Charles IFE Pty Ltd and Domestic Offsets Integrity Committee
[2014] AATA 33
•24 January 2014
[2014] AATA 33
Division GENERAL ADMINISTRATIVE DIVISION
File Number 2013/3620
Re Charles IFE Pty Ltd
APPLICANT
And Domestic Offsets Integrity Committee
RESPONDENT
DECISION
Tribunal Deputy President S A Forgie
Date 24 January 2014
Place Melbourne
The Tribunal has decided to:
1.set aside the decision of the Domestic Offsets Integrity Committee dated 20 June 2013 refusing to endorse the applicant’s proposal dated 19 April 2013 to vary the Carbon Credits (Carbon Farming Initiative) (Destruction of Methane from Piggeries using Engineered Biodigesters) Methodology Determination 2013 by deleting Requirement 2.3(1)(c); and
2.substitute a decision endorsing the applicant’s proposal dated 19 April 2013 to vary the Carbon Credits (Carbon Farming Initiative) (Destruction of Methane from Piggeries using Engineered Biodigesters) Methodology Determination 2013 by deleting Requirement 2.3(1)(c).
…[sgd] S A Forgie.…
Deputy President
CATCHWORDS
CARBON FARMING INITIATIVE – application for endorsement of a proposal to vary methodology determination by removing requirement that engineered biodigesters must have been replaced or installed after 1 July 2010 – decision set aside and decision substituted removing requirement.
LEGISLATION
Acts Interpretation Act 1901, ss 13, 19, 19A
Administrative Appeals Tribunal Act 1975, s 37
Australian National Registry of Emissions Act 2011
Carbon Credits (Carbon Farming Initiative) Act 2011, ss 3, 4, 5, 11, 22, 23, 41,53, 54, 55, 56, 88-91, 106, 107, 108, 109, 110, 112, 114, 116, 117, 120, 122, 130, 133, 147, 150, 150A, 151, 152, 153, 154, 156, 160-169, 245AClean Energy Act 2011
Ministers of State Act 1952, s 4
National Greenhouse and Energy Reporting Act 2007, s 7A
Renewable Energy Electricity Act 2000, ss 3, 5, 14, 18
Carbon Credits (Carbon Farming Initiative) Regulations 2011, rr 3.28, 3.29, 3.33, 3.34, 3.36, 3.37, 9.1, 9.2
Kyoto Protocol to the United Nations Framework Convention on Climate Change
Carbon Credits (Carbon Farming Initiative) (Destruction of Methane Generated from Dairy Manure in Covered Anaerobic Ponds) Methodology Determination 2012, cll 2.3, 2.4
Carbon Credits (Carbon Farming Initiative) (Destruction of Methane Generated from Manure in Piggeries – 1.1) Methodology Determination 2013
Carbon Credits (Carbon Farming Initiative) (Destruction of Methane from Piggeries using Engineered Biodigesters) Methodology Determination 2013, cll 1.3, 1.4, 2.1, 2.2, 2.3,
Carbon Farming (Destruction of Methane Generated from Manure in Piggeries) Methodology Determination 2012
Explanatory Statement to the Carbon Credits (Carbon Farming Initiative) Regulations 2011
Replacement Explanatory Memorandum to the Carbon Credits (Carbon Farming Initiative) Bill 2011Guidelines for Submitting a Methodology Proposal
REASONS FOR DECISION
In very general terms, the Carbon Credits (Carbon Farming Initiative) Act 2011 (CCCFI Act) sets out a scheme that allocates Australian carbon credit units (ACCUs) for each tonne of specified gases[1] that is either not emitted into the atmosphere (abated) or is removed from the atmosphere and is stored in soil or trees (sequestered) by those undertaking certain farming, land care and forestry projects. ACCUs may have a value as they can, in certain circumstances, be exported or sold to others wanting to offset their emissions either voluntarily or to meet regulatory requirements.[2] Only those projects meeting criteria established in accordance with the CCCFI Act and the Carbon Credits (Carbon Farming Initiative) Regulations 2011 (CCCFI Regulations) made under it qualify for an allocation of ACCUs. They are known as “eligible offsets projects”. In order to be an offsets project, a project must, as well as meeting other criteria, be covered by, and undertaken in accordance with, a methodology determination made by the Minister under the CCCFI Act. The Minister must not make a methodology determination unless, among other matters, the Domestic Offsets Integrity Committee (DOIC) has endorsed the proposal for that methodology determination. A methodology determination may be varied by the Minister but not unless the DOIC has endorsed the proposal for the variation.
[1] In this case, the relevant gas is methane (CH4).
[2] In explaining the meaning of “Abatement activities” at page 5, the Replacement Explanatory Memorandum gives an example: “Carbon credits are usually purchased and used by individuals to offset the emissions they generate during their day-to-day life or normal course of business, for example, by consuming electricity or catching a plane.”
On 29 January 2013, the then Parliamentary Secretary for Climate Change and Energy Efficiency[3] made a Methodology Determination under s 106(1) of the CCCFI Act. That was the Carbon Credits (Carbon Farming Initiative) (Destruction of Methane from Piggeries using Engineered Biodigesters) Methodology Determination 2013 (DMPEB Methodology Determination). Among the four requirements that it set out for declaration as an eligible project was a requirement that engineered biodigesters used in the project must have been replaced or installed instead of anaerobic lagoons at a conventional piggery after 1 July 2010. That was set out in cl 2.3(1)(c).
[3] A Parliamentary Secretary is appointed as a Minister of State and so is a Minister for the purposes of the CCCFI Act. See s 4 of the Ministers of State Act 1952 and also ss 19 and 19A of the Acts Interpretation Act 1901 (AI Act).
Charles IFE Pty Ltd (CIPL) then applied to the DOIC for endorsement of a proposal to vary the DMPEB Methodology Determination. It did so on 19 April 2013 when it sought the deletion of cl 2.3(1)(c). On 20 June 2013, the DOIC refused to endorse the proposal to vary the DMPEB determination.[4] I have decided to set aside the DOIC’s decision and to substitute a decision endorsing the proposal.
[4] Documents lodged under s 37 of the Administrative Appeals Tribunal Act 1975 (T documents); T17 at 281-286
BACKGROUND
The piggery operated by CIPL at Berrybank Farm
On the basis of the material submitted by CIPL’s Director and representative, Mr Jock Charles, and not challenged by DOIC, I find that CIPL operates an agricultural business near Ballarat. A major part of its business involves the operation of 20,000 head piggery. In the 1980s, Mr Charles and his father went on a tour of piggeries in Europe and saw anaerobic digestion used as part of the operation of those piggeries. They resolved to introduce it into the operation of CIPL’s piggery as part of what they described as a “Total Waste Management System”. That system, which was commissioned in 1990, captured methane and used it in the generation of electrical and thermal energy.
Events preceding the making of the DMPEB Methodology Determination
The Minister made the Carbon Farming (Destruction of Methane Generated from Manure in Piggeries) Methodology Determination 2012 (Piggery Manure Methodology Determination) on 27 June 2012.[5] It was concerned only with covered anaerobic lagoons that capture methane. There was no requirement that the project have started after a particular date but CIPL’s operations did not come within its scope as it did not use anaerobic lagoons.
[5] Mr Charles referred to its date as 2011 but I have located only that dated 2012 and it appears not to be a variation of an earlier methodology determination.
In April 2012, an industry colleague told Mr Charles that a methodology allowing piggeries that had installed, or intended to install, biodigesters to participate in the carbon credit scheme, was being drafted. He would be kept informed. On 18 June 2012, he was sent a draft methodology determination but no mention was made of a commencement date in the document. On 16 July 2012, four staff members from the office of the Renewable Energy Regulator visited Mr Charles. It is Mr Charles’ recollection of their conversation that CIPL would be eligible under the methodology determination that was about to be made. No mention was made of there being commencement date requirements of the sort made in the Clean Energy Act 2011 (Clean Energy Act).[6]
[6] Mr Charles did not refer to any specific provisions of the Clean Energy Act.
On 11 October 2012, the DOIC endorsed a methodology determination in the form of the DMPEB Methodology Determination including a requirement that an engineered biodigester have been installed or replaced on or after 1 July 2010. A requirement of that sort had not been included in the draft that he had received for comment and a draft including that requirement had not been circulated for public comment before the DOIC endorsed the DMPEB Methodology Determination and it was then made by the Minister.
DMPEB Methodology Determination
The DMPEB Methodology Determination commenced on 1 July 2010.[7] It:
[7] DMPEB Methodology Determination; cl 1.2
“… applies to a project that:
(a)is an agricultural emissions avoidance project; and
(b)proposes to capture and combust biogas generated by the anaerobic decomposition of piggery manure by directing a piggery manure stream into an engineered biodigester.”[8]
[8] DMPEB Methodology Determination; cl; 1.4
The expression “piggery manure” means:
“… a mixture of water, excreta, liquid waste and slurry generated from the piggery shed, piggery feedpad or any pig housing.”[9]
[9] DMPEB Methodology Determination; cl 1.3
An “engineered biodigester”:
“… means a closed unit in which the biological treatment of biomass or other organic matter occurs through anaerobic digestion. This includes, but is not limited to, high rate anaerobic lagoons, plug-flow reactors, continuously stirred tank reactors, fixed film digesters, and upflow anaerobic sludge blanket digesters.”[10]
The expression “anaerobic decomposition” means:
“… biological process where organic matter is broken down by bacteria in the absence of oxygen.”[11]
[10] DMPEB Methodology Determination; cl 1.3
[11] DMPEB Methodology Determination; cl 1.3
Part 2 of the DMPEB Methodology Determination is headed “Requirements for declaration as eligible project”. Clause 2.1 states:
“To be declared an eligible offsets project, a project to which this Determination applies must meet the requirements in this Part.
NoteThose requirements are in addition to those set out by the Regulations for applications for a declaration.”
I will set out only the first two requirements for the third relates to the type of waste that may be deposited into the engineered biodigester and the fourth to flaring systems. Neither is relevant. The first two are:
“Requirement 1 – Project mechanism
The project must propose to:
(a)use one or more engineered biodigesters to prevent the emission of biogas;
(b)collect the biogas from the engineered biodigester; and
(c)combust the methane component of the biogas to convert it to carbon dioxide.
