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Australian National University (ANU)-University of New South Wales (UNSW) ERF
research team submission to the Chubb Review
Dear Professor Chubb, Dr Bennett, Ms Gorring and Dr Hatfield-Dodds
The Australian National University (ANU) and University of New South Wales (UNSW) ERF research team has deep expertise in Australia’s environmental and carbon markets, including the Emissions Reduction
Fund (ERF). The team includes Professor Don Butler, Dr Megan Evans, Professor Andrew Macintosh,
Associate Professor Dean Ansell, Ms Marie Waschka, Mr Pablo Larraondo of Haizea Analytics and Professor
Philip Gibbons.
The ANU/UNSW ERF research team support the use of offsets, and particularly land-sector offsets, to help facilitate a timely transition to a low carbon economy. High integrity offsets, when coupled with an effective carbon pricing scheme, lower the cost of reducing greenhouse gas emissions, making more ambitious emissions reduction targets possible. In the land sector, well-designed offset projects can also generate important environmental and social co-benefits, including improved biodiversity outcomes and regional employment.
While supporting the carbon market and appropriate use of land sector offsets, we are concerned about the ERF’s governance arrangements and the integrity of a number of ERF’s methods, including:
Carbon Credits (Carbon Farming Initiative—Electricity Generation from Landfill Gas) Methodology
Determination 2021 (‘new LFG method’);
Carbon Credits (Carbon Farming Initiative—Avoided Deforestation 1.1) Methodology Determination
2015 (‘avoided deforestation method’);
Carbon Credits (Carbon Farming Initiative) (Human-Induced Regeneration of a Permanent Even-
Aged Native Forest—1.1) Methodology Determination 2013 (‘HIR method’); and
Carbon Credits (Carbon Farming Initiative—Plantation Forestry) Methodology Determination 2022
(‘2022 plantations method’).
We have detailed our concerns in a series of published papers, including the following.
Macintosh, A., Butler, D., Evans, M. C., Larraondo, P., Ansell, D., Gibbons, P. (2022) The ERF’s
Human-induced Regeneration (HIR): What the Beare and Chambers Report Really Found and a
Critique of its Method. The Australian National University, Canberra.
Macintosh, A., Butler, D., Ansell, D. (2022) Measurement Error in the Emissions Reduction Fund's
Human-induced Regeneration (HIR) Method. The Australian National University, Canberra.
Macintosh, A. (2022) The Emissions Reduction Fund's Landfill Gas Method: An Assessment of its
Integrity. The Australian National University, Canberra.
Macintosh, A., Butler, D., Ansell, D., Waschka, M. (2022) The Emissions Reduction Fund (ERF):
Problems and Solutions. The Australian National University, Canberra.
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Macintosh, A., Butler, D., Evans, M. C., Ansell, D., Waschka, M. (2022) Fixing the Integrity Problems
with Australia’s Carbon Market. The Australian National University, Canberra.
Macintosh, A., Butler, D., Evans, M. C., Larraondo, P., Ansell, D., Waschka, M. (2022) Integrity and
the ERF’s Human-Induced Regeneration Method: The Additionality Problem Explained. The
Australian National University, Canberra.
Macintosh, A., Butler, D., Evans, M. C., Larraondo, P., Ansell, D., Waschka, M. (2022) Integrity and
the ERF’s Human-Induced Regeneration Method: The Measurement Problem Explained. The
Australian National University, Canberra.
Macintosh, A., Butler, D., Ansell, D., Waschka, M. (2022) Integrity Problems with the ERF’s 2022
Plantation Forestry Method. The Australian National University, Canberra.
Macintosh, A. (2022) Restoring Integrity to the ERF’s Landfill Gas Method. The Australian National
University, Canberra.
We have attached copies of these papers. The papers are also available at: https://law.anu.edu.au/research/publications.
In order for the ERF to perform its intended functions and realise its potential, there is a need for reform of its governance arrangements and changes to a significant number of ERF methods, including those listed above.
To assist the Panel, we attach a summary of our concerns about the governance arrangements, an overview of the integrity concerns associated with the above methods, and suggestions for corrective actions. The attachment contains new analysis and information, particularly on the avoided deforestation and 2022 plantations method.
Finally, the ANU-UNSW ERF research team recommends the imposition of a price cap under the Safeguard
Mechanism as an interim measure to assist with the transition of the ERF. Dealing with the integrity issues with existing ERF methods and projects is likely to result in a marked reduction in ACCU supply for several years, while the market adjusts and capital is deployed to activities with higher integrity. This would coincide with the tightening of the Safeguard Mechanism baselines, potentially resulting in a sharp increase in ACCU prices and associated compliance costs for designated large facilities. The increase in prices may be partly alleviated by the emergence of Safeguard Mechanism Credits. However, the ACCU price spike could cause considerable disruption to the industries covered by the Safeguard Mechanism and impede the progression of the policy process. An interim price cap would help mitigate these risks. The revenue from the price cap could also be hypothecated to climate initiatives, including in the land sector, to help realise abatement from activities that fall outside of the Safeguard Mechanism.
Yours sincerely
On behalf of the ANU/UNSW ERF research team:
Professor Don Butler Dr Megan Evans Professor Andrew Macintosh
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ANU/UNSW ERF Research Team’s concerns with the governance of the ERF and
integrity of ERF methods
21 September 2022
Contents
1. Problems with the ERF’s Governance Arrangements .................................................................................. 4
1.1 The Clean Energy Regulator has too many roles and is conflicted ........................................................... 4
1.2 Flawed governance arrangements for methods and scheme review ....................................................... 4
1.3 Methods are not required to meet the offsets integrity standards .......................................................... 6
1.4 Inadequate offsets integrity standards ..................................................................................................... 7
1.5 Lack of transparency.................................................................................................................................. 9
1.6 Third parties are excluded from the ERF ................................................................................................. 10
2. Integrity Concerns with ERF Methods ........................................................................................................ 11
2.1 New LFG method ..................................................................................................................................... 11
2.2 Avoided Deforestation ............................................................................................................................ 13
2.3 Human-induced Regeneration (HIR) ....................................................................................................... 22
2.4 Plantations Method ................................................................................................................................. 27
Appendix A. Copy of statutory declaration ...................................................................................................... 30
Appendix B. ANU-CSIRO correspondence in relation to Question 5 ............................................................... 31
Appendix C. CSIRO document explaining FullCAM 2020 calibration............................................................... 36
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1. Problems with the ERF’s Governance Arrangements
There are six main problems with the Emissions Reduction Fund’s (ERF) governance arrangements.
1.1 The Clean Energy Regulator has too many roles and is conflicted
The aim in establishing the Clean Energy Regulator in 2011 was to provide role clarity to the agency
responsible for the administration and enforcement of the Clean Energy Act 2011 and Carbon Credits
(Carbon Farming Initiative) Act 2011 (CFI Act). Consistent with the governance arrangements in many
other areas, including the National Electricity Market, policy functions would sit with the responsible
Minister and the Department, while administration and enforcement would reside with a separate
regulatory agency (the Clean Energy Regulator) that operates at arm’s length to the government of the
day. This structure is consistent with accepted best practice principles for regulatory agencies, including
those set out in the OECD’s Best Practice Principles for Regulatory Policy: The Governance of Regulators,
which states that ‘regulators should not be assigned conflicting or competing functions or goals’.1
The Australian Government drifted from these principles in 2014 when it gave the Clean Energy
Regulator the responsibility for purchasing Australian carbon credit units (ACCUs) on behalf of the
government. It effectively abandoned them in 2020 when it gave the Clean Energy Regulator the
responsibility for the development of methods and providing the secretariat services for the Emissions
Reduction Assurance Committee (ERAC) (roles that previously sat with the Department). The Clean
Energy Regulator is now conflicted and is performing functions for which it has limited in-house
capacity, including method development.
Recommended solution: The Clean Energy Regulator should be returned to being an independent and
impartial regulator, where its functions are confined to the administration and enforcement of the ERF
and other relevant statutory schemes (Safeguard Mechanism, Renewable Energy Target, National
Greenhouse and Energy Reporting scheme and the Australian National Registry of Emissions Units).
1.2 Flawed governance arrangements for methods and scheme review
The ERAC consists of a Chair and at least 4 and no more than 8 other members.2 By law, all members
are supposed to have substantial experience or knowledge and significant standing in a field of
expertise relevant to the ERAC’s functions.3 One of the members must be from the Department and
another must be from the CSIRO.4 All members serve on a part-time basis, with secretariat functions
currently being performed by the Clean Energy Regulator. Prior to 2020, they were performed by the
Department.
The ERAC is supposed to be an independent, technical committee comprised of engaged subject matter
experts who are able to properly evaluate the integrity of methods and to monitor the administration
and ongoing integrity of the methods against the offsets integrity standards. However, the existing
governance structures impede the realisation of this vision and the proper performance of the
committee’s functions. The weaknesses with the existing arrangements include: the part-time status of
1
OECD (2014), The Governance of Regulators, OECD Best Practice Principles for Regulatory Policy. OECD Publishing, p
30.
2
CFI Act, s 256.
3
CFI Act, s 257(2).
4
CFI Act, ss 257(5) and (6).
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appointees; infrequent meetings (the ERAC generally meets for no more than 8 days per year); low
remuneration; members with no background or expertise in environmental markets; members with
conflicts of interest; and the practice of appointing members for short terms, which impedes the
development of expertise and independence.
Due to these factors, particularly the part-time status of its membership, the ERAC is, and has always
been, highly dependent on the Department and Regulator to perform its functions. Yet, as identified in
the Climate Change Authority’s 2017 Review of the Emissions Reduction Fund, the public servants from
the Department and now the Regulator that service the ERAC have a conflict of interest.5 They are
generally the officers responsible for the preparation of methods and method variations, and
administer and oversee the operation of methods on behalf of the government of the day. The
arrangements expect the relevant public servants to impartially service the ERAC, when to do so often
involves critiquing their own work, where identifying and raising problems may be perceived as acting
against the wishes of their employers in the government and the Clean Energy Regulator.
A similar, though less acute, issue arises with the Climate Change Authority’s legislative reviews of the
Emissions Reduction Fund (CFI Act) and National Greenhouse and Energy Reporting scheme (National
Greenhouse and Energy Reporting Act 2007). An inherent tension arises because the Climate Change
Authority provides policy advice related to the design of these schemes and is then charged with
reviewing their operation. It is preferable if these functions are separated so those advising on the
design of legislative schemes are not then responsible for reviewing them.
