GIBBS, Mr Mark, General Manager, Climate Change Policy, Department of Agriculture, Fisheries and Forestry

STUART-FOX, Mrs Maya, Assistant Secretary, Carbon Farming Policy Branch, Department of Climate Change and Energy Efficiency

STURGISS, Mr Robert George, Assistant Secretary, Land Analysis and Accounts Branch, Department of Climate Change and Energy Efficiency

THOMPSON, Mrs Shayleen, First Assistant Secretary, Land Division, Department of Climate Change and Energy Efficiency

CHAIR: We have heard from a number of people who have made submissions to the committee during the course of the day and there will be some questions arising from those submissions. Mrs Stuart-Fox made a presentation to the committee this morning. Mrs Thompson, is there anything else you want to add to the presentation that was given to us—albeit you were not here so I assume you may not be aware of everything that was said to us.

Mrs Thompson : We have prepared a formal opening statement for the committee, which I am very happy to read out if that would assist.

CHAIR: Sure.

Mrs Thompson : The Land Division has responsibility for the work on the carbon farming legislation. The Carbon Credits (Carbon Farming Initiative) Bill 2011 fulfils the government's election commitment to give farmers, forest growers and landholders access to carbon markets. This will begin to unlock the abatement opportunities in the land sectors, which make up almost a quarter of Australia's greenhouse gas emissions. The land sectors have an important role to play in Australia's climate change response. Our natural assets mean that while we have some of the highest agricultural emissions in the developed world there are also significant opportunities to increase carbon storage on the land. Action taken to reduce emissions or increase carbon storage under the Carbon Farming Initiative is also likely to help increase the land sector's resilience to the impacts of climate change, protect our natural environment and improve long-term farm productivity.

We have already made substantial progress in these areas with more than $46.2 million invested into research and development of abatement in climate change adaptation options for the Australian land sectors. CFI will provide new incentives for farmers to adopt new ways of improving the health of their soils, improving herd efficiency and farming more sustainably. The government has developed methodologies for manure management, landfill emissions, savannah farm management and reforestation. We are working with stakeholders to develop methodologies for soil carbon, reductions in livestock emissions and for application in the range lands. Private proponents are also coming forward with methodologies. The Carbon Farming Initiative provides these incentives in a way that does not see the government itself trying to pick winners. It provides a mechanism for farmers to add value to their actions and decide for themselves whether or not there is sufficient incentive to invest. 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 greenhouse gas saved or stored. These credits will be able to be exported or sold here in Australia to companies or individuals wishing to offset their emissions or sell carbon neutral products. The scheme has been designed to encourage broad participation without compromising the environmental integrity and market value of the credits generated.

Submissions from a diverse range of organisation—including carbon businesses and established abatement providers; representatives of the agriculture, forestry, landfill and clean energy sectors; regional natural resource management bodies; state governments and environmental non-government organisations—all welcomed the CFI legislation and noted its potential to contribute to the national emissions reduction effort. The National Association of Forest Industries, for example, said that it considers the CFI to be an important interim measure to provide investment certainty and access to voluntary domestic and international carbon markets. The Wentworth Group of Concerned Scientists said that the legislation represents a sound market based approach for achieving land sector abatement and that it establishes a solid framework for taking advantage of Australia's potential for biosequestration. The National Farmers Federation also welcomed the introduction of the legislation to parliament, noting that many of its initial concerns about the scheme's design had been addressed through the consultation process. Indeed, several improvements were made to the legislation following widespread consultation with stakeholders earlier this year. The changes simplify aspects of the scheme's administration and will further reduce participation costs. They also provide stronger safeguards against potential adverse impacts from abatement projects.

The key change has been the streamlining of the additionality test. Individual project proponents will not need to demonstrate their project's additionality to the scheme administrator. Rather, the government will identify and list eligible activities that are not already in widespread use and deem these to be additional in regulations. The government will consult with stakeholders to identify activities for inclusion on the list. To be eligible an activity would need to go beyond common practice in an industry or under specific regional or environmental circumstances. Other aspects of administration that have been streamlined include reporting and some audit requirements. Proponents will be able to choose a reporting period between 12 months and five years. Auditing may also be reduced for small or less complex projects.