Requirement 2 – Engineered biodigesters
(a)replace or be installed instead of anaeroboic lagoons at a conventional piggery;
(b)receive piggery manure that would otherwise be directed to a lagoon to undergo anaerobic decomposition;
(c)have been replaced or installed in accordance with paragraph (1)(a) after 1 July 2010.”[12]
[12] DMPEB Methodology Determination; cll 2.2 and 2.3
THE SUBMISSIONS
On behalf of CIPL, Mr Jock Charles made a general submission that the inclusion of cl 2.3(1)(c) has the effect of punishing those who adopt innovative technologies at an early stage. In doing that, it provides a disincentive for those who might wish to take the initiative and lead the way in their respective industries. In the context of the pig industry, benefits under the CCCFI Act are potentially available to all of its participants other than CIPL as it is the only producer excluded by cl 2.3(1)(c). As a result, CIPL will face commercial disadvantage in what is a highly competitive industry.
Mr Charles also observed that a requirement of the sort found in cl 2.3(1)(c) was not included in other Methodology Determinations and particularly in those grouped under “agricultural products”. He referred particularly to the Piggery Manure Methodology Determination [13] and The Carbon Credits (Carbon Farming Initiative) (Destruction of Methane Generated from Dairy Manure in Covered Anaerobic Ponds) Methodology Determination 2012 (Dairy Manure Methodology Determination). The latter was endorsed on 15 November 2012[14] and so after the DMPEB Methodology Determination. The Piggery Manure Methodology Determination, which contains a date of July 2007, was made on 27 June 2012 and the Dairy Manure Methodology Determination on 17 December 2012. A further methodology determination called the Carbon Credits (Carbon Farming Initiative) (Destruction of Methane Generated from Manure in Piggeries – 1.1) Methodology Determination 2013 (Piggery Manure Methodology Determination 1.1) was made on 28 May 2013 by the Parliamentary Secretary for Climate Change, Industry and Innovation. That did include a qualification requiring equipment installed to cover lagoons as specified in Requirement 2 to have been installed on or after 1 July 2007 and to exclude reinstalment, replacement, upgrades or modifications of any such equipment installed before 1 July 2007.[15]
[13] I have found only the Destruction of Carbon Farming (Destruction of Methane Generated from Manure in Piggeries) Methodology Determination 2012.
[14] Explanatory Statement to the Dairy Manure Methodology Determination
[15] Piggery Manure Methodology Determination 1.1; cll 2.3 and 2.4(2)
On behalf of the DOIC, Ms Gordon submitted that the CIPL’s proposal for a variation of the DMPEB Methodology Determination would not comply with the mandatory requirements of s 120(3) of the CCCFI Act and, in any event, would not be consistent with the objectives of that legislation. In relation to her first submission, Ms Gordon developed it in this way:
(1)The baseline calculated under the DMPEB Methodology Determination assumes that there has been no capture of greenhouse gases before the relevant reporting period. As that has not been the case in CIPL’s operations at Berrybank Farm, its inclusion as an eligible project by the removal of the requirement that its engineered biodigester have been installed or replaced after 1 July 2010 would mean that its capture of greenhouse gases would be regarded as abatement even though that abatement was occurring before the earliest date on which a determination could take effect i.e. 1 July 2010. That would lead to the result that the abatement would bear no relationship to the actual reduction of greenhouse gas emissions from the implementation of the offsets project and would attract ACCUs under the CCCFI Act.
(2)For the same reason, the proposed variation would not comply with the offset integrity standards described in ss 133(1)(b) and (g). It would permit ACCUs to be issued in relation to an activity that did not yield a reduction of emissions and so did not yield any abatement. Furthermore, to the extent that the method specified in the DMPEB Methodology Determination involved an estimate or assumption, that estimate or assumption would not be conservative as required by s 133(1)(g).
(3)If varied in the manner proposed, the DMPEB Methodology Determination would not be consistent with the objectives of the CCCFI Act, which are to increase carbon abatement and to create incentives for people to carry on certain offsets projects.
(a)A fundamental premise of the CCCFI Act is that ACCUs will be issued for abatement, which must be measured relative to the status quo. This was described as the “abatement premise”.
(b)“27. Carbon credits cannot be issued for activities that represent the status quo. To be eligible, abatement must represent new reductions in greenhouse gas emissions which can offset emissions from other parts of the economy. This embodies the principle of additionality and is a requirement of all offset schemes. One way to ensure that the abatement is new is to consider whether the offsets project was motivated by the CFI scheme itself or, in the case of transitioning projects, offsets projects that were incentivised by another offsets scheme.
28. The CFI Act’s explicit provision for transitioning projects[16] demonstrates that the legislative intent of the scheme was to allow only some pre-existing objects to be eligible under the CFI for the purposes of crediting abatement. If all pre-existing projects were intended to be eligible to create carbon credits, then the provisions for transitioning provisions would not have been needed.
[16] FN 23 to [28] of the Statement of Facts and Contentions of the Respondent: “The relevant transitioning schemes are specified in CFI regulations 1.7, 3.2 and 3.28, which are relevant to the specification of ‘non-CFI offsets schemes’ under the Act (see Division 2 of Part 7 of the Act) and the additionality test in section 41(1)(a) of the CFI Act.”
29. The Applicant’s biodigester does not promote the objects of the CFI Act because it does not increase carbon abatement relative to the status quo; rather, any benefit to the environment that is caused by the Applicant’s biodigester is part of the status quo.
30. Section 107 provides as follows:
‘For the purposes of the application of this Act to a methodology determination, a baseline for an offsets project is to be calculated on the assumption that the project was not carried out.
31.The Explanatory Memorandum to the Bill that became the CFI Act contains the following explanation of the baseline:
Estimation methods will need to include a baseline calculation for the project. This is because reductions in emissions or increases in sequestration must be estimated relative to a baseline that represents the emissions that would have occurred in the absence of the project. … More information about baselines and baseline setting is provided in the Methodology Guidelines, which is available on the Department’s website.
32.The current Methodology Guidelines include the following guidance on additionality and identifying the baseline:
(Page 8; T-Docs, 70)
Additionality
Under the CFI, credits are issued for abatement that is additional to what would occur normally in the absence of the CFI project. These additional emissions reductions or increases in carbon sequestration can be used to offset or ‘cancel out’ the effect of emissions elsewhere in the economy. Crediting only additional abatement ensures that CFI credits have value in the carbon market and may be used for compliance with obligations under the carbon price mechanism.
To ensure that CFI abatement is additional, eligible projects must:
-involve activities that go beyond common practice and are on the ‘positive list’;
-not be required by law, for example some tree planting and landfill gas capture is mandatory and cannot be credited under the CFI;
-apply a methodology that has been approved for use under the CFI – methodologies establish the baseline for a project that represents what is likely to happen in the absence of the CFI project. (emphasis added)
…
(Page 20)
The applicant must justify and provide evidence for the proposed approach to identifying and selecting the baseline scenario, including all assumptions. Understanding the baseline scenario is critical for the DOIC to assess whether the baseline input data and calculations in this proposal are a genuine representation of what would occur in the absence of the proposed activity.
33. As identified above, this guidance includes the three components of additionality that the DOIC takes into account when considering a methodology proposal. That is, to be an eligible project, each of the three matters above are considered by the DOIC. When taken together, the above materials demonstrate that the concept of baseline in the Act is a realistic projection of what will happen assuming that the eligible offsets project is not carried out.
34. The Applicant’s current farm operation uses a biodigester and is already in use. There is no suggestion that the current use of the biodigester will cease. Accordingly, a realistic projection of what will happen must include the fact that the Applicant’s biodigester will continue in use. Obviously, the Applicant should be entitled to credits for any improvement on historic rates of gas capture, and the Respondent has made it clear its desire to work with the Applicant to recognise any such improvement.”[17]
[17] Statement of Facts and Contentions of the Respondent dated 26 November 2013 (footnote omitted)
The statement prepared on behalf of DOIC under s 37 of the Administrative Appeals Tribunal Act 1975 is important in understanding the way in which it views the baseline and its setting:
“How the DOIC assessed the baseline requirement under the proposal to revise the determination
54.In considering the appropriateness of a proposed baseline for emissions avoidance projects in particular circumstances, the DOIC looks for reductions in emissions relative to a baseline that represents the emissions that would have occurred during ‘business as usual’ – being what would have occurred in the absence of the incentive created by the CFI scheme. In this connection, the CFI Bill EM states (at page 47):
5.6 The scheme is thus focused on crediting genuine and verifiable abatement which is permanent and additional to business as usual or regulatory requirements. This is given effect by requiring methodology determinations to meet internationally consistent integrity standards.
55.Projects that were established without the incentive of a carbon crediting scheme are generally considered business as usual – they were established and are likely to continue to operate without the need for carbon credits. This is particularly the case of projects that were profitable in the absence of the CFI.
56.The Applicant’s variation proposal sought to remove section 2.3(1)(c) of the existing methodology determination. That section restricts eligibility of the determination to projects that installed engineered biodigester technology on or after 1 July 2010. No other changes were proposed.
57.The Original Determination contained equations for determining the emissions baseline that were premised on there having been no suite of activities in place that reduced the emissions of methane into the atmosphere in operation immediately prior to installation of equipment after 1 July 2010. In this way, the methodology reflected the purpose of the CFI of creating incentives for additional abatement; that is, abatement that would not occur in the absence of the scheme.
58.If the date restriction was removed, a different baseline for projects using existing equipment, which considered the case where there was gas capture in the baseline period, would have been appropriate to ensure that ACCUs were not provided for activity that would have occurred in the normal course of business without the incentive created by the CFI.
59.Existing projects can deliver additional abatement if, for example they are upgraded to increase the amount of gas capture. This further abatement could be credited if the methodology were varied to include instructions for calculating the historic rate of gas capture and improvements relative to such a baseline.
