Critical Issues in Environmental Taxation series
Edited by Larry Kreiser, Ana Yábar Sterling, Pedro Herrera, Janet E. Milne and Hope Ashiabor
Chapter 12: Linking land sector activities to emissions trading: Australia’s carbon farming initiative
The Australian Government’s comprehensive response to the global challenge of climate change, the Clean Energy Plan, centres on the establishment of a price on carbon through an emissions trading scheme (cap and trade mechanism) with a transitional fixed price period, which effectively acts as a carbon tax in this period. An important component of the overall strategy includes the creation of incentives to sequester carbon and reduce emissions in the land use sector, including forestry and agriculture. These incentive measures have been gathered together under the banner of the Carbon Farming Initiative and have gone far beyond the reforestation incentives included in the earlier, failed Carbon Pollution Reduction Scheme. This chapter provides an overview of the main features of the Carbon Farming Initiative and highlights the breadth of project types contemplated by the scheme, as well as the scheme design features that have been included to improve the efficiency and transparency of the scheme’s operation. The chapter commences with an overview of the Clean Energy Plan and its link to the Carbon Farming Initiative. The chapter will proceed to describe the various scheme processes that lead to the declaration of an eligible offsets project and analyse the types of project that may be eligible, including a discussion of the Government’s ‘positive list’ and ‘negative list’ approach. The paper will then describe the reporting mechanism and the features of the scheme designed to ensure permanence of sequestration.
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