Carbon Farming in Rural Queensland: Helping The Land Sector Prepare For Carbon Market Opportunities

Carbon Farming in Rural Queensland
Helping the land sector prepare for carbon market opportunities
Published by: Department of Environment and Resource Management GPO Box 2454 Brisbane Qld 4001
State of Queensland (Department of Environment and Resource Management) 2011
This document has been prepared with all due diligence and care, based on the best available information at the time of publication. The department holds no responsibility for any errors or omissions within this document. Any decisions made by other parties based on this document are solely the responsibility of those parties. Information contained in this document is from a number of sources and, as such, does not necessarily represent government or departmental policy. The department authorises the reproduction of material in this report, whole or in part and in any form, provided the appropriate acknowledgement is given. Contact Communication Services if an alternative format is required. Phone: +61 3227 8311 Cover images by Department of Environment and Resource Management. Email: enquiries@derm.qld.gov.au If you need to access this report in a language other than English, please call the Translating and Interpreting Service (TIS National) on 131 450 and ask them to telephone the departments Library Services on +61 7 3224 8412.
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Message from the Minister
As Australia moves toward a lower carbon economy, new economic opportunities are emerging for rural Queensland. Under the Australian Governments Carbon Farming Initiative (CFI), farmers can earn money from activities such as planting trees, managing regrowth vegetation and adopting more sustainable agricultural practices. The Queensland Government is committed to helping landholders take advantage of these emerging opportunities. Carbon Farming in Rural Queensland outlines our range of policy measures and the actions to help landholders get involved. We want stakeholders to make informed decisions about the opportunities in their regions and recognise the potential biodiversity benefits from carbon forests in the landscapean important linkage with Building Natures Resilience: A Biodiversity Strategy for Queensland and the update to Queenslands climate change adaptation strategy. Our focus on biodiversity will also help Queensland attract incentives and investments under the Australian Governments $946 million Biodiversity Fund. Many of the actions in Carbon Farming in Rural Queensland are being implemented in advance of the CFIs proposed commencement so that landholders can get involved from the schemes start. We want to ensure the right balance is struck between carbon and agriculture. We recognise there are opportunities for Indigenous participation in the CFI and the importance of science in expanding the range of activities eligible for carbon creditsvital to realising the greatest carbon outcomes over the longer term. Recent economic analysis shows the CFI can provide an additional income source for farmers with regrowth on marginal or otherwise unprofitable land. This reinforces the importance of the Queensland Governments long campaign for the inclusion of managed regrowth in a national carbon market. We have continued to represent the interests of Queensland farmers on this issue by working with the Australian Government during the design of its CFI. Carbon Farming in Rural Queensland builds on a significant body of work commissioned by this government including ground-breaking research from the CSIRO and expert policy advice from the Premiers Council on Climate Change. Queenslands land sector has been the source of significant emission reductions over the past 20 years. We want to continue these reductions and ensure both farmers and the environment stand to benefit from long-term changes in the land sector.
Vicky Darling MP Minister for Environment
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Contents
Message from the Minister .......................................................................................................iii 1 What have we done to prepare for carbon farming in Queensland? ......................................... 1
1.1 1.2 1.3 Purpose of this document........................................................................................................2 Queenslands early policy work ...............................................................................................2 Queensland Government actions to support carbon farming.................................................... 3
2 Introduction ...........................................................................................................................5
2.1 2.2 2.3 Introduction to greenhouse gas abatement in the land sector? ................................................6 What is biosequestration? .......................................................................................................6 What are emissions avoidance activities? ................................................................................6
3 Carbon markets: economic opportunities for land sector greenhouse gas abatement .............7
3.1 3.2 3.3 3.4 3.4.1 3.4.2 3.4.3 What are carbon markets? .......................................................................................................8 The carbon market in Australia ................................................................................................8 International accounting rules .................................................................................................9 The Carbon Farming Initiative (CFI)..........................................................................................11 What activities are included? ..................................................................................................11 What are the requirements for participating? ..........................................................................11 What credits can landholders generate? .................................................................................11
4 Queenslands land sector greenhouse gas abatement opportunities .................................... 13