60.Accordingly, the DOIC decided that the equations for calculating the baseline in the Original Determination would not have been appropriate if the date restriction was removed.”[18]
[18] Revised Section 37 Statement at 13-14 (footnote omitted)
CONSIDERATION
The DOIC appears to have taken the position that one of the objectives of the CCCFI Act is about the reduction of greenhouse gas[19] emissions by abatement or sequestration when compared with the position before 1 July 2010. I agree that this is a broad objective underpinning the legislation.[20] It is reflected in the object stated in s 3(2) of the CCCFI Act to implement Australia’s obligations under the Climate Change Convention and the Kyoto Protocol. At the same time, it is consistent with the object expressed in s 3(4) to increase carbon abatement in a manner that is consistent with the protection of Australia’s natural environment and improves resilience to the effects of climate change.
[19] The expression “greenhouse gas” has the same meaning as in the National Greenhouse and Energy Reporting Act 2007 (NGER Act): CCCFI Act; s 5. Section 7A(1) of the definition of “greenhouse gas” in the NGER Act provides: “(1) For the purposes of this Act and the Clean Energy Act 2011, each of the following is a greenhouse gas:[20] Relevant provisions set out at [42]-[44] below
Those two objects view carbon abatement in a broad context but there is a third object. The final object of the CCCFI Act takes another view. It is a view that relates to those persons or enterprises that can affect carbon abatement through their activities and by the way in which they carry them out. It is set out in s 3(3) and is “… to create incentives for people to carry on certain offsets projects.” That object is not stated in terms of those “certain offsets projects” increasing carbon abatement but in terms of incentives to undertake them. From the structure of the CCCFI Act, though, it is clear that, if undertaken, they will contribute to an increase of that sort. Although not part of the legislation,[21] the Long Title to the CCCFI Act recognises that the emphasis of the objects set out in s 3 is upon “… projects to remove carbon dioxide from the atmosphere and to avoid emissions of greenhouse gases …” (emphasis added) as well as “for other purposes”. It is not upon the net abatement of greenhouse gases although that can be expected to follow if the incentives are taken up.
[21] Acts Interpretation Act 1901; s 13
In that regard, it is to be contrasted with legislation such as the Renewable Energy (Electricity) Act 2000 (REE Act).[22] One of the objects of the REE Act is “to encourage the additional generation of electricity from renewable sources”[23] (emphasis added). The focus is clearly upon a net increase in the generation of electricity from a baseline, known as the 1997 eligible renewable power baseline.[24] The nominated person for an accredited power station may create a renewable energy certificate for each whole MWh of electricity generated by that power station during a year that is in excess of the power station’s 1997 eligible renewable power baseline.[25]
[22] Mr Charles referred to the Clean Energy Act 2011 in support of his argument that, unlike, the CCCFI Act, it imposes a date from which emissions are to be measured. I have considered that legislation but have found it difficult to draw analogies between it and the CCCFI Act. The two schemes are quite different. One, the Clean Energy Act, is focused on the imposition of liabilities (although it does have inducements also) and the other, the CCCFI Act, is focused on the offer of incentives. The former is focused on the activities of individual emitters and imposes liabilities from 1 July 2012. The latter, while offering inducements to individuals, only does so after an analysis of the practices of the majority of those in the industry in which those individual emitters are engaged. The inducements are offered for greenhouse gases that are captured by those who adopt certain methodologies in circumstances in which, if those methodologies were not used, they would be emitted into the atmosphere. In general, emissions from agricultural emissions are not subject to the liability regime imposed by the Clean Energy Act unless the emissions are a product of carbon capture and storage or certain landfill activities.
[23] REE Act; s 3(a)
[24] REE Act; ss 5(1) and 14
[25] REE Act; s 18(1)
By way of contrast, the CCCFI Act does not calculate a baseline for an offsets project that has regard to abatement of greenhouse gases already achieved. Rather, s 107 provides that, “For the purposes of the application of the Act to a methodology determination, a baseline for an offsets project is to be calculated on the assumption that the project were not carried out.” Given that, for the purposes of coming within the definition of an “offsets project” in s 5, “… it is immaterial whether the project has been carried out”,[26] that strongly suggests that, while abatement of greenhouse gases underlies the CCCFI Act, abatement is not required for each and every project from a specific date.
[26] See definition at [73] below
This suggestion gains support when regard is had to the overall scheme established by the legislation. The way in which a person obtains ACCCUs and so gains access to any market in them is by being the holder of a certificate of entitlement under s 15. The Regulator will only issue that certificate if the applicant meets the criteria in that section. Among those criteria is a requirement that the applicant for the certificate is a recognised offsets entity and was, immediately before the end of a reporting period, the project proponent for the project and recognised as such in the declaration made under s 27.[27] An offsets entity will only obtain that declaration if it meets the criteria set out in s 27(4).
[27] CCCFI Act; s 15(2)(a) and (b)
It is not in issue whether CIPL is a recognised offsets entity and undertaking the project and compliance matters are not yet relevant matters. Whether CIPL’s project is an eligible offsets project is also not in issue at this stage but I acknowledge that, as it stands, cl 2.3(1)(c) in the DMPEB Methodology Determination would be fatal to any application made by CIPL for a declaration that its project is an eligible offsets project.
Any consideration of an application for a declaration of a project as an offsets project requires the Regulator to consider whether it meets criteria that fall within two distinct groups. First, the Regulator must consider whether the project is an “offsets project” and, if so, whether it is an “eligible offsets project” within the meaning of ss 5 and 27. If satisfied that it is an eligible offsets project, the Regulator must decide whether it is an eligible Kyoto project or an eligible non-Kyoto project.[28] Classification of an eligible offsets project as either an eligible Kyoto project or an eligible non-Kyoto project determines the type of ACCCUs that can be earned by the project.
[28] CCCFI Act; s 55
In deciding whether a project, which is defined to “… include a set of activities”,[29] is an “offsets project”, it is important to note the following in the context of the facts in this case:
(1)It is immaterial whether the project has been carried out.[30]
(2)It must be either a sequestration offsets project[31] or an emissions avoidance offsets project[32] but only the latter is relevant in this case.
(3)In order to be an emissions avoidance offsets project, a project must be, again in the context of this case, “agricultural emissions avoidance project”.[33]
(4)Among other projects, “… a project to avoid … an emission of … methane … from the decomposition of … livestock urine; or … livestock dung” is an “agricultural emissions avoidance project”.[34]
[29] CCCFIC Act; s 5
[30] Definition of “offsets project”: CCCFI Act; s 5
[31] CCCFI Act; s 54
[32] CCCFI Act; s 53
[33] CCCFI Act; s 53(1)(a)
[34] CCCFI Act; s 5 and see [54] below
Once the Regulator decides that a project is an offsets project, the second set of criteria come into play. They are the criteria by reference to which the Regulator decides whether the offsets project is an eligible offsets project. Those criteria are set out in s 27(4) of the CCCFI Act. I have set them out at [59] below but want to draw attention to the following four:
(1)“the project is covered by a methodology determination”;[35]
(2)“the project meets such requirements as are set out in the methodology determination in accordance with paragraph 106(1)(b)”;[36]
(3)“the project passes the additionality test”;[37] and
(4)“the project is not an excluded offsets project”.[38]
[35] CCCFI Act; s 27(4)(b)
[36] CCCFI Act; s 27(4)(c)
[37] CCCFI Act; s 27(4)(d)
[38] CCCFI Act; s 27(4)(m)
Beginning with the fourth criterion, I note that “excluded offsets projects” are those that are specified in rr 3.36 and 3.37 of the CCCFI Regulations. They are set out at [64] to [68] below. I have included their provisions in relation to offsets projects related to abatement of greenhouse gases as well as to their sequestration. They reflect the matters to which the Minister, under s 56(2), had to have regard in recommending to the Governor-General that they be made. They show that regard was had to the availability of water, the conservation of biodiversity, employment, the local community and land access for agricultural production in, or in the vicinity of, the project areas, for that kind of project. As I have said, regard had to be had to all of those matters by s 56(2) of the CCCFI Act. That provision does not require regard to be given to the time at which the activity or activities comprising the project began. The regulations do not require such regard either. Certainly, r 3.36(a) refers to a project involving an activity that was previously mandatory but which, since 24 March 2011, is either no longer mandatory or is less onerous. A project of that sort is an excluded offsets project but there is no broader provision in the regulations that a project involving an activity that was previously undertaken is an excluded offsets project. Indeed, it would not be expected given that, for the purposes of the definition of “offsets project”, it is immaterial that the project has been carried out.
The third criterion I have separated from the remainder is that the offsets project must meet the “additionality test” provided for in s 41 of the CCCFI Act and the CCCFI Regulations. An offsets project passes the additionality test if it is a project of a kind specified in the regulations and it is not required to be carried out by or under the law of the Commonwealth, State or a Territory. That is the effect of s 41(1) of the CCCFI Act and is found at [86] below. There are qualifications to the requirement that the project not be required to be carried out by or under the law of the Commonwealth, State or a Territory. They are found in s 41(4A) and r 3.29 set out at [87] below. They are not relevant but the requirement that the offsets project be a project of a kind specified in the regulations is relevant. Regulation 3.28(1) specifies those projects. “The capture and combustion of methane from livestock manure”[39] is one of the “kinds of project” specified for the purposes of s 41(1)(a). At [90] below, I have reproduced the first 13 kinds of project that have been specified for some of those projects do contain requirements as to the date on which they were undertaken. The establishment of permanent plantings must have occurred on or after 1 July 2007 in order to be a kind of offset project specified in r 3.28(1)(a). That was a date well before 1 July 2010, which is the earliest date on which a declaration as an eligible offsets project may take effect.[40] Another, specified in r 3.28(1)(l), refers to the diversion, before 1 July 2012, of mixed solid waste, which would otherwise have entered landfill, to an alternative waste treatment plant. That diversion could have been in place before 1 July 2010 for r 3.28(1)(l) does not specify a date by which the diversion must have been in place provided it was in place before 1 July 2012.
