This month, the first Australian Government carbon auction was completed as part of its Direct Action climate change plan to meet Australia’s emissions reduction target.
The auction drew on the Emissions Reduction Fund (ERF), currently $2.55 billion, which was established to incentivise carbon abatement activities across the Australian economy.
Senior Rangeland Scientist at Rangelands NRM, Dr Peter Russell, said there had been significant movement in the last six months on carbon farming.
“In Australia, we are now getting more guidance on the marketing of carbon, new approved methods (previously called methodologies) for measuring and auditing carbon abatement, and beneficial changes to financial regulations,” he said.
What is not yet clear, is whether the auction increased or decreased incentive for commercial carbon abatement, particularly for land sector sequestration projects.
Ultimately, the price of carbon will determine the success or failure of the ERF in reducing Australia’s emissions sufficiently and enabling a viable carbon market.
Part of the ERF is allocated for the purchase of Australian Carbon Credit Units (ACCUs) from eligible carbon abatement projects. One ACCU is earned for each tonne of carbon dioxide equivalent (tCO2-e) stored or avoided by a project. ACCUs can be sold to generate income, either to the Government through a carbon abatement contract, or on the secondary market.
Projects are submitted to a tender process conducted by the Clean Energy Regulator (CER) and bids specify a price and tonnage for the delivery of ACCUs. In the reverse auction process, the CER sets a maximum price for the ACCUs and accepts contracts at or below that price.
The ERF reverse auction is similar to the existing National Water Market, which trades water allocations and entitlements to manage river flows.
In recent months, five new carbon abatement project methods became eligible:
1. avoided deforestation (updated version protecting native forest from being cleared)
2. aggregation of electricity consumption saving from small energy users
3. fuel efficiency in industrial electricity generation
4. savanna burning including the new low rainfall (1000-600mm) method
5. wastewater treatment ‘ replacing deep open anaerobic lagoons with anaerobic digesters.
Rangelands NRM is conducting a Carbon Awareness Project, funded by the Western Australian (WA) Government Royalties for Regions program, with in-kind support from collaborating pastoralists for on-ground activities.
The project involves extensive, land system-based soil sampling and vegetation measurements being carried out across the Murchison and Pilbara regions of the state to estimate carbon stocks and study its distribution across the landscape. This work will underpin future sequestration projects that will assist pastoralists and others to manage and rehabilitate their properties.