Carbon Credits (Carbon Farming Initiative) Amendment (Extended Accounting Period) Rule 2016

Overview

The Carbon Credits (Carbon Farming Initiative) Amendment (Extended Accounting Period) Rule 2016 amends the Carbon Credits (Carbon Farming Initiative) Rule 2015 to enable projects registered under the Carbon Credits (Carbon Farming Initiative—Source Separated Organic Waste) Methodology Determination 2016 to have an extended accounting period. This amendment was introduced to more accurately reflect the rate at which emissions reductions occur in projects involving the avoided disposal of organic waste in landfill, which decomposes to produce methane over many years. The extended accounting period, which begins immediately after the end of the crediting period, does not change the length of the crediting period and only applies to emissions reductions accrued during the project's crediting period. The Amendment Rule was made under the authority of the Carbon Credits (Carbon Farming Initiative) Act 2011, specifically section 308, which allows the Minister to make legislative rules. The Amendment Rule was developed in consultation with industry experts and the Clean Energy Regulator and was subject to public consultation in 2015. The Carbon Credits (Carbon Farming Initiative) Act 2011, enacted by the Australian Parliament, established the Emissions Reduction Fund to help Australia meet its greenhouse gas emissions reduction targets by purchasing approved and verified emissions reductions from registered projects. The Act was amended in 2014 by the Carbon Farming Initiative Amendment Act 2014, which expanded the crediting of emissions reductions to include non-land based sectors of the Australian economy. The primary objective of the Emissions Reduction Fund is to assist Australia in meeting its international obligations under the United Nations Framework Convention on Climate Change and the Kyoto Protocol. The Act is administered by the Clean Energy Regulator, which is empowered to purchase emissions reductions and enter into contracts for this purpose.

Scope and Application

The Carbon Credits (Carbon Farming Initiative) Amendment (Extended Accounting Period) Rule 2016 amends the Carbon Credits (Carbon Farming Initiative) Rule 2015, which is a subordinate legislation supporting the Carbon Credits (Carbon Farming Initiative) Act 2011. This Act applies to projects involved in the abatement of greenhouse gas emissions under the Carbon Farming Initiative, particularly within the non-land based sectors of the Australian economy as expanded by the Carbon Farming Initiative Amendment Act 2014. The Act, administered by the Clean Energy Regulator, facilitates the purchase of approved and verified emissions reductions from registered projects to meet Australia's international greenhouse gas emissions reduction targets. The Amendment Rule specifically allows for an extended accounting period for projects registered under the Carbon Credits (Carbon Farming Initiative—Source Separated Organic Waste) Methodology Determination 2016, and the Carbon Credits (Carbon Farming Initiative—Alternative Waste Treatment) Methodology Determination 2015, enabling them to report and be credited for emissions reductions over a longer period, up to six years. This extended period ensures more accurate reflection of emissions reductions, particularly for organic waste projects where emissions occur over several years. The Amendment Rule was developed in consultation with industry experts and the Clean Energy Regulator, and no public comments were received on the exposure draft.

Key Provisions

The main operative sections of the Carbon Credits (Carbon Farming Initiative) Amendment (Extended Accounting Period) Rule 2016 (the Amendment Rule) are found in Schedule 1, where section 6 of the Carbon Credits (Carbon Farming Initiative) Rule 2015 (the Principal Rule) is amended. Specifically, section 6 of the Principal Rule is repealed and replaced with a new rule that allows for an extended accounting period for certain projects. This amendment enables projects registered under the Carbon Credits (Carbon Farming Initiative—Source Separated Organic Waste) Methodology Determination 2016 (the Determination) to have an extended accounting period of six years, which is the same period provided for in the Carbon Credits (Carbon Farming Initiative—Alternative Waste Treatment) Methodology Determination 2015. The Amendment Rule imposes obligations on projects that are eligible for an extended accounting period. These projects must adhere to the provisions set out in the Determination, which specifies the methodologies for calculating emissions reductions from avoided landfill disposal of organic waste. The extended accounting period allows these projects to report and be credited for emissions reductions accrued during their crediting period, and ensures that the projects receive all credits to which they are entitled. It is important to note that activities occurring during the extended accounting period are not eligible for emissions reductions crediting. The Amendment Rule does not explicitly outline specific offences, penalties, or civil/criminal consequences for breach. However, the underlying Act, the Carbon Credits (Carbon Farming Initiative) Act 2011, does provide for enforcement mechanisms. Non-compliance with the requirements of the Act or the Regulations could potentially lead to enforcement actions, which may include fines or other penalties. The Clean Energy Regulator, which is empowered to conduct processes to purchase emissions reductions and enter into contracts for this purpose, plays a crucial role in ensuring that the provisions of the Act and its subordinate legislation are adhered to by project proponents. Given the nature of the Amendment Rule, which primarily seeks to clarify and extend the accounting period for certain types of emissions reduction projects, the primary focus is on ensuring that these projects can accurately report and be credited for their emissions reductions. The extended accounting period is designed to reflect the rate at which avoided landfill emissions would have arisen, thereby providing a more accurate accounting of emissions reductions achieved by these projects.