[39] CCCFI Regulations; r 3.28(1)(f)
[40] CCCFI Act; s 27(16)
In recommending to the Governor-General that particular kinds of projects be specified in r 3.28, the Minister was obliged by s 41(3)(a) to have regard, in essence, to “whether carrying out such a project is not common practice in … the relevant industry … or the kind of environment in which such a project is to be carried out.” Under s 41(3)(b), the Minister was required to consider the same issue but disregarding Part 2 of the legislation. Part 2 is concerned with the issue of ACCUs in respect of offsets projects. I emphasise that the issue is not whether the project is not being carried out at all but whether or not it is “common practice in … the relevant industry”.
It is clear that projects are not excluded by the additionality test simply because they are already being undertaken. Those specified in r 3.28 have been assessed not to be common practice. They have not been assessed as not having been undertaken at all although, in some instances at least, that may be the case. Section 41(3) requires only that they not be “common practice”.
That seems to be the plain meaning of s 41(3) in setting the matters to which the Minister must have regard in recommending the making of r 3.28. That meaning is supported by the Replacement Explanatory Memorandum to the Carbon Credits (Carbon Farming Initiative) Bill 2011 when it describes the Minister’s task under s 41(3):
“5.48 The Minister must consider whether carrying out the project is beyond common practice in the relevant industry or part of an industry, or in the environment in which the project is to be carried out [Part 3, Division 6, clause 41(3)(a)]. The Minister may also consider other matters the Minister considers relevant [Part 3, Division 6, clause 41(3)(e)].
5.49 The common practice test is intended to provide a streamlined way of identifying activities that would not normally have occurred in the absence of this scheme and are therefore genuinely additional.
5.50 In assessing whether a project is common practice, the Minister will factor out the impact of the scheme [Part 3, Division 6, clause 41(3)(b)]. This is to clarify that activities that are common because of the scheme should not fail the additionality test.
5.51 Common practice is not defined in the legislation. This is to allow for the application of expert judgement as to what constitutes common practice in different environments and industry circumstances. The Government will consult with stakeholders on approaches to identifying common practice and provide further guidance.”
The Explanatory Statement to the CCCFI Regulations shows that this underpinned the identification of the projects in r 3.28. As the Minister said:
“59. Regulations made for the purposes of paragraph 41(1)(a) constitute the ‘positive list’. The positive list identifies activities that are not considered to be common practice within relevant industries or environments. If a project consists of activities listed in the positive list, and is not required to be carried out by law, then the project passes the additionality test. Subject to compliance with other eligibility requirements, the project would be eligible to participate in the CFI.
60. The positive list will grow over time as new abatement activities are identified and determinations made about activities not being common practice. …
61. …
62. For each of the specified offset projects listed below, the level of uptake for the activity has been estimated to be at 5% or less because:
• the activity is dependent on new technology that is not yet widely available, or
• there is one or more significant impediments to adoption (e.g. high establishment costs, high ongoing costs or increased technical complexity with little or no commercial benefit).
63. The Australian Government will review the activities on the positive list periodically to ensure that the list takes account of technological developments and the latest scientific research.
64. In determining whether an activity should be removed from the positive list, the effect of the CFI will be factored out. An activity will not be removed from the positive list if it becomes common because of the CFI. Projects will continue to receive credits for the duration of their crediting period, even if the project activity is removed from the list.”
The passages from the Explanatory Memorandum and the Explanatory Statement simply amplify what seems clear from s 41(3) and r 3.28. That is to say, they amplify that projects are specified for the purposes of the additionality test by reason of their not being common practice. That does not translate into a requirement, as DOIC’s submissions would effectively have me find, that ACCUs cannot be credited under the CCCFI Act if it was already being undertaken before the date on which the earliest determination can take effect i.e. 1 July 2010. There can be no doubt that the legislation is directed to abatement and sequestration of greenhouse gases but it does it by providing incentives in industries where abatement or sequestration by particular means is not common practice. It recognises that projects of that sort may already be in place but does not exclude them by means of the additionality test. That test is a measure across a particular industry and not across the activities of a particular participant in that particular industry.
That brings me to the first and second criteria of the four I have focused on in obtaining a declaration of an offsets project as an eligible offsets project. They relate to the methodology determination. The project must be covered by a methodology determination and must meet the requirements set out in the relevant methodology determination in accordance with s 106(1)(b). This is a step quite separate from a consideration of whether the project passes the additionality test.
The making of the methodology determination is also a process that is quite separate from the specification of projects under s 41(3). The Minister must not make a methodology determination unless it meets the requirements of s 106(4) set out at [71] below. One of those requirements is that the DOIC has endorsed the proposal under s 112. Section 112(3) provides that the DOIC must not endorse the proposal unless, if the Minister were to give effect to it, it would meet the requirements set out in that provision. I have set it out at [76] below. None of those requirements refers to the additionality test or to a project’s incorporating an activity that does not represent the “status quo” in the sense that no participant in the industry is already undertaking it.
The only reference to the additionality test, and it is an oblique reference, comes through the requirement that a methodology determination endorsed by the DOIC must comply with the offsets integrity standards. Those standards are set out in s 133(1). The only reference they make to the additionality test is set out in s 133(1)(a) is that the project is:
“a project of a kind specified in a methodology determination in accordance with paragraph 106(1)(a) should be covered by the additionality test regulations”.[41]
That is a reference to those projects covered by r 3.28. It does not add any requirement that the DOIC consider whether the projects should have been included in that regulation.
[41] Section 106(1)(a) provides that “The Minister may, by legislative instrument, make a determination that: (a) is expressed to apply to a specified kind of offsets project.”
The remaining provisions of s 133 relating to the offsets integrity standards refer to the measurement of the removal and reduction of greenhouse gases from the atmosphere and their emission into the atmosphere. The removal, reduction or emission has to be measurable and capable of being verified. It must do that for the purposes of ss 106(1)(c) and (d). They provided that the carbon dioxide equivalent net abatement or net sequestration amount, as the case may be, is taken to be an amount ascertained using a method specified in the methodology determination.
The offsets integrity standards then go on to specify the criteria with which that method must comply. Of these, my attention was drawn specifically to s 133(1)(g) which requires that, to the extent that a method specified in a methodology determination involves an estimate, projection or assumption, that estimate, projection or assumption should be conservative. That requirement must be understood in its context. That context is that of the Minister’s making a methodology determination that relates to a specified kind of offsets project. It does not relate to a particular project for which a declaration is sought. Section 133(1)(g) refers specifically to the method specified in a methodology determination for the purposes of ss 106(1)(c) and (d). That is a method for ascertaining the carbon dioxide equivalent net abatement amount or net sequestration amount as the case may be. At the same time, s 106(4)(f) requires the methodology determination to include a calculation for the baseline for the project. Again, the reference to the project is not a reference to a particular offsets project for which a declaration is sought as an eligible offsets project. It is a reference to a specified kind of offsets project. In calculating that baseline, regard must be had to s 107 for the word “baseline” has the meaning affected by s 107.[42] That section provides:
“For the purposes of the application of this Act to a methodology determination, a baseline, for an offsets project is to be calculated on the assumption that the project were not carried out.”
[42] CCCFI Act; s 5
There is nothing in the offsets integrity standards that limits the measurement of the removal, reduction or emission of greenhouse gases by reference to projects or activities that were only undertaken after a certain date. Those standards look only to a specific project and so to a set of activities and to the methods for measuring that removal, reduction or emission and to the carbon dioxide net abatement amount or net sequestration amount, as the case may be. Equally, there is nothing in s 112 that authorises the exclusion of a project because it was undertaken before a certain date.
That provision does not mean that projects already being undertaken in the industry but not representing common practice in the industry are to be excluded in the calculation of a baseline. It means that, for the purposes of calculating an offsets project, it is to be assumed that the activity or activities undertaken in the project were not carried out. This is not distorting the measurement of the abatement or sequestration of greenhouse gases for the purposes of the CCCFI Act. That is so because the broader policy of the CCCFI Act is to increase projects directed to abatement and sequestration by means of an incentive. That incentive is the opportunity to trade in the carbon trading market but it is an incentive offered only to those in industries where abatement or sequestration by means of specified offsets projects is not common practice in the industry. There is nothing in the CCCFI Act that excludes those pathfinders in the industry[43] who have not followed common practice and who have already adopted particular practices directed to abatement or sequestration and specified in r 3.28 for the purposes of the additionality test. To exclude those pathfinders by means of a requirement in the methodology determination that their equipment be installed or replaced by a certain date would run counter to the additionality test which they clearly pass.
[43] In view of the Minister’s approach to the specification of offsets projects in r 3.28, they can amount to no more than 5% of the participants in the industry.
Specification of a date becomes relevant once the Regulator is satisfied that all of the relevant criteria in s 27(4) have been met. Only then does the Regulator specify a date if it is decided, with the applicant’s consent, that the declaration will come into effect earlier than the date on which it was made.[44] Any date that is specified must not be earlier than 1 July 2010.[45] The date that is specified in that declaration is not a date that has any relevance to when the project was first undertaken by its project proponent. It is not a date that has any relevance in determining a methodology determination for a specified kind of offsets project or in determining whether a particular offsets project is an eligible offsets project because it meets the criteria in s 27(4). Its only relevance is in setting the date on which the declaration of a project as an eligible offsets project comes into effect. That date, in turn, fixes the beginning of the time from which the project proponent must report to the Regulator as required by s 76. It ends at the conclusion of the reporting period expressed for an eligible offsets project. The project proponent may then apply under s 12 to the Regulator for the certificate of entitlement in respect of the project for that reporting period.
[44] CCCFI Act; s 27(15)
[45] CCCFI Act; s 27(15(16)
It follows that it seems to me that the scheme of the CCCFI Act is at odds with the submissions made on behalf of the DOIC. Enterprises undertaking abatement and sequestration offsets projects before the introduction of the CCCFI Act are not regarded as part of the “status quo” unless projects of that sort were common practice in the industry in which they were participants. If they were common practice, the offsets projects would not pass the additionality test. To attempt to exclude offsets projects that do pass the additionality test by means of a requirement in the methodology determination would be contrary to the scheme of the CCCFI Act.