The bill includes an objective to achieve carbon abatement in a manner that is consistent with the protection of Australia's natural environment and improves resilience to the impacts of climate change. Activities that have a high potential for adverse impacts on regional communities' water and biodiversity will be ineligible for Carbon Farming Initiative credits and listed in regulations. Eligible projects will need to comply with all state, Commonwealth and local government water, land-use planning and environmental regulations and to take account of regional natural resource management plans.

CHAIR: I might stop you there, because this is the exact statement that you have provided to the Senate committee, and members have access to that if they want to read the full statement. Given that I am aware that some members have a plane to catch and a number of questions arise from today's hearings that we would like to put to you, could you just wrap up your opening statement by summarising any critical issue that you feel the committee would not be aware of. We will then go questions, if you do not mind.

Mrs Thompson : The main changes that we have made to the statement following on from the Senate committee have already been put into my opening statement, so we are happy to take the statement as read if in fact it has been provided to the committee and move on.

CHAIR: Thank you. I note that there are a number of questions. Ms Hall?

Ms HALL: One issue that has arisen today that is important to me is around carbon literacy and the plans the department may have to deal with carbon literacy amongst land users and within communities generally so that they will be more inclined to embrace this legislation and the programs that will be available under it. Given that there can be some resistance to new ideas, and carbon farming is a new idea, it might be useful if you could share with the committee ideas and initiatives that will be undertaken in that area.

Mrs Thompson : The carbon farming initiative also included some quite specific information provisions and outreach activity for farmers and other landholders to address, as you say, the particular problem that you mention.

Ms HALL: Did you say 'included'?

Mrs Thompson : Yes. I will invite my colleague from DAFF, Mark Gibbs, to tell us a little bit more about that stream of work, given that DAFF takes the lead on that.

Mr Gibbs : What Mrs Thompson is alluding to is that under the CFI package there is $4 million dedicated to using the Landcare movement to extend it and work with land managers to implement the CFI, the Carbon Farming Initiative. We have set up a steering group to implement that initiative and we have looked at things like carbon literacy. Members of that steering group are very keen on carbon literacy, recognising the points that you have made—that we have a new piece of legislation. We need to start talking with land managers about what that bill means and how it is implemented. We figure that the best way to start that is to use a group like Landcare, with their 56 regions. One thing that will come out of the CFI is that no regions are the same. They are different. Having these people within a regional context means they can talk to farmers about different elements. To work with the Landcare managers we will be doing some activities. We have already held a national forum with the Landcare managers. We are also starting to prepare some course material that goes through the basics of the Carbon Credits (Carbon Farming Initiative) Bill. It is a training module for working with that Landcare network. We will be doing some further work on the key messages and how we give those key messages to farmers in the right way, which builds their knowledge around the Carbon Farming Initiative and the opportunities that are there for them.

Ms HALL: And will this be ongoing?

Mr Gibbs : This is for another three years after this financial year.

Ms HALL: Good. The next issue to raise is that we have received a submission from Andrew Macintosh. He provided evidence to the committee just before you. In his submission he suggested that there could be some unintentional, perverse outcomes. His suggestion was that the CFI be linked to the regulations made under part 3, section 25 of the EPBC Act.

Mrs Thompson : We saw that suggestion in Mr Macintosh's submission. Our feeling is that the carbon farming bill contains a number of provisions to address the potential for perverse outcomes from carbon farming projects. The most important of those I mentioned in my opening statement, which is this proposal we have for what we are calling a 'negative list'. That will create in regulation a list of activities that are ineligible under carbon farming so that they will not be able to be undertaken. The proposal is that we will be consulting with stakeholders very soon on the items that should go on to the negative list. Then that will be brought forward as part of this process.

One of the strengths of the negative list is that it means that you can actually be quite specific about the particular adverse impact that you are trying to avoid, even going down to a local or catchment level with respect to the particular environmental conditions that are in place there or that are associated with the activities of a particular sector. So we think it is going to be a very powerful tool for ensuring that we do not in fact have the sorts of problems that Andrew Macintosh is looking to solve. I guess our feeling on this is that it is better to use the regulatory architecture specifically for carbon farming to address those particular problems rather than going through a bill like the EPBC Act, which we think will risk the potential of being less targeted to the particular problems that the CFI has. To put it another way, we think the best way of solving issues associated with the CFI is within the CFI legislation itself.

