18 March 2014
Towards the end of 2012, I spoke at the
Carbon Farmers Australia conference in Dubbo
and presented the Coalition's blueprint
for a stronger Australia, including our
plans for a stronger economy and cleaner
environment.
I spoke there at the
invitation of Michael and Louisa Kiely.
I’ve known the Kielys for several years
and greatly appreciate their passion and
commitment to helping farmers and land managers
gain access to carbon markets.
It gives me great pleasure
to return and speak to you today as Minister
for the Environment and to provide an update
on the progress we are making in putting
our plans into action.
I would like to take
this opportunity to talk about our Direct
Action plan and the opportunities it presents
for the land sector, as well as the future
of the Carbon Farming Initiative. I will
also address some of the issues and questions
that members of this audience and others
in the land sector have raised about our
Emissions Reduction Fund.
It’s worth framing this
discussion within the context of our overall
policy, so before I get down to specifics,
allow me to briefly outline the Coalition
Government's Plan for a Cleaner Environment.
A Plan for a Cleaner
Environment
Our environment plan
rests on four pillars: Clean Air, Clean
Land, Clean Water and Heritage Protection.
This plan is an essential
element of our national policy framework
and encompasses simple, practical actions
that will achieve real, measurable results.
Clean Air centres on
two important reforms: the abolition of
the Carbon Tax and the implementation of
our Direct Action plan, which I will discuss
in detail later.
The Coalition Government
is committed to our unconditional emissions
reduction target to reduce Australia’s emissions
by five per cent below 2000 levels by 2020.
However, the Government believes there is
a fundamentally better way to meet this
commitment than through a Carbon Tax.
Our commitment to abolish
the Carbon Tax is not a disagreement over
belief, science or targets. Rather, we will
abolish the tax because it represents ever
increasing financial pain for no real environmental
gain. Under the Carbon Tax, our domestic
emissions are projected to go up, not down.
In this light, scrapping the Carbon Tax
is the only responsible course of action.
We are repealing the
Carbon Tax to reduce costs for households
and business and to pave the way for our
Direct Action plan. Abolishing the tax will
flow through to businesses in the form of
lower input costs and to households through
lower energy bills and cheaper household
items.
Legislation to repeal
the Carbon Tax was the first item of business
introduced by the Government into the new
Parliament. The House of Representatives
has now passed the Carbon Tax repeal bills
and they are currently before the Senate.
The Carbon Tax will be replaced by our Direct
Action plan.
Clean Land encompasses
the Green Army, Landcare reform and environmental
approvals simplification, otherwise known
as the One Stop Shop.
The Green Army, when
fully operational, will see 15,000 young
people deployed across Australia to work
on local environmental priorities.
The Green Army will
generate real and lasting benefits for the
environment. Many of you will have seen
that I released legislation to establish
the Green Army at the end of last month.
In addition, the Coalition
is placing Landcare back at the centre of
our land management programs, based on three
principles: simple, local and long-term.
It is recognition of the valuable work local
Landcare groups undertake.
The third element of
our Clean Land policy - the One-Stop-Shop
- centres on streamlining environmental
approvals while maintaining the same high
standards. A simpler environmental approvals
process with a single entry point across
jurisdictions will create a nationally competitive
advantage for Australia.
We have already made
significant inroads with this agenda. Memoranda
of understanding have now been signed with
all jurisdictions and the development of
bilateral agreements is well underway.
Perhaps Australia's
most important natural asset - the Great
Barrier Reef - is a particular focus of
the Clean Water strategy. Our Reef 2050
plan will tackle the risks to reef health
with a $40 million Reef Trust to fund major
projects.
Other elements of Clean
Water include the 10-point Murray-Darling
plan and the National Water Security plan.
The primary goal of
the final pillar, Heritage Protection, is
to instil a new sense of pride in Australia's
heritage. We are developing a new National
Heritage Strategy and are placing greater
focus on support for community heritage
projects. We want to help local communities
across Australia tell their stories and
showcase their local history.
Together, these four
pillars form the backbone of the Government's
plan for the environment.