Reforms are needed to the governance arrangements concerning the making methods and review and
oversight of the scheme.
Recommended solution: The ERAC should be abolished and its functions and responsibilities
transferred to another body. Changes are also recommended to the functions of the Climate Change
Authority. The recommended governance structure is as follows.
1. The Department should be responsible for developing methods.
2. The functions of the ERAC should be transferred to the Climate Change Authority and performed by
a sub-committee comprised of at least one fulltime member. The sub-committee should include 3-
4 part-time Associate Members with expertise and standing in the design and administration of
environmental markets and disciplines relevant to the operation of environmental markets (e.g.
ecology and agricultural science). Staff from the Department and Regulator could be seconded to
the Climate Change Authority where necessary to support method reviews.
3. To prevent conflicts with the functions of the Climate Change Authority, responsibility for reviewing
the operation of the ERF should be transferred to the Productivity Commission.
4. In addition to the development of methods, the Department should be responsible for:
(a) oversight of the CFI Act and Rules;
(b) government purchasing of ACCUs; and
(c) providing policy advice to the Minister and Government.
5
Climate Change Authority (2017) Review of the Emissions Reduction Fund. Commonwealth of Australia, Canberra, pp
10 and 30.
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1.3 Methods are not required to meet the offsets integrity standards
Carbon offsets are a high risk environmental policy instrument and should only be used where there is
high confidence that the credited abatement is real (the emissions reductions have occurred) and
additional (the emissions reductions would not have happened without the incentive provided by the
issuance of the credit). This is why the CFI Act’s offsets integrity standards require the methods to only
credit abatement that is ‘unlikely to occur in the ordinary course of events’ and to be supported by
‘clear and convincing evidence’, and for all of the assumptions, projections and estimates in methods to
be ‘conservative’.6
When the CFI Act first commenced in 2011, methods could only be made if the Domestic Offsets
Integrity Committee endorsed them and the Committee’s power to endorse a method was contingent
on the method complying with the offsets integrity standards.7 Similarly, the Minister could not make a
method unless it complied with the offsets integrity standards.8 These constraints on the endorsement
and making of methods were abandoned in 2014 when the ERF was introduced. The ERAC now only
needs to provide its opinion on whether the standards are satisfied and, in making methods, the
Minister only has to ‘have regard to’ the standards.9
Recommended solution: The CFI Act should be amended to once again give the offsets integrity
standards primacy in the method development and approval process. This requires the following.
(a) The sub-committee of the Climate Change Authority (or ERAC if it is retained) should be required to
endorse methods prior to them being made by the Minister.
(b) The sub-committee’s power to endorse methods should be contingent on the methods complying
with the offsets integrity standards.
(c) The Minister’s power to make methods should be contingent on the methods complying with the
offsets integrity standards.
(d) The sub-committee’s decision to endorse a method, and the Minister’s decision to make a method,
should be subject to judicial review.
(e) The CFI Act should include an open standing provision to give any person standing to seek judicial
review of administrative decisions concerning the endorsement and making of methods.
6
CFI Act, s 133(1).
7
CFI Act, ss 112(3)(a) and 120(3)(a). Available at: https://www.legislation.gov.au/Details/C2011A00101 (12 September
2022).
8
CFI Act, ss 106(4)(c) and 114(2)(c). Available at: https://www.legislation.gov.au/Details/C2011A00101 (12 September
2022).
9
CFI Act, ss 123A(3) and (4), and ss 106(4) and 114(2).
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1.4 Inadequate offsets integrity standards
The CFI Act’s offsets integrity standards are not fit for purpose in that they ambiguous and do not
adequately cover the six main integrity risks associated with carbon offsets, namely:
additionality – the risk of issuing ACCUs for abatement that would occur anyway, without the
incentive provided by the scheme;
measurement – the risk of issuing ACCUs for abatement that has not occurred because of the
failure to accurately measure or estimate emissions and removals associated with the project
activities;
project emissions – the risk of issuing ACCUs for abatement that has not occurred because of
the failure to accurately measure or estimate increases in emissions, or reductions in removals,
that occur within the project boundary as a consequence of the project activities;10
leakage – the risk of issuing ACCUs for abatement that has not occurred because of the failure
to account for increases in emissions, or reductions in removals, that occur outside of the
project boundary as a consequence of the project activities;
permanence – the risk that carbon stored by sequestration projects, and credited under the
scheme, will be fully or partially released as a result of future events; and
eligible abatement – the risk that methods credit abatement that is not counted towards
Australia’s international climate change mitigation obligations (e.g. under the Paris Agreement).
In addition, the CFI Act does not contain, either in the offsets integrity standards or elsewhere, an
overarching standard that ACCUs should only be issued where there is high confidence that the
credited abatement is real and additional.
The offsets integrity standards’ coverage of these issues and the associated problems with the relevant
standards are summarised in Table 1.
Table 1. Offsets integrity standards coverage of standard integrity risks
Risk Standards Problem
Additionality 133(1)(a): the application of the Two issues.
requirements set out in, and the method It is not clear to what extent a
specified in, or ascertained in accordance method must result in abatement
with, a methodology determination, in that would not have occurred in
relation to projects of the kind specified in the absence of the incentive
the determination, should result in carbon provided by the ERF. Does the
abatement that is unlikely to occur in the standard require all (100%), a
ordinary course of events (disregarding the substantial majority (>75%), a
effect of this Act) significant majority (>60%), or
most (>50%) of the abatement that
is credited under the method to be
additional?
For sequestration projects, it is not
clear whether the test requires the
10
This can be treated as part of measurement. Here, we separate out project emissions to align with their treatment in the offsets integrity standards.
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sequestration activity would never
occur, or just that it would not
occur within a reasonable time
period?
Measurement 133(1)(b): to the extent to which a method Two issues.
specified in, or ascertained in accordance It is not clear whether the standard
with, a methodology determination in requires methods to provide
accordance with paragraph 106(1)(c) robust approaches for
involves ascertaining any of the following: measurement, reporting and
(i) the removal of one or more greenhouse verification. The standard merely
gases from the atmosphere; (ii) the states that the relevant emissions,
reduction of emissions of one or more removals, and reductions must be
greenhouse gases into the atmosphere; ‘measureable’ and ‘capable of
(iii) the emission of one or more being verified’.
greenhouse gases into the atmosphere; … It is unclear whether this standard
the removal, reduction or emission, as the is intended to cover project
case may be, should be: (iv) measurable; emissions and how it relates to
and (v) capable of being verified. 133(1)(e).
Ineligible 133(1)(c): a method specified in, or It is unclear whether, and to what extent, abatement ascertained in accordance with, a 133(1)(c) requires consistency with the
methodology determination in accordance methods used in the National Inventory
with paragraph 106(1)(c) should provide Report (NIR). Under one interpretation, it is
that carbon abatement used in ascertaining sufficient if Australia accounts for the
the carbon dioxide equivalent net relevant type of emissions/removals, even if
abatement amount for a project must be the differences between the NIR and ERF
eligible carbon abatement from the project, methods are such as to effectively prevent
where ‘eligible carbon abatement’ is the use of the credited abatement to meet
defined as ‘carbon abatement that results Australia’s targets. Alternatively, 133(1)(c)
from the carrying out of the project that is may require ‘functional’ consistency
able to be used to meet Australia's climate between NIR and ERF methods, meaning
change targets under the Kyoto Protocol or that, even if there is not full consistency
an international agreement (if any) that is between the two, the abatement is
the successor (whether immediate or included in the accounts (even if it is not on
otherwise) to the Kyoto Protocol’. a 1 tCO2 to 1 tCO2 basis).
High confidence 133(1)(d): a method specified in, or The main problem is the absence of an abatement is ascertained in accordance with, a overarching standard that clarifies that real and methodology determination in accordance ACCUs should only be issued where there is additional with paragraph 106(1)(c) should be high confidence the credited abatement is
supported by clear and convincing real and additional. The standards in
evidence. 133(1)(d) and (g) could then be included as
ways of giving effect to this overarching
133(1)(g): to the extent to which a method standard.
specified in, or ascertained in accordance
with, a methodology determination in In addition, the Minister should not have
accordance with paragraph 106(1)(c) the power to override the conservatism
involves an estimate, projection or standard, as is currently provided by s
assumption – the estimate, projection or 133(4).
assumption should be conservative.
Project 133(1)(e): a method specified in, or Three issues.
emissions ascertained in accordance with, a It is unclear how this standard
methodology determination in accordance relates to the measurement
with paragraph 106(1)(c) should provide standard (133(1)(b)).
that, in ascertaining the carbon dioxide It is unclear whether it includes
equivalent net abatement amount for a direct leakage (emissions arising
project, there is to be a deduction of the from outside of the project
carbon dioxide equivalent of any amounts boundary as a consequence of the
of greenhouse gases that: (i) are emitted as proponent moving an activity).
a direct consequence of carrying out the
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project; and (ii) under the determination, The materiality requirement in the
are taken to be material amounts. standard is circular (the method
can set a threshold for materiality
that neutralises the standard).
Leakage No explicit standard. There are two types of leakage: direct and
indirect. Direct leakage refers to instances
where the project proponent moves the
emitting activity to another location, while
claiming credits for the reduction in
emissions at the initial site of the activity.
Indirect leakage refers to instances where
the benefits of the abatement within the
project boundary are negated by market
induced increases in emissions outside of
the project boundary.
Two issues.
It is unclear whether direct leakage
is covered, although it is possibly
covered by 133(1)(e) or (g).
Indirect leakage is not explicitly
covered by the standards, although
it is possibly covered by 133(1)(g).
Permanence No explicit standard. There is no standard that explicitly relates
to permanence. However, section 133(1)(g)
potentially covers permanence, at least in
relation to some methods, where
assumptions are made about the retention
or re-establishment of stocks (e.g. the
plantations method).
Recommended solution: The CFI Act should be amended to include an overarching standard that
ACCUs should only be issued where there is high confidence the credited abatement is real and additional. The offsets integrity standards should then seek to give effect to this overarching standard by clearly and unambiguously addressing each of the integrity risks associated with carbon offsets: additionality, measurement (including project emissions), leakage, permanence, and ineligible abatement.