Ms HALL: The Wentworth Group also gave evidence today and they put forward that this was an opportunity to pay farmers to manage land. They emphasised that it was basically a once-in-a-lifetime opportunity to get it right. They emphasised the need for planning and putting in place the right sort of approach, one that was really well planned. Would you like to comment on that and whether or not you see that provisions within this legislation are adequate to cover the planning needs not only from a Commonwealth perspective but also pulling in the states and local governments as well?

Mrs Thompson : One of the other elements that carbon farming has also to address this potential for adverse outcomes is to draw on the catchment management plans, and I know that is one of the issues that the Wentworth Group raised in their submission. Our proposal is that each of the 56 catchment authorities prepare plans that try to balance the land uses in their particular local regions, and we are saying that carbon farming offsets projects need to take account of these plans. They are actually a very important way, we think, of giving local communities a say in the land use planning decisions that go on in their local areas.

It is the case, we acknowledge, that the plans vary a bit at the moment in terms of how well they deal with climate change mitigation or emissions reduction approaches and also with looking ahead to adapting to climate change impacts. So what we are wanting to do with the plans is to work with departments like SOPAC, the environment department and also our colleagues in DAFF, to ensure that the plans are enhanced in their ability to deal with these issues. In that regard, we are planning a workshop in early June with a number of the representatives from the catchment management authorities and also people with expertise in terms of adapting to climate change and thinking about how best to deal with land use impacts with a view to improving these plans' ability to address the needs of the carbon farming initiative.

Ms BURKE: The NRM chair this morning made that very comment. One of her difficulties was that they are state regulated and so in various places—and some are just voluntary groups—what was envisaged under the National Heritage Act has not come to pass. So her argument is that the 56 are not operating on the level as envisaged by this act and they will need a lot more money to come up to speed and a lot more direction from state government to ensure that they are complying with state government requirement as well as your requirements. Some of these groups are voluntary organisations coming together and, as the Chair said, they do not have the capacity to do all that and it is going to require a little more than a workshop to get them there.

Mrs Thompson : I think that it is a well-known point that a journey of a thousand miles begins with a single step. Of course the workshop would be the beginning of an effort to address the sorts of issues you are referring to. I think that it is worth bearing in mind that the Commonwealth's approach to the catchment management plans and the catchment management bodies is mainly done through the Caring for Our Country program that is jointly administered by the environment department and DAFF, and there is actually a review of Caring for Our Country going on at the moment. So this effort with a workshop is not a one-off or a single shot in the locker; it is actually the beginning of what would be a much longer process to address and deal with the sorts of concerns you are just raising.

Ms HALL: That was a very good point, Anna. I have had a lot of dealings with total catchment management groups and I know that they vary considerably. They can be quite political bodies and that can interfere with the operations that the department has planned for them. You need to be cognisant of that fact. We really want this legislation to work; it is good legislation. We need to put in place the right sorts of safety mechanisms to ensure that it does.

Mrs Thompson : I want to be a bit clearer on that, because I might not have been as clear as I should have been. What we are really saying is that we agree that the catchment management bodies and plans vary in terms of their capacity and nature and so forth across the various jurisdictions. But we see them as the vehicles for local communities to use to have their say in terms of what land use activities happen in their regions. We see the main vehicle for dealing with the perverse outcomes problem—and these perverse outcomes can range from problems to do with local biodiversity or with water or whatever—as being the negative list that I was talking about earlier. We are really looking at a multipronged approach, if you like, in dealing with these sorts of problems. The main role of the catchment management plans is engaging local communities and allowing them to have a say in what is going on in their areas.

Ms HALL: This question flows on from something that I mentioned earlier this morning when Mrs Stuart-Fox came and spoke to us. I asked whether there are any similar schemes operating anywhere internationally, and we talked about the Chicago one.

Mr Gibbs : Alberta.

Ms HALL: That is where I am coming to. The scheme in Chicago is folding up. We found out later that there is a similar scheme in operation in Alberta, Canada. We want to check whether or not that is operating and to what degree the department has looked at it.

