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Consultation paper: Proposed amendments to the Carbon Credits
(Carbon Farming Initiative) Rule 2015 relating to Emissions Reduction
Fund native vegetation regeneration projects
Contact details
Name of organisation Climate Friendly
Contact person Skye Glenday
Phone number 0432 890 447
Email Skye.Glenday@climatefriendly.com
Postal Address Level 2, 140 William Street, Woolloomooloo NSW
Do you want this submission to be treated as confidential? Yes No X
ABN 123 456 789 ! 1800 223 276
Level 2,
" carbonfarming@climatefriendly.com
140 William Street,
Woolloomooloo # www.climatefriendly.com
NSW Australia 2011
20 January 2022
Department of Industry, Science, Energy and Resources
Via the Consultation Hub website
Soils & Vegetation team,
RE: Proposed amendments to the Carbon Credits (Carbon Farming Initiative) Rule 2015 relating to
native vegetation regeneration projects under the Emissions Reduction Fund
Thank you for the opportunity to provide comments on the consultation paper “Proposed
amendments to the Carbon Credits (Carbon Farming Initiative) Rule 2015 (CFI Rule) relating to
Emissions Reduction Fund (ERF) native vegetation regeneration projects” (the consultation paper).
Climate Friendly and our partners are wholly committed to best-practice, sustainable active land
management through carbon farming. This provides new economic, social, cultural and
environmental stewardship opportunities, helping to keep farming families on the land and building
community cohesion in rural, regional and remote Australia.
Based on our preliminary review of the consultation paper, the proposed amendment to the CFI
Rule as it is currently drafted will introduce significant uncertainty and duplication, increase scheme
complexity and barriers to participation in the ERF, and potentially lead to material adverse impacts
for regions that are yet to benefit from carbon farming. Given the significant potential for adverse
impacts, we do not support the amendments as currently drafted and the proposal for an additional
approval requirement.
Proposal duplicates existing regulatory requirements and increases administrative complexity
The proposed amendment has three stated objectives:
1. Maintaining adequate management of weeds, pests and fire risks;
2. Maintaining or enhancing agricultural production; and
3. Ensuring no negative impacts on local communities.
These requirements are already addressed through existing safeguards in the CFI regulatory
framework and guidelines. As such, the proposed additional approval appears duplicative and
increases administrative complexity and uncertainty for land managers who are considering
participating in carbon farming.
1. Adequate management of weeds, pests and fire risk
Requirements for management and reporting of weed, pest and fire risk are already addressed
directly or indirectly via at least nine existing provisions in the CFI Regulatory Framework and
accompanying guidance.
1. concurrence of state and territory laws: all carbon farming projects must comply with state and
territory laws, including in relation to weed, pest and fire management (CFI Act s294)
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" carbonfarming@climatefriendly.com
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NSW Australia 2011
1.1. Non-compliance with an environmental law is also a consideration in relation to fit and
proper person test to enable an entity to become or remain a project proponent (CFI Rule
s61(1)(e)(i))
2. compliance with relevant National Resource Management (NRM) Plan: all carbon farming
projects must be implemented consistently with NRM plans, which commonly include
provisions related to management of pest, weeds and fire. This must be confirmed as part of
the project application and is also commonly reviewed as part of project audits (CFI Act
s23(1)(ga)(ii)).
3. implementation of relevant management changes related to weed and pest control: two of
the five eligible management changes in the HIR and NFMR methods include management of
pests and weeds - ‘the management, in a humane manner, of feral animals’; and ‘the
management of plants that are not native to the project area’. (HIR Method s7(2), NFMR
Method s1.4(2)).
4. permanence plan, including addressing fire risk and management actions: all HIR and NFMR
projects must have permanence plans covering the applicable 25 or 100 year period, which
must be submitted to the Regulator at legislated intervals. (CFI Rule s13(1)(p) & s70(4A))
4.1. The Regulator Guidance Document1 specifies what information should be included in a
permanence plan. The Permanence Plan must describe the actions that the proponent will
take, to the satisfaction of the Regulator, to prevent and suppress fire.
4.2. Additional Regulator Guidance on “Reducing Fire Risk and Preserving Sequestered Carbon”2
sets out further detailed information on requirements.
5. notification requirements in the event of a natural disturbance or fire: in addition to the fire
plan, proponents must notify the Regulator within 60 days of ‘a natural disturbance that causes
a reversal of the removal’. (CFI Act s81)
6. Eligible interest holders in the land are required to give consent to the project: common
interest holders include state & territory governments, Traditional Owners and financial
institutions. These entities commonly request information around permanence obligations and
broader land management plans, including in relation to compliance with any relevant state-
based laws, lease requirements or lending requirements. (CFI Act s 43-45A)
Given the existing multiple layers of legislation that already seek to address the objectives described
in the consultation paper, we question the utility of adding additional administrative processes. This
is contrary to efforts underway by the Regulator to streamline administration, reduce scheme
complexity and enable more land managers to participate in carbon farming.
