5.2. Australian Carbon Credit Units

MATT WOODS: Hello. I'm Matt Woods, and with me is doctor Philip Ireland. Phil has worked in climate change policy for 20 years. And is currently the CEO of Carbon Neutral, one of Australia's oldest carbon project developers. He's worked on large scale environmental initiatives at a global level, is a founder and director of Hone Carbon, a soil carbon measurement startup, and a director of the national Soil Carbon Industry Group. Phil has a PhD in Climate Change adaptation and has worked in UN climate change negotiations. Phil, why is carbon farming as a mitigation to climate change important?

DOCTOR PHILIP IRELAND: Thank you. Carbon farming is incredibly important. In my work in climate change over 20 years, most of what I've done has been working on policy to reduce emissions going into the atmosphere. But as my career has progressed, I've recognised and the broader scientific community has recognised that we need to also draw carbon emissions out of the atmosphere if we're to achieve any of our targets and keep a safe climate. One of the best ways to draw carbon out of the atmosphere is through agricultural methods, through sequestering carbon into biomass, but also into soil organic carbon.

WOODS: In Australia, agriculture accounts for about seventeen percent of our emissions, can agriculture be seen as part of solution to climate change?

IRELAND: Agriculture has to be part of the solution. We can't achieve our targets without it.

One of the really interesting facts that has come out recently is that if we were to take all of the world's agricultural soils, and increase soil organic carbon by one percent in one metre of those soils, we would draw almost half of the historical emissions of our species out of the atmosphere. Soils and biomass have a huge potential to help us get to our net zero targets.

WOODS: I'm gonna move to carbon credits now. How does that system work in Australia, the carbon credit system?

IRELAND: So the Australian carbon credit system is one of the longest-standing carbon credit systems in the world, and it's been developed over successive governments. There are a number of methods that we use. In very broad terms, the system works by incentivising individuals and businesses to reduce their emissions, to avoid potential emissions and to draw carbon dioxide out of the atmosphere.

Using methods that sit under those broad three categories, individuals and businesses are then awarded a carbon credit unit or in Australia, we call it an ACCU, an Australian Carbon Credit Unit. That unit represents a tonne of carbon and that, once it's generated, can be sold and traded.

WOODS: Okay. I think there's a bit of confusion with farmers and landowners about how mature this market is. Is this something they can do today? Can they get involved in it now?

IRELAND: Absolutely. The market was first established a bit over ten years ago around 2011, and since it has had a number of changes and evolutions.

It's become a lot more sophisticated in recent years, with a number of very specific methodologies for very specific approaches to reducing emissions and drawing carbon out of the atmosphere. On the ACCU scheme website, the methods for farmers and landholders fall under the sections of agriculture and vegetation.

Under agriculture, there are a number of methods to reduce animal waste and effluent going into the atmosphere. There's also a method for increasing soil organic carbon, which is one of the fastest growing methods, and I believe one of the most exciting.

Under vegetation, there are a number of different things that landholders can do. They can plant plantations that have to remain in the ground for a set number of years, and they can also do reforestation using native and biodiverse species.

So carbon farming has a whole range of benefits for landholders, and a lot of these aren't talked about. Upfront, better management of your land for carbon can increase yield and profitability of your property. We know, greater soil organic carbon can reduce the need for more expensive fertilisers and chemicals.

We can think about carbon also as another crop. You're going in a process of de-risking the revenue of your property by providing more possible pathways for revenue. So that's number one, increasing yields and profitability.

Number two is climate change adaptation and resilience.

You're increasing your farm's and your land's ability to adapt to changes that are happening and are coming into the climate. We know increased soil organic carbon can increase water retention and water holding capacity of soils for times of drought. We know that trees and windbreaks can protect livestock from inclement weather, and we know the weather may become more windy and more unpredictable into the future. So you're making your property more resilient and adapted.

The third thing is that you're also contributing to climate change mitigation.

Farmers and landholders can get involved right now. They can register projects. They can be drawing carbon out of the atmosphere, and they can be generating extra revenue for their properties.

WOODS: Great. I'm sure every farmer's interested in extra revenue. What about the risks, though, to their business?

IRELAND: There are a number of risks. There are risks in all aspects of agriculture.

I'd encourage anyone looking at getting involved in carbon farming to do good due diligence on the people that they're working with and the methods.

The key thing to keep in mind is the long term obligations and commitments that you're putting your farm and future generations that are managing your farm under.

Under most carbon credit methods, you're making a commitment to permanence. We call it a permanence period of 25 to a hundred years. So in the instance of soil carbon, you're committing to draw carbon out of the atmosphere and then hold that carbon in the soil for a period of time. In vegetation and biomass methods, you're committing to growing trees, plants and shrubs and keeping those trees, plants and shrubs growing, and on the land, for a set period of time. There are obviously other risks associated with it as well, which are covered in this course.