Mrs Stuart-Fox : My understanding is that it is operating. There are methodologies that are developing over time. We have looked at it in the design of this scheme. But, having said that, we are very aware of the particulars of Australia's natural environment and the variability in our landscape. While we have looked at overseas schemes and learnt a lot of lessons from them, in terms of the way that this scheme has been designed it has been very driven by the interests and needs of our particular stakeholders and landscape.

Ms HALL: If you have looked at that Alberta scheme, how successful has that been?

Mrs Stuart-Fox : One of the issues with these schemes is the demand side. One of the issues there is that you do not have a huge amount of demand in those schemes. It is similar to things like the CDM or the voluntary carbon standard, which also credits land sector abatement. The amount of abatement that those schemes generate is partly a product of the way in which those schemes are designed—what sorts of integrity standards and administrative processes and order processes that they have—but large a product of how much demand you have coming in. If you have voluntary demand, it is going to be reasonably small. The fact that you have low levels of demand does not necessary mean that the scheme has been poorly designed. It is just the fact that there is no mandatory obligation and voluntary demand can be quite low. So it can be difficult to draw conclusions about the success or otherwise of a scheme from the amount of abatement that is being pulled through.

Ms BURKE: To clarify, we are living in a new paradigm. We have had these bills referred to us by the select committee. We have not chosen to drag you out today. In our new world, House committees can have bills referred to them in very much the same way as Senate committees. This is not something that we have dreamed up. Someone from one of the parties, and they do not have to give us a reason, has asked us to investigate the bills. We are trying to do it as quickly as we can. As I said to Mrs Stuart-Fox today, we recognise the difficulty in that there is a Senate inquiry happening with a report coming out and we are about to do one as well. So we do not want to make your life any more difficult than it already is but, at the same time, it is complex legislation and we would rather get it right now. We have already lived through one set of this legislation not getting up. Hopefully the second time round we may be more successful. One of the issues that keeps coming back is methodology. Some people are worried about a list. One of the groups said: 'It should be project by project.' It should be an overall assessment so that the perverse effects and the leakage, all those concerns, can be dealt with. It is not a list where you just tick a box; it must be whether it works. If you move the cows from here, has someone replaced them with cows somewhere else? So we need to look at the whole picture. Do you envisage that legislation will actually work like that in the end or is it going to be literally project by project?

Mrs Thompson : My own view is that, in toto, the culmination of the regulatory framework for the carbon farming bill is actually an extremely effective way of dealing with all of those concerns. The bill has in legislation the requirement for permanence—and I gather Mrs Stuart-Fox talked to you about those had this morning. With respect to the methodologies and issues like leakage, we are saying that projects will need to have an appropriate and relevant methodology to govern how they are going to deal with the estimation, reporting and verification that applies to all the projects that would fit under this particular methodology. That means that you can have quite a granulated approach to dealing with those issues. With respect to leakage, I think it is quite important to be clear about what the concern actually is. Sometimes when people talk about leakage, they are actually talking about emissions that result from the project activity and are within the control of the proponents themselves. It might be something like getting more fossil fuel emissions from transport than you otherwise would as a result of doing the project. The methodological guidance that the department has issued makes it very clear that those sorts of emissions need to be captured within what we are calling the 'greenhouse gas assessment boundary' that is part of the methodology that applies to this particular types of projects.

With respect to other sorts of leakage, you can have what is known as a leakage effect whereby there is an increase in emissions that is not actually within the control of the project proponents themselves. An example might be that a farmer decides to take action to reduce methane from his herd. This would lead to increased costs for him. The farmer down the road then meets the gap in demand by increasing his cows, say. The department have said that we are aware of that as a particular problem. The methodological guidance indicated that what we would be doing on that is holding a workshop in June to discuss with stakeholders some approaches to deal with that production affect leakage and then they will become part of the regulatory package that sits alongside carbon farming. We have indicated to stakeholders that that might involve some discounting of the permits that they might actually get.

If you look at the whole of carbon farming and all things it puts in place—the positive list for additionality, the negative list to address perverse incentives and the rules for methodologies, which will themselves be legislative instruments that go before the parliament for approval—you have an approach that is actually very well designed in terms of dealing with all these problems from the land sector.

