WATCH THE VIDEO: SCHEME INDEPENDENCE
The Australian carbon market has faced backlash regarding the integrity of the Australian Carbon Credit Unit (ACCU) Scheme. Concerns have been raised over the robustness of key methodologies such as Human Induced Regeneration (HIR), particularly in relation to additionality and permanence. Carbon credits have also been used as financial instruments at an increasing rate, contributing to speculative trading activity.
At the same time, there has been much activity on creating a nature-based market, modelled largely on the carbon market. This faces the potential to replicate the multiple concerns of the carbon market.
In response, Greenfleet has collaborated with the Australian National University (ANU) to develop a new Nature and Carbon Scheme. This initiative aims to integrate biodiversity outcomes into carbon projects, promoting high-integrity approaches that support the restoration of native ecosystems, the enforcement of permanence, removal of carbon and avoid speculative trading.
The Nature and Carbon Scheme (NCS) is an independent scheme establishing an accreditation framework for ecological restoration and carbon removal from the atmosphere on cleared land via planting and direct seeding. It is not legislated under Australian law or administered by any government entity. Scheme administration and project registration will be undertaken by an independent body. Scheme accredited projects are issued Nature and Carbon Scheme Tonnes (NCSTs), which recognise nature restoration and carbon removal simultaneously in a single unit.
See Section 2, page 5 of Scheme rules.
WATCH THE VIDEO: NCS PROJECT AND NCST TRADING RESTRICTIONS
As a new Scheme focused on delivering both biodiversity enhancement and carbon removal, the Nature and Carbon Scheme does not recognise projects under other schemes.
By preventing recognition with other scheme products, the NCS aims to ensure additionality and avoid double dipping. The Scheme does not permit trading of NCSTs beyond the transaction made by the initial participant. After the initial transaction NCSTs must be retired.
This condition reflects the Scheme's intention to achieve environmental impact as a priority over financial products.
See Parts 20.8 and 20.9, page 34 of Scheme rules.
WATCH THE VIDEO: FORWARD DEEMING OF CARBON SEQUESTRATION
The Nature and Carbon Scheme takes a different approach to industry standard historical crediting. The NCS relies on forward deeming that recognises future carbon removal and biodiversity restoration at project commencement.
Other schemes assign carbon credits for historical carbon sequestration, which poses financial barriers to entry for environmental planting proponents who face high front-end costs.
The forward deeming concept is designed to remove barriers to entry by making funds available for project developers to implement high quality restoration work at time of greatest need.
Proceeds from NCST sales will be deposited into and held by an independent trust controlled by the Scheme Administrator. Project funds are to be released by the trust administrator upon verification of project milestone completion, according to transparent audited trust rules. Project owners must at all times maintain alignment with Scheme rules including rigorous monitoring and reporting to verify that the forest is meeting expected outcomes.
Under the Scheme, Co2 removal can be calculated using tools such as FullCAM and others as approved by the Scheme Administrator.
See Part 2, page 6 of Scheme rules.
WATCH THE VIDEO: INDEPENDENT TRUST MECHANISM
The Scheme establishes an independent trust to manage project funding. The purpose of the trust is to receive, hold and distribute funds to project owners based on the completion and verification of approved milestones outlined in the project plans. Verification of milestone achievements prior to funds release will provide confidence to NCS participants. Feedback is being sought during this consultation process on the Scheme trust concept to inform decisions around its implementation.
See Part 6, page 10 of Scheme rules.
WATCH THE VIDEO: PROJECT ELIGIBILITY CRITERIA
To be able to register a project in the NCS, prospective project owners must meet Scheme criteria.
Eligibility for project registration is based on:
- Land for project operations must have been cleared and have remained cleared for the 5 years prior to project registration (natural regeneration projects are ineligible).
- The forest must be legally protected for at least 100 years using instruments on title such as carbon rights.
- Potential proponents must be accepted under the Scheme as appropriate/suitable persons.
- Project owners must have the legal right to undertake the project.
- Assessment and project plan development must be undertaken by an approved assessor as described in the Scheme rules.
See Part 9 page 15-16 and Part 10 page 16 of Scheme rules.
WATCH THE VIDEO: TIERS OF NCS PROJECTS
The Nature and Carbon Scheme consists of two tiers of projects. Project owners can elect to nominate their project as either a Tier 1 project, or a Tier 2 project.
A Tier 1 project is outcomes focused; it involves the collection of ecological data to demonstrate compliance with Scheme criteria.
Tier 2 projects must comply with all Tier 1 requirements but must also demonstrate compliance with additional management actions.
Tier 2 projects must be designed to include site-specific, scientifically backed management actions, additional to those required to meet Tier 1 criteria, intended to further accelerate the biodiversity of a site. Examples include nest box installation, succession planting/seeding of understory and ground strata species, wetland or stream habitat enhancement, cultural and/or ecological burning, erosion mitigation etc. Tier 2 management actions are specified in the project plan and approved by the project administrator. Tier 2 management actions may be undertaken during the time between planting and 15 years post-planting.
Funds for Tier 2 activities will not be released to project owners from the Scheme trust until verification is provided that the works have been implemented in alignment with the approved project plan.
See Part 2, page 5 of Scheme rules.
WATCH THE VIDEO: CARBON REMOVAL CONSERVATISM DISCOUNTS
In recognition of the fact that the Scheme will use a forward deeming approach and will allow soil carbon to be accessed as a carbon pool for determining tonnes of carbon removal, discounting has been included in carbon calculations to ensure conservative CO2 removal crediting under the Scheme. The discounts are as follows:
- a 35% error discount on soil carbon stocks with a maximum 20% cap on soil carbon improvement
- a 5% discount on total carbon removal to account for potential reduction associated with climate change
- a 1% discount on total carbon removal for operational emissions associated with the project.
See Part 19, page 31 of Scheme rules.
WATCH THE VIDEO: PROJECT MONITORING
The NCS adopts two approaches to monitoring project performance.
Tier 1 Monitoring – Assessment of project performance measurement of ecological parameters. Methodologies include a mix of on ground ecological data collection and remote technological approaches, including an openness to new technology. Formal Tier 1 Project monitoring must be completed and submitted to the Scheme administrator at least once every 5 years for the first 15 years of a project. These reports must be prepared by an approved assessor.
Tier 2 Monitoring – Verification the Tier 2 management interventions comply with approved project plan over the 0-15 year timeframe.
See Part 21, page 35 and Appendix D page 53 of Scheme rules.
WATCH THE VIDEO: SCHEME COMPLIANCE MONITORING
The Scheme Administrator has the power to undertake a monitoring assessment of any Scheme registered project at any time. Where the Administrator determines that a project is not complying with Scheme rules, compliance notices can be issued detailing non-compliance and requiring ameliorative measures from the project owners. Failure to address a compliance notice may result in the Administrator deregistering the project from the Scheme.
See Part 26, page 40 of Scheme rules.
WATCH THE VIDEO: NCS BIODIVERSITY AND CARBON UNITISATION
Projects that restore forests on cleared land under this Scheme will reflect the reality that biodiversity enhancement and carbon removal occur in unison. While other markets have separated units for carbon and biodiversity credits, the Nature and Carbon Scheme has combined biodiversity and carbon into a single unit expressed as Nature and Carbon Scheme Tonnes (NCSTs). Tier 2 NCSTs are expected to cost more than Tier 1 NCSTs, recognising the higher input costs and further potential biodiversity enhancement through management actions.
See Part 1 page 4 and Part 20 page 34 of Scheme rules.