One is that there is some volatility in the market for carbon as there are in all agricultural commodities. You can think about carbon as another crop. Another thing that you're growing on your property and you have to manage that in a similar way you have to manage other commodities that you're producing.

WOODS: Okay. So if I'm a farmer or land manager, and I want to get involved in it today, what's your top line advice of where to start and what to do?

IRELAND: There are lots of carbon project developers out there. They'll have different revenue and partnership models, which will suit different farmers in different ways. Definitely look into what they're offering and how they're getting paid for that offering. Is it an upfront fee or is it a long term share of the carbon credits? Both are legitimate ways, but they'll have different applications for you and different prices.

The second thing I would say is whilst it can be overwhelming, don't be overwhelmed and take your time. This isn't going anywhere, And over time, there will become more requirements, not just of farmers and landholders, but of all businesses - to be measuring their greenhouse gas emissions, reducing where they can, and in some cases, like landholders, drawing carbon out of the atmosphere. And engaging with this system will ultimately hopefully help for your farm's productivity and resilience to a changing climate.

So the first place to start is with the government website. So there's this thing called the ACCU scheme, the A-C-C-U scheme. It used to be called the Emissions Reduction Fund. You might be familiar with that. And this all sits under a government agency called the Clean Energy Regulator.

Over many years, they've made those materials more accessible, but that's your first stop when dealing with anything like this, because those websites cover the policy. They also are the doorways into registering projects and all these types of things.

From there, there are lots of carbon project developers and advisors that sit around that. But all of those bodies as well will be referring back to the government website.

WOODS: Okay. Any advice for people looking into this about potential consultants that they might want to get involved with?

IRELAND: There are a number of different consultants. I obviously work for one of those companies. There are ten to fifteen companies in Australia; a simple web search will bring up a number of these.

My encouragement would be to: If you want to bring on an advisor or a carbon project developer, look around, do your due diligence, really try to understand what their revenue model is. Some carbon project developers will support you for an upfront fee, and that's all. Other carbon project developers may not charge you a fee, but will take a share of your long term carbon.

Other carbon project developers will partner with you and help you generate the carbon, whereas others will stand back. So depending on what your needs are, there will be an advisor and a developer to help you, but definitely look around.

WOODS: Maybe ask some other people that have been involved, that you trust; farmers, land managers?

IRELAND: Absolutely. You should be able to find some other farmers in your region who have done something in this space. And if not, there are networks on social media and other places. There are also more and more media articles about this. Landline has started covering this. It's on the ABC. So you should be able to verify who's around and what they're doing.

WOODS: Terrific. Final question, Phil. What is the win-win-win scenario for carbon farming?

IRELAND: So I believe for farmers, there are at least three wins with engaging carbon farming. It's increased farm profitability, it's farm adaptation to climate change and it's contribution to mitigation of climate change. On farm profitability, managing and increasing carbon on your property can increase yields of crops.

For example, we know that increased soil organic carbon increases the fertility of the soil, which can reduce the need for more expensive, and also carbon intensive fertilisers.

Windbreaks can help sheep and other animals survive inclement weather. And carbon could be thought of as another crop in your property. So when you're growing a crop, you've got your above-ground yield with whatever you're producing. You've got your below-ground yield of carbon. So it's contributing to de-risking of your future revenue flows by finding more diversified income bases.

Secondly, with adaptation, we know we're facing currently a changing climate, and it will change further into the future. A healthy farm, a farm with greater soil organic carbon with more trees, is a farm that's more resilient to those changes. We know soil with more soil organic carbon can hold and retain more water for dry times. We know trees form windbreaks and shade for animals, and there are a whole range of other co-benefits.

And finally, with mitigation, I believe over the long term, most farms will be drawing more carbon out of the atmosphere than they're actually putting into the atmosphere.

So farms and landholders are gonna play huge role in the mitigation of climate change, which isn't just good for future generations and the environment. It's going to be good for profitability of that property.

WOODS: Terrific. Thanks, Phil. I really appreciate your time.

IRELAND: My pleasure. Thanks for having me.

Estimating soil organic carbon sequestration using measurement and models method

Projects using this method must introduce one or more of the following activities:

• soil management, including applying nutrients to the land through fertiliser and applying lime to remediate acid soils and gypsum to remediate soils with high concentrations of sodium salts (sodic soils) or magnesium (magnesic soils)
• land management, including new irrigation, modifying the landscape or landform to remediate land or adding or redistributing soil mechanically
• vegetation management, including re-establishing or rejuvenating pasture, establishing and permanently maintaining pasture where there was previously none, retaining stubble after crop harvesting, changing from intensive tillage to reduced or no tillage, using legume species in a cropping or pasture system and using a cover crop to improve soil vegetation cover or soil health
• altering the stocking rate, duration or intensity of grazing.