4.1 4.2 4.3 Attainable land sector abatement .......................................................................................... 14 Economic opportunities for carbon forestry ........................................................................... 15 Opportunities for other land sector abatement activities ....................................................... 17
5 Helping landholders prepare for a carbon marketQueensland Government actions under Carbon Farming in Rural Queensland ............................................................. 21
5.1 5.2 5.3 5.4 5.5 5.6 Ensuring all rural landholders can benefit from the CFI ..........................................................22 Supporting carbon forestry .................................................................................................... 23 Getting the balance right: carbon and agriculture .................................................................. 25 Increasing Indigenous opportunities from carbon markets .................................................... 27 Improving the science around land sector greenhouse gas abatement ..................................28 Improving carbon outcomes from the timber industry ............................................................30
6 New Opportunities for the land sector and where to go for further information .....................32
Contacts ................................................................................................................................ 34
7 Glossary...............................................................................................................................35
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1 What have we done to prepare for carbon farming in Queensland?
1.1 Purpose of this document

The purpose of Carbon Farming in Rural Queensland is to communicate the Queensland Governments policies and actions designed to help the rural sector benefit from the emerging carbon market, including the Carbon Farming Initiative (CFI). The CFI is a national scheme that allows landholders to generate tradeable carbon credits from a range of land-based activities that reduce greenhouse gas emissions (land sector abatement).
The document is not designed to provide assistance with farm level decision-making, and individual landholders will need to undertake their own analysis and consider their specific circumstances before making a decision to enter the carbon market. Rather, it provides information to landholders including: an introduction to greenhouse gas abatement in the land sector what carbon markets are and how they operate the specific design features of the CFI and potential carbon abatement activities; and a summary of actions the government has either already implemented, is in the process of implementing or will undertake in the future to help landholders take advantage of emerging carbon market opportunities.
1.2 Queenslands early policy work

Aug 2009 Investigate opportunities
ClimateQ: Commitment to investigate the carbon storage potential of the Queensland landscape
Nov 2009 Understand the scientific potential

CSIRO: An analysis of biosequestration potential from rural land use in Queensland
Dec 2009 Undertake early policy work

Premiers Council on Climate Change Working Paper: Capturing Carbon in the Rural Landscape
Aug 2010 CFI announced
2010- 2011 Influence the market design

Work with Australian Government on the CFI to ensure its design benefits Queenslanders
SeptDec 2011 Dec 2011 CFI finalised Launch policy
The Australian Government announces its broad plans for the CFI
CFI legislation passes Australian Parliament and commences in December 2011
Queensland Government policy response: Carbon Farming in Rural Queensland
Carbon Farming in Rural Queensland builds on a significant ongoing body of work by the Queensland Government to assist rural landholders to engage in land sector greenhouse gas abatement. In August 2009, Queenslands climate change strategy, ClimateQ, committed the government to investigate the carbon storage potential in the Queensland landscape. The Queensland Government subsequently commissioned the CSIRO to undertake what was a first-of-its-kind analysis. The final CSIRO report, delivered in December 2009, highlighted enormous biosequestration potential in Queensland and
informed national debate about the role for such activities in meeting Australias emission reduction targets. Based on the CSIRO report, the governments independent expert advisory body on climate changethe Premiers Council on Climate Change (PCCC)developed its Working Paper 4, Capturing Carbon in the Rural Landscape: Opportunities for Queensland, which included a number of recommendations to maximise opportunities for rural Queensland under a future national carbon market.
The PCCC endorsed Working Paper 4 in October 2009, which provided the basis for the policy responses outlined in Carbon Farming in Rural Queensland. As the Queensland Government proceeded with implementation of its policy, it continued to call on the Australian Government to introduce incentives for land sector abatement. When the Australian Government announced its plan to develop the CFI in August 2010, the Queensland Government was prepared to proactively influence the schemes design. To ensure that the CFI includes activities which are suited to Queensland, such as managed regrowth vegetation, the Queensland Government has made several submissions on the schemes design. Queenslands formal submissions on the CFI are available at the Department of Climate Change and Energy Efficiency website at: www.climatechange.gov.au.
1.3 Queensland Government actions to support carbon farming