These pillars support
our vision that households, businesses and
communities are best placed to get on with
the business of responsible air, land, water
and heritage management.
The plan will provide
for a strong economy and a healthy environment
and since the election we’ve been getting
on with the job of implementing this plan.
I would like to turn
now to the element of our Plan for a Cleaner
Environment that will be of particular interest
to those here today: the Emissions Reduction
Fund. In particular the opportunities that
it will provide for the land sector - opportunities
that will help Australia’s regions become
even more vibrant, productive and liveable.
Emissions Reduction
Fund
Many of you here today
will already be familiar with our Direct
Action plan and its key components. Indeed,
I have spoken at length with many of you
personally about these.
You will also know that
at the heart of the plan is the Emissions
Reduction Fund.
The Fund will create
positive incentives to reduce Australia’s
emissions: incentives for businesses to
innovate and invest in new technologies,
incentives to improve the efficiency and
productivity of businesses’ operations and
incentives to encourage farmers and landholders
to store carbon on the land.
With an initial allocation
of $300 million, $500 million and $1000
million over three years, the Fund will
establish a pool of capital to create a
market for abatement. This will be far more
effective at reducing Australia's emissions
than the Carbon Tax.
This Fund is being designed
to provide a powerful and direct incentive
for businesses, farmers and landholders
across Australia to identify and take up
opportunities to reduce their emissions,
or to store carbon in the land.
Design of the ERF
Allow me to briefly
recap some of the main design features of
the Emissions Reduction Fund.
The Fund will buy abatement.
Auction processes are a well-established
market mechanism and will allow the Government
to achieve our environmental objectives
while minimising costs.
By buying up the 'abatement
cost curve' we will provide powerful incentives
for businesses to bring forward the lowest
cost emissions reduction projects.
The Fund will create
a market for abatement in the same way that
the National Water Market System has created
a market for water. The latter system also
relies on an auction process and has proven
effective in allowing the Government to
minimise costs, while achieving additional
water flows.
Late last year, the
Government released a Green Paper setting
out design options for the Fund.
The Green Paper also
set out three high level principles that
are guiding our decisions:
First, emissions reductions
must be genuine and go beyond 'business-as-usual'
Second, the Fund will be designed to encourage
projects to deliver lowest cost abatement
Third, administration of the Fund should
be streamlined and cost-effective.
Emissions reductions to be unlocked by the
ERF
I'm often asked where
the emissions reductions will come from.
The reality is we are not being prescriptive
about the source of potential abatement.
In fact, we are keen to unlock abatement
opportunities across the Australian economy
- from businesses, industries and especially
the land sector.
The lowest cost abatement
may involve projects to clean up waste coal
mine gas, clean up power stations or capture
landfill gas. It may be a mix of energy
efficiency improvements in Australian buildings
and industrial facilities.
It may be reafforestation
of marginal lands, or revegetation, or improvement
of soil carbon.
The important thing
is not where the emissions reductions are
achieved, but that they are real, genuine
and additional to business-as-usual.
The Fund will offer
a range of opportunities for Australia’s
regions and the land sector - not only to
reduce emissions or sequester carbon, but
to increase productivity as well.
Consultation on the
Emissions Reduction Fund
As many of you are aware,
over the past months we have been consulting
widely on the design of the Fund and have
received a strong and considered response
to our invitation to provide input.
We received more than
280 submissions in response to the Terms
of Reference we released in October and
over 300 more in response to the Green Paper.
Many of these related to the land sector.
We have also had in-depth discussions with
business, environment and community representatives
from across the Australian economy.
Key themes raised during
consultations
Allow me to briefly
highlight some of the common themes that
were raised during these consultations:
Stakeholders have told
us that significant opportunities exist
for reducing emissions in Australia, and
these opportunities will also deliver valuable
environmental benefits and cost savings
Stakeholders have told us that three design
features will be important in unlocking
these opportunities:
First, we need to develop simple ways to
calculate genuine emissions reductions
Second, we need to keep transaction costs
low
Third, we need to build on the strengths
of existing platforms, including the National
Greenhouse and Energy Reporting Scheme and
- especially - the Carbon Farming Initiative.