2. Maintaining or enhancing agricultural production
Carbon farming involves both land regeneration and improved sustainability and management of
agricultural enterprises for the long-term. This is aligned not only with the intents and purposes of
the CFI Regulatory Framework, but also the Government’s pilot and planned Agricultural Biodiversity
Stewardship programs.
1
Regulator permanence plan guidance can be accessed at:
http://www.cleanenergyregulator.gov.au/ERF/Choosing-a-project-type/Opportunities-for-the-land-
sector/Permanence-obligations
2
Regulator guidance on Reducing Fire Risk and Preserving Sequestered Carbon can be accessed at:
http://www.cleanenergyregulator.gov.au/DocumentAssets/Documents/Reducing%20the%20risk%20of%20fir
e%20and%20preserving%20sequestered%20carbon%20in%20ERF%20vegetation%20projects.pdf
ABN 123 456 789 ! 1800 223 276
Level 2,
" carbonfarming@climatefriendly.com
140 William Street,
Woolloomooloo # www.climatefriendly.com
NSW Australia 2011
1. Carbon farmers manage land for agriculture, carbon and biodiversity stewardship: All the
carbon projects we support involve improved management of cattle, sheep and/or goats on
their property. We note that to be eligible for an HIR project, land managers have historically
been supressing regeneration on their property, typically through a combination of over-
stocking relative to pasture availability, inadequate infrastructure and/or grazing rotations,
vegetation clearing and/or lack of weed control. This means they have not had an optimal mix of
sustainable agriculture and environmental stewardship, and that a carbon project necessarily
involves adoption of more sustainable practices which improve long-term agricultural viability.
A very common situation land managers found themselves in prior to starting a carbon farming
project was running stock numbers above the land carrying capacity to ensure the short-term
viability of their business and debt servicing. This resulted in land managers being in a position
where both their land and agricultural activities were less productive for the medium to long
term. Carbon farming has enabled their land to regenerate and for stock levels to be re-aligned
with carrying capacity, benefiting both the environment and agricultural productivity. The
carbon project is an additional complementary activity and a new source of revenue, alongside
sustainable agricultural and environmental stewardship activities that our carbon farming
partners conduct on their respective properties.
2. Improved drought resilience and adaptive agricultural management: a survey on carbon
farming and drought resilience conducted by Charles Sturt University and Climate Friendly in
2021 (and funded by the Future Drought Fund), found that those engaged with carbon farming
activities had a 15% greater feeling of control over drought than other land managers. Those
carbon farming participants that had received revenue from carbon farming, also reported they
experienced reduced stress during drought compared with before having the carbon farming
project. This is supported by accounts from our clients that they were able to survive the recent
drought thanks to the carbon farming revenue they received. The carbon farming revenue
enabled them to reduce stocking in response to the dry conditions, while still servicing their
debts. When the drought broke in 2021, the carbon farming revenue ensured they had sufficient
cash reserves to rebuild their herds, despite a competitive cattle market. Far from displacing
agriculture, our data suggests that carbon farming has enabled continuation of agriculture
through extremely tough drought conditions.
3. Stabilisation of sustainable agriculture enterprises in carbon farming regions: ABARES Farm
Survey data3 further supports the notion that carbon farming is supporting adaptive, sustainable
agricultural enterprises. ABARES data shows that since carbon farming projects commenced in
2015, the number of registered farm businesses has stabilised in regions with larger numbers of
carbon farming projects. This stabilisation is contrary to long term trend of decline in number of
agricultural businesses located in the key carbon farming regions, such as South West
Queensland and North West NSW.
4. Enhanced agricultural management is leading to improved productivity: In conducting due
diligence on a prospective carbon project, our team works with our carbon farming partner to
compile a ten-year management history across the property. This includes reviewing historic
land management practices, including agricultural activities, on the property. This information
forms part of the carbon project audit pack, which is reviewed by an independent auditor and
the Regulator. Once a project is established, we collect quarterly information on property
3
The ABARES Farm Survey is available at: http://apps.agriculture.gov.au/agsurf/
ABN 123 456 789 ! 1800 223 276
Level 2,
" carbonfarming@climatefriendly.com
140 William Street,
Woolloomooloo # www.climatefriendly.com
NSW Australia 2011
management activities, including livestock management. Through this quarterly monitoring we
can ensure livestock levels are aligned with pasture availability, and not supressing land
regeneration. By implementing improved agricultural practices, such as better management of
timing and extent of grazing, our partners are managing livestock more sustainably, and they
have indicated they have achieved improved productivity and better liveweight gain as a result.
