Australia mulls foreign-linked carbon offset scheme
The Australian government is proposing to allow foresters and farmers to create carbon offset credits for international sale into foreign emissions trading markets. Prime Minister Julia Gillard launched the policy on the weekend, part of campaigning ahead of a federal election on August 21.
Carbon sequestration through afforestation, reforestation and better forest and savannah management as well as reducing emissions from livestock and fertilisers would be recognised under the scheme, which would see reductions verified to national carbon accounting standards. Soil carbon and avoided deforestation would also be considered.
Full details on scheme workings would not be available until 2011 but the intention is to allow offsets to be generated for domestic and foreign sale. The government says it estimates $A500 million in credits could be generated over 10 years under the scheme, and 21 million tonnes of emissions abatement up to 2014.
The policy is a fall-back position to restore carbon market access for land-use activity, cut off in the shelving of the Labor government’s Carbon Pollution Reduction Scheme (CPRS) earlier this year.
The government received heavy criticism when it shelved the proposed emissions trading scheme until at least 2013 in the face of parliamentary opposition, leaving a nascent forest carbon sector high and dry. The phase-out of the voluntary Greenhouse Friendly offset scheme to make way for the CPRS still went ahead, leaving current projects with no domestic market in which to sell their carbon credits from emissions reduction activity.
The new scheme will be of interest to neighbouring New Zealand, which has just begun its emissions trading scheme on July 1. There, the government has been keen to establish international carbon trading linkages, particularly with Australia, to boost supply of carbon credits and inject liquidity into its small carbon market.
Australia’s conservative Liberal-National opposition has promised a $3 billion emissions reduction fund in the election campaign, a large chunk of which will be spent buying carbon offsets from farmers for soil carbon sequestration. The opposition firmly rejects emissions trading and a price on carbon.