To my mind, it is not to the point that CIPL was profitable in the absence of the incentive scheme under the CCCFI Act. Profitability has no place in the scheme of the CCCFI Act. That is an end of the matter but, from a practical point of view, I suggest that it is not to the point that the proponent of a particular project has been profitable before the introduction of the incentives scheme. It is one thing to make a large capital investment in a market in which others have chosen not to make that investment. It is another to make it in a market that presents the same constraints and opportunities to that person as before but which, to that person’s competitors, presents opportunities to obtain ACCUs and access to a market for trading in those ACCUs.
In this case, the relevant project is specified in r 3.28(1)(f) i.e. “the capture and combustion of methane from livestock manure”. Therefore, it passes the additionality test. For the reasons I have given, to include the requirement in the DMPEB Methodology Determination that engineered biodigesters used in the project must have been replaced or installed instead of anaerobic lagoons at a conventional piggery after 1 July 2010 runs counter to the scheme established under the CCCFI Act. Therefore, DOIC’s decision to refuse to endorse CIPL’s proposal to vary the DMPEB should be set aside. In its place, I substitute a decision that CIPL’s application to vary the DMPEB Methodology Determination should be accepted so that the requirement in cl 2.3(c) is deleted.
LEGISLATIVE FRAMEWORK
The object and outline of the scheme established by the CCCFI Act
The long title of the CCCFI Act is: “An Act about projects to remove carbon dioxide from the atmosphere and projects to avoid emissions of greenhouse gases, and for other purposes”. A “project” is defined by s 5 to “… include a set of activities.”
Section 3 sets out the legislation’s three objects. The first object is to implement certain obligations under the Climate Change Convention and the Kyoto Protocol. The remaining two are set out in ss 3(3) and (4):
“ Incentives
(3)The second object of this Act is to create incentives for people to carry on certain offsets projects.
Carbon abatement
The third object of this Act is to increase carbon abatement in a manner that:
(a)is consistent with the protection of Australia’s natural environment; and
(b)improves resilience to the effects of climate change.”
Section 4 sets out a simplified outline of the CCCFI Act:
“·This Act sets up a scheme for the issue of Australian carbon credit units in relation to eligible offsets projects.
·An Australia carbon credit unit is personal property and is generally transferable.
·The main eligibility requirements for eligible offsets projects are as follows:
(a)the projects must be carried out in Australia;
(b)the project must be covered by a methodology determination made under this Act.
·A methodology determination must comply with the offsets integrity standards set out in this Act.
·This Act is administered by the Clean Energy Regulator.”
Outline of Regulator’s obligation to issue Australian carbon credit units in relation to eligible offsets projects
A. An outline
After the end of a reporting period for an eligible offsets project, a person may apply to the Clean Energy Regulator (Regulator[46]) for a certificate of entitlement in respect of an eligible offsets project for that reporting period. On receiving that application, the Regulator must issue that certificate of entitlement if satisfied of the matters set out in s 15(2) of the CCCFI Act.
[46] CCCFI Act; s 5
Once a certificate of entitlement is in force in respect of an eligible offsets project for a reporting period, regard must be had to s 11.[47] That section sets out the Regulator’s obligations to issue ACCUs on behalf of the Commonwealth.[48] The Regulator’s obligation to issue ACCUs depends on whether the project is an eligible Kyoto project or an eligible non-Kyoto project[49] and whether the reporting period ends after the Kyoto abatement deadline. If the project is an eligible Kyoto project and the reporting period ends on or before the Kyoto abatement deadline, the Regulator must issue to the holder of the certificate a number of Kyoto ACCCs equal to the number specified in the certificate as the unit entitlement for that certificate.[50] If an eligible non-Kyoto project, the Regulator has a similar obligation but this time it is to issue non-Kyoto ACCUs.[51] In either case, if the reporting period ends after the Kyoto abatement deadline, the Regulator must issue the relevant number of non-Kyoto ACCUs.[52] The Regulator issues ACCUs by making an entry of the relevant number in the Registry account of the holder of the certificate.[53]
[47] CCCFI Act; s 11(1) The Regulator issues a certificate of entitlement
[48] CCCFI Act; s 147
[49] The meanings of the expressions “eligible Kyoto project” and “eligible non-Kyoto project” are set out in ss 27(2)(a) and (b) respectively; CCCFI Act; s 5. I return to that at [60]-[62] below.
[50] CCCFI Act; s 11(2)
[51] CCCFI Act; s 11(3)
[52] CCCFI Act; s 11(4)
[53] CCCFI Act; ss 11(5) and (6)
ACCUs are personal property of the person who is their registered holder. Subject to the CCCFI Act and the Australian National Registry of Emissions Act 2011, the registered holder may deal with ACCUs and give good discharges for any consideration for any such dealing.[54] ACCUs are transferred by removing the entry of those units in a Registry account kept by the transferor and entering them in the Registry account of the transferee.[55] The transfer is of no effect until the transferor instructs the Regulator to make the transfer.[56] Other provisions relate to matters such as the transmission of ACCUs by operation of law,[57] the international transfer of ACCUs,[58] transfer from one Registry account to another Registry account held by the same person[59] and information kept about ACCCUs.[60]
[54] CCCFI Act; ss 150 and 150A
[55] CCCFI Act; s 151(a)
[56] CCCFI Act; s 152
[57] CCCFI Act; s 153
[58] CCCFI Act; s 154
[59] CCCFI Act; s 156
[60] CCCFI Act; ss 160-169
B.What is the “Kyoto abatement deadline”?
The Kyoto abatement deadline is either 30 June 2012 or any later day specified in the CCCFI Regulations.[61] Regulation 1.5 of those Regulations provides:
“For paragraph (b) of the definition of Kyoto abatement deadline in section 5 of the Act:
(a)31 December 2012 is specified in relation to the kinds of project mentioned in regulation 3.55; and
(b)31 December 2020 is specified in relation to the kinds of project mentioned in regulation 3.35A; and
(c)30 June 2020 is specified in relation to all other kinds of project.”
[61] CCCFI Act; s 5
C. What is an “eligible Kyoto project” and an “eligible non-Kyoto project”
The two expressions are given their meaning by s 27(2) of the CCCFI Act:[62]
[62] CCCFI Act; s 5
“After considering the application, the Regulator may, by writing:
(a)declare that the offsets project is:
(i)an eligible offsets project for the purposes of this Act; and
(ii)an eligible Kyoto project for the purposes of this Act.
(b)declare that the offsets project is:
(i)an eligible offsets project for the purposes of this Act; and
(ii)an eligible non-Kyoto project for the purposes of this Act.”
D. What is a “reporting period”?
The project proponent for an eligible offsets project must give the Regulator a written report about the project for a period that is expressed to be the reporting period for the project.[63] It begins when the declaration of the project under s 27 took effect.[64] It may not be shorter than 12 months nor longer than five years.[65]
[63] CCCFI Act; s 5(1)(a)
[64] CCCFI Act; s 76(1)(b)
[65] CCCFI Act; s 76(1)(d)
What is an “eligible offsets project”?
An “eligible offsets project” is defined in s 5 to have the meaning given by s 27(2)(a)(i) and (b)(i). I have set out those provisions at [49] above in defining an “eligible Kyoto project” and an “eligible non-Kyoto project”. It is an “offsets project” declared by the Regulator to be an “eligible offsets project”.
A.What is an “offsets project”?
The expression “offsets project” is defined in s 5 to mean:
“(a) a sequestration offsets project; or
(b)an emissions avoidance offsets project.
For this purpose, it is immaterial whether the project has been carried out.”
A.1What is an “emissions avoidance offsets project”?
A “sequestration offsets project” is a project to remove carbon dioxide from the atmosphere in the circumstances and in the ways specified in s 54.[66] A project of that sort is not relevant in this case. What is relevant is an emissions avoidance offsets project, which is explained by s 53:
[66] CCCFI Act; s 5
“(1) For the purposes of this Act, a project is an emissions avoidance offsets project if it is:
(a)an agricultural emissions avoidance project; or
(b)a landfill legacy emissions avoidance project; or
(c)an introduced animal emissions avoidance project; or
(d)a project of a kind specified in the regulations.
(2)Paragraph (1)(d) does not, by implication, affect the application of subsection 13(3) of the Legislative Instruments Act 2003 to another instrument under this Act.
(3)For the purposes of this Act, a project is not an emissions avoidance offsets project if the project is a sequestration offsets project.”
A.1.2What is an “agricultural emissions avoidance project”?
The expression “agricultural emissions avoidance project” is defined in s 5 of the CCCFI Act. In so far as that definition applies to the facts of this case, it provides:
“agricultural emissions avoidance project means a project to avoid any of the following emissions:
(a)an emission of methane from the digestive tract of livestock;
(b)an emission of:
(i)methane; or
(ii)nitrous oxide;
from the decomposition of:
(iii)livestock urine; or
(iv)livestock dung;
(c)-(f)…
…”
The expression “introduced animal emissions avoidance project” is defined in s 5 to mean:
“(a) a project to avoid emissions of methane from the digestive tract of an introduced animal; or
(b)a project to avoid emissions of:
(i)methane; or
(ii)nitrous oxide;
from the decomposition of:
(iii)introduced animal urine; or
(iv)introduced animal dung.
…”
Applying for a declaration of an offsets project as an eligible offsets project
Section 23 of the CCCFI Act sets out the form in which an application for a declaration of an offsets project as an eligible offsets project must be made. It is qualified by ss 23 to 26. I will set out only the requirements set out in s 23(1):
“An application must:
(a)be in writing;
(b) be in a form approved, in writing, by the Regulator; and
(c) be accompanied by such information as is specified in the regulations; and
(d)if the project is of a kind specified in the regulations – be accompanied by a prescribed audit report prepared by a registered greenhouse and energy auditor who has been appointed as an audit team leader for the purpose; and
(e)if:
(i)the project area for the project is or was, or the project areas for the project area are or were, wholly or partly covered by a prescribed non-CFI offsets scheme; and
(ia)the prescribed non-CFI offsets scheme is specified in regulations made for the purposes of this subparagraph; and
(ii)the applicant is entitled to make a request under section 92 in relation to the project;
be accompanied by such a request; and
(f)if an indigenous land use agreement is relevant to the Regulator’s decision on the application – be accompanied by a copy of the agreement; and
(g)if the project area, or any of the project areas, for the project is covered by a regional natural resources management plan – be accompanied by a statement about whether the project is consistent with the plan; and
(h)be accompanied by such other documents (if any) as are specified in the regulations; and
(i)be accompanied by the fee (if any) specified in the regulations.