Historic, planned and actual agricultural management practices are already assessed as part of
carbon farming project eligibility, audits, and ongoing project reporting. For example, Climate
Friendly has developed a ‘safe grazing calculator’ that provides an assessment of pasture availability
and total grazing pressure. This helps to inform both an historic assessment of suppression and
degradation caused by past practices, and to plan and monitor actual grazing practices to ensure
they are sustainable throughout implementation of the carbon farming project. This calculation is
performed for each of our client’s properties on a quarterly basis. This information is already
routinely reported by Climate Friendly to the Regulator. As such, adding an additional point in time
approval creates complexity and duplication. If additional information is required on agricultural
activities implemented alongside carbon projects, the Regulator could issue supplementary guidance
and it could readily be incorporated into existing reporting mechanisms with streamlined
administration.
3. Ensuring no negative impacts on local communities
In our experience carbon farming has had a positive impact on local communities. Positive impacts
include:
1. Keeping farming families in regional Australia and actively land stewardship: We have
observed little evidence of the perceived issue of farm management transitioning from an onsite
to offsite management model since commencing an HIR project. Within our portfolio, 48% of the
projects we support are owner occupied properties, while 33% of the projects employ an on-site
station manager. 19% of the projects we support have an off-site manager who attends the
property at frequent intervals to actively manage the project and the land. Often an offsite
manager may be managing a small portfolio of properties in the local area. Since commencing
carbon farming, we note that only one property has changed from an onsite arrangement to an
offsite manager model, while two projects have changed from offsite to on-site manager or
owner-occupied arrangements.
2. New economic opportunities in regional Australia: nationally, over 32 million ACCUs have been
issued to HIR and NFMR projects since 2015, with an estimated value of over $400 million based
on average auction prices (note: actual value will be higher, given some ACCUs traded outside
ERF auction mechanism). Around half of these have been issued to projects which Climate
Friendly supports.
3. New economic, cultural, employment and social opportunities for Traditional Owners:
Significant financial and non-financial benefits have also flowed through project partnerships
with Traditional Owners. Climate Friendly has over 19 project specific agreement with Native
Titleholders and the relevant landowner. These agreements have already delivered over
$1 million in financial benefits to the Traditional Owner partners, as well as providing
opportunities to participate in field monitoring, establish bush tucker enterprises and other
social and cultural benefits. Most importantly, they have also resulted in strengthened
relationships been pastoralists and the Traditional Owners, and improved health of country. We
ABN 123 456 789 ! 1800 223 276
Level 2,
" carbonfarming@climatefriendly.com
140 William Street,
Woolloomooloo # www.climatefriendly.com
NSW Australia 2011
continue to explore new ways to expand these partnerships and deliver multiple benefits
through carbon farming in existing and new regions.
4. Regional training, community events and services: Climate Friendly supports the local
communities in which we work in a range of other ways, including being a Co-Founder of the
Wal Dunsdon Memorial Scholarship which was established in 2019. Annually, we host and
support a variety of other regional community events and services, including field days, sporting
events, and supporting important services such as the Royal Flying Doctors.
5. Employment opportunities for regional Australians: apart from opportunities created directly
through the management of carbon farming projects, Climate Friendly is also a direct employer
of people who live in the communities where we work. In the last two years our team has nearly
doubled in size. Our staff live in Quilpie, Dalby, Toowoomba, Dubbo, Tamworth, Moree,
Daylesford and many other regional communities around Australia. We understand that country
needs management and communities need people, and this is at the core of our partnership
model.
Climate Friendly and our partners not only believe that carbon farming should have no negative
impacts on local communities, but rather we believe we should seek to maximise positive impacts
and make significant investments into the regional communities where we live and work. The above
information clearly highlights some of the key benefits to communities from carbon farming.
However, we note that not all communities have had the chance to realise these benefits. To date,
49% of ACCUs issued were issued to projects in NSW, 47% to projects in Queensland and only 4% to
projects in Western Australia or South Australia. As such any changes to the CFI Rule will
disproportionately impact the communities in states and territories where regeneration projects are
in the early stages of consideration. While the intention of the amendment is to ensure no negative
impacts on local communities, the reverse could be true: the additional administrative burden and
investment uncertainty might have a disproportionate impact on projects in regions where HIR or
NFMR projects are only just starting to become viable.
