On 8 December 2011 the Federal Government's Carbon Farming Initiative (CFI) commenced operation. The CFI is a carbon offset scheme designed to allow abatement activities from the land sector to generate carbon credits which can be used in the domestic and international compliance and voluntary carbon markets. For details of the CFI, please refer to our previous legal updates:
- Carbon Farming Initiative
- Carbon Farming Initiative legislation tabled
- The Carbon Farming Initiative is legislated
We also refer readers to the Guide on the CFI that Norton Rose Australia has co-authored with RAMP Carbon on behalf of the Carbon Market Institute - Implementing the Carbon Farming Initiative: A Guide for Business.
With the commencement of the CFI, now is a good time to start actively examining funding opportunities that may be available to support activity under the CFI. Such opportunities will be particularly relevant for potential CFI participants in the farming, forestry, land management and landfill sectors. It is also important that other potential market participants, advisers and intermediaries understand the support opportunities associated with the CFI.
This legal update:
- provides an overview of the Carbon Farming Futures program (Program)
- discusses the five components of the Program and the eligibility requirements for funding under specific components
- details what stakeholders should do next to take advantage of funding under the Program.
Carbon Farming Futures program
Funding is available to support the CFI and promote emissions reductions under the Program. The Program is part of the Federal Government's Clean Energy Future Plan, released in July 2011. View our previous legal updates.
A total of A$429 million over six years is provided under the Program to fund research, development and demonstration of emissions reduction technologies. The five components of the Program are as follows:
- Filling the Research Gap
- Converting research into methodologies
- Action on the Ground
- Refundable tax offset for new conservation tillage equipment
- Extension and outreach
Opportunities, and eligibility requirements, for funding under each component are discussed below.
Filling the Research Gap
The Department of Agriculture, Fisheries and Forestry (DAFF) is responsible for administering Filling the Research Gap. Under this program, A$201 million in funding is provided for research into emissions reductions technologies and practices. The program has the objective of:
To be eligible, applicants must be an Australian company, business, research organisation, government agency or department. The first round of applications for funding closed on 3 February 2012, with future rounds yet to be announced. Applications submitted in the first round are to be assessed against a range of criteria, including that the proposed research is clearly defined, will achieve the programs' objective and addresses one or more of the following research priorities:
- reducing methane emissions
- reducing nitrous oxide emissions
- increasing soil carbon
- improving modelling capability.
We consider it likely that in future rounds of funding similar assessment criteria will be used. As such, these criteria provide a useful guide to applicants.
Examples of research projects which address the research priorities include:
- research into innovative cropping or grazing practices to increase soil carbon
- research into new fertiliser technologies and management strategies to reduce soil nitrous oxide emissions
- research into feed additives or forages that can reduce methane production in ruminants
- development of improved measurement techniques.
An expert panel will assess applications and make recommendations to the Minister for Agriculture, Fisheries and Forestry (or their delegate) for a final decision. Successful applicants will be required to enter into a funding deed with DAFF.
Converting research into methodologies
The Department of Climate Change and Energy Efficiency (DCCEE) is responsible for administration of Converting research into methodologies. Under this program a total of A$20 million in funding is available to convert research (including research conducted under Filling the Research Gap) into methodologies to be used under the CFI. A methodology is essentially a set of rules governing the design and implementation of a project under the CFI. DCCEE has responsibility for developing methodologies under the CFI. It follows therefore that DCCEE has responsibility for converting research into methodologies, unless this is undertaken by the private sector. It is not yet clear how this fund will operate. The fund is to commence in July 2012 and interested persons can register their interest by emailing the Carbon Farming Administrator
Action on the Ground
DAFF is responsible for Action on the Ground, which provides a total of A$99 million:
It is thought that funding for trial practices and technologies will aid in knowledge sharing and promotion of emissions abatement activities. Landholders, research, industry, non-government, government and farmer 'care' 'grower' groups are specifically targeted for funding under this program.
To be eligible, applicants must be an Australian legal entity, for example a company. The first round of applications for funding closed on 8 February 2012, with future rounds yet to be announced. It is possible to submit applications after 8 February 2012, but there must be extenuating circumstances. First round applicants are eligible to receive up to A$605 000 (inc GST) and are to be assessed on a merit basis against a range of criteria identified in the round one guidelines. Criteria used are similar for Filling the Research Gap and include that the project is clearly defined, is supported by scientific research/evidence and addresses one or more of the programs priorities. In the first round, the following were identified as priorities:
- reducing methane emissions
- reducing nitrous oxide emissions
- increasing soil stored in carbon
- reducing greenhouse gas emission and/or storing carbon in soil through the application of innovative practices and/or abatement technologies.
Examples of practices and technologies which address the priorities identified above and are eligible for funding include:
- animal management and feed strategies that can reduce methane emissions
- management strategies to reduce soil nitrous oxide emissions including the use of chemical inhibitors
- planting, rotation, cropping or grazing practices to either reduce agricultural greenhouse gas emissions from soil and/or increase carbon stored in soil
- on-farm management practices and abatement technologies to reduce agricultural greenhouse gas emissions from agricultural wastes
- other practices and abatement technologies that can be demonstrated on-farm to have the potential to reduce agricultural greenhouse gas emissions and/or increase carbon stored in soil.
As regards the assessment process, DAFF will conduct an initial assessment of applications for eligibility. Applications will then be considered by one of four Technical Assessment Panels. The Technical Assessment Panels are comprised of independent external assessors with expertise in the priority areas. An Assessment Review Panel is to review the work of the Technical Assessment Panel, and make recommendations to the Minister for Agriculture, Fisheries and Forestry (or their delegate). The Minister (or their delegate) is to make a final decision on whether to approve funding. Successful applicants will be required to enter into a funding deed with DAFF. The funding deed requires that applicants provide ongoing progress and financial reports.
Refundable tax offset for new conservation tillage equipment
The Australian Taxation Office will deliver the refundable tax offset (RTO) for new conservation tillage equipment. The RTO provides a 15 per cent tax offset for newly purchased eligible conservation tillage equipment which is installed between 1 July 2012 and 30 June 2015.
Extension and outreach
DAFF is responsible for the Extension and outreach program. The purpose of this program is:
A total of A$64 million is available under this program which will be used to fund various activities such as workshops and field days, and the development of extension networks. It is not yet clear how this fund will operate or when it will commence. Accordingly, interested persons should monitor DAFF's website or consult with DAFF for updates.
Applications for funding under the Filling the Research Gap and Action on the Ground programs have closed. DAFF has indicated that there will be future rounds of applications, however at present the dates for future rounds have not been announced. Monitoring of the DAFF website for information on future rounds of funding is recommended for persons seeking funding under these programs. In the meantime, the guidelines for first round applications are available online. Examples of eligible projects contained in the guidelines provide a useful indication as to what research and activities could be eligible for funding in future rounds. As regards Converting research into methodologies and Extension and outreach, these programs are yet to commence. Accordingly monitoring of relevant department websites for announcements is recommended.
If you require further information about the CFI or assistance in applying for funding, please contact a member of our Climate Change and Carbon Finance Team.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.