14.7 RESEARCH

14.7 RESEARCH

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RESEARCH
Carbon farming opportunities for coal based products
By Matthew Warnken
Managing Director, Corporate Carbon


The Australian Government's Emissions Reduction Fund (ERF) provides incentives for the development of eligible greenhouse gas (GHG) abatement projects. Emissions reduction projects compete on price for a contract to deliver Australian Carbon Credit Units (ACCUs) with the Clean Energy Regulator at an ERF Auction.

The first auction was held in April and contracts to purchase 47 million ACCUs at an average price of A$13.95 per ACCU (A$660 million in total) were awarded. The ERF still has A$1.9 billion remaining for future auctions and the date of the next auction has not been announced.

Emissions reductions (or abatement) can be in the form of carbon sequestration such as tree plantings, or avoided emissions such as improving energy efficiency. ACCUs are awarded to projects for each tonne of carbon dioxide pollution avoided or sequestrated. It is these credits that are purchased by the ERF.

The ERF Auction is essentially a form of tender process with the lowest cost carbon sequestration bids offered being the winners of the auction. However there are a number of involved steps for project registration, auction pre-qualification, auction participation, project implementation and ongoing monitoring and compliance in order for projects to participate in an ERF auction, create ACCUs and be paid for ACCU delivery. Project registration is the first step and requires a legislated Methodology Determination that covers the proposed project activity.

The Methodology sets out eligibility requirements for the emissions reduction project and also the process of calculating the number of ACCUs that a project will create. In a carbon sequestration project, the calculation is set by the increased amount of carbon stored in a given reporting period, minus any emissions from running the project. Some methodologies adopt a measurement approach, while others have a model that provides conservative estimates based on a set of prescribed activities.

Part of the conversation about improving agricultural practices has been around the use of coal based products to improve soil health and fertility. Specifically, the humic and fulvic acid components within lignite and the potential for these components to assist with plant growth.

As a result of the additional plant growth, there is the potential to increase soil carbon levels and also reduce the nitrous oxide emissions intensity of crops (more output for a given set of nitrogen inputs). Note that accounting for the increase in soil carbon would have to subtract the carbon content of any coal based additives as these do not provide additional carbon storage (the coal based carbon was already stored in the ‘ground’).

Currently, the only way that coal based fertilisers could be used to create ACCUs is in association with irrigated cotton crops, under the Carbon Credits (Carbon Farming Initiative—Reducing Greenhouse Gas Emissions from Fertiliser in Irrigated Cotton) Methodology Determination 2015, which focusses on reduction of the use of synthetic nitrogen fertilisers.

However, under the Carbon Credits (Carbon Farming Initiative) (Sequestering Carbon in Soils in Grazing Systems) Methodology Determination 2014, ‘soil amendments containing coal’ are not allowable. This means that a change to the methodology would be required to create ACCUs using coal based products in grazing pastures.

Corporate Carbon has introduced a streamlined ‘end-to-end’ solution for ERF landholder participation that removes barriers and minimises risk. Under this approach, Corporate Carbon manages all of the registration, establishment, implementation, monitoring, offsets reporting, audit and ACCU issuance activities required by the scheme, and enters into a contract with the landholder to purchase ACCUs from the project. This removes not only the upfront cost and hassle of a carbon project; it also removes the potential risks of an ERF contract with Government, such as contract delivery shortfall, make good and damages.

Corporate Carbon was successful in winning contracts for 5.5 million ACCUs across a number of methodologies, including soil carbon storage projects in grazing systems. This level of success has made Corporate Carbon the largest new carbon project contractor and gives them valuable insights into the operation of emissions reduction projects. For further information please contact Corporate Carbon by visiting their website
www.corporatecarbon.com.au.
Figure 1: Coal based ACCUs could be used with irrigated cotton crops.

Figure 2: Change in methodology is needed to create coal based ACCUs for grazing pastures.




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