Under Carbon Farming in Rural Queensland the government is implementing 20 separate but coordinated actions to meet six key policy challenges: 1. ensure all landholders can benefit from the carbon market 2. support the development of carbon forestry 3. ensure an appropriate balance between carbon farming and agricultural production 4. increase Indigenous opportunities from carbon markets 5. improve the science around biosequestration 6. improve carbon outcomes from the timber industry. Table 1 provides a summary of these policy actions. Further information on these actions is described in Section 5.
Table 1: Summary of Queensland Government policy measures and actions to support land holders
Ensuring all rural landholders can benefit from a carbon market recognising carbon rights on leasehold land Supporting carbon forestry investigate economic opportunity for carbon forestry in Queensland
investigate incentives for biodiverse carbon forestry develop online information for landholders prioritise carbon forestry in NRM funding develop reference materials to help NRM bodies incorporate carbon forestry in NRM plans develop a regional-scale spatial mapping method for biodiverse carbon forestry ensure that all statutory regional plans include a policy principle to allow the consideration of carbon forestry where opportunities are identified in the relevant NRM plans review how carbon forestry is being addressed in local planning schemes twelve months after commencement of the CFI, and determine what additional guidance local governments may require
Getting the balance right: carbon and agriculture managing carbon forestry on Strategic Cropping Land (SCL)
manage the impact of carbon forestry on water through the implementation of review processes for Water Resource Plans under the Water Act 2000
Increasing Indigenous opportunities from carbon markets investigate opportunities for Indigenous participation in the CFI
monitor outcomes of the savanna fire management projects in the Western Cape York and Gulf regions
Improving the science around land sector greenhouse gas abatement investigate CFI method for counting carbon from managed regrowth
work with Australian Government to achieve better alignment between the Statewide Land Cover and Trees Study (SLATS) and the National Carbon Accounting System (NCAS) Queensland Enteric Methane hub review and monitor research outcomes from biochar
Improving carbon outcomes from the timber industry continue to implement the Queensland Timber Plantation Strategy, including seeking to expand future opportunities for the timber industry under the CFI
review codes of practice for native forestry timber production on freehold land to include mechanisms for enhancing the retention of carbon stocks and maintain/enhance rural socio-economic values review codes of practice for native forest timber production on state land to include mechanisms for enhancing the retention of carbon stocks
2 Introduction
2.1 Introduction to greenhouse gas abatement in the land sector

Land sector abatement broadly encompasses activities that remove and store carbon dioxide (CO2) in the landscape, as well as activities that reduce greenhouse gas emissions (CO2e) from agriculture below what they otherwise would have been. Queensland has achieved significant reductions in emissions from the land sector since 1990 through initiatives such as the phase out of broadscale land clearing. The land sector remains a major source of emissions in Queensland. Together, land clearing and agriculture accounted for almost 32 per cent of Queenslands total emissions in 20091. Unlike other sectors of the economy, however, the land sector has long-term potential to move from a net source of emissions to a net carbon sink. This is because activities such as forestry actually involve the removal of carbon from the atmospherea process referred to as biosequestration.
Carbon accumulates in soil as vegetation dies. Some is incorporated into the soil while a portion is released back into the atmosphere as carbon dioxide. Vegetation assists the retention of soil carbon. When a forest is converted to agricultural land or when pasture is converted to cropping land the soil organic carbon content decreases. Appropriate management of agricultural soils by landholders can reduce the amount of organic carbon loss. Soils with high organic carbon content are healthier and more productive and have higher water-holding capacity. Measuring changes in soil organic carbon content is more difficult than other forms of biosequestration, and is therefore currently less market ready compared to other offset options such as reforestation. Biosequestration can offset some of the emissions from other sectors of the economy and plays an important role in a comprehensive strategy of stabilising or reducing emissions while new emissions reduction technologies are developed. Companies or individuals that participate in eligible biosequestration activities can generate carbon credits, which can be sold to buyers on the carbon market. Given the need to ensure that carbon is stored permanently, biosequestration projects usually come with long-term legal rights (in the form of a carbon sequestration right) and obligations to ensure carbon stores do not decrease over time.
2.2 What is biosequestration?

Biosequestration is the general term used to describe the natural processes that remove CO2 from the atmosphere and store it in vegetation or soil. Biosequestration in vegetation occurs via the process of photosynthesisas plants use the energy of sunlight to convert CO2 to carbohydrates for their growth and maintenance. The increase in a plants biomass reflects the amount of CO2 it has taken from the atmosphere. Generally, the rate of uptake of CO2 by vegetation is highest in the initial years of growth, slowing over time as plants grow to their full capacity as a carbon store. The amount of carbon that can be sequestered in vegetation varies with species, soil quality, climatic conditions and land management practices.
2.3 What are emissions avoidance activities?

