Edition 01 2012
Carbon Farming Initiative case study
13.6 New South Wales
Environmental plantings of native tree species
Case study snapshot
•
Theoretical property in New South Wales
•
Varied soil types
•
Direct seeding v. seedlings
Acknowledgements
The Australian Government Department of Agriculture
acknowledges the work of the Australian Farm
Institute in preparing this case study.
This case study was produced with funding from the
Australian Government Department of Agriculture
as part of the Carbon Farming Futures Extension and
Outreach Program.
© Commonwealth of Australia
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plantings of native tree species: 13.6 New South Wales, Department of Agriculture, Canberra, 2013.
Cataloguing data
Department of Agriculture 2013, Carbon Farming Initiative case study—environmental plantings of native tree species: 13.6 New South
Wales, Canberra.
ISBN: 978-1-760030-25-4 (printed)
ISBN: 978-1-760030-26-1 (online)
CFI case study: 13.6
Internet
Carbon Farming Initiative case study—environmental plantings of native tree species: 13.6 New South Wales is available at daff.gov.au/
climatechange/resources.
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Contents
Purpose of this case study
The Carbon Farming Initiative
Australian carbon credit units
2
2
3
1Introduction
Plantings in a high-rainfall area of New South Wales
4
5
2 Land-use implications
7
3Case study details and key decision points
Tree species
Implementing an environmental plantings project
8
8
8
4Pre-project needs
12
5Resources and skills required
13
6Australian carbon credit units
14
7 Potential costs
16
8Risk analysis
18
Abbreviations20
Department of Agriculture
Carbon Farming Initiative case study: 13.6 New South Wales
1
Purpose of this case study
This document is a case study of a potential offset project under the Carbon
Farming Initiative (CFI). The case study describes a potential project that could, in
principle, satisfy the requirements to be an eligible CFI project, but it is not currently
an eligible CFI project.
The purpose of this case study is to illustrate:
• the applicability of the environmental plantings methodology determination
• matters considered in determining the choice of technology, site selection, and implementing
and operating the physical characteristics of a CFI project
• the project monitoring and record-keeping requirements of the methodology determination
and the establishment of project monitoring and record-keeping systems
• the financial and non-financial costs and benefits of a potential CFI project.
You should not take action in relation to a CFI project or Australian carbon credit units (ACCUs)
purely on the basis of the scenarios presented in this document. Before you take any action, you
should get further information or advice relevant to your individual circumstances.
This case study does not claim to comprehensively cover all the above matters and does not
necessarily do so. It may use estimates, forecasts and assumptions, and these may be simplified for
the purposes of illustration. This case study also does not cover all the matters you could or should
consider in implementing a CFI project of this type.
The information in this case study is not necessarily applicable to any other case. Again, you should
obtain any appropriate professional and financial advice relevant to your individual circumstances
and not rely solely on the information in this case study.
The Carbon Farming Initiative
The CFI is an Australian Government scheme that allows farmers and other land managers to
earn ACCUs by reducing greenhouse gas emissions or storing carbon (also known as carbon
sequestration) in the landscape. These ACCUs can be sold to people and businesses wishing to
offset their emissions.
The CFI also helps rural communities and the environment by supporting sustainable farming by
creating incentives for landscape rehabilitation.
2
Department of Agriculture
Carbon Farming Initiative case study: 13.6 New South Wales
Purpose of this case study
Participation in the CFI is voluntary; farmers and land managers can choose whether or not to
be involved.
For more information about the CFI, visit www.daff.gov.au/climatechange/cfi.
Australian carbon credit units
Subject to satisfying the monitoring, auditing, reporting and other requirements under the CFI for a
particular reporting period, an eligible CFI project can apply for ACCUs. Each ACCU represents one
tonne of carbon dioxide equivalent (CO2-e) net abatement (through either emissions reductions or
carbon sequestration) achieved by eligible activities.
From 17 May 2013, two types of ACCUs can be generated under the CFI; Kyoto and non-Kyoto
(voluntary) ACCUs.1
Kyoto ACCUs:
• are created by Kyoto offsets projects with a reporting period that occurs from 17 May 2013
until 30 June 2020
• can be sold to companies (liable entities) to meet their obligations under the carbon
pricing mechanism
• can be sold on the voluntary market to individuals or businesses who voluntarily want to offset
their emissions.
Non-Kyoto (voluntary) ACCUs:
• are created by non-Kyoto offsets projects
• can be sold on the voluntary market to individuals or businesses who voluntarily want to offset
their emissions
• are unable to be sold to companies (liable entities) to meet their obligations under the carbon
pricing mechanism
• are unable to be exchanged for international emissions units.
The table below summarises the characteristics of each type of ACCU.
Table 1 ACCU characteristics
Characteristic
Kyoto ACCUs
Non-Kyoto (voluntary) ACCUs
Able to be sold on the voluntary market


Can be surrendered under the carbon
pricing mechanism


Any reference to a value of an ACCU in this case study should be taken as an example of a value,
which may or may not occur in the future. The Commonwealth of Australia, nor any of its officers
or related bodies, cannot make any representation or provide any guarantee concerning the future
values of non-Kyoto (voluntary) ACCUs.