1.5 Lack of transparency
To provide the public and market with confidence, the ERF’s systems and processes need to be open and transparent. However, at present, there is a marked lack of transparency concerning the operation of the ERF, which is undermining confidence in the scheme. Relevant information that is not published
(or only published via requests made under the Freedom of Information Act 1982 (Cth)) includes:
the location of the carbon estimation areas of sequestration projects – i.e. the areas credited in
reforestation, avoided deforestation, plantation and soil carbon projects;
the modelling assumptions used in projects that rely on modelled estimates of emissions and
removals – e.g. the baselines used in landfill gas projects and the modelling commencement
dates in human-induced regeneration projects;
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details of the project activities (project mechanism) – e.g. in relation to human-induced
regeneration projects, the HIR activities that projects are undertaking to regenerate the native
forests (management of grazing by livestock or feral animals, management of weeds, or
cessation of clearing of regrowth);
offsets and audit reports;
information relied on by the Clean Energy Regulator and Emissions Reduction Assurance
Committee in making, varying and reviewing methods, and in responding to issues raised about
methods; and
minutes of meetings of the Emissions Reduction Assurance Committee and Technical Working
Groups concerning methods and method variations.
The lack of transparency surrounding the operation of the ERF is partly attributable to the CFI Act’s
provisions concerning ‘protected information’, which restrict the ability of the Clean Energy Regulator
and Emissions Reduction Assurance Committee to share and publish information ‘on the affairs of a
person’ engaged in the ERF.11 However, the Clean Energy Regulator and Department frequently use the
protected information provisions to justify the refusal to release information that can be legally
published, and even to obstruct the Emissions Reduction Assurance Committee’s access to information.
Recommended solution: The ‘protected information’ provisions of the CFI Act should be removed and
new rules and processes should be adopted that encourage the release of information on projects in a
form that can increase confidence in the integrity of the scheme. Consistent with other carbon offset
schemes around the world, this should include requirements for the Clean Energy Regulator to publish
offset reports and audit reports on individual projects, provide the location of areas that are credited
under land sector projects, and provide details on the methods used to estimate abatement. Private
details of project proponents and information that is commercially sensitive could be redacted from
reports to address privacy concerns.
1.6 Third parties are excluded from the ERF
The regulation of markets should not be left exclusively to government regulators. Regulators can be
captured and their ability to oversee market behaviour can be constrained by resource and capacity
limitations.12 It has long been recognised that allowing third parties to initiate enforcement proceedings
to uphold the law, and to seek judicial review of administrative decisions, can help improve the
effectiveness of regulatory systems.13 Reflecting this, section 232 of the Australian Consumer Law
(Schedule 2 of the Competition and Consumer Act 2010) allows Courts to grant injunctions to prevent
11
CFI Act, Part 27.
12
Stigler, G. (1971) The Theory of Economic Regulation. Bell Journal of Economics and Management Science 2 (1), 3–
21; Laffont, J-J., Tirole, J. (1991) The Politics of Government Decision Making: A Theory of Regulatory Capture.
Quarterly Journal of Economics 106 (4), 1089–127; Carpenter, D., Moss, D. (eds) (2014) Preventing Regulatory
Capture: Special Interest Influence and How to Limit It. Cambridge University Press, New York.
13
Sax, J. (1971) Defending the Environment: A Strategy for Citizen Action. Alfred A. Knopf Inc., New York; Mossop, D.
(1995) Citizen Suits — Tools for Improving Compliance with Environmental Laws. In: Gunningham, N., Norberry, J.,
McKillop, S. (eds), Environmental Crime: Proceedings of a Conference Held 1–3 September 1993, Hobart. Australian
Institute of Criminology, Canberra; Australian Law Reform Commission (1985) Standing in Public Interest Litigation.
ALRC Report No 27. Commonwealth of Australia, Canberra; Australian Law Reform Commission (1996) Beyond the
Doorkeeper: Standing to Sue for Public Remedies. ALRC Report No 78. Commonwealth of Australia, Canberra.
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or restrain breaches of the law ‘on application by the regulator or any other person’. These are what are known as open standing provisions – they allow third parties to seek relief in courts without needing to satisfy the normal ‘standing’ requirements, which require applicants to be a person directly affected, a person aggrieved or a person with a special interest.
The CFI Act does not contain open standing provisions. This is a significant oversight. Carbon offset markets are inherently complex and are almost defined by asymmetries of information, where sellers and regulators have substantially more information on the characteristics of what is being purchased than potential buyers. This leaves the markets vulnerable to fraud and manipulation. Open standing provisions will not provide a complete cure to this issue but they could lessen the scope for regulatory capture, maladministration and the manipulation of the market by self-interested players.
Recommended solution: The CFI Act should be amended to include open standing provisions to allow third parties to seek judicial review of administrative decisions made under the Act and to seek injunctions to restrain breaches of the Act.
2. Integrity Concerns with ERF Methods
The issues in contention about the integrity of the new LFG, avoided deforestation, HIR and 2022 plantations methods turn on 12 main questions. Details of the methods and the key integrity questions are outlined below.
2.1 New LFG method
Landfill gas projects receive ACCUs for capturing and combusting the methane (CH4) component of the biogas emitted from solid waste landfills. Burning CH4 converts it to carbon dioxide (CO2) and water
(H2O), neutralising its warming effects. Projects combust the CH4 using either a flare or an electricity generator.
The main integrity issue with the new LFG method concerns additionality – the risk that the landfill sites would have captured and combusted the CH4, even if they did not receive ACCUs. This risk arises because the vast majority of landfills with ERF projects are legally required to manage biogas emissions for odour and safety reasons, and generation sites can be profitable solely through the revenues earned from the sale of electricity and large-scale generation certificates (LGCs).
The new LFG method uses a baseline to address the first of these issues – the regulatory additionality risk. Notably, the method does not contain any measures to address the ‘financial additional risk’ (the risk operators will destroy more CH4 than they are legally required to because they can make a profit from the sale of electricity and LGCs alone). The baseline under the method is a prescribed proportion of the gas captured and combusted at each site. ACCUs are not issued for this baseline proportion, it is deducted from the total amount of CH4 combusted at the site when calculating the credited abatement. For example, if a project has a 30% baseline and combusts 100 tonnes of greenhouse gases in a reporting year, it will be credited for 70 tonnes.
The debate about the integrity of the new LFG method turns on one question:
Question 1: Are the baselines that apply to a significant number of sites under the new LFG method
too low, in that they do not appropriately reflect the non-ERF regulatory and financial incentives for
capturing and destroying landfill gas?
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Answer 1: There are two main issues with the baselines that apply under the new LFG method:
the baselines for projects transitioned into the ERF from the Carbon Farming Initiative do not
capture the impacts of state and territory regulatory requirements, with the exception of
projects that have been upgraded; and
the baselines do not capture the incentive that some landfill projects have to capture and
combust more CH4 that is required under regulations that stems from the ability to sell
electricity and LGCs (i.e. the method does not contain any measures to address the financial
additionality risk).
In 2011-12, when the Carbon Farming Initiative’s landfill gas methods were being made, the
government and industry reached a negotiated outcome in which it was agreed that 30% would be set
as the default minimum baseline proportion under the method, based solely on the regulatory
requirements that apply under state and territory environmental laws.14 Projects would use the higher
of the default 30% or any specific proportion set under the applicable state/territory laws. However, a
side deal was struck that allowed pre-existing projects to use the baselines that applied under older
offset schemes (the NSW Greenhouse Gas Abatement Scheme (NSW GGAS) and the Australian
Government’s Greenhouse Friendly scheme). Projects registered under NSW GGAS were given 24%
baselines and those registered under the Greenhouse Friendly scheme were given 0% baselines. For
most projects, these concessional baselines do not appropriately reflect the impacts of state and
territory regulatory requirements, let alone the financial incentive for project operators to go beyond
the regulatory minimum due to their ability to profit from the sale of electricity and LGCs. Due to this, it
is beyond doubt that most of the projects that were transitioned into the Carbon Farming Initiative and
then into the ERF have been significantly over-credited; they have been issued ACCUs for abatement
that is likely to have happened anyway.15
The concessional arrangement given to these projects was due to expire at the end of their original 7-
year crediting periods under the ERF. For most of these projects, this would have fallen around 2020-
2022. However, the new LFG method rekindled the concessional arrangement by granting these
projects 5-year extensions to their crediting periods and allowing them to continue to use their historic,
sub-30% baselines.
The Review Panel has letters from two landfill gas operators, who are collectively responsible for the
majority of registered projects and ACCUs issued to landfill gas projects, stating that they agree the
baselines for a number of sites are too low and that this adversely affects the integrity of the new LFG
method. The Review Panel also has a joint letter from the four largest landfill gas operators, who are
responsible for more than 80% of registered projects, that states they are committed to progressing
‘the development of an increased baseline setting framework to ensure the integrity of the Landfill Gas
14
SMEC (2018) Analysis of Waste Sector Projects and Methods. DELIVERABLE 2: Performance of the landfill gas method against the offsets integrity standards. Report for the Department of the Environment and Energy. SMEC
Australia Pty Ltd, North Sydney, Australia.
15
SMEC (2018) Analysis of Waste Sector Projects and Methods. DELIVERABLE 2: Performance of the landfill gas method against the offsets integrity standards. Report for the Department of the Environment and Energy. SMEC
Australia Pty Ltd, North Sydney, Australia; Emissions Reduction Assurance Committee (2018) Landfill Gas Method
Crediting Period Review Report. Commonwealth of Australia, Canberra; Emissions Reduction Assurance Committee
(2020) 2019-2020 Re-evaluation of Electricity Generation Projects under the Landfill Gas Method. Commonwealth of
Australia, Canberra.
12
(Electricity Generation) Methodology Determination’.16 It should now be beyond dispute that there are
integrity problems with baselines under the new LFG method and that the method needs to be
amended to address them.
Recommended solution: The baselines should be reset to more appropriate levels to ensure they fully
reflect the non-ERF regulatory and financial incentives for capturing and destroying landfill gas. This
should be done in a timely manner to ensure projects can continue to operate without undue
regulatory disruption and uncertainty.
