk for agricultural industries – an opportunity to significantly reduce agricultural emissions and to offset emissions from other industries, but a risk as being seen as a large emitter and compliance policies being introduced.
The ERF is moving from an intense project development phase to project implementation and monitoring phase. The Clean Energy Regulator manages the ERP projects. Issues so far with project implementation include reporting on time, incorrect reporting, approval timing / consents and delivery schedules for ACCU payments. The point was made that contracts can be terminated. There are still a number of conditionally registered projects which are yet to be contracted.
The Carbon Market Institute is developing an Industry Code of Conduct for the carbon market in Australia which will apply to both those organisations participating in the ERF and in voluntary carbon markets. The ICC will provide those operating in the carbon market a legal and social license to operate which goes beyond compliance, and will be based on best practice with a high degree of integrity.
It is envisaged that the ERF will transition into the private market to offset liabilities for carbon emissions in industry. The supply of local offset options will determine the future price for carbon.
Three organisations dominate the ERF – Climate Friendly, Green Collar and Corporate Carbon, with 90% of the ERF contracts.