An ACCU is a ‘financial product’ under the Corporations Act 2001 and the Australian Securities and
Investments Commission Act 2001. This means people who provide financial services in relation to
ACCUs and related financial products and services in Australia may require an Australian Financial
Services (AFS) licence, which authorises them to provide those services.
You should obtain your own professional advice about the trading of ACCUs, having regard to your
own situation.
For further information on the characteristics of ACCUs, please refer to the descriptions of the
Clean Energy Regulator at www.cleanenergyregulator.gov.au/ANREU/Concise-description-ofunits/Pages/default.aspx.
1
There is a third type of ACCUs called non-Kyoto (eligible) ACCUs. This type of ACCUs was only able to be generated by Kyoto eligible
projects between 1 July 2012 and 16 May 2013. These credits are the same as Kyoto ACCUs with the exception that they cannot be
exchanged for international emissions units.
Department of Agriculture
Carbon Farming Initiative case study: 13.6 New South Wales
3
1Introduction
This case study explores undertaking a potential CFI project using the
environmental plantings methodology determination, Carbon Farming (Quantifying
Carbon Sequestration by Permanent Environmental Plantings of Native Species using the
CFI Modelling Tool) Methodology Determination 2012.
The environmental plantings methodology determination covers the establishment and
management of permanent native forests through the planting and/or seeding of native species
on cleared or partially cleared land. This achieves greenhouse gas abatement by removing carbon
from the atmosphere and storing (sequestering) it in trees by growing a native forest.
This methodology determination can be applied Australia-wide to CFI projects that meet
requirements, such as:
• The native forests are established through direct planting or seeding; native forest regrowth
through existing natural seed banks is not eligible.
• The native forests are established on land that has been clear or partially clear of forest for the
five years before tree planting or seeding.
• The native forests consist of Australian species that are native to the local area. They may be
a mix of tree and understorey species, or one single species if the species naturally occurs as a
monoculture in the area.
• The trees have the potential to attain a crown cover of at least 20 per cent and a height of at
least 2 m.
• The project does not involve harvesting of wood products—you can remove a maximum of
10 per cent of debris per year for personal use (e.g. firewood).
• Grazing by livestock is prevented in the first three years after tree planting or seeding.
• The carbon stored in biomass (vegetation) is stored permanently for at least 100 years.
Established permanent environmental plantings may be eligible to participate in the CFI using
this methodology if they meet the above requirements and were planted on or after 1 July 2007.
Plantings established before 1 July 2007 could still be eligible if there is documentary evidence
that they were planted for the purpose of generating carbon credits. ACCUs will only be issued for
abatement from 1 July 2010.
The complete methodology is available at www.comlaw.gov.au/Details/F2012L01340.
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Department of Agriculture
Carbon Farming Initiative case study: 13.6 New South Wales
Introduction
Plantings in a high-rainfall area of New South Wales
This potential CFI project involves the planting of an area of land to a carbon sink forest
consisting of a mix of local native trees species, using the environmental plantings methodology
determination. As the trees and shrubs grow, they remove carbon dioxide from the atmosphere
and store carbon in plant matter. Under the methodology, the amount of greenhouse gases locked
up in plant matter and debris is estimated using standard calculations, and is expressed in the
internationally accepted unit of CO2-e—with one ACCU being earned for every tonne of CO2-e
locked up by the project.
Environmental plantings are planted or seeded areas, where the vegetation consists of native trees
and understorey species that occur naturally in the area.
The planted area must have the potential to meet the definition of a forest. The definition of a
forest is an area of land of more than 0.2 ha on which there are trees with a potential crown cover
of at least 20 per cent of the land surface, and a mature height of at least 2 m. Environmental
plantings need to be permanent, meaning the stored carbon must be maintained for a minimum of
100 years. If the trees are removed during this period, the ACCUs earned will need to be repaid, as
the carbon will be released back into the atmosphere.
Environmental plantings bring additional benefits to farms, including attracting and improving
the habitat of birds, reptiles and native animals. They can also improve pest control by birds and
insects, increase pollination services by insects, contribute to salinity management, contribute to
reduced wind and water erosion, provide wind and weather shelter for crops and livestock, and
generate recreation and amenity benefits.1
Location and enterprise type
CFI projects using the environmental plantings methodology determination would be suited to
many locations across Australia, and for many different farm enterprises. Obviously, a critical
question will be whether there is an area of land available to be planted to trees, meaning this
methodology will be less suitable for farms with only limited land area.
To meet the requirements of the environmental plantings methodology determination, the project
must be established on land that is clear or partially clear of mature trees (forest) for at least five
years before establishing the project.
