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Thursday, 24 March 2011
Page: 3145


Mr COMBET (Minister for Climate Change and Energy Efficiency) (10:15 AM) —I move:

That this bill be now read a second time.

The government is committed to action on climate change and the need to reduce our carbon pollution.

This is because the government accepts the science and understands both the damage that unmitigated climate change would cause to Australia and the opportunities for our economy if we do take action.

On 24 February this year we announced the framework for a carbon price to take effect from 1 July 2012. That framework would not place any liability on agricultural, forestry or legacy waste emissions.

However, the government has also committed to create opportunities in these sectors for the creation of revenue through the reduction or storage of carbon pollution.

The Carbon Credits (Carbon Farming Initiative) Bill 2011 fulfils an election commitment to give farmers, forest growers and landholders access to carbon markets.

This will begin to unlock the abatement opportunities in the land sector which currently make up 23 per cent of Australia’s emissions.

Australia has amongst the highest agricultural emissions of the developed countries. But we also have significant opportunities to increase carbon storage in our landscape.

We are a very big country.

This scheme presents an opportunity for Australia to address these high emissions and for the agriculture sector to be part of the solution to climate change.

We are already making progress in this area.

For example, through Australia’s Farming Future, the government has invested $42.6 million into research and development into abatement options for the land sector.

The CSIRO and other research institutions are making important advances in carbon estimation techniques.

And around the country, innovative farmers have been developing ways to improve the health of agricultural soils, to improve herd efficiency and to farm more sustainably.

This scheme will drive and reward the deployment of this Australian innovation.

The Carbon Farming Initiative will create incentives to protect our natural environment and adopt more sustainable farming practices as well as mitigate climate change.

Increasing carbon storage in agricultural soils improves soil health and productivity.

Revegetation will help restore degraded landscape and protect biodiversity.

Tree planting can help to address salinity and reduce erosion.

This is important because the agricultural sector is likely to be one of the most strongly affected by climate change.

The importance of these co-benefits is reflected in the objects of this bill.

We want to achieve carbon abatement in a manner that is consistent with protection of Australia’s natural environment and improves resilience to the impacts of climate change.

The Carbon Farming Initiative will create new, real and lasting economic opportunities for regional communities in this country. Farmers and landholders will be rewarded for their actions to reduce or store carbon pollution. This is a very important step forward for regional and rural Australia.

This is not a government grant program.

The legislated scheme will allow sellers to deal directly with buyers and leverage the opportunities of the marketplace. Such a marketplace allows companies to invest in local land sector abatement through long-term contracts and partnerships with farmers and landholders.

Markets are not new to farmers, nor are many of the things which can save or store carbon—trees and soil. What farmers need is a mechanism to add value to their actions and decide whether or not to invest.

Real and lasting economic opportunities are also what Indigenous Australians are telling us they want. The Carbon Farming Initiative includes a number of provisions to ensure Indigenous Australians can effectively participate and take up these opportunities.

This package of bills creates a legal framework which will provide certainty for private investment in carbon abatement.

The Carbon Farming Initiative provides a framework which is grounded in the science of climate change and provides clear economic value to actions which store or reduce our carbon pollution.

Overview

The Carbon Credits (Carbon Farming Initiative) Bill 2011 is one of a package of three related bills. The two which I will subsequently present to the House are the Australian National Registry of Emissions Units Bill 2011 and the Carbon Credits (Consequential Amendments) Bill 2011.

The Carbon Farming Initiative is a voluntary scheme. There is no requirement on anyone to participate. But those that do will be eligible to receive carbon credits for every tonne of carbon pollution saved or stored.

These carbon credits can be exported or sold to companies that want to offset their emissions or to sell carbon neutral products.

The legislation seeks to balance environmental integrity with administrative simplicity. This is to enable broad participation in the scheme.

The government have made a number of changes to the proposal released for consultation earlier this year to reduce administrative costs. In particular, a lot of attention in the consultation process was focused on what was called the additionality test.

The additionality test has been now streamlined by removing the need to prove financial additionality. Instead, the government will identify and list activities that are not already in widespread use—that go beyond common practice. The government will consult with stakeholders, and may undertake surveys, to identify activities that are beyond common practice. We will adopt a common-sense approach that takes account of local conditions and industry circumstances.

Offsets reports will not be required once reforestation and vegetation has stopped growing and is no longer receiving credits.

Project proponents can choose a reporting period between 12 months and five years.

Audit requirements may be reduced for less complex projects.

This scheme will complement other government commitments to protect Australia’s unique natural environment and enable the development of competitive and sustainable farm industries.

This bill includes provision to exclude projects that have perverse impacts on water availability, biodiversity conservation, employment or local communities from the scheme.

Eligible projects will need to comply with all state, Commonwealth and local government water, planning and environment requirements.

Project proponents will also be required to take account of regional natural resource management plans. These provide a mechanism for local communities to have their say about the type and location of abatement projects.

The government will monitor the implications of the scheme for regional communities and on the environment.

If there is evidence that projects are likely to have a material and adverse impact, we will consider what further protections may be necessary.

On the positive side of the ledger, the government will make it easy to market the co-benefits of abatement projects.

We know that buyers in the voluntary market want projects that have positive environmental and social benefits.

Integrity of abatement

Carbon credits are used to offset emissions. The price that buyers will be willing to pay for credits will depend on their perceived environmental credibility.

Therefore, an independent expert committee, the Domestic Offsets Integrity Committee, has been established to ensure that estimation methodologies are rigorous and lead to real and verifiable abatement.

Other elements of the design of the scheme to ensure the integrity of credits include: issuing credits after the sequestration or emissions reductions have actually occurred; tracking of credits through a central national registry—this is included in the registry bill; transparency provisions including the publication of a wide range of information about approved projects; appropriate enforcement provisions to address non-compliance; and a robust audit scheme based on the National Greenhouse and Energy Reporting Scheme.

Carbon storage has to be permanent if it is going to be treated as equivalent to carbon emissions from the industrial sectors.

The provisions to deal with permanence are rigorous yet they are flexible and well suited to Australian conditions.

Participants would be able to cancel their project and hand back credits issued at any time, for example because they wish to sell the land or use it for something else.

Land managers would not have to hand back credits if carbon stores are lost because of bushfire or drought. This is a very important point to understand. Instead, land manager holders will be required to take steps to re-establish lost carbon stores.

Temporary losses of carbon following a bushfire or drought would be covered by a risk of reversal buffer where a proportion of the credits are withheld.

Conclusion

We must not let the debate that is raging over the carbon price stop us from making a start on land sector abatement through the Carbon Farming Initiative.

We need a long-term framework for rewarding land sector carbon abatement.

This will provide the investment certainty the sector needs to be part of the solution to climate change.

I commend the bill to the House.

Debate (on motion by Mr Turnbull) adjourned.