These messages mirror the design principles
we have set for the Fund. Therefore, it
gives me great confidence that the Fund
- true to these principles - will be well-supported
by business and the community.
I have complete confidence
that it will be a highly effective, low-cost
mechanism that will help Australia to meet
our emissions reduction target.
Carbon Farming Initiative
and the ERF
I’d like to spend a
few moments talking about the future of
the Carbon Farming Initiative. This, I’m
sure, is an issue that will be of considerable
interest to many of you here.
The Coalition Government
is a strong supporter of the CFI. We have
championed it both in opposition and in
Government.
We have supported it
because we recognise that there are considerable
opportunities in the land sector to reduce
emissions and sequester carbon. That is
why we have made it the backbone of the
Emissions Reduction Fund.
At the moment, however,
the CFI is not as well-designed as we’d
like it to be. It can be better, stronger,
simpler and more streamlined.
As we think through
the final design of the Emissions Reduction
Fund, front and centre in our deliberations
is the question of how we can improve the
CFI and make it easier for farmers and landholders
to participate.
There are two issues
that I’d like to briefly discuss today that
illustrate how the CFI can be easily improved.
Key themes raised by
the land sector – Permanence
First, many of you will
be aware of the CFI’s rules concerning permanence.
As the CFI is designed today, projects that
sequester carbon in the land - either under
existing methods focussing on vegetation
or under future methods for soil carbon
- must agree to maintain the carbon on that
land for 100 years, or to hand back credits
issued for that project.
Now, this rule exists
to align the CFI with approaches applied
in comparable schemes overseas. In principle,
this is not a bad idea because it means
that the market sees CFI credits as being
reliable, and therefore valuable.
The problem is that
landholders are simply not interested in
taking on these obligations on their land
for 100 years.
It’s not that landholders
object to storing carbon in forests, vegetation
and - in the future - soils. In fact, I’ve
talked to many farmers who would be quite
prepared to help the environment by seeing
permanent forests established on their properties.
Rather, it is the quite
understandable reluctance to commit farmland
to a particular form of management for 100
years.
The Coalition believes
that there’s not much point in having the
most rigorous, gold-plated carbon sequestration
rules in the world if it means that nobody
participates.
For this reason, the
Coalition went to the election last year
with the commitment to streamline these
rules while maintaining their scientific
credibility. We promised that we would introduce
a 25-year option for carbon sequestration
projects. The Government intends to deliver
on this promise.
Farmers could have the
option of storing carbon for 100 years,
and the CFI would credit this appropriately.
But farmers could also be able to store
carbon for a shorter, more realistic period,
and retain the situation where their children
can decide whether they want to continue
this enterprise.
Key themes raised by
the land sector – Streamlining method approvals
The second issue raised
by stakeholders is that unnecessary ‘green
tape’ is preventing projects from being
brought forward under the CFI.
Under its current design,
the CFI includes a ‘positive list’ process
to assess whether an emissions reduction
activity is eligible for crediting. To include
project types on the positive list, a ‘common
practice’ test is applied to assess whether
land sector activities are additional to
business as usual. Once an activity is on
the positive list, a second process must
then take place to establish a methodology
for that activity which projects must satisfy.
The message we have
received is that this process is administratively
onerous and has contributed to unnecessary
delays in implementing new projects. It
is a message which we have heard loud and
clear.
We will be streamlining
the method approval process to make it faster,
more flexible and less complex.
In pursuing this goal,
we will not diminish the scientific integrity
of methods. To do so would be in nobody’s
interests. Therefore, it will continue to
be the case that emissions reductions credited
by the CFI must be real, genuine and additional.
However, we will remove
unnecessary green tape and make it easier,
faster and more attractive for farmers and
landholders to participate in the CFI.
I will have more to
say in coming weeks about these and other
reforms that will streamline and strengthen
the Carbon Farming Initiative.
