Carbon Farming Initiative Brochure

An introduction to the Carbon Farming Initiative

The Carbon Farming Initiative (CFI) is a carbon offsets scheme established by the Australian Government to provide new economic opportunities for farmers, forest growers and landholders and help the environment by reducing greenhouse gas (GHG) emissions.

The CFI is a key component of the Australian Government’s Clean Energy Future Plan.

Land sector emissions

What is the impact of the land sector on Australia’s greenhouse gas emissions?

In 2009, the land sector (agriculture and land use, land-use change and forestry) made up 18 per cent of Australia’s total GHG emissions. Agricultural emissions alone represented 15 per cent of Australia’s total emissions.¹

The significance of emissions from agriculture is mirrored globally – agricultural emissions represent around 13.5 per cent of global emissions.² This is projected to rise to 40 per cent by 2050 if no significant abatement measures are introduced in the agriculture sector.

Given these figures, many countries are seeking GHG abatement opportunities for the land sector. Efforts to address land based emissions, including from agriculture, are a priority for the Australian Government.

What are the sources of land sectorgreenhouse gas emissions?

Agricultural GHG emissions come from three main sources; livestock, cropping and savanna burning.

Livestock emissions are comprised of methane (CH₄) produced by enteric fermentation (the anaerobic digestion of plant matter by livestock) and methane and nitrous oxide (N₂0) produced from animal waste.

Sources of cropping emissions include methane released in rice cultivation, methane and nitrous oxide produced from burning agricultural residues and nitrous oxide emissions resulting from fertiliser application.

Cropping and grazing act both as a source and sink for GHGs. Cropping and grazing land can store GHGs where additional carbon is incorporated into plants or the soil and maintained through improved land management practices. However, cropping and grazing lands are often net emitters of GHGs, particularly during dry weather and in areas of drought.

Deforestation and forest degradation are also sources of emissions.

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¹ National Greenhouse Gas Inventory - Kyoto Protocol Accounting Framework, website calculated on 1 November 2011.
² IPCC, Climate Change 2007: Synthesis report

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Australian emission sources by sector (2009)

Source: Adapted from Table 1, Appendix 2 in: Department of Climate Change and Energy Efficiency (2011) National Greenhouse Gas Inventory: accounting for the KYOTO target December Quarter 2010, ISBN: 978-1-921299-47-6. Available on Climate Change website. 

Carbon markets and the Carbon Farming Initiative

What is a carbon offset?

A carbon offset is a reduction in GHG emissions to compensate for emissions generated elsewhere. For example, an electricity company can compensate for its emissions by buying offsets from a farmer who has planted a native vegetation windbreak on their property. The farmer receives credits for the carbon stored in the trees and the electricity company can buy them to offset the emissions from its electricity plant.

Carbon emissions and carbon offsets are usually measured in metric tons of carbon dioxide-equivalents.

What is a carbon offset market?

A carbon offset market allows individuals or businesses to sell and buy credits generated from carbon offset projects. An offset market is somewhat like the stock market, except that the currency exchanged is carbon offsets.

There are two types of markets for carbon offsets: compliance markets and voluntary markets.

The key difference between compliance and voluntary markets is that under a compliance market entities are required, by law, to reduce or pay for their emissions. There is no such requirement under a voluntary market, where buyers choose to reduce their emissions for social responsibility or product marketing purposes. Therefore, the demand for offsets will generally be higher under a under a compliance market.

Regardless of the type of market, participation by sellers (suppliers of offsets) is voluntary.

The Clean Development Mechanism (CDM) is an example of an international compliance market.  Under the CDM, carbon offsets generated in a developing country can be sold to another country to help meet its obligations under the Kyoto Protocol.

An individual who books an airline ticket and then chooses to purchase offsets to reduce the emissions produced by the flight is participating in a voluntary market.

What are integrity standards and why are they important?

Integrity standards are the criteria a carbon offset must satisfy to ensure real reductions in GHG emissions are achieved. They are important for providing consumer confidence in the market and underpinning the value of offset credits.

While different carbon markets may set different integrity standards, carbon offsets must generally prove that they create additional and permanent reductions in GHG emissions that are measurable and can be verified.

To demonstrate additionality, there needs to be evidence that the emissions reductions would not have occurred in the absence of the offset project; they must be additional to business as usual.

Demonstrating permanence is important for offsets that involve the storage of carbon dioxide, for example in plants or soils.  If this is subsequently released, there is no benefit to the atmosphere.  Biological carbon stores are generally considered permanent if they are held for at least 100 years. 

What is the Carbon Farming Initiative?

The CFI is a voluntary carbon offsets scheme established by the Australian Government to encourage land sector abatement and provide opportunities for farmers and landholders to participate in carbon markets.