2.2 Avoided Deforestation
The avoided deforestation method is intended to generate abatement by incentivising the retention of
native forests in western New South Wales that would otherwise have been cleared. For land to be
eligible for inclusion in the carbon estimation area (CEA) (the areas that are credited) of an avoided
deforestation project, it must meet several eligibility requirements, including:
it must have contained native forest that had forest cover at the time of the application for
project registration (‘forest cover’ is defined as an area of at least 0.2 hectares with trees that
have crown cover of at least 20% of the area of land and have reached a height of at least 2
metres); and
it must be subject to a clearing consent issued prior to 1 July 2010 that authorises the
conversion of the native forest to cropland or grassland, requires the conversion to be
maintained in perpetuity, and does not require an offset to mitigate any effect from the
clearing to which it relates.17
These requirements confine eligibility to areas covered by a specific type of clearing consent, known as
Invasive Native Scrub Property Vegetation Plans (INS PVPs), issued prior to 1 July 2010 under the now
repealed Native Vegetation Act 2003 (NSW). INS PVPs were issued between 2005 and 2017 and
allowed for controlled treatment of native woody vegetation species where they were deemed to have
encroached into native grasslands and grassy woodlands; a process known as ‘woody thickening’.18 The
cause of this woody thickening is debated, however, the INS PVPs were premised on the assumption
that it was a product of overgrazing by domestic, feral and native herbivores and changed fire regimes
(removal of Indigenous burning and suppression of wildfires).19 Hence, the policy justification for INS
PVPs was that the clearing and other treatment of invasive native species was necessary to address
16
LMS Energy, Cleanaway Waste Management, Veolia ANZ and EDL (2022) Letter to Senator Pocock - The Emissions
Reduction Fund Landfill Gas Method. 1 September 2022.
17
Carbon Credits (Carbon Farming Initiative—Avoided Deforestation 1.1) Methodology Determination 2015, s 10.
18
NSW Government (2006) Managing invasive native scrub. Info Sheet 9. NSW Government, Sydney; Central West
Catchment Management Authority and the Western Catchment Management Authority (2010) Managing invasive native scrub to rehabilitate native pastures and open woodlands: A Best Management Practice
Guide for the Central West and Western Catchments. NSW Government, Sydney; Local Land Services (2014) Managing invasive native scrub to rehabilitate native pastures and open woodlands: A Best Management Practice Guide for the
Central West and Western Regions. NSW Government, Sydney; Western Local Land Services (2019) Managing invasive native scrub. NSW Government, Sydney.
19
Central West Catchment Management Authority and the Western Catchment Management Authority (2010)
Managing invasive native scrub to rehabilitate native pastures and open woodlands: A Best Management Practice
Guide for the Central West and Western Catchments. NSW Government, Sydney; Local Land Services (2014) Managing invasive native scrub to rehabilitate native pastures and open woodlands: A Best Management Practice Guide for the
Central West and Western Regions. NSW Government, Sydney.
13
land degradation associated with the encroachment of woody vegetation into native grasslands and
grassy woodlands. The stated aim of INS PVPs –and INS management more broadly – is to restore a
mosaic of different vegetation types in affected landscapes, comprised of a mix of ‘native pastures,
open woodlands, and open and denser INS areas [that] provide greater habitat diversity and
biodiversity than one vegetation type alone’.20
The main concern about the avoided deforestation method is that its assumptions regarding the
clearing of native forests covered by INS PVPs are not sufficiently conservative. In other words, there is
not sufficient confidence that the protected forests would have been permanently cleared for pasture
or cropping had they not been included in projects, and therefore that the credited abatement is
additional.
The debate about this issue turns on the three questions set out below, labelled questions 2, 3 and 4.
Question 2: Over what timeframe does the method assume landholders who applied for and
received eligible INS PVPs would have cleared the protected forests?
Answer 2: The method assumes landholders who applied for and received INS PVPs prior to 1 July 2010
would have cleared the relevant native forests within 15 years. This is reflected in the fact the method
employs a 15-year crediting period.21 The logic behind the use of the 15-year crediting period is
explained in the Explanatory Statement to the method, which states:
Section 6 provides that projects covered by this Determination have a 15 year crediting period. This
represents a revision in the crediting period from 20 years, as provided for with the original
Avoided Deforestation method, to better reflect when abatement occurs.22 [Emphasis added]
Consistent with this, the Departmental briefing to the Emissions Reduction Assurance Committee
(ERAC) in 2015, when the method was first made, stated:
The crediting period has been defined as 15 years, a reduction from the current 20 years. This is to
reflect the lifetime of the clearing permits most commonly applicable for projects using the
method. The change allows crediting to better match the time over which clearing would occur.23
[Emphasis added]
The Clean Energy Regulator’s guidance on the method makes a similar statement:
20
Local Land Services (2014) Managing invasive native scrub to rehabilitate native pastures and open woodlands: A
Best Management Practice Guide for the Central West and Western Regions. NSW Government, Sydney, p 6. See also
NSW Government (2006) Managing invasive native scrub. Info Sheet 9. NSW Government, Sydney; NSW Department of Natural Resources Science and Information Board (2006) Clearing/thinning of native vegetation known as invasive native scrub under the Native Vegetation Act 2003: Collation of Discussion Paper submissions and responses from the
Invasive Native Scrub Team. NSW Government, Sydney.
21
Carbon Credits (Carbon Farming Initiative—Avoided Deforestation 1.1) Methodology Determination 2015, ss 6, 18 and 65.
22
Explanatory Statement: Carbon Credits (Carbon Farming Initiative) Act 2011 – Carbon Credits (Carbon Farming
Initiative—Avoided Deforestation 1.1) Methodology Determination 2015, p 5.
23
Department of the Environment and Energy (2015) Overview of changes to the existing avoided deforestation method. Commonwealth of Australia, Canberra, p 1. Document obtained under the Freedom of Information Act 1982
(Cth), reference LEX 70064 - Document 8.
14
The crediting period in the original version was 20 years. In version 1.1, it is 15 years. This change
reflects the lifetime of the clearing permits most commonly applicable for these projects.24
[Emphasis added]
Further evidence for the 15-year clearing assumption is provided by section 25 of the method, which
requires proponents to prepare a baseline deforestation plan that describes what would have occurred
in the project area if it was not included in the project. The Explanatory Statement to the method states
that, ‘[t]he deforestation plan corresponds to the activities permitted and/or prohibited by the
clearing consent’.25 As a matter of simple logic, clearing consents can only permit activities during the
period over which they remain valid. INS PVPs were valid for 15 years.
This issue should not be debated – the 15-year assumption is a fundamental element of the method,
just as the assumption that the forests would be cleared within 20 years was a fundamental element of
the original method. However, the Clean Energy Regulator and the Carbon Market Institute have both
claimed that the method is based on the assumption that the protected forests would be cleared within
100 years and/or that the emissions associated with clearing are avoided at the date when the projects
are registered. For example, following the release of a report on this issue by The Australia Institute and
the Australian Conservation Foundation,26 the Clean Energy Regulator issued a statement that
commented:
A deep flaw in the TAI-ACF analysis is that it assumes land clearing prevented by the method
needed to occur during the 15 years of the clearing permit. This is not the case.
Almost all avoided deforestation projects that have been credited with ACCUs opted for a 100-year
permanence period, which means scheme participants are unable to clear their land for 100 years,
irrespective of the duration of the NSW clearing permit.
The 15-year timeframe for crediting Australia carbon credit units (ACCUs) is not about mimicking
the life span of the clearing permit. When a decision is taken not to clear land, all the emissions
from removing vegetation are avoided at once, so all the credits could be issued at once.27
The Carbon Market Institute made a similar statement:
The report appears to confuse clearing rates and crediting periods. Avoided Deforestation projects
are eligible to receive credits over 15 years, with clearing rates modelled across the 100-year
permanence period required by the project, not a 15-year period as the report suggests.28
24
Clean Energy Regulator (undated) Participating in the Emissions Reduction Fund: A guide to the avoided deforestation 1.1 method. Commonwealth of Australia, Canberra, p 7.
25
Explanatory Statement: Carbon Credits (Carbon Farming Initiative) Act 2011 – Carbon Credits (Carbon Farming
Initiative—Avoided Deforestation 1.1) Methodology Determination 2015, p 15.
26
Merzian, R., Hemming, P., Schoo, A. (2021) Non-additionality in the Emissions Reduction Fund’s Avoided
Deforestation Method. Australian Conservation Foundation and The Australia Institute, Melbourne.
27
Clean Energy Regulator (2021) ‘Statement: Response to TAI-ACF Report on the Emissions Reduction Fund’, 22
September 2021. Available at: https://www.cleanenergyregulator.gov.au/About/Pages/News%20and%20updates/NewsItem.aspx?ListId=19b4efbb-
6f5d-4637-94c4-121c1f96fcfe&ItemId=977 (18 August 2022).
28
Carbon Market Institute (2021) ‘Avoided Deforestation Method in the spotlight – CMI’s response’, 22 September
2021. Available at: https://carbonmarketinstitute.org/2021/09/22/avoided-deforestation-method-in-the-spotlight- cmis-response/ (18 August 2022).
15
Both of these statements are incorrect. In the case of the Clean Energy Regulator, its argument directly
contradicts its own guidance on the method.
Professor Macintosh was the Chair of the ERAC when the method was made in 2015 and was both
Chair of the ERAC and the ERAC avoided deforestation sub-committee in 2019 when the review of the
method was initiated and almost completed (before the review was seemly indefinitely suspended). To
assist the Review Panel, Professor Macintosh has signed a statutory declaration confirming the method
is based on the 15-year clearing assumption (see Appendix A). It is politely suggested that any person
wishing to argue that the method is not based on the 15-year clearing assumption should be asked to
sign a statutory declaration to that effect.
The assumed timing of clearing in the counterfactual is fundamental to the evaluation of the
additionality of avoided deforestation projects. This is made clear by questions 3 and 4, which relate to
the likely clearing avoided deforestation projects are supposed to have prevented over the 15-year
crediting period.
Question 3: What is the total area of land that is likely to be eligible for inclusion in avoided
deforestation projects because the land contains forest that is authorised to be cleared under an INS
PVP issued between 2005 and 30 June 2010?
Answer 3: INS PVPs are not public documents, which makes it difficult to determine the area of land
that is likely to be eligible for inclusion in avoided deforestation projects. The New South Wales
Government publishes an estimate of the total area of land covered by INS PVPs.29 However, not all of
this land area is eligible under the method.
