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Soil Carbon Industry Group
Submission to:
Independent Review of ACCUs: Implementation
Strengthening Transparency via legislated Rules
Exposure draft: Carbon Credits (Carbon Farming Initiative) Amendment (2024 Measures No. 2) Rules 2024
Friday, 4 October 2024
Summary
The Soil Carbon Industry Group (SCIG) understand that this consultation is about amendments to the legislated
CFI (Carbon Farming Initiative) Rule. These amendments will require publishing of additional project data on the
CER (Clean Energy Regulator’s) website. These changes are an appropriate strengthening of transparency provisions of the ACCU Scheme.
These changes however need to be considered in context. Progress towards projecting the clarity and integrity of the ACCU scheme more widely is still required.
SCIG calls attention to our views last year on consultation into the implementation of the Chubb Review closing in October 2023 (Appendix 1).
Context
Offsets as a mechanism have a central part to play in climate action. They are particularly effective because they contain 2 incentives, one on either side of the transaction. Purchasers are encouraged to reduce emissions in their value chain. Offset developers are encouraged to invest in mitigation.
Offsets are also morally defensible as internalising an externalised cost. The cost of emissions is born by the world. Imposing this cost back on the emitters activates this double incentive mechanism. Whilst these costs are likely to be passed on to consumers this gives a simpler life for consumers. Price is a truer reflection of the cost of producing goods. Without a requirement to offset emissions companies do not need to consider these impacts on the wider world.
In the case of soil carbon, drawing down atmospheric carbon via photosynthesis nourishes soil biology. This builds landscape productivity, resilience and function. As soil carbon projects are implemented across Australia
(and the world) there will be a step-change in agricultural productivity.
The ACCU scheme is a global beacon for climate action and the 2021 Soil Carbon Method is the global benchmark in soil carbon method integrity.
The 2021 Soil Carbon Method requires physical measurement of soil carbon. Australian Soil Carbon Projects under the ACCU Scheme have this advantage over other systems across the globe. The measurement integrity of the system is embedded within measurements conducted within the project itself.
Soil Carbon Industry Group CLG ACN 644 517 626 Level 1, 601 Dean Street, Albury NSW 2640 Australia
admin@scig.org.au www.scig.org.au
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SCIG commend the CSIRO presentation of the Soil Carbon Method at the recent meeting in Brussels, Thursday
26 October 2024 by Dr Senani Karunaratne. ORCaSa Policy Workshop on International Carbon Certification
Schemes - ORCaSa (irc-orcasa.eu). Australia’s global leadership position in soil carbon sequestration is more than just a feather in our cap. This leadership position brings an imperative to do what is necessary to bring this innovative system to the world.
SCIG call on the Government to ensure all agencies and NRM (Natural Resource Management) organisations are aligned with the policy to reward farmers and land managers for drawing down CO2 from the atmosphere through soil carbon projects under the ACCU scheme. The urgency of the climate situation can be reviewed elsewhere.
SCIG members have an interest in higher ACCU pricing. Farmers respond to price signals. Climate action through the benefits of soil carbon projects will be directly related to ACCU pricing. SCIG support any action to increase recognition of the integrity of the ACCU scheme as foundational to carbon market confidence.
SCIG stand ready to help Australia and other countries design a roadmap for climate action through soil carbon.
Project data availability
The proposed changes to the draft rule are appropriate and acceptable to SCIG.
Additional suggestions
One suggestion is that publishing of ‘persons involved in a project’ may instead include ‘corporate persons’ such as a project developing company or an auditing company.
SCIG have been in discussion with the CER about voluntary disclosure of data from soil carbon projects. As more projects are credited it will be clearer as to what data would be most helpfully published. There is a substantial cost of formatting and dealing with these types of data release. Budgeting for and prioritising this work needs to be aligned with facilitating scheme uptake. SCIG will continue these discussions.
Conclusion
Thank you for the opportunity to comment on these changes designed to increase the transparency of the ACCU scheme. SCIG supports these changes.
Yours sincerely
Matthew Warnken
Louisa Kiely
Soil Carbon Industry Group CLG ACN 644 517 626 Level 1, 601 Dean Street, Albury NSW 2640 Australia
admin@scig.org.au www.scig.org.au
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Appendix 1: Extract from SCIG submission to Chubb Implementation Review October 2023
“…Summary
1) The ACCU Scheme is sound, beware of unintended consequences, especially those that would
delay action and innovation to achieve abatement at scale.