Selecting an area for planting or seeding should involve assessing the site for soil type and
structure, slope, aspect, and location in the landscape. Site selection should also consider any
potential to prevent erosion, to better manage water runoff, and to help manage problems such
as dryland salinity or waterlogging. A site assessment should also consider access requirements
for moving stock, people, vehicles and machinery, as well as how to control weeds or feral animals
on the site.
If the land being considered for the project is likely to revert to forest under normal management
practice the land cannot be used for an environmental planting project.
Forests established after 1 July 2007 are eligible to be recognised as a permanent environmental
planting project under the CFI. Forests established prior to this date can still be eligible if evidence
is provided that the trees were planted to store carbon and earn carbon credits. However, any
carbon stored by the trees before 1 July 2010 will not be eligible for crediting.
Minimum tree lot area
The minimum area for a CFI project of this type is 0.2 ha. The number of trees that need to be
planted per hectare to meet the criteria of at least 20 per cent canopy cover will depend on the
crown size of the trees and shrubs being planted. For example, to achieve 20 per cent canopy cover
with evenly spread trees that have a mature canopy diameter of about 4 m per tree, a minimum
density of approximately 160 trees per hectare will be required.
1
Greening Australia, Recognising the values and benefits of native vegetation,
http://live.greeningaustralia.org.au/nativevegetation/pages/page74.html
Department of Agriculture
Carbon Farming Initiative case study: 13.6 New South Wales
5
Introduction
Tree species, composition and structure
Permanent environmental plantings must be established through direct seeding or planting, and
the trees or shrub species must be Australian species that are native to the area. The CFI project
can be a mix of tree and understorey species, or can consist of a single species of tree if such
monoculture forests are common in the area.
Tree lot management
To allow the planted trees to establish, grazing livestock must be excluded from the project area
for at least the first three years. After this period, strategic grazing of the project area is permitted,
but must not result in any reduction in the rate of tree growth.
The trees must not be harvested for commercial wood products at any stage. Some cutting of
firewood is permitted, but only for personal use and up to 10 per cent of the debris (dead branches
that fall on the ground) can be removed for this purpose. Some thinning is allowed to promote
growth and maintain a healthy forest; however, the resulting cut trees and thinning must be
retained on-site, unless removal is necessary for fire management or in accordance with traditional
indigenous practices.
Any weed species that a landholder is required by law to manage will need to be controlled or
eradicated in the project area.
Landholders usually do not apply lime or fertilisers to areas of environmental plantings. Although
there are no restrictions on their use, fertiliser and lime would add to the cost of the project and
the cost benefit of using them would need to be evaluated.
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Department of Agriculture
Carbon Farming Initiative case study: 13.6 New South Wales
2 Land-use implications
Unless planted on unproductive land, establishing an environmental plantings
project will probably require you to remove some land from other types of farm
production, such as growing crops or grazing livestock. A decision to permanently
remove some land from normal farm production will require careful consideration.
However, if the right area of land is selected—such as poor-performing cropping
paddocks or mid-slope water interception points—the farm may benefit, and
existing farm enterprises may be minimally affected.
The area most suited for an environmental planting project will probably be less productive
land, or land on which there are management problems such as erosion, waterlogging or salinity.
Steeper or rocky land that cannot be used for cropping or improved pasture establishment may
also be suitable. Remember, however, that the growth rate of trees (and hence the number of
ACCUs the project generates) will be affected by the productive capacity of the land on which the
project is established. If a project is being established on poorer land the revenue generated by the
project is likely to be lower. It is also important to consider species type, because conditions will
favour some species over others, affecting tree growth rate and consequently the rate at which
ACCUs are generated.
The project area will need to be fenced to exclude livestock for the first three years after
establishing the planting (grazing by livestock is allowed after this period). You may be able to
minimise fencing costs by designing the project area so that some existing fence lines are used.
It may also be possible to design the project so that its location provides benefits by creating a
laneway to assist stock movement, or by excluding stock from areas that are difficult to muster.
The effect of the design of the environmental planting area on the standard operations of the
farm should be evaluated. The introduction of an environmental planting has the potential to
fundamentally modify the way livestock, equipment and human resources move around a property,
so placement should be considered in the context of the whole farming system. In the case of a
cropping enterprise, for example, it will be important to ensure that the location and shape of the
project area still enables harvesters and seeders to access paddocks and move along laneways.
Do not forget that an environmental planting project needs to be retained permanently, unless
the landholder is prepared to hand back the total number of ACCUs earned by the project to the
Clean Energy Regulator. The decision to implement an environmental planting project should be
part of long-term property planning process to ensure the planted area fits with the overall farm
plan, and is designed in a way that maximises any potential benefits.
Department of Agriculture
Carbon Farming Initiative case study: 13.6 New South Wales
7
3Case study details and
key decision points
The environmental plantings methodology determination encourages the planting
or direct seeding of areas of native tree and understorey species to permanently
store carbon. Tree lots must be more than 0.2 ha in area, and be planted to species
capable of growing taller than 2 m and achieving more than 20 per cent crown
cover over the project area.