Noting this, the minimum area of land that could be eligible under the method is the aggregate of the
CEAs of the 63 registered projects. As of July 2021, the aggregate of the CEAs of the 59 registered
projects that had reported was 349,136 hectares.30 Since then, another project has reported, which is
likely to bring the aggregate of the CEAs of the 60 projects that have reported to around 350,000
hectares. Hence, 350,000 hectares can be used as the minimum area that could be eligible under the
method.
The maximum eligible area is more difficult to estimate because of the lack of publicly available
information. However, the primary proponent and carbon service provider involved in avoided
deforestation projects, GreenCollar, has estimated that the maximum eligible area in the Western
Division of New South Wales is likely to be approximately 690,000 hectares.31 The focus on the Western
Division, or as it is now called, the Western Local Land Services (LLS) region, is due to the fact that 94%
of the approved INS PVP treatment area that is eligible under the method is in this region. Further,
29
NSW Department of Planning and Environment (2022) ‘Public Register of PVPs and Development Consents that approve broadscale clearing and/or specify a date for the definition of regrowth’. Available at: https://www.environment.nsw.gov.au/topics/animals-and-plants/native-vegetation/historic-native-vegetation- legislation/native-vegetation-act-2003-public-registers/approved-clearing-pvps-under-the-repealed-native- vegetation-act-2003 (16 September 2022).
30
Clean Energy Regulator (2021) Answers to Questions on Notice. Environment and Communications Legislation
Committee, Question No. 98. Commonwealth of Australia, Canberra.
31
Schultz, J., Sinclair, J. (2022) Avoided Deforestation Q&A. GreenCollar, Sydney. Available at: https://greencollar.com.au/wp-content/uploads/2022/04/Avoided-Deforestation-QA_.pdf (18 August 2022).
16
more than 90% of the project areas of avoided deforestation projects are located in the Western LLS region (Figure 1).
On this basis, a conservative estimate of the native forest area that is likely to be eligible under the method, on the assumption that, if it was not included in projects it would be cleared within 15 years, is between 350,000 and 690,000 hectares.
Figure 1. Location of avoided deforestation projects and INS PVP treatment areas, pre-1 July 2010, and extant native vegetation
Source: Extant native vegetation: NSW State Vegetation Type Map, https://datasets.seed.nsw.gov.au/dataset/nsw-state-vegetation-type-map (accessed 12/8/2022); Avoided deforestation projects: Area-based Emissions Reduction Fund (ERF) projects, https://data.gov.au/dataset/ds-dga-
4eac1209-869f-466f-b583-70ffded90a56/details (accessed 15/9/2022); Western LLS: Natural Resource
Management (NRM) Regions (2020), https://data.gov.au/dataset/ds-environment-122fd267-e687-4465-9f2a-
229953faf7d0/details?q=NRM%20regions%202020 (accessed 16/08/2021); Cobar Peneplain: Interim
Biogeographic Regionalisation for Australia (IBRA), Version 7, https://data.gov.au/dataset/ds-dga-d44dd392- ebea-4f1a-b30e-4a2da154aae4/details (accessed 29/6/2021).
17
Question 4: Is it conservative to assume that the area of land that is likely to be eligible for inclusion
in avoided deforestation projects would have been cleared within the assumed clearing period?
Answer 4: No, the rate of clearing would have to have increased many fold for land eligible for avoided
deforestation projects to have been cleared within 15 years.
If it is assumed that the eligible area is between 350,000 and 690,000 hectares, for the 15-year clearing
assumption to be valid, the average rate of agricultural-related deforestation in the eligible areas in the
counterfactual would need to be between 23,333 and 46,000 hectares per year. These clearing rates
are significantly above the average rate of agriculture-related clearing across the whole of New South
Wales since the late 1980s, and they are far above the likely clearing rate within the 1.3% of the state
covered by the projects. By any measure, it cannot be considered conservative to assume that the rate
of clearing in the eligible areas if the projects were not initiated would be in excess of 23,333 hectares
per year, let alone get anywhere near 46,000 hectares per year. It is not conceivable that these clearing
rates could be achieved within the eligible areas. Accordingly, it should be beyond debate that the
method does not meet any reasonable interpretation of the offsets integrity standards.
The irrefutability of this conclusion can be further demonstrated by looking at the average agricultural-
related clearing rates in the Western LLS region, which contains 94% of the eligible approved INS PVP
treatment area and approximately 92% of the projects areas of registered projects. Woody vegetation
clearing for agriculture in the Western LLS region averaged 4,085 hectares per year between 1988 and
2010.32 As Figure 2 shows, this historic clearing rate is between 427% and 938% lower than the rates
required for the 15-year clearing assumption to hold in the region.33
Figure 2. Western LLS region, historic agriculture-related clearing rate (1988-2010) vs rates of clearing
required within eligible areas for the 15-year clearing assumption to hold
45,000 42,412
hectares per year
40,000
35,000
30,000
25,000 21,513
20,000
15,000
10,000
4,085
5,000
-
Actual 1988-2010 Required (min) Required (max)
Source: NSW Department of Planning and Environment (2022) Results Woody Vegetation Change, Statewide
Landcover and Tree Study (SLATS) 2020. NSW Government, Sydney.
32
NSW Department of Planning and Environment (2022) Results Woody Vegetation Change, Statewide Landcover and
Tree Study (SLATS) 2020. NSW Government, Sydney. Available at: https://www.environment.nsw.gov.au/topics/animals-and-plants/native-vegetation/landcover-monitoring-and- reporting (16 September 2022).
33
Calculated on the assumption that 92% of the eligible area is within the Western LLS region, as per the distribution of project areas.
18
Another way of highlighting the implausibility of the 15-year clearing assumption is to compare it to the
average actual rate of agricultural-related clearing in the Western LLS region over the period 2017-2020
(Figure 3). As Figure 3 shows, for the 15-year clearing assumption to hold, the rate of clearing in the
Western LLS region would need to have jumped from the 1988-2010 average of 4,085 hectares per year
to a minimum of 29,477 hectares per year (assuming there was no leakage).34 Over the entire time
series of the NSW Statewide Landcover and Tree Study (SLATS), which runs from 1988 to 2020,
agriculture-related clearing across the whole of the state has only ever exceeded 29,477 hectares per
year on two occasions: 1988 and 1989.35
Figure 3. Western LLS region, average historic agriculture-related clearing rate (1988-2010), average
actual agriculture-related clearing rate (2017-2020), and minimum region-wide required clearing
rates for the 15-year clearing assumption to hold
35,000
Hectares per year
29,477
30,000
25,000
20,000
15,000
10,000 7,964
4,085
5,000
-
Historic Actual Required (min)
Source: NSW Department of Planning and Environment (2022) Results Woody Vegetation Change, Statewide
Landcover and Tree Study (SLATS) 2020. NSW Government, Sydney.
GreenCollar has argued that the clearing rates in the Cobar Peneplain IBRA region should be used for
these purposes.36 However, as can be seen from Figure 1, most of the avoided deforestation projects in
the Cobar Peneplain IBRA region are located in the western part of the region, which is largely
uncleared. The eastern and southern sections of the Cobar Peneplain IBRA region, which do not contain
any avoided deforestation projects, are extensively cleared, reflecting the higher rainfall and resulting
higher returns from clearing in the east of the region. Due to this, the clearing rates from across the
Cobar Peneplain IBRA region are unlikely to be representative of those experienced within the areas
containing avoided deforestation projects. Notwithstanding this, woody vegetation clearing for
agriculture in the Cobar Peneplain IBRA region still only averaged 4,646 hectares per year over the
period 1988-2010 and, over the period 2017-2020, it averaged 9,846 hectares. As Figure 4 illustrates,
using these rates does not materially alter the conclusion that the assumptions behind the avoided
deforestation method are not conservative.
34
The minimum region-wide required clearing rate is calculated here as the average actual rate over the period 2017-
2020 plus the rate required to clear the aggregate avoided deforestation CEA area.
35
The 1988 and 1989 estimates are averages from the two year period. It is possible one of these years was less than
29,477 hectares per year.
36
Schultz, J., Sinclair, J. (2022) Avoided Deforestation Q&A. GreenCollar, Sydney. Available at: https://greencollar.com.au/wp-content/uploads/2022/04/Avoided-Deforestation-QA_.pdf (18 August 2022).
19
Figure 4. Cobar Peneplain IBRA region, average historic agriculture-related clearing rate (1988-2010),
average actual agriculture-related clearing rate (2017-2020), and minimum region-wide required
clearing rates for the 15-year clearing assumption to hold
35,000
31,359
30,000
25,000
20,000
15,000
9,846
10,000
4,646
5,000
-
Historic Actual Required (min)
Source: NSW Department of Planning and Environment (2022) Results Woody Vegetation Change, Statewide
Landcover and Tree Study (SLATS) 2020. NSW Government, Sydney.
The data suggest it is not plausible, let alone conservative, to assume that the average rate of clearing
in the eligible areas would have been between 23,333 and 46,000 hectares per year over 15 years, if
landholders were not given the opportunity to enter into avoided deforestation projects. It would have
required the rate woody vegetation clearing for agriculture across the entire state to more than double,
and for the vast majority of this increase to occur in the Western LLS region, where clearing rates have
averaged around 4,000-8,000 hectares per year since 1988.
The assumption that the average rate of clearing in the eligible areas in the counterfactual would have
been between 23,333 and 46,000 hectares per year is made even more implausible by the fact that INS
PVPs only permitted the clearing of remnant native forests and regrowth that had regrown prior to 1
January 1983 in the Western Division and 1 January 1990 elsewhere in the state.37 Government
approvals (INS PVPs) were not required under the Native Vegetation Act 2003 (NSW) to clear invasive
native scrub that had regrown since 1983 in the Western Division and 1 January 1990 in the Eastern
and Central Divisions; this younger regrowth could be cleared ‘as of right’. Accordingly, only remnant
native forests and pre-1983/1990 regrowth native forests should be eligible under the avoided
deforestation method.38 This is because of the requirement in the method for eligible land to be
covered by a ‘clearing consent’, which is defined as:
37
Native Vegetation Act 2003 (NSW), s 9.