Market uncertainty in lead up to 14th ERF Auction
We note that the consultation draft specifies the proposed amendment would apply retrospectively
to any new projects registered after 10 December 2021. This has the potential to create significant
uncertainty for prospective project proponents. If the Rule was propagated in advance of the ERF
Auction scheduled for 5-6 April 2022, there is potential that prospective auction participants who
lodge a project registration application between 10 December 2021 and the 15 February 2021
registration deadline could miss out and be unfairly disadvantaged. The proposed additional
approval by the Minister for Agriculture can take 75 days to be processed following a new ERF
regeneration project notification based on the current draft. There are exactly 75 days between
today, 20 January 2021, and the ERF auction bid window on 5-6 April 2021. A proponent cannot
participate in the auction if the proposed carbon project has not been declared. Under the proposed
new Rule, the Regulator will not be able to declare a project until the notification period is complete.
We note that the draft provision does not include any provision that allows the Minister for
Agriculture to exercise a truncated process and make a positive approval, it only provides for an
adverse finding.
Further, we note that in the 13th ERF Auction, HIR projects comprised 95% of the contracted
abatement. On average across all ERF auctions, HIR and NFRM projects have accounted for 58% of
ABN 123 456 789 ! 1800 223 276
Level 2,
" carbonfarming@climatefriendly.com
140 William Street,
Woolloomooloo # www.climatefriendly.com
NSW Australia 2011
contracted abatement. As such, uncertainty around the timing of the Rule, combined with
complicated and lengthy administrative processes for decisions could have a material impact on the
14th ERF Auction.
In 2021 the Government committed to a net zero target by 2050 and to stimulating supply of ACCUs
in the Australian market. This included commitments to introduce a requirement for Climate Active
participants to be required to purchase a minimum % of ACCUs as part of the carbon neutral
certification. In this context, the Rule as currently drafted could not only impact the upcoming ERF
Auction, but could be perceived as contradicting other policies and targets and lead to broader
market uncertainty.
Meaningful consultation required prior to any amendments
As noted above, given the significant safeguards already in place covering the same issues and the
potential for adverse impacts on local communities, we do not support the amendments as currently
drafted. If, contrary to the information detailed in this preliminary submission, the Government
wishes to proceed with an amendment to the CFI Regulatory framework, we believe that they
should firstly conduct a more thorough consultation and take the ERF auction timing into
consideration. A meaningful consultation would involve roundtables with stakeholders who will be
impacted, including land managers in regional communities and Traditional Custodians. The current
very short consultation period coincided with summer holidays and a covid outbreak, which
combined have restricted the potential of stakeholders to provide considered submissions. We
suggest the consultation period be extended by two months with a series of regional forums across
the country to fully assess the potential impacts of the change and evaluate alternative models if
consultations indicate changes to the regulatory framework are required. This proposal for an
extension and appropriate consultation process was outlined in a letter to Minister Angus Taylor on
23 December 2021, and many of our partners who live and work in impacted communities have also
sought an extension and to be properly consulted in separate correspondence. While the
Department indicated flexibility to receive written submissions until 31 January 2022, this short
extension does not address concerns around the adequacy of consultation in the regions and still
coincides with the holiday period and covid outbreak.
Responses to specific questions in the consultation paper are also included at Annex I. We would
welcome the opportunity to discuss the information in our preliminary submission in further detail,
as part of a stakeholder forum or a dedicated meeting. Please do not hesitate to contact me at
skye.glenday@climatefriendly.com or on 0432 890 447 to arrange a time for further discussion.
Yours sincerely,
Skye Glenday
Co-CEO, Climate Friendly
ABN 123 456 789 ! 1800 223 276
Level 2,
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NSW Australia 2011
Annex I: Response to specific questions in the consultation paper
Our response to the specific questions in the consultation paper are as follows:
1.Are the rule amendments appropriately drafted?
As specified in the covering submission to this Annex, we do not believe the amendments are
necessary or appropriately drafted. In addition to the considerations previously outlined, the draft
Rule amendment will apply to projects whose project area covers more than 30% of a property or a
greater than 15 hectares. The basis for selecting these two parameters is unclear. We suggest that
these thresholds for triggering the notification should be evidenced based and subject to
appropriate consultation and regulatory impact assessment.
Additionally, the draft Rule does not include any decision-making criteria for when the Minister
would seek to exercise the veto power to reject a project. It also does not include any opportunity to
seek review of an adverse finding. Both aspects are highly problematic given a decision to veto a
project has substantial implications for private property rights of the landowner and their ability to
determine how they manage their land asset. Conversely, the draft rule also does not include an
option to provide a positive approval for a project and therefore the Regulator would operationally
be required to wait the 75-day period to determine whether an adverse finding had been made.
