Chapter 4
Other issues
4.1
In addition to the issues regarding the integrity standards in the bill
and avoiding potential adverse impacts of the Carbon Farming Initiative (CFI),
concerns regarding Aboriginal and Torres Strait Islander land, and the link between
the CFI and a carbon price mechanism were also raised during the course of the
inquiry.
Aboriginal and Torres Strait Islander land
4.2
Broadly, the bill seeks to treat Aboriginal and Torres Strait Islander
land in the same way as freehold land by enabling native title land holders to
participate in the CFI in the same way as other interest holders.[1]
However, as acknowledged in the explanatory memorandum, the bill:
...does not provide any special treatment for non-exclusive
native title. This is because non-exclusive native title interests, such as
native title access or usage rights, would be less likely to include carbon
sequestration rights, and are more akin to non-freehold interests such as an
easement or a licence. Easements and licences do not confer carbon
sequestration rights which would give a project proponent the basis to
undertake projects.[2]
4.3
The area of land where exclusive native title determination exists is
693 930 square kilometres.[3]
The area of land where non-exclusive native title has been determined is 344
007 square kilometres, accounting for approximately one third of land where
native title has been determined.[4]
4.4
Numerous organisations were critical of the bill's treatment of
indigenous land, specifically land held under non-exclusive native title.[5]
4.5
The National Native Title Council (NNTC) described the CFI as 'a great
opportunity for Indigenous people'.[6]
Mr Warren Mundine, Director, NNTC explained:
We think it is a great opportunity to look at the size of the
land ownership of the Indigenous people in Australia, which is about 22 per
cent. I am not saying that all of that 22 per cent would be part of this
market, but we believe that this is one of the rare opportunities we get in Australia
where, at the beginning, the Indigenous people can play a role and be a
contributor not only to the Aboriginal communities themselves but also to
Australia and the global community. So we take this very seriously and we are
very happy to play a big role in this process.[7]
4.6
Whilst the NNTC believed the bill gave certainty to exclusive native
title rights holders, and treated them in a way that was 'fair and
appropriate', the NNTC described the 'failure to provide a clear pathway for
non-exclusive native title holders into participation in offset projects' as a
'major weakness'.[8]
Mr David Yarrow of the NNTC informed the committee that a large proportion of
indigenous land in Australia is held under non-exclusive native title and
stated:
The significant concern of the National Native Title Council
is that, by sidelining the treatment of non-exclusive native title, by
relegating the treatment of that issue to the Native Title Act, in fact the
Carbon Farming Initiative bill is excluding non-exclusive native title holders
from participation. In fact, non-native title rights in Australia represent the
vast bulk of native title rights at large. Let us take Western Australia as an example.
Approaching 20 per cent of the state is subject to an existing native title
determination and, of that approaching 20 per cent, probably 90 per cent or 85
per cent is non-exclusive native title. This bill, other than by the mechanism
of an Indigenous land use agreement with a state or territory government,
provides no opportunity for non-exclusive native title holders to participate.
The bill also says on Aboriginal land rights land that is not
freehold land—Aboriginal reserve, 99-year lease in Western Australia, deeds of
grant in trust in Queensland—carbon sequestration rights are primarily with state
governments. Those propositions are unacceptable. It is unfortunate that the
bill does not take this opportunity to address the vast bulk of Indigenous land
interests in Australia.[9]
4.7
The Kimberley Land Council (KLC) was more forthright in their criticism:
The treatment of non-exclusive native title is discriminatory
and fails to accord proper importance to the interests carried by native title.
...