38
It is notable that the Clean Energy Regulator’s statement in response to the Australian Conservation Foundation-The
Australia Institute report criticises it for relying on the rate of clearing of remnant native forests and pre-1983/1990 regrowth native forests rather than the total rate of clearing. This raises the prospect that the Clean Energy Regulator has allowed proponents to include post-1983/1990 regrowth forests in CEAs, contrary to the requirements of the method. See: Clean Energy Regulator (2021) ‘Statement: Response to TAI-ACF Report on the Emissions Reduction
Fund’, 22 September 2021. Available at: https://www.cleanenergyregulator.gov.au/About/Pages/News%20and%20updates/NewsItem.aspx?ListId=19b4efbb-
6f5d-4637-94c4-121c1f96fcfe&ItemId=977 (18 August 2022).
20
clearing consent: where, under Commonwealth, State or Territory law, an area of land cannot be
cleared without an approval issued by the appropriate authority, such an approval is a clearing
consent for the area of land.
As the definition makes clear, an INS PVP is only a clearing consent for these purposes to the extent
that it authorises the clearing of forest that could not be lawfully cleared without approval.
Due to this, when analysing whether it is plausible to assume that the average rate of clearing in the
eligible areas would have been between 23,333 and 46,000 hectares per year over 15 years, the
relevant basis of comparison is the rate of clearing of remnant native forests and older (pre-1983/1990)
regrowth. These data are not publicly available but it is reasonable to assume that the relevant clearing
rates are likely to be significantly below the rates cited above, which reinforces the conclusion that the
15-year clearing assumption is not conservative.39
The fundamental challenge with all avoided loss projects, like avoided deforestation, is adverse
selection.40 Adverse selection describes circumstances where there is an asymmetry of information
between transacting parties, which prompts selective participation to the detriment of counterparties.
Adverse selection is a feature of a number of markets, including health insurance, used cars and, most
relevantly, carbon and biodiversity offset markets.41 In avoided loss offsets, adverse selection arises
because only landholders know whether they would clear the eligible land in the counterfactual, and it
is extremely difficult to design a set of rules that is able to confine eligibility to the pool of landholders
that will clear their land if they are not offered credits. The requirement to hold an INS PVP was
intended to perform this function. However, landholders had incentives, and were encouraged, to
obtain INS PVPs to gain an option to clear, even when they had no plans to clear the land in the
foreseeable future. Due to this, the issued INS PVPs permitted the clearance of a vast area of land, well
in excess of what was conceivably going to be cleared over the life of the permits. In these
circumstances, adverse selection suggests that the landholders who are most likely to seek to register
avoided deforestation projects are those who were least likely to have cleared the land in the
counterfactual. For these landholders, there is no opportunity cost associated with foregoing the right
to clear because they never intended to use it.
As Figure 1 shows, the distribution of avoided deforestation projects aligns with what the theory of
adverse selection suggests will occur. Most of the projects are located in regions that are not
extensively cleared, to the west of the areas covered by INS PVPs, where the returns from clearing are
marginal (and frequently negative). This reinforces the implausibility of the 15-year clearing assumption
and the lack of conservativeness in relying on INS PVPs as a basis for assuming relevant forests would
be cleared.
39
Merzian, R., Hemming, P., Schoo, A. (2021) Non-additionality in the Emissions Reduction Fund’s Avoided
Deforestation Method. Australian Conservation Foundation and The Australia Institute, Melbourne.
40
Burke, P.J. (2016). Undermined by Adverse Selection: Australia’s Direct Action Abatement Subsidies. Economic
Papers 35, 216–229; Bushnell, R.S. (2012) ‘The Economics of Carbon Offsets’. In: Fullerton, D., Wolfram, C. (eds) The
Design and Implementation of US Climate Policy. University of Chicago Press, Chicago.
41
Maseyk, F.J.F., Maron, M., Gordon, A., Bull, J.W., Evans, M.C., 2021. Improving averted loss estimates for better biodiversity outcomes from offset exchanges. Oryx 55, 393–403; Maron, M., Bull, J.W., Evans, M.C., Gordon, A., 2015.
Locking in loss: Baselines of decline in Australian biodiversity offset policies. Biological Conservation 192, 504–512.
21
Recommended solution: The avoided deforestation method does not meet the offsets integrity
standards and should be revoked immediately. However, revoking the method will not prevent the
existing 63 projects from continuing to receive ACCUs for the remainder of their crediting periods. To
date, more than 24 million ACCUs have been issued to these projects and, if nothing is done, the
existing projects are likely to receive a further 14-20 million ACCUs. To address this issue, we
recommend prohibiting designated large facilities from using ACCUs from avoided deforestation
projects to meet their Safeguard Mechanism obligations. The Australian Government should also stop
purchasing ACCUs from avoided deforestation projects. This would allow existing project proponents to
continue to receive ACCUs but the only place to sell them would be the voluntary market.
Another issue of note is that a number of proponents appear to have been allowed to register projects
on areas that are not covered by INS PVPs issued prior to 1 July 2010 (see Figure 1, project areas that
do not contain pink circles). It is a clear requirement of the method that areas are only eligible if they
are covered by clearing consents issued before 1 July 2010. 42 These projects appear to have been
registered unlawfully.
Recommended solution: Avoided deforestation projects that are not covered by INS PVPs issued
before 1 July 2010 should be revoked immediately. These projects should be required to relinquish the
same number of ACCUs they have been issued.
2.3 Human-induced Regeneration (HIR)
The HIR method provides landholders with ACCUs for regenerating native forests by changing land
management practices. When it was originally made, the method was intended to incentivise the
regeneration of native forests by allowing juvenile trees and shrubs to regrow in areas that were
previously cleared. Offset projects involving the regeneration of native forests in previously cleared
areas are both legitimate and desirable. However, the vast majority of HIR projects are not doing this.
Almost all of the current HIR projects are located in semi-arid and arid areas (less than 350 mm average
annual rainfall) that have never been comprehensively cleared (Figure 5), meaning proponents are
trying to regenerate native forests in remnant native vegetation solely by reducing grazing pressure
from livestock and feral animals.
42
Carbon Credits (Carbon Farming Initiative—Avoided Deforestation 1.1) Methodology Determination 2015, s
10(1)(b)(i).
22
Figure 5. Location of registered HIR project areas (September 2022) and extant native vegetation
Source: Area-based Emissions Reduction Fund (ERF) projects, https://data.gov.au/dataset/ds-dga-4eac1209-869f-
466f-b583-70ffded90a56/details (accessed 21/9/2022); National Vegetation Information System (NVIS) Version
6.0 - AUSTRALIA - Extant Vegetation.
http://environment.gov.au/fed/catalog/search/resource/details.page?uuid=%7Bab942d6d-9efd-4cf2-bec7-
4c1521b83803%7D (accessed 21/9/2022).
There are two main integrity issues with projects registered under the HIR method.
The measurement problem. The sequestration of carbon dioxide in forests that are
regenerated through HIR project activities is estimated using a model (known as the Full Carbon
Accounting Model (FullCAM)) that is not calibrated for use on sites that contain significant
amounts of pre-existing woody biomass (sites that contain more than 5% of their estimated
maximum biomass carrying capacity under native vegetation). Despite this, projects have been
allowed to include areas that contain significant amounts of pre-existing woody biomass within
their carbon estimation areas (CEAs) (the land areas that are credited). This is likely to be
resulting in the over-estimation of sequestration in regenerating trees in these areas.
23
The additionality problem. The primary driver of fluctuations in woody biomass in uncleared
rangeland areas is rainfall. In certain circumstances, reducing grazing pressure in these areas
can increase tree and shrub cover. However, generally, any increases in woody biomass that
can be achieved through changes in grazing pressure are likely to be small, particularly in
comparison to the fluctuations driven by rainfall, and temporary. The HIR method does not
adequately control for the impacts of rainfall on regeneration to avoid crediting regeneration
that would have occurred anyway. That is, it has no processes for separating out the impacts of
management from the impacts of rainfall in any observed increases (or decreases) in woody
biomass. Due to this, there is a significant risk HIR projects in uncleared rangeland areas are
being, and will continue to be, credited for non-additional abatement.
The resolution of these issues turns on the following four questions, labelled questions 5, 6, 7 and 8.
Question 5: Is it scientifically valid to use the Full Carbon Accounting Model (FullCAM) and the
Reforestation Modelling Tool (RMT) to estimate above-ground biomass accumulation in
regenerating woody vegetation on sites that contain significant baseline biomass, where significant
baseline biomass is defined as more than the lesser of:
(a) 5% of the maximum above-ground biomass in undisturbed native vegetation for the site; or
(b) 5 tonnes of dry matter per hectare in above-ground biomass?
Answer 5: No, FullCAM and RMT assume negligible initial biomass and model the development of an even-aged forest that grows towards the site’s maximum carbon carrying capacity when under native vegetation. Due to this, it is not scientifically valid to use either model (in their current form) to estimate above-ground biomass accumulation in regenerating woody vegetation on sites that contain significant baseline biomass.
There are three versions of the HIR method that are currently in use: the so-called Reforestation
Modelling Tool (RMT) version; FullCAM 2016 version; and the FullCAM 2018 version. As these names suggest, there are three accompanying versions of the FullCAM model that are currently being used by proponents to estimate sequestration in regenerating woody vegetation: RMT (a simplified version of
FullCAM), FullCAM 2016 and FullCAM 2020.
RMT, FullCAM 2016 and FullCAM 2020 are not calibrated for use on sites that contain significant
‘baseline biomass’, which refers to mature woody vegetation that pre-existed the projects and is not being regenerated through the project activities. Significant baseline biomass is generally defined for these purposes as biomass equivalent to more than 5% of the maximum above-ground biomass (AGB) the site could contain if it had undisturbed native vegetation or more than 5 tonnes of dry matter per hectare in AGB. The question is framed around AGB because FullCAM’s tree yield formula estimates
AGB. Total biomass (above and below ground live biomass, and debris) is derived from the AGB estimate using a series of assumptions regarding the allocation of biomass between components of the trees, and turnover and decomposition rates.
There is no doubt RMT, FullCAM 2016 and FullCAM 2020 cannot be validly applied to sites that contain significant baseline biomass. Using FullCAM on sites that contain significant baseline biomass is likely to lead to the over-estimation of sequestration in regeneration. This is clear from the fundamentals of the model and how it has been calibrated.