…”
Regulations 3.1(1) and (2) of the CCCFI Regulations prescribes the additional information that is required. Regulation 3.1(3) prescribes further information that must be provided if the project has been issued with carbon offsets credits under a prescribed non-CFI offsets scheme or a non-CFI scheme. A “non-CFI scheme” is defined in r 1.3 to mean “… a carbon offsets scheme that: (a) is not carried out under the Act or these Regulations; and (b) is not a prescribed non-CFI offsets scheme.” The expression “prescribed non-CFI offsets scheme” is given its meaning by the CCCFI Regulations.[67] That comes about in r 3.2 when, for the purposes of s 23(1)(e)(ia), it provides that:
“… the following prescribed non-CFI offsets schemes are specified:
(a)the Commonwealth Government Greenhouse FriendlyTM initiative;
(b)the New South Wales Government’s Greenhouse Gas Reduction Scheme;
(c)the Australian Capital Territory Government’s Greenhouse Gas Abatement Scheme.”
[67] CCCFI Act; s 5
Making a declaration of an offsets project as an eligible offsets project
Section 27 applies once an application has been made under s 22. I have already set out s 27(2) at [49] above. It is the provision empowering the Regulator to make a declaration of one or other types. Section 27(3) sets out the information that the Regulator must include in a declaration.
Section 27(4) specifies the criteria to which the Regulator must have regard in making a declaration. I will only reproduce those that do not relate only to a sequestration offsets project:
“The Regulator must not declare that the offsets project is an eligible offsets project unless the Regulator is satisfied that:
(a)the project is, or is to be, carried on in Australia; and
(b)the project is covered by a methodology determination; and
(c)the project meets such requirements as are set out in the methodology determination in accordance with paragraph 106(1)(b); and
(d)the project passes the additionality test; and
(e)the applicant is the project proponent for the project; and
(f)the applicant is a recognised offsets entity; and
(g)…
(h)...
(i)…
(j)the project does not involve:
(i)the clearing of native forest; or
(ii)using material obtained as a result of the clearing or harvesting of native forest; and
(k)…
(l)the project meets the eligibility requirements (if any) specified in the regulations; and
(m)the project is not an excluded offsets project.
…”
Sections 27(5) to (13) qualify various paragraphs in s 27(4). Two relate to the declaration of a project as either an eligible Kyoto project or as an eligible non-Kyoto project. They are ss 27(12) and (13). They provide, in outline, that the Regulator must not declare an offsets project to be one or the other unless satisfied that it is an eligible Kyoto project or an eligible non-Kyoto project as the case may be.
The expression “Kyoto offsets project” has the meaning given to it by s 55.[68] For the purposes of this case, I note that s 55(1)(a) provides that “For the purposes of this Act, an offsets project is a Kyoto offsets project if it is: (a) an agricultural emissions avoidance project”. That provision is, however, subject to the qualification in s 55(3).[69] Paragraph 55(3)(b) applies to emissions avoidance projects and it provides:
[68] CCCFI Act; s 5
[69] CCCFI Act; s 55(2)
“For the purposes of this Act, an offsets project is not a Kyoto offsets project unless:
(a)…
(b)if the project is an emissions avoidance offsets project to avoid emissions of one or more greenhouse gases – the avoidance can be used to meet Australia’s climate change targets under:
(i)the Kyoto Protocol; or
(ii)an international agreement (if any) that is the successor (whether immediate or otherwise) to the Kyoto Protocol.”
If an offsets project is not a Kyoto offsets project, it is a non-Kyoto offsets project.[70]
[70] CCCFI Act; s 55(5)
Section 55(6) recognises that a project may be partly a Kyoto offsets project and partly a non-Kyoto offsets project. It provides:
“(c) the overall project, to the extent to which it is a Kyoto offsets project, is taken to be an offsets project in its own right; and
(d)the overall project, to the extent to which it is a non-Kyoto offsets project, is taken to be an offsets project in its own right.
It is immaterial whether the Kyoto offsets project and the non-Kyoto offsets project have the same project area or areas.”
Section 27(11) is concerned with the situation in which a declaration is sought in relation to a project when there is, or has been, an eligible offsets project or a sequestration offsets project and one of the situations in ss 88 to 91 applies. In broad terms, those situations require relinquishment of ACCUs.[71] Section 27(11) is also concerned with the situation in which the project area, or any of the project areas, for the project was identified in the relevant s 27 declaration for the project for which relinquishment of ACCUs was required. If that is the case and the person did not comply with the requirement to relinquish within 90 days and did not pay the penalty under ss 179 and 180, the Regulator must not make a declaration under s 27(2) in relation to that project.
[71] Each situation is one in which a person to whom ACCUs have been issued has been required to relinquish them. Section 89 relates to a sequestration offsets project when there has been a unilateral revocation of a declaration for what may broadly be described as failure to meet the eligibility criteria. Sections 90 and 91 relate to reversal of sequestration and are not relevant in this context. Section 88 requires relinquishment when the issue of ACCUs has been directly or indirectly attributable to information contained in, or given in relation to, an application and that information was false or misleading in a material particular.
A. What is an “excluded offsets project”?
Although a project may be an offsets project because it comes within one or other paragraph of s 5, it will be an “excluded offsets project” if it is a project of a kind specified in regulations made under the CCCFI Act. That is the effect of s 56(1).
A.1 Criteria to which Minister must have regard in recommending regulations
Section 56(2) sets out the matters to which the Minister must have regard in recommending to the Governor-General that regulations should be made specifying an offsets project as an excluded offsets project. Those matters are:
“(a) the availability of water;
(b)the conservation of biodiversity;
(c)employment;
(d)the local community;
(e)land access for agricultural production;
In, or in the vicinity of, the project area, or any of the project areas, for that kind of project.”
A.2 The Regulations specifying excluded offsets projects
Regulations 3.36 and 3.37 of the CCCFI Regulations specify offsets projects that are excluded offsets projects. Beginning with r 3.36, it specifies “kinds of projects [that] are excluded offsets projects”.[72] They are:
[72] Regulation 3.36 is included in Division 3.12 of the CCCFI Regulations and is made for the purposes of s 56(1) of the CCCFI Act: CCCFI Regulations; r 3.33.
“(a) a project that involves an activity that:
(i)was mandatory under a Commonwealth, State or Territory law; and
(ii)is no longer mandatory because the law was repealed, or amended to be less onerous, after 24 March 2011;
(b)the planting of a species in an area where it is a known weed species;
(c)the establishment of a forest under a forestry managed investment scheme for Division 394 of Part 3-45 of the Income Tax Assessment Act 1997;
(d)the cessation or avoidance of the harvest of a plantation;
(e)the establishment of vegetation on land that has been subject to illegal clearing of a native forest, or illegal draining of a wetland;
(f)the establishment of vegetation on land that has been subject to clearing of a native forest, or draining of a wetland (that was not an illegal clearing or draining), within:
(i)7 years of lodgement of an application for the project to be declared an eligible offsets project; or
(ii)if there is a change in ownership of the land that constitutes the project area, after the clearing or the draining – 5 years of the lodgement of an application for the project to be declared an eligible offsets project;
(g)a project that protects native forest on freehold or leasehold land, for which a clearing consent or harvest approval plan was granted on the basis that the clearing or harvesting of the native forest:
(i)would lead to an environmental improvement or benefit, or would maintain an environmental outcome; or
(ii)was for fire management purposes.”
Regulation 3.36(1)(g)(i) is qualified by r 3.36(3), which provides:
“Subparagraph (1)(g)(i) does not apply to a project if:
(a)the clearing consent or harvest approval plan provides options for vegetation management; and
(b)the project provides active and on-going management of the project area in accordance with one of those options.”
Regulation 3.37(1) provides:
“Specified tree planting is an excluded offsets project unless it is mentioned in subregulations (2) to (6) or subregulation (8).”
The expression “specified tree planting” means “… the planting of trees in an area that, according to the CFI rainfall map, receives more than 600mm long-term average rainfall.”[73]
[73] CCFI Regulations; r 3.34
Although there is no suggestion that the piggery bears any relationship to specified tree planting, I will set out the qualifications to r 3.37(1) for they illustrate the approach taken by the Minister in specifying which are, and are not, excluded offsets projects:
“(2) Specified tree planting is not an excluded offsets project if the planting is a permanent planting that is also an environmental planting.
(3)Specified tree planting is not an excluded offsets project if the project proponent demonstrates that the planting contributes to the mitigation of dryland salinity in accordance with the Salinity Guidelines.
(4)Specified tree planting is not an excluded offsets project if the project area is in a region in relation to which the National Water Commission has determined that the commitments by the relevant State or Territory government under the National Water Initiative to manage water interception by plantations have been adequately implemented.
(5)Specified tree planting is not an excluded offsets project if the project proponent holds a water access entitlement that:
(a)grants or confers an entitlement to water in the project area; and
(b)relates either to groundwater or surface water, or both, depending on the water resource management arrangements applicable in the project area; and
(c)is held from the date that is no later than 2 years after the forest is first planted for the duration of the project; and
(d)provides a long-term average yield, per year, of at least 90% of the volume of water required as an offset, calculated in accordance with the formula given in subregulation (7).
(6)However, subregulation (5) does not apply if the water to which the water access entitlement relates is held, taken, intercepted, stored or used for any purpose other than to offset the water intercepted by the forest.
(7)…
(8)Specified tree planting is not an excluded offsets project if:
(a)the project area is in a region in which it is not possible to obtain a water access entitlement; and
(b)the Regulator, after seeking advice of the relevant State or Territory agency that manages water resource and the other expert advice as necessary, is satisfied that there is no material impact on water availability, or on the reliability of existing water access entitlements, in or near the project area, for the duration of the project.
(9)However, paragraph (8)(a) does not apply to a project in relation to which it is not possible to obtain a water access entitlement because the relevant catchment is fully allocated.”