The KLC observes that the effect of the proposed system would
be to confer proprietary rights in carbon on holders of non-exclusive non-native
title interests, while excluding non-exclusive native title holders simply by
reason of the type of proprietary interest they hold. The KLC considers that
there is a real risk that such an approach is inconsistent with the Racial
Discrimination Act (1975) (Cth).[10]
4.8
By contrast, the Premier of Western Australia the Hon Mr Colin Barnett
MLA considered the carbon sequestration right provisions in the bill:
...by a clear negative implication, indicates that the
relevant State Minister does not hold an "eligible interest" in State
Crown land if that land is not Torrens system land and is subject to a
determination of exclusive possession native title.[11]
4.9
Premier Barnett was of the opinion the bill 'arbitrarily limits and
curtails the rights of the State over State Crown land' and 'the Bill is
discriminatory in relation to the State's interests as the State is treated
differently from private land owners'.[12]
4.10
In addition to their concern regarding the treatment of non-exclusive
native title holders, the NNTC suggested the need for a statutory authority
with oversight of indigenous participation in carbon trading.[13]
The NNTC stated that the Aboriginal community needed assistance with engaging
in carbon trading, including educating indigenous land holders about carbon
trading and how they might participate in carbon trading.[14]
Mr Parry Agius, Director, NNTC suggested another important role for such a peak
body would be to assist with the establishment of commercial relationships
between indigenous land holders and the business community.[15]
Mr Agius outlined the reasons why the NNTC believed such an organisation
was required:
...we do not have a national structure within the framework
that can guide the Aboriginal community about how to engage in carbon trading,
or to guide the corporate world in the area of using Aboriginal land for carbon
trading. We do not have, in a sense, a national body or a national broker that could
be used in the commercial sense to assist with the corporate world creating a
business relationship with the Aboriginal landholders in that manner. We do not
have a commercial positive structure that can provide forms of commercial
agreements between the two players in this game. We do not have a body that
provides, in real layman’s terms, information to the Aboriginal community about
what carbon trading is and about how an Aboriginal landholder could participate
in the carbon trading.
What we do have, though, is a research and development team
quite strong in expertise; we do have a legal team with expertise. But we do
not have a body such as a statutory authority to look at regulations,
obligations, compliance and those sorts of things in this space of Aboriginal
carbon.[16]
4.11
Centrefarm Aboriginal Horticulture Ltd proposed a role for the
Aboriginal Carbon Fund Ltd (ACF Ltd) in this regard (see Chapter 2) but felt
this should be an interim measure and:
Ultimately the role of the ACF Ltd should be undertaken by an
independent commonwealth Statuary Authority to ensure Indigenous groups,
corporate Australia and the general public can acquire carbon credits according
to agreed standards and there is a high degree of certainty in the market
place.[17]
Committee comment
4.12
The committee notes the government's commitment to facilitate 'Aboriginal
and Torres Strait Islander participation in carbon markets'.[18]
The committee acknowledges the bill's approach provides 'holders of exclusive
possession native title a clear and direct access to participate in the scheme
similar to other land owners.'[19]
4.13
The committee is, however, concerned that the bill's failure to
specifically address the ability of non-exclusive native title holders to
participate in the CFI breeds uncertainty around the scheme's applicability to a
large proportion of indigenous held land in Australia.
4.14
The committee views participation in the CFI as a valuable opportunity
for Aboriginal and Torres Strait Islander people to achieve social and economic
benefits via offset projects on their land. Therefore, the committee recommends
the government address obstacles to indigenous participation in the CFI,
including resolving outstanding uncertainties in relation to participation by
holders of non-exclusive native title.
Recommendation 7
4.15
The committee recommends the government address obstacles to indigenous
participation in the CFI, including resolving outstanding uncertainties in
relation to participation by holders of non-exclusive native title.
Link between the CFI and a carbon price mechanism
4.16
As discussed in Chapter 1, numerous submitters questioned the ability of
the CFI to facilitate effective participation by project proponents in carbon
markets, in particular a voluntary domestic market, in the absence of a
mandated carbon price.[20]
Many of these submitters called for the CFI to be directly linked to a future
carbon price mechanism.
4.17
The Australian Plantation Products and Paper Industry Council's (A3P)
opinion was representative of these concerns:
The CFI is primarily designed to interact with the voluntary
market, where demand is shallow and weak, and the carbon price will be
insufficient to realise much of the potential carbon savings and sequestration
in Australia. A3P supports Professor Garnaut’s finding in his paper on rural
land use that the Government should seriously consider linking the CFI to any
emerging mandatory carbon market.[21]
4.18
Mr David Eyre, Policy Manager for the NSW Farmers Association claimed
the government had been 'a little disingenuous to say that the bill is
freestanding' and argued the introduction of the CFI legislation was premature
in the absence of an emissions trading scheme (ETS):
...the CFI has been presented to parliament before a decision
has been made regarding the introduction of a mandated carbon price and
emissions trading scheme. This decision is crucial to the economics of the CFI
and how it will impact the commercial farm sector and regional Australia...The
CFI bill...allows for the creation of both Kyoto compliant and non-Kyoto
compliant credits, with the former potentially eligible for trade in an ETS and
the latter restricted to voluntary non-mandated markets. The explanatory
memorandum states that the bill is freestanding. The draft bill had some explicit
clauses related to linkages to a future ETS. Those have been removed. It is
pretty clear that the bill is not really freestanding in the sense that
throughout it there are provisions for a future carbon price. In fact, the whole
thrust of the memorandum is about the Kyoto compliant credits and credits which
will be eligible within an ETS. The focus of methodology development and
mechanisms and all the legal framework around compliance is about the CFI
operating in the context of an ETS.[22]
4.19
The Australian Industry Greenhouse Network (AIGN) concurred that
introduction of the CFI was 'premature' and therefore unlikely to meet the
government's expectation of investment in carbon abatement.[23]
The AIGN went on:
It is AIGN’s view that developing the voluntary CFI before
the [Multi-Party Committee on Climate Change] process is concluded is
incompatible with establishing a cohesive long-term price signal across the
whole economy.
