White Paper to Draft Legislation – ERF

In case you have not heard: The Clean Energy Regulator survives – it was an error the government has corrected on 7 May 2014. What was intended was to say the Clean Energy Fund is gone. Thank you Greg Hunt for your courage in having that clarified.

It is also hoped you heard late Friday 9th May 2014 the Federal Government released its exposure draft legislation for the Emissions Reduction Fund. They want you to be quick in responding -Two weeks have been given for the review, with submissions due EST 12 noon, Friday 23 May 2014.

The key matter is the draft legislation rebadges the Carbon Credits (Carbon Farming Initiative) Act. And:

  • A broader range of activities can create “carbon abatement” and include avoidance activities
  • A broader definition of additionality is given
  • A broadening of the authority of the Clean Energy Regulator
  • Establishing the Emissions Reduction Assurance Committee
  • Establishing that a yet to be (re)named CFI audit legislation will carry through the audit and assurance through the existing CFI audit legislation.

Why hoped you heard – well we did not want you going to sleep on us because we are boring!

Those that see opportunity are, for instance:

Currently celebrating their 30th year – Energetics consult and offer fee for service activities, and they say:

  • Immediately assess the abatement opportunities you have to create emission reductions to sell into the ERF
  • Understand your risk profile for future capital investments – has this shifted?
  • Assume you need a shadow carbon price
  • Comment on the draft legislation.

Of course the issue for their advise is for you to work out – www.energetics.com.au.

Those that see tragedy are, for instance:

The Climate Spectator www.businessspectator.com.au say,

“Half-baked outline

The half-baked nature of this scheme is revealed on the very first page of descriptive text within the Explanatory Memorandum, where it states:

The Emissions Reduction Fund … will allow businesses, local governments, community organisations and individuals to undertake approved emissions reduction projects and to seek funding from the government for those projects through a reverse auction or other purchasing process.

Government ignores its own red tape cutting advice

I was shocked to find no regulatory impact statement accompanying the ERF legislation, comparing this scheme against alternatives and why it represented a superior cost-benefit case.

Amidst a bonfire of red tape, the government had assured us that they were going to force public servants to see regulation in a ‘new light’ by following a seven-step guide to evaluating new regulations.”

Then finish off saying “I wonder when we’ll see the detailed cost-benefit analysis for the ERF relative to other regulatory alternatives, such as a simple price on carbon emissions.”

For CO2Land org the ‘scary spice’ is the mechanisms can change at any time at the whim of government – regardless of the pain you the business offered or suffered. Again the need for consistent policy is far greater than the words spoken to date. We also tend to agree with one aspect of Energetics spiel – prepare your alternatives. Just in case. And, you don’t have long to comment.

 

 

Movements – a Viable CFI methodology

Under debate for some time has been whether reforestation, and afforestation should be part of the CFI. It was thought only conservation planting was viable as a measure under Natural Resource Management (NRM) rules. In more recent times part of discussion was a concern that political movements would be disruptive.

Two announcements made by the Australian Government on these matters by newsletter on 12 April 2013 may be helpful for the debate. Namely:

  1. First reforestation and afforestation project approved, and
  2. No changes to methodology development following changes to the Cabinet.

Posted on April 8, 2013 by co2land, Makers – a Viable CFI methodology the point was made it is not a simple process to develop CFI Methodology and program rules are a major factor in participating, and the recent Government announcements will address most of those points (but not the coalitions position).

On point 1: The Clean Energy Regulator under the Carbon Farming Initiative has announced the first project using the Carbon Credits (Carbon Farming Initiative) (Reforestation and Afforestation) Determination 2013. There are now 53 projects approved under the Carbon Farming Initiative. All projects declared eligible under the CFI Act are published on the Register of Offsets Projects.

On point 2: Work on the development and assessment of Carbon Farming Initiative methodologies undertaken by the Department of Climate Change and Energy Efficiency (DCCEE) will continue apace under new Ministerial Responsibilities announced recently by the Prime Minister.

DCCEE’s energy efficiency functions will be have been transferred into the Department of Resources, Energy and Tourism (DRET) while the remaining policy functions currently performed by DCCEE, including the CFI, will be have been transferred to the newly-named Department of Industry, Innovation, Climate Change, Science, Research and Tertiary Education (DIICCSRTE).

Former DCCEE staff working on the CFI and other land sector measures will move to DIICCSRTE and continue their work accordingly.

Whether participating in CFI or not is still very much a matter of it depends on the location and the carbon sequestration rates that would be possible for it to be viable.

If we start by avoiding the cost of participation discussion, one non-scientific way to help you decide is to ask: Did the area to be used have really large trees present in the past? If yes it could be very viable. It follows that nature will want to regenerate those areas into large carbon rich forests. In gathering your evidence you could include old local history photos of the areas showing the large density of trees on them. In choosing a more scientific way: Gather the Lot & DP numbers and/or GPS points, and the CFI environmental tools should be useful to tell the landholder the likely sequestration rates. However, as we said in the former Co2Land org post the uncontrollable factor in proving if it is viable is the price of carbon. Notice it was not said the ‘carbon price’ as that is an artificial price set for the transition period.

If we focus on the cost of developing a methodology for inclusion into the CFI program register the major factor is cost in terms of the capability to enter into initiative. You may find innovation is required for a “creative” way to recover the cost of developing a methodology. Or is it? It follows that once published on the climate change website it becomes public information. However, it will still take some effort and there will be a need to lobby Government to allow the methodology to be used by another entity. In equity you should anticipate any agreement might require a royalty payment to the original developer.

If you can overcome the matter of cost, it becomes a question of what CFI environmental tools you refer to for the CFI Mapping and Reforestation Modeling tools. Also the methodology costs will depend on the level of verification and any additional research required, in many cases there are sufficient prior studies (such as survival & growth rates in the targeted region) and accepted calculation methods to do this could be found from a literature search, or you could talk to others trying to develop the same thing. It is understood the web page: http://www.greeningaustralia.org.au/our-projects/land/bio4 will promote further research on this matter.

One suggested project to study as a background search is the NSW Blacktown Council and their Regenesis Project. That project has lessons that can be of benefit to be aware of in your deliberations. One example lesson is they had a significant grant to develop their concepts and actually generated the first carbon credits only to have a later policy decision rule projects within urban boundaries to be ineligible. Notwithstanding, the core of their work is valid. You can view the Regenesis projects on the website – www.australiancarbontraders.com and then click on the Regenesis link on the front page.

So frustration will continue and innovation continues to be encouraged – for those eligible – and that suggests you need friends to be recognized as able to be innovative. At cross purposes you might argue!  An anonymous friend, name provided but withheld, said “in an entirely different forum some years ago we flagged this as a problem for the then announced Innovation Strategy. The senior public servant delivering the local launch responded: We can’t have people solving problems in unique ways that we can’t predict, you wouldn’t know where would it all end up!

It would seem the core problem with the current grant model is that it is primarily a funding model for the usual suspects, as practiced the truly (open) competitive component is only a small % of the funding available.

We need a better approach that covers needs of Universities and commonwealth and state research agencies separately.”

Then we hear funding has no longer been provided for strategic innovation!