24
To confirm this, we put Question 5 to the CSIRO scientists that were responsible for calibrating FullCAM
2020. The relevant correspondence and their response are attached in Appendices B and C. We note also that GreenCollar, the largest carbon service provider for ERF vegetation projects, agrees FullCAM is not calibrated for sites that contain more than, as is reflected in a joint letter we have submitted to the
Review Panel.
For further details on this issue, see:
Macintosh, A., Butler, D., Ansell, D. (2022) Measurement Error in the Emissions Reduction
Fund's Human-induced Regeneration (HIR) Method. The Australian National University,
Canberra.
Macintosh, A., Butler, D., Evans, C.E., Larraondo, P., Ansell, D., Waschka, M. (2022) Integrity and
the ERF’s Human-Induced Regeneration Method: The Measurement Problem Explained. The
Australian National University, Canberra.
Question 6: Do the three current versions of the HIR method allow proponents to include areas that
contain mature woody vegetation within their CEAs?
Answer 6: We do not believe the three current versions of the HIR method allow proponents to include areas that contain mature woody vegetation within their CEAs. This would result in FullCAM being applied to sites that it is not calibrated for and necessarily result in the over-estimation of sequestration in projects, on a portfolio-wide basis.
Our legal reasoning is set out in:
Macintosh, A., Butler, D., Ansell, D. (2022) Measurement Error in the Emissions Reduction
Fund's Human-induced Regeneration (HIR) Method. The Australian National University,
Canberra.
Question 7: Is rainfall a significant driver of changes in woody biomass in uncleared rangeland
areas?
Answer 7: Inter-annual variability in rainfall is a major driver of vegetation dynamics in Australia’s arid and semi-arid rangelands. Runs of wet years, often associated with La Nina events in eastern Australia, can trigger expansion of woody vegetation cover, while droughts can reduce that cover. Before carbon farming was conceived, there was considerable scientific effort invested in understanding the causes of increases in woody cover in grazed rangelands observed since the mid-20th century, a phenomenon known as ‘woody thickening’ (as noted above, the treatment of woody thickening provided the policy justification for INS PVPs in New South Wales, which are used in the avoided deforestation method).
While management can play a role in the thickening process, rainfall was established as a fundamental driver. The process of woody thickening in grazed rangelands also undercuts the idea that grazing relief is generally required for regeneration in Australia’s rangelands.
Question 8: Does the HIR method contain appropriate measures to ensure ACCUs are only issued for
increases in woody biomass that are attributable to project activities, and to prevent credits from
being issued for increases in woody biomass that are wholly or primarily attributable to fluctuations
in rainfall?
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Answer 8: The HIR method does not contain appropriate measures to ensure ACCUs are only issued for
increases in woody biomass that are attributable to project activities, and to prevent credits from being
issued for increases in woody biomass that are wholly or primarily attributable to fluctuations in
rainfall.
HIR CEAs are subject to ‘gateway’ requirements that require evidence of ongoing regeneration at years
5 and 10, and for 90% of the CEA to achieve forest cover at year 15.43 However, these gateway
requirements do not appropriately control for the impacts of rainfall on woody vegetation – they
provide a minimum level of confidence that the site has achieved a degree of regeneration over a 15
year period. This is sufficient for sites that have previously been cleared and contain minimal woody
biomass at project commencement. They are not sufficient for sites that contain uncleared native
vegetation, where the only project mechanism concerns reducing grazing pressure from livestock and
feral animals and/or the control of weeds.
To separate out the impacts of rainfall from the impacts of project activities for these areas, it would be
necessary to establish appropriate control sites, where land management practices are maintained as
they previously were over an extended period. To be valid, these sites would need to have the same or
similar characteristics to those in the CEAs, including soil and vegetation types, and rainfall. Establishing
valid control sites that meet these requirements is likely to be challenging and, even then, it would take
an extended period (at least 15 years) to be able to have sufficient confidence that any detected affects
are attributable to the project activities. Due to this, we do not believe HIR should be allowed to
continue in uncleared rangeland areas, instead it should be confined to areas that have previously been
cleared of forest.
Recommended solution: The HIR method should immediately be varied to confine eligibility to areas
that have previously been cleared of forest, where there is high confidence the land can sustain forest
in the long-term and it is likely the area will be kept in a cleared (or semi-cleared) condition in the
absence of the incentive provided by the ERF. The Clean Energy Regulator should also clarify that HIR
CEAs must not include mature vegetation or, preferably, the method should be varied to limit eligibility
to areas that contain less than 5% of their estimated maximum biomass carrying capacity under native
vegetation (when assessed at an appropriate scale).
Varying the HIR method will not stop registered projects from continuing to receive ACCUs. Without
reforms, HIR projects in uncleared rangeland areas that are currently receiving ACCUs to grow trees
that are already there, and to regenerate forests in areas that are unlikely to not sustain them, are
likely to continue to receive ACCUs for the remainder of their crediting periods, which, for most
projects, is between 20 and 22 years.
To address this, we recommend that the CFI Act be amended to provide a 2-year transition period for
existing HIR projects. Over this period, projects should be able to transition onto the varied method if
the land is eligible (i.e. it has previously been cleared). Projects located in areas that have not
previously been cleared should be terminated; however, landholders should be released from their
permanence period obligations and not be required to return ACCUs that have already been issued.
43
Carbon Credits (Carbon Farming Initiative) Rule 2015, s 9AA.
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2.4 Plantations Method
The 2022 plantations method provides for four project types, the first two of which were present in the
now superseded 2017 commercial plantations method, and the last two being added in the recent
revision:
a. the establishment of new plantations on land that was previously used for other non-forest
purposes; and
b. the conversion of short-rotation plantations to long-rotations (what should involve shifting
from pulplog to sawlog production).
c. continuing plantation projects, where proponents get ACCUs for re-establishing a plantation
after it has been harvested; and
d. permanent planting projects, where proponents get ACCUs for converting an existing
plantation to a permanent planting that is not harvested.
Continuing plantation projects and permanent planting projects are essentially avoided deforestation
projects, or what can be called ‘avoided plantation conversion projects’. Projects get credits for not
converting the plantation to another non-forest land use.
The concerns about the integrity of the 2022 plantations method relate primarily to avoided plantation
conversion projects. The concerns about these project types turn on the four questions set out below,
labelled questions 9, 10, 11 and 12
Question 9: Is it conservative to assume that a significant proportion of Australia’s plantation estate
would be converted to non-forest land uses (e.g. cropping and grazing) in the foreseeable future,
unless they are offered ACCUs?
Answer 9: No, it is not likely that a significant proportion of Australia’s plantation estate would be
converted to non-forest land uses (e.g. cropping and grazing) in the foreseeable future, in the absence
of the prospect of generating ACCUs.
Australia’s plantation estate has only ever experienced one significant episode of plantation
conversions, and that has occurred over the past decade. Since 2009, the hardwood estate has shrunk
by almost 300,000 hectares – the softwood estate has been relatively stable.44 The contraction in the
hardwood estate was an inevitable consequence of the distortions created by the tax incentives
associated with forestry MIS. A significant number of plantations were established in unviable
locations, too far from processors and/or with poor growing conditions, simply to access the tax
concessions. In the wake of the global financial crisis in 2008 and the collapse of the forestry MISs, the
forestry industry warned that up to 300,000 hectares of hardwoods could be lost.45 That inevitable
rationalisation of the hardwood estate has now largely occurred and it is unlikely there will be
significant ongoing losses from the estate – there will undoubtedly be some losses at the margins but
most of the estate is likely to remain intact. This view accords with the most recent information
44
ABARES (2022) Australian forest and wood products statistics, September and December quarters 2021.
Commonwealth of Australia, Canberra.
45
Australian Forest Products Association (AFPA) (2015) Plantations. The Missing Piece of the Puzzle. AFPA, Canberra.
27
published by the Australian Bureau of Agricultural and Resource Economics and Sciences (ABARES),
particularly its Australian plantation statistics and log availability report.46
To investigate this issue further, the ANU-UNSW research team submitted a request under the Freedom
of Information Act 1982 (Cth) for ‘all reports, or documents containing advice, commissioned by the
Clean Energy Regulator and/or Emissions Reduction Assurance Committee from the Australian Bureau
of Agricultural and Resource Economics and Sciences (ABARES) or other third parties concerning: the
inclusion of continuing plantation project activities in the Carbon Credits (Carbon Farming Initiative—
Plantation Forestry) Methodology Determination 2022; and/or the likelihood of softwood and/or
hardwood plantations being converted to non-forest land in the absence of government intervention,
including through the Emissions Reduction Fund’.47 The Clean Energy Regulator identified nine
documents that fell within the scope of this request but fully redacted eight of the nine documents on
the basis they contained deliberative matter (s 47C) or that the release of the information would
prejudice the Regulator’s operations (s 47E).48 The only document it released was a draft of the
financial assessment guidance used under the method. Much like the rule from Jones v Dunkel,49 the
Clean Energy Regulator’s refusal to release this information suggests there is an absence of compelling
evidence to support the conclusion that a significant proportion of Australia’s plantation estate was
likely to be converted to non-forest land uses in the absence of being offered ACCUs.
Question 10: Is it conservative to assume that, if an alternative non-forest land use has a higher
projected internal rate of return (IRR) than the IRR associated with the continuation of the existing
plantation, the plantation will always be converted? For example, if the IRR of cropping a parcel of
land is 12% and the IRR from continuing the plantation (without credits) on the same land is 11%, is
it conservative to assume the plantation will be converted to cropping land?
Question 11: If a method relies on the test described in Question 10, it is appropriate and
conservative to allow the financial assessment to be undertaken by the proponent and reviewed by
their paid consultant?
Answers 10 and 11: Financial forecasting requires the making of a significant number of largely
subjective decisions about a variety of issues that can materially influence the forecast returns from
competing land uses; for example, concerning discount rates and future land values, commodity prices
and production costs. Due to this, it is inherently risky to rely on them to assess the likelihood of
conversions because of the range of defensible assumptions, the incentives for proponents to select
assumptions that favour their desired outcome, and the asymmetries of information that exist between
the proponent and other parties, including auditors and the Clean Energy Regulator. This has been
demonstrated with the Clean Development Mechanism, where project level financial additionality
46
Legg, P., Frakes, I., Gavran, M. (2021) Australian plantation statistics and log availability 2021. ABARES. Canberra,
Australia. See also Downham, R., Gavran, M. (2020) Australian plantation statistics 2020 update. ABARES. Canberra,
Australia.