B. What is a “methodology determination”?
The expression “methodology determination” has the meaning given to it by s 106 of the CCCFI Act. Section 106(2) provides that a determination made by the Minister under s 106(1) is a “methodology determination”. Section 106(1) provides:
“The Minister may, by legislative instrument, make a determination that:
(a)is expressed to apply to a specified kind of offsets project; and
(b)sets out the requirements that must be met for such a project to be an eligible offsets project; and
(c)provides that, if such a project is an eligible offsets project other than a native forest protection project, the carbon dioxide equivalent net abatement amount for the project in relation to a reporting period for the project is taken, for the purposes of this Act, to be equal to the amount ascertained using a method specified in the determination; and
(d)provides that, if such a project is a native forest protection project, the carbon dioxide equivalent net sequestration amount for a crediting period for the project is taken, for the purposes of this Act, to be equal to the amount ascertained using a method specified in the determination.”
B.1 What a methodology determination may provide
Section 106(3) provides:
“A methodology determination that applies to a particular kind of offsets project may provide that, if such a project is an eligible offsets project, the project proponent for the project is subject to any or all of the following requirements:
(a)specified requirements to include specified information relating to the project in each offsets report about the project;
(b)specified requirements to notify one or more matters relating to the project to the Regulator;
(c)specified record-keeping requirements relating to the project;
(d)specified requirements to monitor the project.”
B.2Matters to which Minister must have regard in making a methodology determination
Section 106(4) provides:
“The Minister must not make a methodology determination unless:
(a)the determination gives effect to a particular proposal for a methodology determination; and
(b)the Domestic Offsets Integrity Committee has:
(i)endorsed the proposal under section 112; and
(ii)advised the Minister of the endorsement under section 113; and
(c)the determination complies with the offsets integrity standards; and
(d)the determination does not specify a kind of offsets project by reference to a State or part of a State; and
(e)the determination complies with such requirements (if any) as are specified in the regulations; and
(f)the method specified in the determination in accordance with paragraph (1)(c) or (d) of this section includes a calculation of a baseline for the project; and
(g)in a case where:
(i)a method determined under subsection 10(3) of the National Greenhouse and Energy Reporting Act 2007 is a method by which the amounts of the emissions of greenhouse gases from a particular source are to be measured for the purposes of that Act; and
(ii)the method specified in the methodology determination in accordance with paragraph (1)(c) or (d) of this section involves the measurement of emissions from greenhouse gases from that source;
the methodology determination provides that the emissions are to be measured, under the method specified in the methodology determination in accordance with paragraph (1)(c) or (d) of this section, in the same way as they are measured under the method determined under subsection 10(3) of the National Greenhouse and Energy Reporting Act 2007.
…”
Provision is made in s 106(5) for the situation in which DOIC has endorsed a proposal for a methodology determination and advised the Minister of its endorsement but the Minister decides not to make a methodology determination. Section 106(6) permits the Minister to ask the DOIC for advice about a matter arising under s 106.
B.2.1What is a “baseline”?
A “baseline for an offsets project has a meaning affected by section 107.”[74] Section 107 goes on to provide:
“For the purposes of the application of this Act to a methodology determination, a baseline for an offsets project is to be calculated on the assumption that the project were not carried out.”
[74] CCCFI Act; s 5
B.2.2 Matters relevant to endorsement by the Domestic Offsets Integrity Committee
A person may apply to the DOIC for endorsement of a specified proposal for a methodology determination.[75] The form that application is to take is set out in s 109 and the committee may ask the applicant for further information.[76] In addition to the information set out in s 109(1), an application for endorsement must include any information and documentation specified by the CCCFI Regulations.[77] Regulation 9.1(2) provides that an application for an endorsement of a methodology determination must be accompanied by the information and the documentation specified in the Guidelines for Submitting a Methodology Proposal published by the Department and as in force from time to time.
[75] CCCFI Act; s 108
[76] CCCFI Act; s 110
[77] CCCFI Act; ss 109(1)(d) and (e)
After considering the application, the committee must either endorse the proposal or refuse to do so.[78] It must not endorse the proposal unless it is satisfied that, if the Minister were to make a methodology determination to give effect to the proposal, it would meet the criteria specified in s 112(3).
[78] CCCFI Act; s 112(2)
Those specified in ss 112(3)(a), (b) and (g) mirror those criteria in ss 106(4)(c), (d) and (g) of which the Minister must be satisfied before making a methodology determination. That in s 112(3)(c) mirrors in substance that in s 106(3)(e) for both require compliance with any requirements specified in regulations. The final criteria of which the committee must be satisfied is that in s 112(3)(d). Before endorsing a proposal, it must satisfy itself that:
“(d) the method specified in the determination in accordance with paragraph 106(1)(c) or (d) would include a calculation of a baseline for the project; …”
Its obligation under s 112(3)(d) complements that of the Minister to make a determination including a method for determining either the carbon dioxide equivalent net abatement amount for the project in relation to a reporting period or the carbon dioxide equivalent net sequestration amount for a crediting period for a project as the case may be.
B.2.3DOIC’s obligations to publish the proposal and to invite submissions
DOIC’s obligations to publish and consult are set out in ss 112(5) to (13). Section 112(5) of the CCCFI Act provides:
“The Domestic Offsets Integrity Commission must not endorse the proposal unless the Committee has first:
(a)published on the Department’s website:
(i)the proposal; and
(ii)a notice inviting the public to make a submission to the Committee on the proposal by a specified time limit; and
(b)considered any submissions that were received within that time limit.”
The time limit must not be shorter than a period of 40 days.[79]
[79] CCCFI Act; s 112(6)
DOIC may also publish other information it has obtained from the application under s 109 or further information it has requested under s 110 but not if the applicant for the methodology determination has asked it not to do so.[80] An applicant’s refusal may, but not necessarily, lead to refusal of the application for s 112(10) provides:
“The Domestic Offsets Integrity Committee must refuse to endorse the proposal if:
(a)the applicant has made a request under subsection (8) for the Committee not to publish particular information; and
(b)the Committee is satisfied that failing to publish that information could reasonably be expected to substantially prejudice the ability of the public to make well-informed submissions on the proposal under subsection (5).”
[80] CCCFI Act; ss 112(7) and (8)
The DOIC is also obliged to publish submissions it receives but must not do so if it receives a request that it not do so on the grounds that publication could reasonably be expected to substantially prejudice the submitter’s commercial interests or those of another.[81]
[81] CCCFI Act; s 112(11)-(13)
B.3The duration of a methodology determination
Subject to two qualifications, a methodology determination comes into force either when it is made or, if it specifies a later time, that later time.[82] In the circumstances specified in s 122(3), the determination may be expressed to come into force on a day earlier than the day on which it was made. Those circumstances are:
“If:
(a)a methodology determination is made on or before 30 June 2013; and
(b)an application under section 108 for endorsement of a proposal for the determination was made on or before 30 June 2012;
the determination may be expressed to have come into force at the start of 1 July 2010.”[83]
[82] CCCFI Act; s 122(1)(a)
[83] CCCFI Act; s 122(3)
Section 130 sets out the circumstances in which the Regulator may approve the application of a methodology determination to an eligible offsets project with effect from the start of a reporting period. Those circumstances arise if:
“… during a reporting period for an eligible offsets project, a request under section 128 has been made for the approval of the application of a specified methodology determination to the project with effect from the start of the reporting period.”
A methodology determination remains in force either for the period specified in the determination or, if the Minister specifies a longer period in a legislative instrument, it remains in force for that longer period. If a methodology determination expires, the Minister is not prevented from making a fresh methodology determination in the same terms.[84]
[84] CCFI Act; s 122(4)
B.4Variation of a methodology determination
Section 114 provides for the variation of a methodology determination. The Minister may vary it by legislative instrument.[85] Section 114(2) goes on to provide:
[85] CCCFI Act; s 114(1)
“The Minister must not vary a methodology determination unless:
(a)the variation gives effect to a particular proposal for the variation of a methodology determination; and
(b)the Domestic Offsets Integrity Committee has:
(i)endorsed the proposal under section 120; and
(ii)advised the Minister of the endorsement under section 121; and
(c)the varied determination complies with the offsets integrity standards; and
(d)the varied determination does not specify a kind of offsets project by reference to a State or part of a State; and
(e)the varied determination complies with such requirements (if any) as are specified in the regulations made for the purposes of paragraph 106(4)(e); and
(f)the method specified in the varied determination in accordance with paragraph 106(1)(c) or (d) includes a calculation of a baseline for the project; and
(g)in a case where:
(i)a method determined under subsection 10(3) of the National Greenhouse and Energy Reporting Act 2007 is a method by which the amounts of the emissions of greenhouse gases from a particular source are to be measured for the purposes of that Act; and
(ii)the method specified in the methodology determination in accordance with paragraph 106(1)(c) or (d) involves the measurement of emissions from greenhouse gases from that source;
the methodology determination provides that the emissions are to be measured, under the method specified in the methodology determination in accordance with paragraph 106(1)(c) or (d), in the same way as they are measured under the method determined under subsection 10(3) of the National Greenhouse and Energy Reporting Act 2007.
…”
Provisions relating to the form of an application for a variation and the steps that the Minister must take reflect those relating to an application for a methodology determination. An application is made for endorsement of a specified proposal for variation of a methodology determination under s 116. The form of that application is provided for in s 117 and again refers to information and documents specified in the CCCFI Regulations. Regulation 9.2(2)(c) requires that the information include that required by the Department’s Guidelines for Submitting a Methodology Proposal.