Tree species
Catchment management authorities can provide advice on tree species that are native to a
particular area. Florabank (www.florabank.org.au) provides a useful tool to identify native species
local to regional natural resource management (NRM) areas. For example, the Florabank website
identifies up to 59 different native tree and grass species for the New England Tablelands. Tree
species include acacias, allocasuarinas, banksias, and a large range of eucalyptus species. For the
South West Slopes, 61 different tree and grass species are suggested. Again, a large range of acacias
and eucalypts are included in the list.
Before implementing a project under the environmental plantings methodology determination,
landholders should consult with local native vegetation experts and native tree nurseries to ensure
that the mix of tree species selected will grow to meet the definition of a forest, and is local to
the area.
Implementing an environmental plantings project
To participate in the CFI, you have to register as a participant (i.e. become a Recognised Offsets
Entity) by completing an application form and submitting it to the Clean Energy Regulator.
The recognised offsets entity is the person who will become owner of any ACCUs generated by
the project. The next step is to have the project accredited by the Clean Energy Regulator as an
Eligible Offsets Project.
If you, as the project owner, meet the reporting and notification requirements, you will be issued
with a Certificate of Entitlement, which identifies the number of ACCUs that will be credited for a
specific reporting period. These will be created in your registry account (similar to a share registry
account). You are then able to keep or sell the ACCUs as you see fit.
8
Department of Agriculture
Carbon Farming Initiative case study: 13.6 New South Wales
Case study details and key decision points
Defining the project area
The project area must be defined using geographic reference points; this can be done either with
the use of a global positioning system (GPS) to identify the latitude and longitude of the project
boundaries or the CFI Mapping Tool (CMT) available for free on the internet. A single CFI project
can have multiple carbon estimation areas (CEAs), but each defined area must be completely
separate from other areas.
This geospatial information on the project area is required when submitting an application to
have the project registered. The Clean Energy Regulator requires this information to ensure two
projects do not overlap, to ensure that projects are not registered twice, to assess whether the
project meets all the relevant requirements and to determine whether the project is eligible for
Kyoto or non-Kyoto (voluntary) ACCUs.
Defining carbon estimation and exclusion areas
CEAs and exclusion areas (EAs) must be identified for each of the project areas if site
characteristics and proposed management are not uniform for the whole area. CEAs are areas
that have similar site characteristics (stratifications – see below), and EAs are areas that do not
contribute to carbon storage, such as a roads, rocky outcrops or remnant vegetation. This mapping
should identify any relevant areas that are more than 5 m in width or depth; smaller areas do not
need to be identified. A project area may have one or many CEAs.
If the project area has distinct regions because of characteristics such as soil type or slope, similar
areas should be divided into CEAs. This is so that the effect of different site characteristics or
management can be considered in calculating estimates of stored carbon for the project. The
project area must be divided up using characteristics that affect tree growth, such as:
• soil type
• aspect
• position on the slope.
Each CEA must contain a static ‘modelling or reference point’ identified by geographic coordinates.
This location is used by the Reforestation Modelling Tool (RMT) to estimate the amount of
stored carbon for the CEA. Reference points do not move over the life of the project, unless a CEA
is modified.
A CEA must be managed consistently. That is, it must be:
• established using the same method and at the same time (no more than 30 days between first
seeding/planting and the last)
• planted or seeded with the same species or species mix
• managed in the same way.
To define the boundaries of the project, as well as the CEA and EA boundaries, at least one of the
following methods must be used:
• CMT
• field survey or sampling
• aerial photograph
• satellite imagery
• soil, vegetation and landform maps.
The CMT can be used to define the project area, and to distinguish CEAs and EAs. Project maps
developed using this tool can be saved for later viewing or editing. The CMT also allows geographic
information from other sources to be imported.
During the project life, CEAs may need to be further divided if the way the area is managed changes
or in the event of a serious bushfire that kills trees. In the event of a bushfire, the affected trees will
need to be replaced or allowed to regenerate, and will require different management and therefore
need to be identified as a separate CEA.
Defining the greenhouse gas boundary
The term ‘greenhouse gas boundary’ refers to the sources of greenhouse gas emissions and
sequestration that will be included for the purposes of estimating the net amount of greenhouse
gases sequestered by the CFI project.
Department of Agriculture
Carbon Farming Initiative case study: 13.6 New South Wales
9
Case study details and key decision points
Under the environmental plantings methodology determination, the greenhouse gas boundary
for a project includes carbon stock changes in the above and below ground biomass, dead plant
material and debris, and also the greenhouse gas emissions created by vehicles or other equipment
used when establishing and managing the project.
Greenhouse gas emissions that must be accounted for in a net project sequestration
estimate include:
• carbon released as a result of fire or management
• methane and nitrous oxide released in prescribed or uncontrolled fire events
• carbon dioxide from fuel use in vehicles and machinery during planning, site selection,
preparation and seed collection
• carbon dioxide from vehicle and machinery fuel use during establishment and management
operations
• carbon dioxide from vehicle and machinery fuel use for transportation (people or supplies) and
travel between business locations and for deliveries to the site.