47
Macintosh, A. (2022) Freedom of Information Request - documents concerning Carbon Credits (Carbon Farming
Initiative—Plantation Forestry) Methodology Determination 2022. Email dated 8 July 2022. CER FOI reference no.
36_2022.
48
Bradley, J. (2022) Notice of Decision FOI Request No. 36_2022. 19 September 2022. Clean Energy Regulator,
Canberra.
49
Jones v Dunkel [1959] HCA 8.
28
assessments have proven to be inaccurate and unreliable.50 Their unreliability and cost explain why
they are not used in any other ERF method.
In this case, using financial assessments to test additionality is made more problematic by the fact the
analysis can be undertaken by the proponent and reviewed by a paid consultant. Further, the
‘conversion test’ that is employed is flawed because it assumes plantation owners will always optimise
land use, in the sense of ensuring that every parcel of land is devoted to the land use that provides the
maximum possible rate of return, unadjusted for risk. This does not reflect the reality of land use in
Australia or elsewhere. Most landowners do not optimise land use. Land use choices are driven by a
variety of factors, including the producer’s knowledge and experience with particular production
systems, their desire to diversify to reduce risk, and the extent to which their business is linked to, or
integrated with, nearby processors. This is the case with many plantation owners and growers. They are
specialised and often integrated with mills, and the fact there is an alternative, potentially higher
earning land use is unlikely to sway them to convert, unless the plantation is not providing reasonable
returns. Due to this, it is not conservative to assume that, if an alternative non-forest land use has a
higher projected IRR than the IRR associated with the continuation of the existing plantation, the
plantation will always be converted.
Question 12: Is it conservative to assume that a plantation that would be cleared now in the
absence of ACCUs would be repeatedly re-established over a 100-year period, even after the project
stops receiving ACCUs and is no longer subject to any permanence obligations?
Answer 12: It is illogical and fundamentally unbelievable to assume that a plantation that would be
cleared now in the absence of ACCUs would be repeatedly re-established over a 100-year period, even
after the project stops receiving ACCUs and is no longer subject to any permanence obligations. Yet this
is the assumed counterfactual against which project abatement is calculated, leading to an obvious risk
of over-crediting.
Further details on our concerns about the 2022 plantations method are outlined in the paper:
Macintosh, A., Butler, D., Ansell, D., Waschka, A. (2022) Integrity Problems with the ERF’s 2022
Plantation Forestry Method. The Australian National University, Canberra.
Recommended solution: The Australian Government should immediately vary the method to remove
the option of undertaking continuing plantation projects. Permanent planting projects could be
retained but only if the method was varied to ensure the baseline for such projects, against which
abatement is calculated, is the continued use of the land as a plantation. The alternative is that the
method could be disallowed, and the Minister for Climate Change could then make a new method that
confines project eligibility to plantation establishment, rotation extensions and, if the baseline is
revised, permanent planting projects. The method’s integrity could be further improved by requiring all
projects to have 100-year permanence periods or modifying how the long-term average carbon stock is
calculated in the project scenario for projects with 25-year permanence periods to account for the risk
of reversion after the permanence period has ended.
50
Schneider, L. (2009) Assessing the additionality of CDM projects: practical experiences and lessons learned. Climate
Policy 9(3), 242-254; Carnes, M. et al. (2016) How additional is the Clean Development Mechanism? Analysis of the application of current tools and proposed alternatives. INFRAS and SEI, Switzerland and United States.
29
Appendix A. Copy of statutory declaration
30
Appendix B. ANU-CSIRO correspondence in relation to Question 5
From: Andrew Macintosh 60% of M (Fig. 9), but the median age of these stands was only 7 years. For natural regeneration in land managed for grazing, this is below G (= 12.53 years), which is the age at which the stands growth rates start to decline due to inter-tree competition.
Most (75%) of the calibrations stands had < 150 baseline trees (or shrub) (Fig. 10). This meant that typically, a baseline tree had between 0.05-0.15 Mg DM tree-1 (Fig. 11).
Verification stands
As outlined in Section 1, the model start date for simulation of regeneration was primarily assumed to be the year at which clearing cessed, and only for stands with no known history of clearing was the model start date taken as the year at of removal of suppression due to grazing.
This was the approach taken in both the calibration (Paul and Roxburgh, 2020) and verification
(Paul et al. 2022, in prep.) of the TYF for land managed for grazing. As such, despite the age of the
25 verification stands being generally older than those used in the calibration, nevertheless40% of the stand had a baseline of <2 Mg DM ha-1 (Fig. 8), or <5% of M (Fig. 9).
However, some users of FullCAM’s TYF on lands with clearing histories apply the TYF to model to regeneration that is effectively a 2nd cohort of regeneration. This 2nd cohort is regeneration post removal of grazing suppression on lands that had already had a 1st cohort of regeneration post- clearing. Across the 16 verification stands where these two phases of regeneration occurred, there was an average of 6.3 Mg DM/ha of baseline AGB generated from the 1st phase of regeneration.
Because this 1st phase of regeneration needs to be included in the baseline, for the verification sites where a 2nd phase of regeneration was predicted post removal of suppression (N=29), far fewer sites had negligible baselines. Using this alternative (Alt) approach for verification, only 14% of stands had a baseline of <2 Mg DM ha-1 (Fig 7), and only 7% had a baseline that was <5% of M
(Fig. 8).
Although a number of calibration and verification stands were observed to have baseline AGB that were close to or exceeded M (Fig. 9), this does not necessarily imply that those particular stands have no additional capacity to sequester additional carbon. M is a generalised, continental-scale product that yields high accuracy at the continental (or regional) scale, but is highly uncertain at any given point in the landscape (Roxburgh et al. 2019).
44
Figure 7: Frequency distribution of the age across the calibration stands (upper panel) or verification stands (lower panel). The alternative (Alt) verification approach applied solely to model regeneration post removal of suppression due to grazing, even when this regeneration was a 2nd cohort of regeneration that occurred after the 1st cohort due to an earlier cessation of clearing.
45
Figure 8: Frequency distribution of the baseline AGB across the calibration stands (upper panel) or verification stands (lower panel). The alternative (Alt) verification approach applied solely to model regeneration post removal of suppression due to grazing, even when this regeneration was a 2nd cohort of regeneration that occurred after the 1st cohort due to an earlier cessation of clearing.
46
Figure 9: Frequency distribution of the baseline AGB, expressed as a proportion of M, across the calibration stands (upper panel) or verification stands (lower panel). The alternative (Alt) verification approach applied solely to model regeneration post removal of suppression due to grazing, even when this regeneration was a 2nd cohort of regeneration that occurred after the 1st cohort due to an earlier cessation of clearing.
47
Figure 10: Frequency distribution of the number of baseline trees (or shrubs) within the stand, across the calibration stands (upper panel) or verification stands (lower panel). The alternative
(Alt) verification approach applied solely to model regeneration post removal of suppression due to grazing, even when this regeneration was a 2nd cohort of regeneration that occurred after the
1st cohort due to an earlier cessation of clearing.
48
Figure 11: Frequency distribution of the AGB per baseline tree across the calibration stands (upper panel) or verification stands (lower panel). The alternative (Alt) verification approach applied solely to model regeneration post removal of suppression due to grazing, even when this regeneration was a 2nd cohort of regeneration that occurred after the 1st cohort due to an earlier cessation of clearing.
49
Upload 1
ANU/UNSW ERF Research Team Submission – supporting material
Macintosh, A. (2022) The Emissions Reduction Fund's Landfill Gas Method: An Assessment of its Integrity. The Australian National University, Canberra. https://law.anu.edu.au/sites/all/files/erf_landfill_gas_method_-_an_assessment_of_its_integrity_16_march_2022.pdf
Macintosh, A. (2022) Restoring Integrity to the ERF’s Landfill Gas Method. The Australian National University, Canberra.
Macintosh, A., Butler, D., Ansell, D. (2022) Measurement Error in the Emissions Reduction Fund's Human-induced Regeneration (HIR) Method. The Australian National University, Canberra. https://law.anu.edu.au/sites/all/files/measurement_error_in_hir_method_14_march_2022.pdf
Macintosh, A., Butler, D., Ansell, D., Waschka, M. (2022) Integrity Problems with the ERF’s 2022 Plantation Forestry Method. The Australian National University, Canberra. https://law.anu.edu.au/sites/all/files/short_-_integrity_problems_with_the_plantations_method_120822_final.pdf
Macintosh, A., Butler, D., Ansell, D., Waschka, M. (2022) The Emissions Reduction Fund (ERF): Problems and Solutions. The Australian National University and University of New South Wales, Canberra. https://law.anu.edu.au/sites/all/files/erf_-_problems_and_solutions_final_6_april_2022.pdf
Macintosh, A., Butler, D., Evans, M.C., Ansell, D., Waschka, M. (2022) Fixing the Integrity Problems with Australia’s Carbon Market. The Australian National University and University of New South Wales, Canberra. https://law.anu.edu.au/sites/all/files/short_-_erf_reform_june_2022_final.pdf
Macintosh, A., Butler, D., Evans, M.C., Larraondo, P.R., Ansell, D., Gibbons, P. (2022) The ERF’s Human-induced Regeneration (HIR): What the Beare and Chambers Report Really Found and a Critique of its Method. The Australian National University, Canberra. https://law.anu.edu.au/sites/all/files/what_the_beare_and_chambers_report_really_found_and_a_critique_of_its_method_16_march_2022.pdf
Macintosh, A., Butler, D., Evans, M.C., Larraondo, P.R., Ansell, D., Waschka, M. (2022) Integrity and the ERF’s Human-Induced Regeneration Method: The Measurement Problem Explained. The Australian National University, University of New South Wales and Haizea Analytics Pty Ltd., Canberra. https://law.anu.edu.au/sites/all/files/short_-_hir_measurement_july_2022_final.pdf
Macintosh, A., Butler, D., Evans, M.C., Larraondo, P.R., Ansell, D., Waschka, M. (2022) Integrity and the ERF’s Human-Induced Regeneration Method: The Additionality Problem Explained. The Australian National University, University of New South Wales and Haizea Analytics Pty Ltd., Canberra. https://law.anu.edu.au/sites/all/files/short_-_hir_additionality_july_2022_final.pdf
