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Wednesday, 6 July 2011
Page: 4115

Senator LUDWIG (QueenslandMinister for Agriculture, Fisheries and Forestry, Manager of Government Business in the Senate and Minister Assisting the Attorney-General on Queensland Floods Recovery) (10:17): I would like to thank senators for their contribution to the debate on the Carbon Credits (Carbon Farming Initiative) Bill 2011, Carbon Credits (Consequential Amendments) Bill 2011 and the Australian National Registry of Emiss­ions Units Bill 2011.

I would also like to thank members of the land sector and Indigenous working group for their important contribution to these bills. The government has listened and acted in response to the issues raised. The recommen­dations by the National Farmers Federation is a case in point, and today I will move an amendment to the Carbon Credits (Carbon Farming Initiative) Bill to add to the list of matters that must be considered to include whether there is a significant risk that that kind of project would have a significant adverse impact on land access for agricult­ural production.

The government has committed to create opportunities in the agricultural, forestry or legacy waste sectors for the creation of new revenue streams through the reduction or storage of carbon pollution. The Carbon Farming Initiative fulfils this commitment. It would contribute to improving farm productivity, create jobs in regions, provide new opportunities for Indigenous commun­ities, enhance our biosecurity and build resilience to the impacts of climate change. Around the country, innovative farmers, landholders and scientists have been developing ways to improve the health of agricultural soils, improve herd efficiency, recycle waste and to farm and manage their land more sustainably.

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 landscapes and protect biodiversity. Tree planting can help to address salinity and reduce erosion. This is important because the agricultural sector in Australia is likely to be one of the most strongly affected by climate change.

The Carbon Farming Initiative balances environmental integrity with administrative simplicity. 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. This committee is now consulting on five draft methodologies with more in the pipeline, including matters such as re­afforestation; forest management and native forest protection; savanna fire management; landfill gas recovery and manure manage­ment; and management of methane from livestock, soil carbon and biochaff.

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. We have also put in place arrangements to ensure that adverse impacts are avoided. Some have commented about the threat to prime agricultural land from tree planting. The government is confident that prime agricultural land is not at risk, and the legislative structure will prevent perverse outcomes: (1) while permanent tree planting will be rewarded, those responsible must take into account applicable natural resource management plans; (2) all state, territory and Common­wealth requirements must be complied with, including any water entitlements which may be required; (3) managed investment schemes will not be eligible because short rotation commercial forestry will fail the common practice test and management investment schemes will be explicitly excluded; (4) the economics of carbon credits are such that land use change is likely to occur on marginal agricultural land as evidenced by recent estimates of abatement by the department of CSIRO. It must also be remembered that the Carbon Farming Initiative is not just about tree planting but also covers a wide range of agricultural practices which reduce emissions, such as better fertiliser use, manure management and enhancing soil carbon. Many of these practices increase the productivity of prime agricultural land and this initiative will provide a new income stream for those who take up new and more sustainable farm practices.

The proposed legislation includes provisions to exclude activities that carry a high risk of adverse outcomes on the environment and local communities through a negative list which will be contained in regulation. The government will include activities on the negative list that pose a significant risk to the availability of water, to the conservation of biodiversity, to employ­ment or to local communities. These activities will not be eligible to receive carbon credits under the Carbon Farming Initiative. The Department of Climate Change and Energy Efficiency has under­taken a first-pass risk assessment of carbon forest activities and released this for public comment.

The government's position is that the following activities be on the negative list: establishing vegetation on land cleared of native vegetation since 1 July 2007, establishing a known weed species, establishing forest in conditions where it would risk impacts on the availability of water and establishing a forest as part of a managed investment scheme. The govern­ment recognises the need to monitor issues that may be raised with crediting metho­dologies and will engage with local government, natural resource management bodies and other stakeholders on whether additional activities should be added to the negative list. The government also recog­nises the need to act promptly with respect to these issues to ensure that perverse outcomes for biodiversity or agricultural land use are avoided. Negative list activities and the circumstances in which they apply will be tightly defined to avoid prohibiting low-risk projects.

With the content of the key regulations and the first methodologies now published, there is no reason to delay the passage of these bills. Investment in further metho­dologies and the underpinning science is dependent upon stakeholders having certainty that the initiative will actually go ahead. This is why it is essential for parliament to pass these bills and not continue to find excuses for delay. The environmental integrity of the Carbon Farming Initiative is essential to the value and credibility of the credits that are created.

The government recognises that some types of carbon projects indirectly cause emissions elsewhere in the economy through the effect of leakage. For example, a project based on preventing logging in part of our native forest estate could lead to an increase in logging elsewhere in the country if demand for timber remains. If unaddressed, leakage can reduce or even obviate abate­ment from such projects. The regulatory framework requirement for streamlined accounting treatments for leakage are to be incorporated in the methodologies. The Department of Climate Change and Energy Efficiency is currently developing mandatory guidelines to establish the accounting rules for dealing with leakage. This will be based on a discounting approach which identifies the likely risk and extent of leakage for projects based on forecasts about supply and demand in the relevant market. The government will work closely with key stakeholders to develop this guidance.

Another key to environmental integrity is the risk of reversal buffer. The government recognises the need to keep this under review as further evidence is gathered of potential risks. The CSIRO is well placed to do further work in this area.

The government is committed to ensuring Indigenous Australians can participate in and benefit from the Carbon Farming Initiative. The first methodology to be released for public comment under the Carbon Farming Initiative, 'savanna fire management', could inject over $2 million of revenue each year to projects such as those in western Arnhem Land. The government is consulting with Indigenous Australians to work through implementation issues with this initiative. In committing to ensure that they stand to benefit to this end, clarifying the consent rights of non-exclusive possession with native title holders will be important.

The government also recognises that other groups may need to be prescribed by regulation as having eligible interests, in particular those who hold mining leases over an area of land or have a legitimate interest in projects involving the same area of land, will be prescribed as eligible interests. The government also accepts the need to work with natural resource management bodies to improve the consistency of regional plan­ning. The government recognises the need to help build carbon literacy amongst land­holders and has already engaged Landcare facilitators to communicate the benefits and responsibilities involved with the initiative to interested stakeholders. We will continue to work with landholders, including Indigenous leaders, to ensure that they have the greatest ability to capitalise on the benefits of this very substantial opportunity for regional Australia.

In summing up, these bills before the Senate today will provide real opportunity to regional and rural Australians to be part of the climate change solution. We do appreciate that this sector needs to learn more about the potential abatement oppor­tunities by making a start with the Carbon Farming Initiative and getting projects on the ground. I commend the bills to the Senate.

I table two replacement explanatory memoranda, relating to the Carbon Credits (Carbon Farming Initiative) Bill 2011 and the Australian National Registry of Emissions Units Bill 2011.

Question put:

That the amendment (Senator Birmingham's) be agreed to:

The Senate divided. [10:33]

(The PRESIDENT—Senator Hogg)

Question negatived.