The CFI commenced in December 2011.

An independent administrator is responsible for the operation of the CFI, including activities such as approving projects, issuing credits, keeping a registry and ensuring projects continue to meet the scheme’s requirements.

Who can participate in the Carbon Farming Initiative?

Potential participants in the CFI include farmers, landholders, foresters, community groups, businesses and governments.

The primary role for farmers, landholders, forest growers and community groups will be to carry out activities that can create carbon offsets.

Businesses, such as agents or carbon trading companies, may assist project proponents to participate in the scheme.

What activities will be included in the Carbon Farming Initiative?

The CFI will cover land based activities that reduce or avoid GHG emissions and/or increase carbon storage or ‘sequestration’.

This includes activities such as:

• reduced methane emissions from livestock, manure management and landfill waste
• reduced emissions from fertilisers, rice cultivation, avoided deforestation, forest management, savannah burning and crop residue burning
• increased carbon sequestration through reforestation, revegetation and improved soil management.

What are the benefits of the Carbon Farming Initiative?

The CFI may benefit landholders, regional communities and the environment in a number of ways.

The scheme will result in land sector GHG abatement while providing landholders with an additional and diversified source of income. The CFI will also assist landholders to adopt management practices that help them adapt to the impacts of climate change, often with farm productivity increases.

The CFI has the potential to contribute to biodiversity, natural resource management and regional community benefits. For example, a project that revegetates an eroded gully could increase biodiversity, decrease soil loss and improve water retention.

Participating in the Carbon Farming Initiative

What is the Domestic Offsets Integrity Committee?

The Domestic Offsets Integrity Committee (DOIC) is an independent panel of experts responsible for assessing and recommending approval of offset methodologies for use in CFI projects.

Committee members have knowledge and experience in the fields of science, law, ecology and government, and will ensure that all carbon credits generated under the CFI meet the scheme’s integrity standards. 

What is an offset methodology?

A methodology is a set of instructions that, when followed, will produce a consistent outcome.  GHG offsets, a methodology refers to the rules and procedures that need to be followed to demonstrate that a project delivers real and effective GHG abatement. 

To be approved for use under the CFI, an offset methodology must contain:

• a description of the abatement activities, GHGs, and sources and sinks affected by a project
• procedures for determining the baseline GHG emissions and storage for the project, against which project abatement will be estimated
• procedures for identifying any GHG effects of the project outside of its boundary
• procedures for measuring and monitoring project emissions.

Read the CFI seven steps text version

The proposed CFI methodology and project approval process

How are methodologies approved?

Anyone can develop a methodology and submit it to the DOIC for approval. It is expected that CFI methodologies will be submitted by the government, research organisations, businesses, community groups, and land managers.

The DOIC will assess draft methodologies and recommend them to the Minister of Climate Change and Energy Efficiency for approval.

Once approved, CFI methodologies will be published on the Department of Climate Change and Energy Efficiency website and can used by any CFI project proponent.

How are projects approved?

For an offset project to be approved under the CFI, an application must be lodged with the scheme administrator.

The project proponent must be a recognised offset entity.  Becoming a recognised offset entity is a simple application process, through the CFI administrator, where a project proponent shows that they are a ‘fit and proper’ person.

The project application will need to show that the proponent is using an approved methodology and that the project meets any other criteria set out in the CFI legislation. If the project involves an activity that stores carbon in plants and soils, such as reforestation, the project proponent will have to show that they have the rights to the carbon, lease or own the land.

How will offset credits be issued?

After a project has been approved and is operating, the project proponent will have to report regularly to the scheme administrator.  The project reports will include details of any abatement generated and must be independently audited and approved by the administrator. Once approved, the administrator may issue CFI credits equivalent to the audited project abatement.

The method for determining how much abatement is generated, and therefore how many credits a project will earn, is set out in the applicable CFI methodology.

CFI credits generated from abatement that are recognised towards Australia’s Kyoto Protocol targets can be exchanged for ‘Kyoto’ units and sold in compliance markets overseas.

When will offset credits be available?

Project proponents will receive offset credits after they have generated abatement and their audited project reports have been assessed by the CFI administrator.

Proponents will be able to choose how regularly to report, however it must be no less than annually and no longer than five year periods. 

Additional information on the Carbon Farming Initiative

For more information on the CFI visit this Carbon farming initiative website or phone 1800 057 590 or email Carbon-Farming Initiative Administrator. 

Information is also available through the DAFF website or phone 1800 156 858 or email Carbon-Farming Initiative Administrator at DAFF.

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Disclaimer: the information in this document may be subject to change and is current as of February 2012.