What is the CFI?

The Commonwealth Government’s Carbon Farming Initiative (CFI), announced on 14 August, 2010, aims to give farmers, landholders and forest owners access to domestic and international carbon markets.

There are many opportunities for farmers and landholders in the CFI. They can earn offsets from a long list of activities, including:

· reforestation and revegetation – eg. plantations, integrated farm forestry and regrowth;

· reduced methane emissions from livestock – eg. diet management, rumen inoculants, etc.;

· reduced fertiliser emissions – eg. precision application, alternative fertilizers, etc.;

· manure management – eg. composting, anaerobic digesters and flaring;

· reduced emissions and/or increased sequestration in agricultural soils (soil carbon) – eg. no-till cultivation, grazing management, pasture cropping, nutrient management;

· savanna fire management –eg. avoiding large destructive fires while retaining environmentally-positive use of fire;

· avoided deforestation – eg. reduced land clearing;

· burning of stubble/crop residue - eg. stubble retention/incorporated, etc.;

· reduced emissions from rice cultivation – eg. reducing water levels in paddies to reduce methane emissions;

· reduced emissions from landfill waste – eg. composting, applying compost on soils.

Carbon Farmers of Australia recommend that Farmers decide which of the activities on this list are relevant to them and take a portfolio approach to them: Revenue from offsets will be maximized and opportunities won’t be missed. A typical ‘portfolio’ of activities could include fertilizer reduction/substitution + reduced methane from livestock + reduced landfill/farm composting + soil carbon sequestration.

While the scheme is scheduled to start on 1 July, 2011, not all the options will be ready. The forestry options were trading prior to the CFI and so will start early. Other ‘low hanging fruit’ includes reduced fertilizer usage and manure management/landfill waste. The others will come on stream as they have “Methodologies” approved.

Farmers and landholders have three options:

1. Running a project of their own, gaining the approvals and reporting on their progress.

2. Hiring a specialist to manage the reporting and administration.

3. Allow an offset aggregator to include their activity with others for trading.

Example: Farmer A chooses to undertake a project to reduce fertiliser use on the farm. Finds the relevant CFI methodology, applies to the CFI Scheme Administrator to become a recognised offsets provider and has their project approved. The farmer reduces fertiliser use (by precision application or biofertiliser substitution or other method). Each year the farmer completes a report, has it audited, then submits it to the Administrator. Credits are issued into the farmer’s account in the Offsets Registry. These are then able to be sold via a broker. The farmer can appoint an agent to handle all the adminstration. Or they can join other farmers as part of a ‘aggregation’ or pool.

No Get Rich Quick Scheme

The CFI is not a get-rich-quick scheme. Instead it is an incentive program that aims to help land managers make the shift to lower emissions practices.

When the CPRS was defeated, Australian consumers and corporates wanting to 'abate' their emissions were offered the voluntary market in the form of the National Carbon Offset Standard (NCOS). It covers all offsets not covered in Australia's Kyoto commitment - which is mainly farm carbon offsets. Forestry is covered by our Kyoto commitment and its promoters were looking forward to the CPRS. Instead they were hung out to dry. The CFI plugs that gap for forests because it applies to both Kyoto and non-Kyoto offsets. So the CFI and the NCOS fit together.

CFI… NCOS… CPRS… ETS…?

What is the difference between the CFI and NCOS and CPRS and ETS? It's simple: The CPRS (Carbon Pollution Reduction Scheme) was a proposal by the Rudd Government for a "Compliance"-based "Cap & Trade" market for emissions offsets. That is an ETS or Emissions Trading Scheme. "Compliance" means 'compulsory'. "Cap & Trade" means emitters must change their business practices to reduce their emissions in order to reach a target level or 'cap'.. If they cannot reach that target in the timeframe given (called a Compliance Period, eg. 2008-2012) they must purchase 'offsets' or 'permits' from emitters who exceeded their targets and earned credits by doing so, or from companies earning credits by generating renewable energy or from companies earning credits by sequestering or capturing and holding CO2 in forests. Under the Rudd CPRS scheme only 1000 companies were required to meet a target in each compliance period. They were the 1000 top emitters. They could purchase offsets from local or international companies. The NCOS (National Carbon Offset Standard) was designed to operate alongside the CPRS 'compliance' market by providing a "Voluntary" scheme. It makes available to Australian companies and consumers a source of Australian offsets that they can purchase to offset their emissions so that they can make an advertising claim that their products etc. are carbon neutral or simply to make contribution to the climate change effort by offsetting a family's emissions. The NCOS covers only domestic offsets offered to voluntary buyers. The Carbon Farming Initiative completes the set. It covers domestic and international markets, both compliance and voluntary. The only market not covered is the market that is yet to start: the CPRS or the national domestic compliance market.