Excluded from the net estimate are emissions from:
• any nursery operations to raise seedlings
• fertiliser and lime use
• livestock grazing the area
• burning firewood.
Any changes in soil carbon stocks are excluded from the net sequestration estimate, as the
evidence is conflicting about whether soil carbon will increase or decrease under a tree lot.
Approvals from government agencies and other interested parties
Under CFI legislation, an application for approval of a project requires an attached statement that
the proposed project is consistent with any applicable NRM Plan.
If the project is on Crown leasehold land, the application for approval of the CFI project also
requires approval of the relevant Crown Lands Minister.
In the event there are other parties with an interest in the land on which the project is to be
established (such as a bank holding a registered mortgage, a native title holder, or if there are
a number of different names on the title deeds for the land), approval for the project will be
required from all these parties, and documentation of this will be required as part of the project
application documentation.
Estimating stored carbon for the project
For projects using this methodology determination, the baseline (the amount of sequestration that
would have occurred in the absence of the project) is assumed to be zero. That is, it is assumed that
there was no net carbon storage in the project area before the project began.
The net stored carbon for a project involves estimating the amount from tree growth, and
deducting from this the emissions associated with establishing and maintaining the project, or
arising from fire or other project management activities.
To estimate carbon stored by the project, the RMT must be used.
The RMT uses data from the Australian Government’s national greenhouse gas inventory to
estimate changes in carbon stocks and emissions from fire. It includes settings for species,
management regime and events that may disrupt carbon storage. The RMT does not require the
landholders to undertake direct tree or emission measurements.
You must use the ‘mixed species environmental plantings’ setting of the RMT when estimating
the amount of stored carbon for a specific period. The RMT can be downloaded from http://ncat.
climatechange.gov.au/cfirefor.
For each CEA in the project, use the RMT to calculate:
• The initial amount of carbon already sequestered by the trees to 30 June 2010, if the
environmental planting existed before 1 July 2010. This amount must be subtracted from
any estimates as it does not contribute to carbon stored by the trees for the environmental
10
Department of Agriculture
Carbon Farming Initiative case study: 13.6 New South Wales
Case study details and key decision points
plantings methodology determination. If the environmental planting was established on or
after 1 July 2010, the initial amount of carbon is zero. Each time a report is submitted to the
Clean Energy Regulator, you must recalculate the initial amount of carbon to ensure any
changes to the RMT model are incorporated.
• The amount of stored carbon up to the last month in the reporting period. You should then
calculate the change in stored carbon from the previous report.
• Monthly and total emissions from wildfires during the reporting period. This total estimate
will be subtracted from the abatement estimate.
Using the calculated information, you must report on the stored carbon achieved by each CEA and
the whole project area within the reporting period.
The Reforestation Abatement Calculator (RAC) is another online tool that has been developed
to assist landholders to calculate net project abatement. It combines data from the RMT with
information about other sources of emissions and converts the final abatement figure to carbon
dioxide equivalents’ (CO2-e). The RAC calculates:
• the amount of stored carbon across all CEAs
• emissions from fire
• project emissions (e.g. emissions from using vehicles and machinery)
• net abatement in CO2-e.
The RAC can be downloaded from http://ncat.climatechange.gov.au/cfirefor, or landholders can
develop their own data management system.
Obtaining ACCUs
A project owner receives ACCUs in their registry account once a project report has been submitted
and is accepted by the Clean Energy Regulator. Project reports may be submitted as often as every
12 months, or up to five years apart.
Monitoring, recording and reporting
Initial documentation required to register a project includes:
• data used to create CEA areas
• evidence of species and species mix
• evidence of the applicability of the RMT
• RMT input data (e.g. management events, disturbance events)
• date-stamped CMT reports or other geographic information system (GIS) report, showing
CEAs and modelling point location for CEAs
• date-stamped RMT reports for each CEA.
Each subsequent time you submit a project report, you are required to use the RMT to calculate the
amount of stored carbon achieved over the relevant reporting period. As the RMT only calculates
stored carbon and not emissions, you must use the RAC to record fuel use associated with the
management of the project for each reporting period and convert total abatement to carbon
dioxide equivalents’. These reports must be accompanied by an audit report.
In the event of a disturbance event (fire, pest, disease), you must record:
• when the disturbance occurred
• which CEAs are affected
• the proportion (area) of each CEA affected
• whether trees were killed or have survived.
Observation or imagery may also be used to monitor the progress of the project, and to ensure it
continues to have the potential of meeting the definition of, or is, a forest.
Department of Agriculture
Carbon Farming Initiative case study: 13.6 New South Wales
11
4 Pre-project needs
The first step in selecting a site for an environmental plantings project is to evaluate the land.
