Carbon farming refers to land management activities that aim to reduce greenhouse gas emissions by storing carbon in trees or soils or avoiding the release of carbon through better management of fire, livestock and fertiliser use.
Through carbon farming activities, land managers can earn carbon credits and participate in carbon markets. In Queensland, there are opportunities to do so through the Emissions Reduction Fund and the Land Restoration Fund. We’ve set out some of the legal requirements for this below.
Emissions Reduction Fund
The Commonwealth Government’s Emissions Reduction Fund (ERF) is administered by the Clean Energy Regulator, which can issue Australian carbon credit units (ACCUs) to carbon farming projects that are declared eligible offsets projects under the Carbon Credits (Carbon Farming Initiative) Act 2011 (Cth) (CFI Act).
One ACCU is earned for each tonne of carbon dioxide equivalent stored or avoided by a project.
ERF participants with a registered project may bid for a contract to sell ACCUs to the Clean Energy Regulator through a reverse auction process, where contracts are awarded to the bidder who can provide ACCUs at the lowest cost to the Commonwealth. ACCUs can also be sold to private sector purchasers seeking to reduce their emissions.
Methods of carbon farming approved under the Emissions Reduction Fund include:
- Agricultural methods
- Reducing greenhouse gas emissions by feeding nitrates to beef cattle.
- Reducing greenhouse gas emissions by feeding dietary additives to milking cows.
- Measurement of soil carbon sequestration in agricultural systems.
- Vegetation methods
- Methods for regenerating native forest on previously cleared land.
- Methods for protecting native forests by reducing land clearing.
- Methods for reforestation and afforestation.
- Savanna burning methods – the current methodologies for this are:
- Savanna fire management 2018 – sequestration and emissions avoidance.
- Savanna fire management 2018 – emissions avoidance.
For a project to be eligible for registration under the ERF, it must:
- not have begun to be implemented before it has been registered with the Clean Energy Regulator;
- not be required to be carried out by or under a Commonwealth, State or Territory law; and
- not be likely to be carried out under another Commonwealth, State or Territory government program in the absence of registration under the ERF.
Land Restoration Fund
To grow the carbon farming industry in Queensland, the Queensland Government has established a $500 million Land Restoration Fund (LRF).
The LRF differs from the ERF, because it values the co-benefits associated with carbon farming, as well as the reduction in greenhouse gas emissions.
Eligible applicants, with a carbon farming project capable of being registered with the Clean Energy Regulator under the CFI Act, can apply to sell ACCUs to the LRF and to receive annual co-benefit payments upon demonstration of achievement of co-benefit milestones.
There are three main categories of co-benefits that the LRF is seeking to support:
- Environmental – biodiversity, habitat for threatened species, and healthier soils, wetlands and water systems;
- Social and Economic – improving the resilience and strength of regional communities by supporting direct and indirect jobs, and more money flowing into Queensland’s regions; and
- First Nations – providing on-country business opportunities as well as new service delivery businesses and supporting cultural and customary connections.
The LRF Co-benefits Standard sets out how these co-benefits are to be identified, measured, monitored and reported. For First Nations co-benefits, this can include using the Aboriginal Carbon Foundation’s Core Benefit Verification Framework.
The 2020 Investment Round of the LRF has closed. Projects are now being assessed by an independent investment panel to select a portfolio of projects that best meet the LRF’s objectives.
Successful proponents will need to enter into a Project Investment Agreement. This is an agreement for the project proponent to deliver and be paid for the ACCUs and to report on and be paid for the co-benefits.
Once approved, projects will be entered on the LRF Register.
Future application intakes and investment rounds will be announced on the LRF’s website.
Legal right
To register a project with the ERF and to apply to the LRF you must have:
- the legal right to carry out the project activities on the project site; and
- a lawful and exclusive right to be issued all ACCUs that may be created as a result of the project activities.
Eligible interest holder consents
To register a project, the Clean Energy Regulator requires consents from holders of an eligible interest in the land. This includes any persons or organisations with a registered interest in the land, for example a bank holding a mortgage over the property.
If you have a perpetual or term lease, you do not hold the exclusive legal rights to the carbon on your property. The Minister under the Lands Act is an eligible interest holder and must provide consent for the project. As part of this process, the Minister needs to consult with the Department of Agriculture and Fisheries about the impact of any forest products or quarry material on State land which are the property of the State under the Forestry Act.
You must also consider any native title over the land and obtain the necessary consents from the native title holders. This can be a complex process.
Carbon sequestration projects – carbon abatement interests
For carbon sequestration projects, the Land Title Act and Land Act both provide for a “carbon abatement interest”, the interest in the land consisting of the exclusive right to the economic benefits associated with carbon sequestration on the land. A carbon abatement interest over an area of land can only be created by registering a carbon abatement interest over the lot with the Queensland Titles Registry.
If you own freehold, you can grant carbon abatement interests in your land, to yourself or others.
If you have a freeholding lease, you have the exclusive legal rights to the carbon on your property. For the exclusive rights to the economic benefits associated with carbon sequestration on the land, you will need Ministerial consent for the registration of a carbon abatement interest. Alternatively, you may wish to use this opportunity to address outstanding requirements on the lease, so a deed of grant can be issued.
If you have a perpetual lease or term lease, you require eligible interest holder consent as set out above and you will also need the consent of the Minister under the Land Act to register a carbon abatement interest. Consent may also be required from the Minister administering the Forestry Act or the Nature Conservation Act.
When registering a carbon abatement interest with the Queensland Titles Registry:
- a consent must be provided by each person with a registered interest in the land whose interest may be affected by the proposed carbon abatement interest – for example, a mortgagee or party to a nature refuge agreement; and
- this must also be assessed for duty by the Office of State Revenue.
For more information or assistance with establishing your legal right for a carbon farming project, please contact our Resources and Energy team. Our Resources and Energy team includes an approved adviser under the Queensland Government’s Carbon Farming Advice Rebate Program.
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