I made a presentation on carbon farming to a number of international visitors this week and their view was that we had in fact solved four problems that had been befitting the international climate negotiations and project level approaches for offsets for many years, and they thought it was one of the best designs they have seen. That is a view that is also shared by Professor Garnaut and Will Steffen, who is one of the leading climate change scientists.

Ms BURKE: I know Will; we all know Will.

Mrs Thompson : You know Will very well, yes.

Ms BURKE: I will declare that I am on the board of ClimateWorks Australia, so I have met Will Steffen. I suppose I should have declared that at the beginning, shouldn't I? I have just been appointed to the board of ClimateWorks Australia. One of the other things, leading on from that, is the notion of buy-in and the list not being ready when the legislation goes. The list is not going to come when these bills are being put up. So there is a concern that we are buying into something but we actually do not know what we are buying into. The negative-positive list is not there yet. Are we putting the cart before the horse? Should we wait for that to be done? I know that is a policy question and it is a little unfair to ask that, but is there a need to do this now so that you can actually get that list in train, or should it wait for the list to be there?

Mrs Thompson : I think of one of the challenges with taking these approaches and having the negative and the positive list is that, as I said, we are looking to design them quite explicitly to be very tailored to particular local conditions and needs. That means, in my view, that it is something that is very difficult to do in legislation. You actually do need to do it in regulations so that you can have the consultation process on it and you need the capacity to change it as new information and scientific evidence come to light. I think there are some very sound reasons for doing it in regulation. We are intending to begin the consultations on both the negative and the positive list very soon. We also have put in the explanatory memorandum of the bill a number of examples for both the negative and the positive list to give people a bit of a feel for what we have in mind. If it would help, I can ask Mrs Stuart-Fox to take us through some of those.

Mrs Stuart-Fox : I can do that. We talked briefly about it this morning. On the positive list are things that are not commercial activities and are now unlikely to happen without a carbon incentive. They are things like savannah fire management, establishing environmental plantings, capturing and flaring methane from piggeries and other intensive farm operations, and capturing and flaring methane from landfill. They are some of the things that you would imagine would be on a positive list.

On a negative list you are really looking at perverse outcomes. We talked about overallocated catchments, but you also want to prevent perverse outcomes such as clearing existing trees to plant new trees. So we would say that if you have just cleared the trees then we are not going to give you credits for then replanting them. That is something else. There is also the conversion of existing plantations established for harvest, for example, under those MIS schemes. All of a sudden it might not be viable to harvest those, so people are saying, 'Could I convert it into a carbon sink?' There are problems with trying to keep commercial plantations established for harvest and then keeping them for very long periods of time. We are saying that that is something that you might include on the negative list.

Ms BURKE: Would that also include the fear of using good arable land? In the long run, planting a forest might be more commercially viable, a bit like the wonderful tax schemes you have just referred to.

Mrs Stuart-Fox : When we have looked at it, the economics of doing that make that highly unlikely. When you have an agricultural activity you are of course getting a revenue each year that is ongoing, whereas if you plant a carbon sink it generates revenue for a period of time and then that stops and you have to hold it. So the economics make it very unlikely that you would convert it. But if there were concerns about it then the negative list would be exactly the way that you would address that.

Mrs Thompson : In fact, what we are saying is that commercial forestry, which was so strong incentivised by MIS, generally will fail a common practice additionality test, so that is not going to be raising that sort of concern.

Ms BURKE: As you have seen, the notion that good arable land is going to go to trees has been raised in most of the submissions. The other issue, which nobody has really brought up, is planting crops for ethanol. I am surprised nobody has mentioned that and food scarcity. People usually do. That is the other use of the land.

You were saying that with the Alberta model you cannot measure the abatement, but we are proposing a voluntary model at the outset. Have you done any analysis about what you think will be the take-up rates and how successful this scheme is going to be?

Mrs Thompson : The department has done some initial analysis of what we think the abatement will be from carbon farming. I will ask my colleague Mr Sturgiss to take us through that.

