The “excessive bureaucracy” proposed by the Federal Government for its own voluntary carbon market will create sovereign risk for Australia, market participants have warned.
Under these plans, the federal Minister and Department of Agriculture could step in and veto some new or expanded carbon projects, potentially hurting farmers and businesses trying to make their own decisions. and earn extra money.
“Unsupported by strong evidence, this is an extraordinary double whammy proposal from a liberal national government,” Carbon Market Institute chief executive John Connor said Monday.
The proposals create an additional compliance burden in an already heavily regulated industry and risk setting back investments in regional areas, sustainable agriculture and drought resilience, he said.
But Agriculture Minister David Littleproud says it’s about biodiversity and giving farmers – not city councilors – an extra stream of income before they get up in the morning.
“There’s nothing to worry about in that,” he told AAP.
“I’m not going to spill anything if we find the right balance.”
Australia can now produce food and fiber sustainably and market it at a premium, he said.
“If you tell farmers there is a passive source of income, we are going to empower you to get the money, not someone from Sydney, Melbourne or Brisbane to do it, they are more likely to do it. To do.”
The proposed change to the carbon credit rules would affect two common methods of carbon farming: human-induced regeneration (HIR) of native tree species in a local area and native forest from managed regrowth (NFMR). ).
Some had raised concerns with the government that carbon farming was reducing agricultural productivity and harming regional communities, while limiting the management of fires, wildlife, weeds and pests.
Under the proposed changes, the Minister of Agriculture could exclude projects larger than 15 hectares and covering more than a third of a farm.
“Rather than benefiting regional Australia, the restrictions would disproportionately impact landowners, especially small farmers,” Mr Connor said.
The changes could also undermine the stability of Australia’s carbon market, stifling critical investment in the supply of Australian Carbon Credit Units (ACCUs), the institute warns.
“At a time when the government is seeking to expand ACCU’s offering and reduce unnecessary red tape, the proposal best mixes the message but also raises significant sovereign risk concerns,” according to their submission.
Growing demand and tight supply pushed spot market prices for ACCU to nearly $60 from $16.50 this time last year.
Prices for so-called nature-based offsets have also reached record highs internationally, and some analysts expect prices to rise 50 times by 2050.
But new uncertainty over the rules in Australia and any new timetable could disrupt the upcoming Emissions Reduction Fund (ERF) auction, according to the institute.
A change to create a 75-day period for the minister to review adverse findings could jeopardize many ongoing projects for the April 5-6 bidding window, according to the brief.
The clean energy regulator, which issues ACCUs, said current AAP records indicate strong interest in the auction.
Mr Littleproud rejected calls for more reviews and research before making the changes.
“It’s just a delaying tactic by those with a financial interest rather than really understanding,” he said.
“We did this to death.”
Australian Associated Press