In particular, the CFI:
-
Creates uncertainty with respect
to the future role and nature of voluntary schemes. The explanatory memorandum
and legislation provides no indication on how they might be transitioned into a
mandatory pricing scheme
-
Pre-empts decisions on the
coverage of an emissions pricing scheme, particularly in relation to
agriculture and landfill waste
-
Changes the treatment of forestry
relative to the treatment that had been proposed under the Carbon Pollution
Reduction Scheme (CPRS) and, hence, creates uncertainty about the treatment
expected under any new emissions pricing scheme.
AIGN understands that Australia will easily meet its
commitments in the first period of the Kyoto Protocol. Legislating the CFI now,
or at least prior to decisions on the design details of an emissions pricing
scheme, is unnecessary.[24]
4.20
When asked for their view, the Australian Bureau of Agricultural and
Resource Economics and Sciences (ABARES) indicated that pursuing the CFI
without a carbon price would mean:
...there will not be strong demand for those carbon credits
that are generated by the Carbon Farming Initiative or other schemes without
having some price on carbon, whether that is a carbon tax, a CPRS or whatever.
We highlight in the 2011 paper, as well as in our statement, that the demand
side is quite important.[25]
4.21
A variety of submitters called for the CFI to be explicitly linked to a
future carbon price mechanism. The Queensland Department of Environment and
Resource Management voiced their strong support for linking the CFI to 'any
future compliance market (carbon tax, ETS or otherwise)'.[26]
The Queensland government also noted:
While the CFI provides the mechanism for generating credits,
it won’t effectively drive land sector abatement on its own. The CFI needs to
be backed by market demand for those credits. The voluntary market alone
is unlikely to drive significant activity under the CFI. A carbon price based
on a strong emission reduction target is therefore essential.[27]
4.22
The Australian Forest Products Association (AFPA, formerly the National
Forest Industries Association) informed the committee '...it is imperative that
the carbon offset projects are recognised under a future carbon price mechanism
to promote an efficient market and demand for low-cost abatement options'.[28]
Similarly, the Wentworth Group of Concerned Scientists called for the CFI to be
linked to a carbon pricing mechanism in order '[t]o realise the full potential
of abatement in the land sector'.[29]
Committee comment
4.23
The committee acknowledges the government's statement in the explanatory
memorandum that '[t]he Carbon Farming Initiative is a stand-alone scheme but
would be complementary to a carbon pricing mechanism'.[30]
Despite this, the committee believes it is necessary to dispel the uncertainty
surrounding a linkage between the CFI and a future carbon price so as to
encourage more widespread participation in the CFI. To that end, the committee
recommends the government clarify that Kyoto‑compliant credits issued
under the CFI will be linked to any future carbon pricing mechanism.
Recommendation 8
4.24
The committee recommends the government make clear that Kyoto‑compliant
credits will be linked to any future carbon price mechanism.
4.25
The committee is strongly supportive of the Carbon Farming Initiative
and the legislation proposed to implement the scheme. Nevertheless, the
committee has made several recommendations throughout this report which it
believes will improve the outcomes achieved by the CFI. Accordingly, the
committee recommends the CFI bills be passed, subject to the recommendations
contained elsewhere in this report.
Recommendation 9
4.26
The committee recommends that, subject to the recommendations contained
elsewhere in this report, the Senate pass the Carbon Credits (Carbon Farming
Initiative) Bill 2011; the Carbon Credits (Consequential Amendments) Bill 2011;
and the Australian National Registry of Emissions Units Bill 2011.
Senator Doug Cameron
Chair
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