Mr Sturgiss : I manage the land accounts analysis branch in the land division. Just before Easter we issued a discussion paper as we were trying to plug an information gap. The technical potential of abatement in the land sector has been well discussed. Professor Garnaut has discussed it in detail. It is a story that has been around for a while, and we have known for a long time that the land is a significant contributor to abatement. This document is trying to bring together some realistic and achievable estimates of abatement that are linked to a carbon price, which is consistent with prevailing prices in international markets currently. We are bringing it all together across all the different sources. We put an estimate in the range of five to 15 million tonnes of abatement by 2020.

Mrs Thompson : In 2020.

Mr Sturgiss : An annual abatement of that range. Compared to the technical potential, that is a small number but compared to the abatement achieved by many other government programs, it is going to be a contributor in future.

Mrs Thompson : I think the takeaway point is that we are expecting a fairly modest uptake of carbon farming in the initial years of the scheme. Part of that is because we believe there are a number of barriers to landholders taking on some of these practices. In some cases, the methodologies do not yet exist and will need to be prepared. In addition, because of the additionality test, you will of course need projects to get their method approved, be implemented on the ground and then start sequestering carbon.

Even though the abatement is fairly modest in 2020—and I should emphasise that is a point estimate of what you would get in 2020; we have not quantified what you would get in the lead-up to 2020 and beyond that—we think that once landholders and farmers start becoming familiar with the opportunities for carbon farming once the methodologies are there, you would be looking at a much stronger abatement uptake going forward. Of course if the international rules change so that some of the abatement that is sitting outside Australia's Kyoto accounts is brought in, you would expect to see a bit more uptake from the non-Kyoto abatement like soil perhaps going forward.

As Rob is saying, between five and 15 sounds fairly small but that is still second only to the renewable energy target in terms of current measures and what they are delivering in terms of emissions reduction. It is a not insignificant contribution to the abatement effort.

Dr WASHER: I am fine. All the questions I was going to ask have been asked, so I am pretty content. I will make a quick comment: in one of the presentations the presenter felt that the 100-year permits rule was a bit of a disincentive to people when perhaps it was not necessary, because if you did not continue the credits would be taken back from you and there would be a penalty to pay. That would be a disincentive not to continue. I thought you might comment on that.

Mrs Thompson : We understand the concerns around permanence and that it will act as a barrier to uptake. I think the bottom line is that carbon farming has been designed for the voluntary market and permanence is one of those things that is an absolute requirement. Of course the problem with biosequestration, unlike emissions reductions from fossil fuels and other sources, that particular quantum of abatement that is stored in the trees or the soil, can be returned to the atmosphere. If that happens, you do not get an environmental benefit at all. The 100 years is really a proxy for in perpetuity, if you like. It just gives it a finite end point. We understand people's concerns about the permanence requirement but we believe it is absolutely essential to the environmental integrity of the scheme.

Mrs Stuart-Fox : And the value of the credits.

Dr WASHER: Thank you—I did not necessarily agree with the comment but I wanted you to elucidate.

CHAIR: There are a couple of things that have risen over the course of the day. Firstly, in respect to the Indigenous consultation, there was a presentation made to us—can you just outline for me how you intend to continue that consultation with Indigenous people?

Mrs Stuart-Fox : We envisage a two-pronged approach. There are a lot of complicated legal issues and a number of these organisations, particularly the land councils, have very significant technical capacity. So we would look at targeted consultation with representatives of those organisations to talk through some of the very complicated native title issues and related matters. But there is also, within Indigenous communities and regional areas, great interest in and demand for information about carbon opportunities. So we are looking at doing a roadshow of regional areas in conjunction with the Department of Education, Employment and Workplace Relations and FaHCSIA to provide a range of information in a whole-of-government way—not just what the carbon market opportunities are, but also what capacity-building or other assistance DEEWR and other agencies might be able to provide.

CHAIR: Mrs Thompson ,you referred in your opening comments to the amount of money that had been invested in research and development—I think it was $46 million last year—and also to the level of support for this initiative. Is there any significant opposition to this legislation from any sector?

Mrs Thompson : That is a very good question. Our understanding is that, as I tried to say in my opening statement, people—stakeholders—are generally very supportive of the bill and the approach. Having said that, I think people are using possibly this committee and also the Senate committee as an opportunity to raise the issues that they feel still merit some attention. I guess it is fair to say that the forestry industry would prefer that we did not have the additionality test that we are applying to commercial forestry. They would obviously have preferred it if the government had adopted the same approach as it had for the Carbon Pollution Reduction Scheme, although I should say that that is an issue that is still under consideration. As far as I am aware, that is the only sector or industry that has raised a very serious concern.