You should consider:
• soil type and structure
• soil issues such as sodicity or acidity
• slope and aspect
• position in the landscape (e.g. flats, mid-slope, hill top)
• connectivity with existing vegetation
• land and water issues (e.g. erosion, salinity)
• possible impacts on the farm’s operating procedures
• access for weed and feral animal control
• access to the site and for management of the area.
Particularly in the early development phases, good machinery and vehicular access will be
required to plant and manage the CFI project area. As the trees mature, access within the area
will be needed for fire, weed and feral animal management and maintenance. Consequently,
thought should be given to layout of the trees. Fencing will be required to prevent livestock access,
particularly for the first three years.
Before planting or seeding the selected site, weed control is essential to provide seedlings with
the best opportunity to establish. Weeds compete fiercely with new seedlings for water and
nutrients. Herbicide may need to be applied up to two years before planting, and the area should
be maintained weed free for at least 12 months before planting or seeding.
Clearing of invasive species to plant or seed an environmental plantings project is permitted.
Site preparation requires ripping to a depth of 30–60 cm, which will assist good root development
and increase water infiltration. In areas that receive 800 mm or more of rainfall, ripping and
mounding of existing pastures in preparation for planting is only permitted where it disturbs
<10 percent of the soil surface area. To achieve a good strike rate, fertiliser may be applied to the
soil or incorporated with planting/seeding; however, fertiliser use will depend on the species
being sown because many Australian natives prefer low-nutrient soils.
Although direct seeding can be more cost-efficient, planting seedlings often results in a higher
establishment rate. Planting requires the purchase or generation of seedlings, and increased time
and labour to plant out the site. It is worth including extra seedlings or a higher seeding rate to act
as a buffer against poor establishment.
12
Seedlings up to roughly 1 m high are highly vulnerable to damage from animals such as rabbits
and kangaroos. Plant guards can be used while plants are establishing, and rabbits and kangaroos
are controlled.
Department of Agriculture
Carbon Farming Initiative case study: 13.6 New South Wales
5Resources and
skills required
As with any strategic farm intervention, revegetation requires a long-term plan.
The plan should outline planning, implementation and management activities that
have been time and financially budgeted and appropriately resourced. It should
also identify materials and equipment required.
Practical skills required to manage the environmental planting are not greatly different from
managing pastures or crops. Good site preparation, weed control, establishment and effective
management all help to ensure the tree area establishes and matures well.
Organisations such as Greening Australia and catchment management authorities offer training
in subjects such as planting techniques, plant propagation and weed management. Managers
unfamiliar with tree management may need specific training in appropriate thinning techniques.
Although you can manage your CFI project and ACCUs, it may be more time and cost-effective to
employ external assistance. An arborist, for example, could manage tree growth and supervise
thinning operations, and a carbon aggregator or consultant could undertake the activities required
to estimate stored carbon and prepare reports.
Department of Agriculture
Carbon Farming Initiative case study: 13.6 New South Wales
13
6Australian carbon
credit units
Environmental plantings projects need to meet what is called the ‘permanency’
rule, which means the stored carbon needs to be protected for 100 years. For this
reason, details of a project may be noted on land title information retained by
state governments. The reporting and carbon maintenance obligations associated
with an environmental planting project stay with the land, even if the land
changes ownership.
An environmental planting project therefore has the potential to reduce the value of land, because
it would require a future owner of the land to maintain the project and, depending on crediting
arrangements, it could mean additional costs but no access to revenue. Alternatively, as the global
carbon market develops, the value of ACCUs could substantially increase, making a CFI project area
a valuable asset for future generations or a selling point for the land.
The Australian Government has stated that ACCUs generated by CFI projects that meet
international (Kyoto Protocol) emission accounting rules (i.e. Kyoto ACCUs) can be sold to
companies participating in the mandatory Australian carbon market. Non-Kyoto (voluntary)
ACCUs can be sold in the voluntary carbon market, which is a market created by individuals or
companies that elect to ‘offset’ their emissions voluntarily. The voluntary carbon market generally
trades at lower values compared to the mandatory market.
ACCUs generated from an environmental plantings project will comply with the Kyoto Protocol as
long as it is planted on land that was clear on or before 31 December 1989.
At the time a project is registered and reports are submitted, the Clean Energy Regulator will
advise the type of ACCUs that will be generated by your project. The status of the ACCUs will be
noted in the register, so that buyers are informed of the type of ACCU they are buying.
The volume of ACCUs generated in an environmental planting area will be affected by the
environmental conditions under which the trees grow. Soil condition and rainfall will have the
largest effects on tree growth. Seasonal variation will cause the rate of stored carbon to vary
between years. Carbon storage rates for environmental planting projects could be expected
to range from 5 to 15 tonne per hectare per year CO2-e, for plantings in high-rainfall zones on
productive land. Lower rates would be anticipated in more western parts of the high-rainfall zone,
or in a poorer growing environment.
