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An Introduction to the Carbon Farming Initiative: Key Principles and Concepts

Listed author(s):
  • Andrew Macintosh


  • Lauren Waugh

In December 2011, the Australian Government introduced a project-based, baseline-and-credit carbon offset certification scheme called the Carbon Farming Initiative (CFI). The scheme is one of the broadest and most comprehensive domestic offset schemes of its type in the world. Its formal objectives are to assist in the achievement of Australia's greenhouse gas mitigation obligations and promote abatement in a manner that will protect the environment and improve resilience to the effects of climate change. Most significantly, the CFI will provide the basis for the generation of certified offsets for use in the Australian carbon pricing scheme under the Clean Energy Act 2011 (Cth) (CE Act) and for sale to overseas buyers. It will also certify domestic offsets for use in voluntary markets. This article describes and analyses key aspects of the CFI and sheds light on its relationship with the international greenhouse accounting rules and the CE Act's carbon pricing scheme. It also evaluates the effectiveness of the mechanisms that have been put in place to deal with integrity risks and secondary impacts associated with the scheme. It is concluded that the CFI has the capacity to significantly reduce the cost of meeting Australia's mitigation targets and promote more sustainable land-management practices. The realisation of this potential will rely heavily on how broad regulation-making and administrative discretions are exercised and whether there are sufficient incentives for landholders to participate in the scheme.

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Paper provided by Centre for Climate Economics & Policy, Crawford School of Public Policy, The Australian National University in its series CCEP Working Papers with number 1203.

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Date of creation: Mar 2012
Handle: RePEc:een:ccepwp:1203
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