DOIC’s role is also the same and its obligations under s 120 in relation to an application for a variation of a methodology determination reflect those it carries under s 112(3). They are:
““The Domestic Offsets Integrity Commission must not endorse the proposal unless the Committee is satisfied that, if the Minister were to vary the methodology determination so as to give effect to the proposal:
(a)the varied determination would comply with the offsets integrity standards; and
(b)the varied determination does not specify a kind of offsets project by reference to a State or part of a State; and
(c)the varied determination would comply with such requirements (if any) as are specified in the regulations made for the purposes of s 106(4)(e); and
(d)the method specified in the varied determination in accordance with paragraph 106(1)(c) or (d) would include a calculation of a baseline for the project; and
(g)[[86]] in a case where:
(i)a method determined under subsection 10(3) of the National Greenhouse and Energy Reporting Act 2007 is a method by which the amounts of the emissions of greenhouse gases from a particular source are to be measured for the purposes of that Act; and
(ii)the method specified in the methodology determination in accordance with paragraph (1)(c) or (d) of this section involves the measurement of emissions from greenhouse gases from that source;
the varied methodology determination would provide that the emissions are to be measured, under the method specified in the varied methodology determination in accordance with paragraph 106(1)(c) or (d), in the same way as they are measured under the method determined under subsection 10(3) of the National Greenhouse and Energy Reporting Act 2007.”[87]
[86] [sic]
[87] CCCFI Act; s 120(3)
C. What is the “additionality test”?
C.1 The test
Section 41(1) provides:
“For the purposes of this Act, an offsets project passes the additionality test if:
(a)the project is of a kind specified in the regulations; and
(b)the project is not required to be carried out by or under a law of the Commonwealth, a State or a Territory.”
Paragraph 41(1)(b) does not apply to a requirement of a kind specified in the regulations. That is the effect of s 41(4A) of the CCCFI Act. Regulation 3.29 of the CCCFI Regulations provides:
“(1) For subsection 41(4A) of the Act, the following kinds of requirements are specified:
(a)a requirement to conduct an activity under a conservation covenant entered into with:
(i)the Commonwealth, a State, a Territory or a local governing body; or
(ii)an authority of the Commonwealth, a State or a Territory;
(b)on and after 1 July 2012, a requirement under a law of the Commonwealth, a State or a Territory to offset greenhouse gas emissions if the circumstances in subregulation (2) apply;
(c)a requirement under State or Territory law that is made after 24 March 2011 and that implements an agreement between the Commonwealth and a State or Territory Government:
(i)to establish new reserves or reduce annual native forest harvest; and
(ii)that recognises the potential for carbon offset opportunities for areas protected by the agreement.
(2)For paragraph (1)(b), the circumstances are that a person incurs, or would incur, a liability under the Clean Energy Act 2011 or any of its associated provisions in relation to the greenhouse gas emissions it offsets, or would offset, under the requirement.
(3)In this regulation:
conservation covenant has the meaning it has in section 995-1 of the Income Tax Assessment Act 1997.
…”
C.2The steps the Minister must follow before recommending that regulations be made
Before recommending to the Governor-General that regulations should be made for the purposes of s 41(1)(a), the Minister must ask DOIC about whether a project should, or should not, be specified in them.[88] Once DOIC has advised “in relation to a particular kind of project” and the Minister has decided whether or not to recommend the making of regulations, the Minister must cause a copy of DOIC’s advice to be published on the Department’s website.[89]
[88] CCCFI Act; s 41(2)
[89] CCCFI Act; s 41(5)
Section 41(3) sets out matters to which the Minister must have regard in recommending the making of regulations:
“In deciding whether to recommend to the Governor-General that regulations should be made for the purposes of paragraph (1)(a) specifying a particular kind of project, the Minister must have regard to:
(a) whether carrying out such a project is not common practice in:
(i) the relevant industry or the relevant part of the relevant industry; or
(ii)the kind of environment in which such a project is to be carried out; and
(b)whether, apart from Part 2, carrying out such a project would not be common practice in:
(i)the relevant industry or the relevant part of the relevant industry; or
(ii)the kind of environment in which such a project is to be carried out; and
(c)any advice given by the Domestic Offsets Integrity Committee under subsection (2); and
(d)such other matters (if any) as the Minister considers relevant.”
C.3 The regulations
Division 3.6 of Part 3 of the CCCFI Regulations is concerned with the additionality test. Although only r 3.28(1)(f) is relevant, I will set out the first 13 of the 19 kinds of offsets projects specified in r 3.28(1) in order to give a flavour of the provision:
“For paragraph 41(1)(a) of the Act, the following kinds of project are specified:
(a)the establishment of permanent plantings on or after 1 July 2007;
(b)a project mentioned in subregulation (2);
(c)the human-induced regeneration, on or after 1 July 2007, of native vegetation, on land that is not conservation land, by:
(i)the exclusion of livestock; or
(ii)the management of the timing and the extent of grazing; or
(iii)the management, in a humane manner, of feral animals; or
(iv)the management of plants that are not native to the project area; or
(v)the cessation of mechanical or chemical destruction, suppression or regrowth;; [sic] or
(vi)the rehabilitation of scalded soils on semi-arid rangeland, by the creation of shallow earth banks or furrows to trap rainfall or slow water runoff;
(d)the restoration, on land that is not conservation land, of natural wetlands that had not been drained;
(e)the application of biochar to soil;
(f)the capture and combustion of methane from livestock manure;
(g)early dry season burning of savannah areas greater than 1 km2;
(h)the reduction of methane emissions through the management, in a humane manner, of feral goats, feral deer, feral pigs or feral camels;
(i)the reduction of emissions by feeding:
(i)tannins to livestock; or
(ii)Eremophila species to livestock; or
(iii)fats or oils to dairy cattle that are pasture grazed for at least 9 months each year; or
(iv)fats or oils to livestock that are pasture grazed for the whole year; or
(v)nitrate supplements to livestock;
(j)the application of urease or nitrification inhibitors to, or with, livestock manure or fertiliser;
(k)the capture and combustion of methane from waste deposited in a landfill facility before 1 July 2012;
(l)the diversion, before 1 July 2012, of mixed solid waste, which otherwise have entered landfill, to an alternative waste treatment plant;
(m)the passive oxidation of emissions from waste, deposited in a landfill before 1 July 2012, using biofilters or biocovers on landfills;
(n)-(s)…”
There are certain qualifications to these provisions. Regulation 3.28(1)(l), which is not applicable to the circumstances of the piggery, is qualified by r 3.28(4). It provides that, subject to certain exceptions relating to particular types of waste, the expression “mixed solid waste” means “… waste from sources such as offices, community organisations, sporting facilities, households, retail and catering businesses and institutions (including schools, hospitals and prisons) …”.
D. What are the “offsets integrity standards”?
The expression “offsets integrity standards” is given its meaning by s 133:[90]
[90] CCCFI Act; s 5
“(1) For the purposes of this Act, the offsets integrity standards are as follows:
(a)a project of a kind specified in a methodology determination in accordance with paragraph 106(1)(a) should be covered by the additionality test regulations;
(b)to the extent to which a method specified in a methodology determination in accordance with paragraph 106(1)(c) or (d) involves ascertaining the following:
(i)the removal of one or more greenhouse gases from the atmosphere;
(ii)the reduction of emissions of one or more greenhouse gases into the atmosphere;
(iii)the emission of one or more greenhouse gases into the atmosphere;
the removal, reduction or emission, as the case may be, should be:
(iv) measurable; and
(v) capable of being verified;
(c)a method specified in a methodology determination in accordance with paragraph 106(1)(c) or (d) should not be inconsistent with the methods set out in the National Inventory Report;
(d)a method specified in a methodology determination in accordance with paragraph 106(1)(c) or (d) should be supported by relevant scientific results published in peer-reviewed literature; and
(e)a method specified in a methodology determination in accordance with paragraph 106(1)(c) or (d) should provide that, in ascertaining whichever of the following is applicable:
(i)the carbon dioxide equivalent net abatement amount for a project;
(ii)the carbon dioxide equivalent net sequestration amount for a project;
there is to be a deduction of the carbon dioxide equivalence of the amount that, under the determination, is taken to be the total amount of greenhouse gases that are emitted from any source or sources as a consequence of carrying out the project;
(f)a method specified in a methodology determination in accordance with paragraph 106(1)(c) or (d) should provide for adjustments to take account of significant cyclical variations that are likely to occur in the amount of carbon sequestered in the relevant carbon pool on the project area or project areas during:
(i)a 100-year period; or
(ii)if, at the time when the methodology determination was made, another period was specified in the regulations – that other period;
(g)to the extent to which a method specified in a methodology determination in accordance with paragraph 106(1)(c) or (d) involves an estimate, projection or assumption – the estimate, projection or assumption should be conservative;
(h)if:
(a) a method determined under subsection 10(3) of the National Greenhouse and Energy Reporting Act 2007 is a method by which the amounts of the emissions of greenhouse gases from a particular source are to be measured for the purposes of that Act; and
(b) a method specified in a methodology determination in accordance with paragraph 106(1)(c) or (d) involves the measurement of emissions of greenhouse gases from that source;
the methodology determination should provide that the emissions are to be measured, under the method specified in the methodology determination in accordance with paragraph 106(1)(c) or (d), in the same way as they are measured under the method determined under subsection 10(3) of the National Greenhouse and Energy Reporting Act 2007.
…”
Review of decisions by the Tribunal
The power to make an application to the Tribunal for review of certain decisions made under the CCCFI Act are set out in Part 24 of that legislation. In so far as decisions of DOIC are concerned, an application may be made to the Tribunal for review of its decisions under s 112 to refuse to endorse a proposal for a methodology determination and under s 120 to refuse to endorse a proposal for the variation of a methodology determination.[91]
[91] CCCFI Act; s 245A
I certify that the ninety three preceding paragraphs are a true copy of the reasons for the decision herein of
Deputy President S A Forgie,
Signed: ………[sgd]...................................................
Leah Berardi Associate
Date of Hearing 4 December 2013
Date of Last Submission 8 January 2014
Date of Decision 24 January 2014
Self-represented Applicant Mr J Charles
Counsel for the Respondent Ms F Gordon
Solicitor for the Respondent Ms E Nance
Australian Government Solicitor
(a) carbon dioxide; (b) methane; (c) nitrous oxide; (d) sulfur hexafluoride; (e) a hydrofluorocarbon of a kind specified in the table in subsection (2); (f) a perfluorocarbon of a kind specified in the table in subsection (3);
(g) a prescribed gas.”
Key Legal Topics
Areas of Law
-
Climate Change Law
Legal Concepts
-
Jurisdiction
-
Statutory Interpretation
-
Judicial Review
0
0
0