The discussion this afternoon has, I think, highlighted the issues that people have raised. I think, though, that it is a matter of putting together an approach that balances environmental integrity with creating an incentive for farmers and landholders to take action on their land. One of the unknowns about carbon farming is how the market will indeed respond to there being, for the first time, this very clear legislative framework to underpin people taking these sorts of actions. I think that is the great strength of carbon farming—that it offers the opportunity to road-test the research that our colleagues in DAFF have been funding for some time and actually see how it can work on the ground.

One of the issues that people talk about a lot in that context is the differing views about the potential for soil carbon. I think the fantastic thing about carbon farming is that for the first time people will be able to do these projects and see how much they can actually deliver on the back of a methodology that will be assessed through the Domestic Offsets Integrity Committee. I think the potential for learning by doing and for road-testing approaches to deal with climate change for sectors that have not really had that opportunity before is going to be really significant.

CHAIR: I mentioned the $46 million in research funding because I believe that that may be coming to an end—if it has not already ended—and two other submissions clearly ask for more research dollars in order to support this legislation. The soil carbon example is a good one—we need far more scientific research in order to determine just how effective it is and how you can put the methodologies in place to grant the necessary credits. Are you aware of any proposal to do that—to invest in additional research to enable us to effectively put into place this very proposal?

Mrs Thompson : There are a couple of things. A number of the stakeholders, as you say, have raised this desire for more research and development and outreach funding to support carbon farming, so that is something that government is thinking about. The other thing I should say, though, is that the government is providing quite a lot of support to the development of the methodologies, and that is looking to pick up the outcomes of the research work that Mark's department has been doing over the last few years and putting it into this methodology that will give people the wherewithal to start doing these projects and estimate the emissions reductions on the ground. The department have work streams in place, and we have set up technical working groups with stakeholders, scientific experts and so forth who are working together on putting these methodologies in place, supported by the department. Soil is one of the ones that are in that work stream. We also have work going ahead on avoided deforestation and a few of the others.

So I would not want the committee to not understand that the government is actually doing quite a bit at the moment to support that effort; it is just that it is being done through a collaborative partnership-type approach rather than through giving people grants to go off and develop up some more of these methodologies.

CHAIR: Finally from me: the question of the 100-year life span of a project was also raised, and I have two questions on it. Firstly, it was suggested that it complies, or fits in, with international standards, and I just want confirmation, if you can confirm that, that that is the case. Secondly, I believe it was the Wentworth Group of Concerned Scientists who suggested that people can in fact withdraw from the scheme by in turn purchasing the credits that they were paid for in the first place. Is there any justification for having any timeframe on the scheme at all?

Mrs Stuart-Fox : There is some history to this. When we first did the CPRS, which had a very similar permanence model, we had no time limit on it; it just had that if at any point you chop the trees down you hand back the permits. Industry came back and were sort of perturbed by this, and they asked for a time limit on it. We then did various bits of consultation around time limits, and there was not an awful lot of difference between 70 years and 100 years, because it is beyond anybody's lifetime and beyond normal contractual or payback periods. So, because 100 years was consistent with international thinking, it has become a bit of a proxy for permanence. It was felt that there was not a lot of impact on the project proponent—none of us are going to be around—but in terms of 100 years it gave that integrity to the credits and enhanced their value quite considerably.

That is a little bit of a background to the way that that thinking about that number has evolved.

Dr WASHER: Thank you very much for coming back and for answering those questions for us. I am sure that you have probably had to go through this again with the Senate committee. As I think I explained to you earlier, that is not our doing, but we will provide our report ASAP. Obviously that is what we are trying to do, and that is why we are trying to complete the hearings today.

Mrs Thompson : I just want to apologise again for being late and for us not getting the message that you wanted us early. Given that our time got a bit truncated as a result, if there are any other questions or anything else we can assist the committee with, we would be very happy to supply those by e-mail or indeed to come back up and talk to one or all of you, if that would assist.

CHAIR: Thank you very much for that.

Committee adjourned at 16 : 19