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Department of Agriculture
Carbon Farming Initiative case study: 13.6 New South Wales
Australian carbon credit units
Using the first five-year reporting period as an example, the volume of ACCUs expected to be
generated from a 50 ha environmental planting area in three high-rainfall locations are set out in
Table 2. At a hypothetical ACCU price of $10 per ACCU, potential income ranges from $12 060 to
$32 300. The value of ACCUs will depend on a number of factors, including the level of demand.
The potential price a project could receive is a factor that needs to be considered when deciding to
undertake a project.
Table 2 Expected ACCUs from a hypothetical 50 ha environmental planting in high-rainfall locations in
New South Wales
Location
Net sequestration
(t CO2-e) (ACCUs)
2012–17
Carbon income
($10 carbon price)
Albury
3230
$32 300
Armidale
1210
$12 100
Orange
1206
$12 060
Trees also store carbon at a greater rate for the first 10–20 years. The annual rate of carbon storage
then rapidly plateaus as the trees reach maturity (Figure 1). The age of the environmental planting
area combined with seasonal environmental conditions will affect the volume of ACCUs generated
each year.
Figure 1 E stimate of stored carbon over the life of a hypothetical 50 ha environmental planting located
at Albury, New South Wales
Environmental plantings could be threatened by bushfire, which may severely restrict ACCU
generation. If your project is affected by bushfire, you will have to take reasonable steps to
re‑establish lost carbon and no additional ACCUs will be earned for those areas until the stored
carbon exceeds the previous stored carbon levels at the previous reporting period. You may wish
to take out appropriate insurance cover for any project you manage.
Department of Agriculture
Carbon Farming Initiative case study: 13.6 New South Wales
15
7 Potential costs
There are some important direct costs associated with establishing environmental
plantings, including the seedlings, weed control, fertiliser and fencing. Taking an
average of the cost estimates provided by a number of sources, an indicative cost
is likely to be more than $2000 per hectare. This will obviously vary considerably
depending on the specific site and other project aspects.
1
Preplanting preparation costs (e.g. site evaluation, environmental surveys or testing to establish
CEA regions, and sourcing enough seed or seedlings) incur expense and time. Site preparation
costs would include time and labour involved with weed control and preparing the area for
planting or seeding, as well as the direct costs of herbicide, fertiliser and seedlings.
Once established, forest management may include pruning, thinning and replanting dead trees,
and maintaining fencing to ensure stock are excluded. For environmental plantings, the need to
prune or thin is less likely. Training costs may also be incurred if managers need to obtain some
forest management skills. Many of the maintenance costs will continue for as long as the plantation
is maintained.
Record keeping, determining the amount of stored carbon and reporting also add to the project
costs. Project reports submitted to the Clean Energy Regulator must be externally audited and in
some cases an audit of the project area may be required, adding additional costs. If the plantation
manager elects to use external resources to assist with record keeping and report preparation,
additional costs will be incurred.
Table 3 provides an estimate of some of the costs environmental plantation managers could incur
during the first five years in establishing and maintaining a 50 ha CFI project. These cost estimates
are indicative only, and assume that the landholder fully costs his or her own time associated with
the project. Note that a project will continue generating ACCUs for a much longer period than the
initial five years, but that project initiation costs will only be incurred once.
1
16
Average of establishment cost per hectare for blackwood, eucalypt species and radiata pine (Private Forests Tasmania 2005,
Farm Forestry Information Sheets, blackwood, eucalypts, radiata pine. Accessible at: www.privateforests.tas.gov.au/publications/farm_forestry_
info_sheets)
Department of Agriculture
Carbon Farming Initiative case study: 13.6 New South Wales
Potential costs
Table 3 Some estimated costs incurred in establishing a hypothetical 50 ha planting in a high-rainfall
location in New South Wales
Cost area
Generala
(administration, fees,
setting up, structural
cost areas)
Project
establishment cost
Price
Start up, initial accreditation
and CFI registrationb
$3000 one-off cost
$3000
Legal advice (contract)
$2000 one-off cost
$2000
Project or site
set-up costs
Establishing tree lots
(including seedlings,
weed control, fertiliser
and fencing)
$2188 per hectare
Project overheads
Weed control
(every three years)
$200 per hectare
Reporting/auditing
Initial verificationc
$1500 per day
one‑off cost
Statement preparation to
accompany offset report
$1000 per report
Total
Annual
operating cost
$109 400
$6000
$1500
$1000d
$115 900
$7000
a Cost estimates are based on personal communication with carbon auditors and consultancy firms. Costs are indicative only and will vary
between firms and states.
b While registering to participate in the CFI (becoming a Registered Offset Entity and obtaining project approval) is free this is the
estimated cost if you choose to engage professional assistance in preparing the paperwork.
c
This verification is assumed to take one day because the total area of trees being established is 50 ha.
d
An offset and audit report is submitted within 1–5 years of a project starting and then every one to five years. In this example this
estimate is based on reporting every one year.