2) Method development needs a refined process and iterative discussion with stakeholders. The
Integrity Committee should prioritise EOI’s connecting experienced stakeholders.
3) Consent should not be required from banks where there is no change in land use.
Preliminaries:
Thank you for the opportunity to contribute to this important review. The integrity of Australia’s market-based mechanisms is a global beacon for effective climate policy response….
….2. Is there other information that could be published or collected to improve the transparency of the ACCU
Scheme?
SCIG supports publishing information to improve transparency of the ACCU Scheme and believes that
Government should publish all aspects of the existing checks and balances that speak to the integrity of the
Scheme. For example, the fact that a Reasonable Assurance Audit needs to be undertaken before the CER issue ACCUs should have higher public visibility as it will add credibility and surety to the rigorous processes already undertaken.
The objective should be to provide the broader market with the assurance to invest, scale and deliver projects under the ACCU Scheme. To achieve this, we need to make it clear that Australian Methods are global benchmarks and the processes and requirements governing all ACCU Scheme projects are designed with integrity in mind.
Additionally, we must maintain focus on ACCU Scheme scale and speed, otherwise we risk losing clarity and transparency of the ACCU Scheme overall purpose. SCIG believes it would be beneficial to publish project sign- up statistics under each Method to ensure we are making progress toward 2030 and 2050 targets. Additional information regarding the amount of land in each Method would help measure progress. We know that to achieve our targets and have a safe climate we need close to 100% landholder participation so publishing these metrics would provide incentive and focus.
Additional information regarding innovation successes would highlight the catalyst effect of ACCU incentives for innovation.
Consideration should also be given to potential unintended consequences. For example, in the 2021 Soil
Carbon Method, Land Management Strategies have significant intellectual property for land managers.
Significant investment and commercial knowledge has gone into the development of these strategies and should not be disclosed. Rather than providing a platform for knowledge sharing, SCIG believes this would have a detrimental effect that would discourage ACCU Scheme project uptake and adoption.
Soil Carbon Industry Group CLG ACN 644 517 626 Level 1, 601 Dean Street, Albury NSW 2640 Australia
admin@scig.org.au www.scig.org.au
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SCIG support recommendations to establish clear data infrastructure arrangements as the approach to transparency unfolds. The complex data types and how these will be handled and used is an important consideration.
Protections from bad faith actors that support climate inactivity and that have no real intent to improve the effectiveness of the Scheme should be considered. Landholders and proponents need some privacy protections from vexatious agents. Buying ACCU’s does not require review of individual projects. SCIG call on the Minister and Department to be strong, to trust and to stand by the Clean Energy Regulator. Professor Chubb did not need to review hundreds of individual projects to confirm the integrity of the Scheme.
3. What information should be published about ACCU holdings that delivers greater transparency in the market?
Publishing individual ACCU holdings runs the risk of providing targets for climate naysayers and is likely to act as a potential barrier to those participants that want to make a difference. To achieve the scale and speed needed to reach Australia’s climate targets, we need to make the ACCU Scheme as attractive as possible to maximise investment, innovation, and action.
Information on ACCU holdings should only be published where holdings are over 100,000 ACCUs. This will provide protection for smaller individual landholders and participants.
4. What are the risks to the market from publishing information about ACCU holdings?
There are potential Australian Financial Service Licensing considerations if large buyers are approaching small holders. SCIG would like to protect individual small ACCU holders from potentially harassing behaviours by market participants and observers. As set out above, a materiality threshold of number of ACCUs held (for example under 100,000 ACCUs) would assist.
5. Are there other grounds or circumstances where information should be withheld, for example, an exemption for existing projects?
Innovation can be grounds for withholding information. SCIG looks to protect the capacity for members to innovate and commercialise solutions that will make a material impact.
Companies invest in innovation and Intellectual Property (IP) for commercial advantage. Much of this IP is knowhow, including processes, documentation, measurement, and formatting calculations. This knowledge is not easily protectable or defendable with patents or other legal instruments. There will be a large freeloader tax on innovation if these investments are to be given away for free.
A test of disclosures for transparency should answer: Is this release necessary for public and market integrity?
Release of all other information should be at the commercial discretion of the private parties. …“
Soil Carbon Industry Group CLG ACN 644 517 626 Level 1, 601 Dean Street, Albury NSW 2640 Australia
admin@scig.org.au www.scig.org.au
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