Read more about the Estimating soil organic carbon sequestration using measurement and models method

Estimating sequestration of carbon in soil using default values method

Projects using this method must undertake at least one of the following types of project management activities:

• sustainable intensification to increase soil carbon content (such as by managing nutrients, managing acidity, introducing new irrigation or renovating pasture)
• stubble retention on cropped land to keep biomass as crop residues in the field, where previously they were removed by baling or burning (but not by grazing)
• conversion of continuously cropped land to permanent pasture.

The amount of carbon stored is estimated using sequestration maps providing default values.

There are no projects registered under the method.

Read more about the Estimating sequestration of carbon in soil using default values method

Reducing greenhouse gas emissions from fertiliser in irrigated cotton method

Emissions grow faster when synthetic nitrogen fertiliser is applied above a certain level. Cotton growers can reduce GHG emissions by changing the rate, timing, method or type of fertiliser application.

There are no projects registered under the method.

Read more about the Reducing greenhouse gas emissions from fertiliser in irrigated cotton method

Animal effluent management method

Projects at piggeries and dairies using this method develop new ways to process and treat animal effluent that would otherwise have gone to an anaerobic pond by:

• capturing methane in a digester tank or covered pond, then destroying it by flaring, generating electricity or turning it into biomethane
• avoiding methane emissions by removing volatile solids and treating them using an aerobic process.

Read more about the Animal effluent management method

Reforestation and afforestation method

Projects using this method plant trees to establish a permanent forest on cleared agricultural land used for grazing, cropping, or fallow for at least 5 years previously.

Project proponents must undertake long-term field measurements of the planted trees to obtain data for estimating carbon stored.

Read more about the Reforestation and afforestation method 

Reforestation by environmental or mallee plantings FullCAM method

Projects using this method establish and maintain:

• a mix of trees, shrubs and understory species native to the local area or
• species of mallee eucalypts.

Projects are conducted on land that has been clear of forest for at least 5 years.

Trees can be planted as either seeds or tubestock, in rows or randomly, and in areas that are either linear belts or blocks. They must be planted at a density that allows them to achieve forest cover.

The carbon stored in trees is calculated using the Full Carbon Accounting Model (FullCAM). FullCAM is a calculator also used for estimating the land sector’s GHG emissions. Emissions from fires and using fuel are also estimated and are deducted from the amount of carbon stored. The resulting net abatement is used to earn ACCUs.

Read more about the Reforestation by environmental or mallee plantings FullCAM method.

Avoided clearing of native regrowth method

Projects using this method retain areas of native forest that would otherwise be cleared in the normal course of events and that have been cleared at least twice in the past.

The carbon stored is calculated using FullCAM. Emissions from fires and using fuel are deducted from that amount, and the resulting net abatement is used to earn ACCUs.

Read more about the Avoided clearing of native regrowth method 

Plantation forestry method

Projects using this method can do one or more of these activities:

• establish a new plantation forest where there has not been a plantation or native forest on the land in the past 7 years
• convert a short-rotation plantation to a long-rotation plantation if the plantation forest is in or within 100 km of a National Plantation Inventory (NPI) region (PDF 2.5 MB), with short-rotation species and management required to meet the definitions in the legislation
• continue rotational harvest cycles in a plantation forest if the land has not and will not need to be cleared of native forest, is within 50 km of a NPI region, is of a certain age and would otherwise have been converted to a viable, non-forested land use within 2 years or remain as fallow land
• transition a plantation forest to a permanent forest, where the plantation risks being converted to non-forested land, the land has not and will not need to be cleared of native forest, and would otherwise have been converted to a viable, non-forested land use within 2 years or remain as fallow land.

The plantation forest must not be managed under a forestry managed investment scheme.

Read more about the Plantation forestry method 

Tidal restoration of blue carbon ecosystems method

Projects using this method remove or modify tidal restriction mechanisms and allow tidal flow into an area of land, rewetting completely or partially drained coastal wetland ecosystems and converting freshwater wetlands to brackish or saline wetlands. Projects also earn ACCUs by establishing coastal wetland ecosystems as part of their activities.

Abatement (for both emissions avoided and carbon stored by a project) is calculated using the Blue Carbon Accounting Model (BlueCAM).

Read more about the Tidal restoration of blue carbon ecosystems method

Savanna fire management methods

Projects using this method reduce GHG emissions from fire in savannas in northern Australia by reducing the frequency and extent of unplanned late-dry-season burning of savannas. Annual planned burning is a required fire management activity under the method.

Project areas must be in the high or low rainfall zone (or both), include specified types of vegetation and not include relevant weed species. Annual project management plans must be prepared before burning commences each calendar year. Vegetation fuel type maps must be created, validated and revised as required.

Abatement is calculated using the SavBAT tool.

Read more about the Savanna fire management methods.