Next steps
Over the past few months,
stakeholders have raised a wide range of
issues that are absolutely critical to the
design of the Emissions Reduction Fund and
to its successful implementation.
Many of these issues
we had already started thinking about, but
many others we had not.
This whole process has
reinforced to me the absolute necessity
of casting the net far and wide when designing
critical policy that affects households
and businesses across the country.
I wish to thank everyone
who has given so generously of their time
and expertise to bring us to this stage
of the Fund's design. We were serious about
this process being a full, honest and open
consultation, where all ideas would be welcome.
As we move to the next
phase of implementing the Emissions Reduction
Fund, I hope that we can build on the relationships
that have been established through the process
to date.
In the coming weeks,
we will be releasing the Emissions Reduction
Fund White Paper, which will outline the
final design of the Fund.
The White Paper will
set out the key messages that we have heard
through our discussions with industry, businesses,
land sector representatives and the community,
and through absorbing the tremendous amount
of information contained in the submissions
on the Terms of Reference and Green Paper.
We will also release
exposure draft legislation for the Emissions
Reduction Fund, which will include amendments
to the legislation that underpins the CFI.
Your views on this draft legislation will
be welcome.
In the meantime, we
are continuing to develop new methods that
will allow farmers and landholders to unlock
further abatement opportunities.
Soil Carbon
One exciting new development
which I would like to share with you today
is our progress on developing a soil carbon
methodology.
I would like to take
this opportunity to formally announce that
the land management activity ‘sequestering
carbon in soil in grazing systems’ will
be added to the Carbon Farming Initiative
Regulations—the ‘positive list’ of activities
that reduce greenhouse gases.
This brings farmers
and landholders a crucial step closer to
being able to participate in the Carbon
Farming Initiative and the proposed Emissions
Reduction Fund by storing carbon in their
soil and contributing to direct action on
climate change.
It paves the way for
developing methodologies for soil carbon
sequestration, under which projects can
participate in the Emissions Reduction Fund.
In addition to removing
carbon from the atmosphere, sequestering
carbon in agricultural soils can increase
farm productivity through improved soil
structure, water-holding capacity and fertility.
Under an approved soil
carbon methodology, farmers keen to improve
the condition of their land would have the
added benefit of being able to earn revenue
from abatement projects that build carbon
in their soils.
Landholders will earn
carbon credits for abatement and will be
able to participate in the Emissions Reduction
Fund reverse auctions for the Government
to purchase these credits.
The Government is continuing
its work with landholders, scientists and
key interest groups to develop the methodology
for building soil carbon in grazing systems.
This methodology will
set out the rules for undertaking the activity
and for estimating the resulting sequestration
through direct measurement of soil carbon
levels.
This initial methodology
is expected to be ready in mid 2014, in
time for land managers with soil carbon
sequestration projects to participate in
early rounds of the Emissions Reduction
Fund soon after its commencement on 1 July
2014.
The Government will
develop further soil carbon methodologies,
including for other agricultural land uses,
which will begin to become operational from
late 2014.
Ultimately landholders
will be able to choose from a number of
different measurement and model based soil
carbon methodologies that best cater for
the unique commercial and environmental
characteristics of their project.
I would like to thank
the farmers, scientists, researchers and
land managers - many of whom are here in
the audience today - of the stakeholder
and technical working groups who have contributed
their time, energy and experience to help
the Government develop this methodology.
Conclusion
To conclude, I'd like
to reaffirm the Government's commitment
to helping Australian farmers and landholders
to be innovative leaders in our society.
Our Direct Action plan
to tackle climate change will provide incentives
for farmers and the land sector to cut emissions
and store carbon in the land.
We will not work in
isolation in shaping the Fund's design and
ongoing implementation - that is why we
have maintained our commitment to consulting
as broadly as possible. We want to give
you confidence and security that this policy
will be efficient and effective.
To stand the test of
time, a plan to address climate change must
protect Australian strengths, like our regional
industries and communities.
Protecting the environment
and economic growth are not mutually exclusive
objectives, but rather two essential elements
of a single goal of a stronger Australia.
Thank you.