The lack of clarity on decision making criteria and review process will create significant uncertainty
for land managers considering applying for a carbon project, as it provides another administrative
burden with very broad and unfettered discretion. In our experience working with plantation
projects, the existing approval has stalled decisions whether or not to proceed with projects due to
investment uncertainty.
If the additional notification and approval process is deemed necessary, we suggest the process
needs to be revised to enable:
• an ability for the Agriculture Minister to make a positive approval so the Regulator could
proceed with a project registration upon receipt of the approval;
• specific criteria are specified to set out a clear basis on which an adverse finding may be
made; and
• a clear review process is provided following any adverse finding.
Further consultation is needed in relation to any specific criteria for making a decision. It is unclear
how the information categories specified in the draft Rule would be considered as part of any
adverse or positive finding. Firstly, the draft specifies that five years of historic agriculture data must
be provided. This time differs to the HIR & NFMR project baseline, which is ten years. The rationale
for a different period is unclear. As noted above, part of a carbon farming project involves shifting
from more traditional agricultural practices which may have been degrading land resources and
resulting in lower overall farm productivity and resilience, to more sustainable practices. It is unclear
how the information on historic management would be utilised in an assessment as to whether the
project impact was positive, neutral, or negative. It is also unclear how the specified information
would inform an assessment on community impacts.
More detailed operational guidelines and notification templates should also be prepared and
released for consultation prior to any potential Rule change coming into effect to ensure that it can
be operationalised by prospective project proponents. It took some months for an operational
process to be developed for the plantations method approval and this would create significant
scheme uncertainty if a delay in having an operational process was to be replicated.
ABN 123 456 789 ! 1800 223 276
Level 2,
" carbonfarming@climatefriendly.com
140 William Street,
Woolloomooloo # www.climatefriendly.com
NSW Australia 2011
2.What types of information would be useful to support the Agriculture Minister’s assessment of
whether native forest regeneration projects would have adverse impacts on agriculture and the local
community?
The proposed format of the ‘new ERF regeneration notification’ seeks “a statement setting out the
previous five years of agricultural land use history within the potential project area, including the
area, in hectares, of each land use type.” We caution against examination of livestock numbers or
hectare areas allocated to an agricultural activity in the absence of other data. These numbers do
not provide a basis for considering environmental degradation resulting from historic practices, or
productivity improvements that result from improved more sustainable practices. The also do not
consider the importance of environmental stewardship activities or provide an adequate basis to
consider community impacts. A holistic assessment is required and should consider a combination of
agricultural, biodiversity and carbon benefits and impacts, and this would be better achieved
through a streamlined process as part of an integrated carbon and biodiversity program rather than
a new veto power. Property specific compared to community impacts can better be addressed
through landscape NRM planning. The existing regulatory framework already required alignment
between project and NRM plans.
3.How many projects would be affected by the rule amendment?
Had the proposed legislation been in place at the time of application, all HIR projects we support
would have been required to seek an approval. Looking forward, we believe all new HIR projects
would be affected. Projects are typically registered across an entire property, as the properties in
regions where HIR is implemented are typically managed extensively and regeneration may occur in
patches across a property. While the project area covers the entire property, the carbon estimation
area on which the method is applied is a subset of the property. Projects are not typically registered
to only cover the carbon estimation area as this area can change over time if new regeneration is
detected or if the project if required to be re-stratified in line with the method and mapping
guideline requirements. Nationally, analysis conducted by Climate Friendly has identified more than
3000 properties which have HIR project potential under the current method and commercial
settings.
Further, the upfront nature of the proposed new approval process will create significant uncertainty
in relation to real estate transactions, many of which factor in carbon revenue at the time of
purchase. This is likely to negatively impact on property values, or it could lead to protracted
settlement terms which will complicate land sale transactions.
The proposed new approval process would have a disproportionate effect on regions which have not
yet seen the growth of carbon farming opportunities that has occurred in Queensland and NSW,
such as in Western Australia, South Australia, the Northern Territory and Victoria.
4.Are there any alternatives to manage unintended adverse impacts of ERF projects on agricultural
production and regional communities?
Numerous mechanisms already exist to mitigate, manage and monitor impacts of ERF projects on
agricultural production and regional communities, as outlined throughout this submission. If there
are any gaps identified as part further stakeholder consultations, it would be preferable to
strengthen these existing requirements rather than adding a new veto power and separate approval
process.
ABN 123 456 789 ! 1800 223 276
Level 2,
" carbonfarming@climatefriendly.com
140 William Street,
Woolloomooloo # www.climatefriendly.com
NSW Australia 2011
