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Forestry and the Carbon Pollution Reduction Scheme

A White Paper outlining the Federal Government’s proposed framework for the Carbon Pollution Reduction Scheme (CPRS) was released on 15 December 2008.

The CPRS is the major policy instrument in the Government’s plan to reduce Australia’s greenhouse gas emissions. 

The White Paper follows the release of the Green Paper in July and takes account of submissions received from industry.  It also follows the Garnaut Climate Change Review and the release of Treasury modelling. 

The White Paper confirms the Government’s commitment to reducing Australia’s greenhouse gas emissions by 60% of 2000 levels by 2050.  The White Paper also set a medium term target of between 5% and 15% reductions in greenhouse gas emissions on 2000 levels by 2020.

The White Paper reiterates many of the principles and concepts that were originally set out in the Green Paper in relation to forestry.  In broad terms:

  • Forestry will be included in the CPRS on an opt-in basis.
  • Forest eligibility criteria will broadly be the same as for the Kyoto Protocol.
  • Incentives will be greater for forests not planted for harvesting.
  • Deforestation will not be included in the CPRS.

An entity that opts into the CPRS will qualify for carbon permits (which will be known as Australian Emissions Units). 

To be eligible to opt-in to the CPRS, the entity must have a right to the sequestered carbon.  This will generally be the owner or lessee of the land on which the forest is situated.  In some cases, if the owner or lessee of the land has granted a right to the carbon to a third party, it may include that owner of the right to the carbon.

The CPRS will only cover those forests that are recognised under international greenhouse gas accounting rules.  At this stage, the Government appears to be leaning towards using the National Carbon Accounting System and Toolbox to calculate emissions and sequestration.

Where an entity opts into the CRPS, it will also be liable to surrender carbon permits for any forestry-related emissions.  These emissions could be caused by harvesting or destruction. 

Because of the requirement to surrender permits for forestry related emissions, CPRS participation may not be viable for single rotation plantations.  It is possible that the obligations for harvest emissions could be greater than the benefits gained from sequestration, obviously depending on future log and carbon prices.

It is expected that under the CPRS the greatest benefit will be from new forests that are not harvested.

The entity entitled to the carbon will need to become accredited for CPRS purposes. There are a range of requirements that must be met to become accredited and registration can begin before the official commencement of the CPRS.

The regulator will also publish information about all forest registrations. This is designed to make sure that the market is informed about the number of permits that are covered in the CPRS.

Please contact Lynne Grant or Geoff Green on 03 8319 1866 or at lynne.grant@bsglegal.com.au or geoff.green@bsglegal.com.au for further information.



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