Department of Agriculture
Carbon Farming Initiative case study: 13.6 New South Wales
17
8 Risk analysis
In many respects, an environmental plantings project is very like other farm
enterprises in that there are a range of short, medium and long-term risks involved,
and you need to carefully consider these if you are thinking of setting up a CFI
project on your land.
CFI projects will entail a range of establishment and operating costs, some of which are fixed
and others which depend on the size of the project. Generally speaking, there will be greater
efficiencies associated with large-scale projects, and even preliminary estimates indicate that it
would be difficult to profitably manage an environmental planting project that is smaller than
30–50 ha. Smaller projects may be viable under an aggregation arrangement, or the co-benefits
associated with a project may be sufficient that you may be prepared to accept that the project
will at best reach a break-even financial result.
Management skills will be important. Selection of the right species and project location may make
a big difference to project results.
Like other farm enterprises, there is production risk associated with environmental planting
projects. A sequence of below-average rainfall years, the emergence of a disease that kills trees,
or even poor site and species selection that results in trees dying due to waterlogging or salinity
during a series of wet years are all risks that you need to consider when developing a project.
Such events could dramatically reduce the number of ACCUs that a CFI project generates, or
involve additional costs.
Bushfire or any other natural disaster that has the potential to kill trees or cause the release of
stored carbon is a risk for any project. If trees die or are killed by a bushfire or flood, the trees
must be re-established at the landholder’s cost. Landholders will not be required to hand back
any ACCUs already credited for the dead or lost trees, but new ACCUs will not be credited until
the carbon in the replanted trees exceeds what was there at the time of the last time credits were
issued. The time, cost and resources required to re-establish and potentially re-fence even a
proportion of the environmental planting could be significant.
It is likely that carbon brokers or aggregators will become intermediaries in the carbon market,
identifying buyers for ACCUs and managing CFI projects on behalf of landholders for a fee or
on a commission basis. Such arrangements are likely to assist landholders who do not have
project management and administrative skills, but will come at a cost. It will also be important
for landholders to be very clear on any contractual arrangements they enter into with brokers or
18
Department of Agriculture
Carbon Farming Initiative case study: 13.6 New South Wales
Risk analysis
aggregators. As noted earlier, an environmental planting project may require a notification to be
placed on the title information for the land on which it is established, and this remains with the
land for the duration of the project, or until that obligation is removed by paying back all the ACCUs
earned for the project. If the aggregator company disappears or is declared bankrupt, then the
obligation to continue managing the project will revert to the landholder.
Similarly, if the aggregator or project manager provides the Clean Energy Regulator with incorrect
or misleading information, then the Clean Energy Regulator has the power to cancel ACCUs or
to impose other penalties. Again, if the aggregator is no longer involved for any reason, then the
penalty will effectively be imposed on the landholder.
A further risk associated with projects of this nature arises because of their long-term nature. Once
a CFI project is operating, it will be generating ACCUs and will continue to do so for the life of the
project. It may be prudent for those contemplating starting a CFI project to first try and negotiate
a medium to long-term offtake agreement for the ACCUs the project is likely to generate, to reduce
the risk of facing a future carbon market that is oversupplied.
This risk is, in turn, linked to another risk associated with CFI projects, in that they entail
considerable upfront establishment costs. As noted earlier, typical site preparation and planting
costs amount to $2000 per hectare, and there will also be annual costs associated with the
operation of a project, even before any ACCUs are generated. Since 1 July 2007, you have been able
to claim a deduction for expenditure you incur establishing trees in a carbon sink forest under
Subdivision 40-J of the Income Tax Assessment Act 1997 (ITAA 1997). This deduction encourages
the establishment of carbon sink forests for the dedicated purpose of carbon sequestration, that is,
the process by which trees absorb carbon dioxide from the atmosphere and therefore, applies to
environmental plantings under the CFI.
The Australian Tax Office has also indicated that revenue generated from the sale of ACCUs will not
be considered to be primary production income. This has implications for farm business managers
in relation to income tax averaging, and limits that apply to the amount of non‑primary production
income that may be earned while still being eligible to hold Farm Management Deposits.
Farmers are well used to managing risks, and in that respect an environmental planting project has
similarities to other farm enterprises. However, the long-term nature of such projects and the lack
of flexibility they entail means that farmers should adopt extra caution, and seek appropriate legal
and other professional advice before entering into these projects.
Department of Agriculture
Carbon Farming Initiative case study: 13.6 New South Wales
19
Abbreviations
ACCU
Australian carbon credit units
AFS
Australian Financial Services
CEA
carbon estimation area
CFI
Carbon Farming Initiative
CMT
CFI Mapping Tool
CO2-e
carbon dioxide equivalent
EA
exclusion area
GIS
geographic information system
GPS
global positioning system
NRM
natural resource management
RAC
Reforestation Abatement Calculator
RMT
CFI Reforestation Modelling Tool
Units
20
ha
hectare
m
metre
t
tonne
Department of Agriculture
Carbon Farming Initiative case study: 13.6 New South Wales
Edition 01 2012
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