THE Federal Government’s latest proposal for the carbon market has been met with concern from the industry, with one aggregator telling Beef Central they will have to find something else to do if it goes through unchanged.

The Government released its long-awaited draft of a methodology called Integrated Farm and Land Management at the end of last year, which was in part supposed to replace Human Induced Regeneration – the most popular methodology used for projects in the mulga-lands and in Northern Australia.

But that draft has come out of left field for the carbon industry, who say they are now dealing with a whole new set of phrases and rules that would render the overwhelming majority of projects unviable.

Upscale Carbon executive chairman Shane Charles

Upscale Carbon executive chairman Shane Charles was part of a group that consulted with the climate change and environment department on developing the method. He said he was frustrated with what has been delivered.

“Our business is defunct if this gets up and we will have to find something else to do,” Mr Charles said.

“I am disgusted with how the Government has handled this. The regulator does annual reports on the scheme and it says every year that it is sound. The independent Chubb review said it was ‘essentially sound’ and even the IFLM consultation paper, all the way through it, says it is sound.

“Then they come out with a heap of changes we had never heard about for a method they are saying is sound.”

New HIR projects have essentially been on hold for the past two years after the methodology was wound up in 2023. It came under a series of highly publicised concerns by group of scientists from the Australian National University before it was stopped. They were arguing the scheme lacked integrity and that people were being paid for carbon that was not there.

Many in the carbon industry have been concerned that the ANU scientists were having a disproportionate influence over the development of IFLM, with a series of review giving the methodology a thumbs up.

Mr Charles said what had been drafted tried too hard to have integrity and created rules that would be too strict for landholders to participate.

“They are so concerned about some people that criticise the industry. Sure, there may have been some of the early projects that are not as robust as they are now, but they are throwing the baby out with the bath water,” he said.

So what is wrong with the draft?

Mr Charles and Upscale Carbon general manager John McLaughlin recently ran AgCarbon Central through the specific parts of the draft that they believe make it commercially unviable.

No projects would be eligible

Upscale Carbon general manager John McLaughlin

The new methodology has made a big change to the main measurement used to measure the carbon stocks – shifting it from “canopy cover” to “woody biomass”.

“You need to have less than 5 tonnes of woody biomass/ha to start a project, which is a very low starting point and very restrictive for new projects.

“We would not have a project in the mulga or any project in Queensland and, if we did, it would be land that was cleared a few years ago and it would be under a different methodology.”

Demand for more records

Prior to the method winding up, producers undertaking projects were required to keep records for the previous 10 years – to prove there had been historic suppression of regrowth.

The department is now proposing that period be extended to 20 years, requiring both management and imagery data. Mr McLaughlin said in most cases it was only the satellite data that go back 20 years and it was hard to tell the story of repeated suppression with only satellite data.

“Satellite imagery data becomes less reliable the more remote you go. If we want to register a project with a certain amount of canopy cover at a certain time, we have to go out and do a heap of field calibrations before we submit it.”

“Getting your hands on 20 years of data is actually quite difficult and when you do, you have to question whether it has any meaning. 10 years seemed like a long time.”

More work for less money

According to the pair, the new IFLM methodology required a lot more work to gather information and gave landholders less access to financial rewards – to the point they believe landholders will not sign up.

“Conservatism” is one of the main principles underpinning the carbon market, meaning that less rather than more carbon sequestration is issued for Australian Carbon Credit Units.

Currently, the regulator takes a percentage of ACCUs off any issuance and holds them back until the end of the project, to account for events that may reverse carbon sequestration.

Mr McLaughlin said the draft had increased the percentage of credits that are held back from 5pc to 50-65pc to account for modelling uncertainty and potential vegetation fluctuations due to seasonal conditions – with 40pc buffer that is given back at the end of the project and a rainfall buffer of up to 25pc that is given back over time.

“Five years ago, we were getting 95pc of our credits and now we can get as low as 33pc. The rainfall one will come back overtime, but the 40pc won’t come back to the end of the project in year 25,” he said.

“If we take our fee out, the traditional owners take their fee out – why would a landholder do it and why would a bank approve it?”

While the number of ACCUs that are likely to be issued had decreased significantly, Mr McLaughlin said the field work needed to do projects was also going to increase a lot.

The IFLM draft has introduced a new principle called “leakage”, where landholders are supposed to demonstrate that their work is a net positive. With HIR, it is mainly preventing them stopping clearing land on one part of the property, only to start clearing on another part of the property.

The new methodology will increase the measures to prevent leakage, making project holders monitor all properties in the same land title.

“In many cases, our projects will cover about 15pc of a property. Then we have to monitor an entire property, when we don’t get any income from most of it,” Mr McLaughlin said.

“This is on top of the additionality, which would mean that people will have to put up new fences, waters and adopt rotational grazing – which is all cost.”

Mr McLaughlin said there were also concerns about measures to increase transparency making it prohibitive for landholders to join.

“Landholders have to give all their management data to the Government to be published on their website.

“That is stock numbers, where they have moved them to, what additionality measures are in place. Any intellectual property the landholder may have or IP that the service provider might have is likely to get caught up in that.

“If we go back to the buffer, they are taking more credits off us while increasing the amount of work we need to do.”