The Emissions Reduction Fund: Carbon Farming Initiative Transition

Department of the Environment, 2014

The Emissions Reduction Fund will build on the Carbon Farming Initiative (CFI). An automatic transition of existing CFI projects into the Emissions Reduction Fund will ensure that land managers are well-placed to participate in the Fund.

How do CFI projects transition to the Emissions Reduction Fund?

Existing CFI projects will automatically be registered under the Emissions Reduction Fund. Projects will receive a second crediting period starting from the commencement of the Fund.

Changes to current methodologies and new methods will not affect declared projects. Registered projects will have the option to continue to use the version of the method in force when their project was approved or may apply to use another applicable method.

How will new land sector projects be treated?

Until 1 July 2015, applications for new project registrations can be lodged under the eligibility rules and methods which are currently in place under the CFI.

From 1 July 2015, new applications will be assessed under the Emissions Reduction Fund eligibility rules and must apply the most up-to-date version of the relevant method.

What methods will be available for CFI activities?

Existing CFI methodologies can be used under the Emissions Reduction Fund, unless and until they are varied.

CFI methodologies may be streamlined or new Emissions Reduction Fund methods developed for existing CFI activities.

How will CFI project proponents sell credits under the Emissions Reduction Fund?

CFI project proponents can submit their projects into a competitive auction run by the Regulator. If the project is successful at auction, the Government will enter into a contract to purchase Australian Carbon Credit Units generated by the project for the life of the contract.

What are the changes to reporting and verification?

The reporting and verification arrangements under the Emissions Reduction Fund will build on and streamline those already in place under the CFI.

CFI project proponents will still need to report on their project to receive credits. Proponents can still choose when to report and can report more frequently. Reports can be submitted every six months or, in some circumstances, more frequently. Reports for emissions reductions projects must be submitted at least once every two years and reports for sequestration projects at least once every five years.  

Project proponents will no longer need to have every project report independently audited. The Regulator will apply a risk-based approach to determine how often audit reports will need to be provided, what they will need to cover and the level of assurance required.

What are the changes to the permanence rule?

Proponents of new Emissions Reduction Fund carbon storage projects can nominate a 100- or 25-year permanence period.

Projects with a 25-year permanence period will be subject to a 20 per cent discount on the number of credits that would otherwise be issued for the project. The five per cent risk of reversal buffer will also apply.

Proponents of existing CFI carbon storage projects can request to convert from a 100- to a 25-year permanence period. This request must be made within two years of the start of the Emissions Reduction Fund. If no request is made, the project will remain a 100-year permanence period.

If Australian Carbon Credit Units have already been issued for a project and the permanence period is reduced, project proponents will have 90 days to relinquish (give back) credits to reflect the 20 per cent discount. Alternatively, the proponent can seek the Regulator's agreement to an alternative relinquishment schedule.

More information

Details about the Emissions Reduction Fund are available at:

Note: While the Commonwealth has made reasonable efforts to ensure the accuracy, correctness or completeness of the material, the Commonwealth does not guarantee, and accepts no liability whatsoever arising from or connected to, the accuracy, reliability, currency or completeness of this material. Any references to the potential costs or benefits of undertaking an activity in accordance with an emissions reduction method are estimates only. This material is not a substitute for independent professional advice and entities should obtain professional advice suitable to their particular circumstances.