The Carbon Farming Initiative Amendment Bill and the Emissions Reduction Fund

The Carbon Farming Initiative Amendment Bill 2014, which gives legislative effect to the Emissions Reduction Fund, passed the Senate with amendments on 31 October 2014.

The Emissions Reduction Fund is the centrepiece of the Government’s plan to achieve Australia’s five per cent emissions reduction target by 2020. It builds on the Carbon Farming Initiative to create incentives for businesses and communities across the economy to reduce greenhouse gas emissions.

What does the Bill do?

The Carbon Farming Initiative Amendment Bill 2014 does four key things:

1. It expands the existing Carbon Farming Initiative framework for crediting emissions reductions to cover the broadest possible range of emissions reduction opportunities across the economy.
2. It empowers the Clean Energy Regulator to conduct auctions, enter contracts and purchase emissions reductions.
3. It streamlines existing processes to simplify the use of methods and encourage economy-wide participation.
4. It also provides transitional arrangements for existing Carbon Farming Initiative participants.

What amendments to the Bill were agreed?

Agreed amendments will:

• allow the standard purchasing contract between the Clean Energy Regulator and participants bidding into the Fund to be seven years,
• give the Emissions Reduction Assurance Committee – the independent committee that advises on methods governing the conduct of emissions reduction projects – an additional review function around whether to increase crediting periods,
• expand the role of the Emissions Reduction Assurance Committee in making, varying and suspending methods and enable the public to ask the Committee to review methods,
• establish a framework for the safeguard mechanism to commence on 1 July 2016. The details of the safeguard mechanism will be developed by the Government in consultation with business,
• expand the objects of the Act to incorporate future international climate change agreements, if any,
• give savanna burning projects a 25 year crediting period, and
• reinstate natural resource management plan requirements.

The Bill also includes minor Government amendments, which will ensure the smooth implementation of the Emissions Reduction Fund, including arrangements to assist avoided deforestation projects to transition to the Fund.

What are the next steps?

The amended Bill will come into effect once passed by the House of Representatives and the Bill is proclaimed. This will allow the Clean Energy Regulator to hold the first Emissions Reduction Fund auction early in 2015.

More information

Details about the Emissions Reduction Fund are available at

www.environment.gov.au/emissions-reduction-fund

Details about the Carbon Farming Initiative Amendment Bill 2014 are available at http://www.aph.gov.au/Parliamentary_Business/Bills_Legislation/Bills_Search_Results/Result?bId=r5280

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