Carbon farming encompasses a number of land sector activities that involve the avoidance of emissions that would have otherwise occurred. Because these activities result in a reduction in emissions below business-as-usual, they may still be eligible to generate carbon credits. Examples include managing methane emissions from livestock, reducing emissions from savanna burning (such as natural fires or deliberate burning for pasture management or wildfire prevention), or reducing emissions from fertiliser use. Unlike biosequestration projects, emissions avoidance activities do not involve the creation of a legal carbon sequestration right.
1 Australias national greenhouse gas accounts: State and Territory Greenhouse Gas Inventories 2009, Department of Climate Change and Energy Efficiency 2011.
3 Carbon markets: economic opportunities for land sector greenhouse gas abatement
As governments and private companies explore policies to reduce emissions, carbon markets worldwide present opportunities for rural landholders to generate revenue from land sector abatement. Queenslanders undertaking eligible land sector abatement activities can generate and sell carbon credits into national and international carbon markets via the Australian Governments Carbon Farming Initiative.
In mandatory carbon markets, buyers have some legal or regulatory obligation to purchase credits. Examples of buyers include companies with a liability under an existing emissions trading scheme, or a national government with an emissions liability under an international climate change agreement. Mandatory carbon markets exist in a number of economies around the world including the European Union and New Zealand. In contrast, voluntary carbon markets are driven by organisations or individuals who voluntarily purchase carbon credits to offset the greenhouse impact of their activities.
3.1 What are carbon markets?

The term carbon market refers to the buying and selling of carbon credits generated from recognised offset projects. The carbon market operates in much the same way as markets for shares and property, with the prevailing carbon price determined by supply and demand. Complex rules and regulations determine the activities that are eligible to earn carbon credits, the type of credits they can receive (i.e., whether Kyoto compliant or not), and the type of carbon market in which they can be traded. These rules ensure, amongst other things, that any claimed emissions are real and verifiable. There are two main types of carbon market: mandatory and voluntary.
3.2 The carbon market in Australia

Like the European Union and New Zealand, Australia is establishing a mandatory carbon market. In November 2011, the Australian Parliament passed legislation to introduce a national emissions trading scheme from July 2012, commencing with a three-year fixed price on carbon of $23 per tonne. Importantly for farmers, the schemes design allows large emitters, such as coal-fired electricity generators, to buy carbon credits generated through the CFI to reduce the amount of carbon they are liable to pay for. This is expected to increase opportunities for land sector abatement by stimulating new demand for carbon credits and offset projects.
The Queensland Government supports the Australian Governments exclusion of direct emissions from the land sector from the carbon pricing scheme, whilst allowing it to generate tradeable carbon credits under the CFI. In this way agricultural producers will be able to benefit from abatement without liability for their direct emissions. Until commencement of the Australian Governments carbon pricing scheme, the carbon market in Australia relies on companies, governments or individuals to voluntarily offset their emissions. The Australian voluntary carbon market is valued at approximately $150 million per annum with approximately 56 million units traded in 2009 (Ecofund, 2010). The voluntary market has grown considerably over recent years, and according to Queensland Government-owned carbon broker Ecofund, buyers are becoming increasingly sophisticated and seeking specific information on standards, project types and locations. Via Ecofund, the Queensland Government is a large purchaser of carbon credits on the Australian voluntary carbon market. The government is committed to reducing its carbon footprint, and currently requires that all emissions from government flights and vehicle use be offset. Some departments, including the Department of Environment and Resource Management (DERM), require that all emissions associated with departmental business be offset.
3.3 International accounting rules

Almost all domestic carbon markets are linked to complex international rules that govern the eligibility of activities as carbon offset projects. These rules are determined by the United Nations Framework Convention on Climate Change (UNFCCC), and enshrined in key international treaties such as the Kyoto Protocol, which is due to expire in 2012. International accounting rules ensure that the international community can be confident that carbon credits traded between economies are comparable and represent permanent, additional and verifiable removals of carbon. It is important for governments to explain what these complex national and international rules actually mean for rural landholders on a practical level. A number of actions contained in Carbon Farming in Rural Queensland will help with the provision of simple and accessible advice to landholders on how to become involved in carbon markets.
Ecofund: Queensland Governmentowned Offset Provider

In 2008 the Queensland Government established Ecofund, Australias first government-owned offset provider. Ecofund was formed to ensure that growing investment in carbon can be channelled towards Queenslandbased projects that secure outcomes for the states natural environment. Carbon brokerage is one of a range of commercial services offered by Ecofund. This means it can buy carbon credits from Queenslanders participating in the CFI and onsell them to the carbon market. Ecofund also buys carbon credits on behalf of a range of clients in government, the private sector and the community. More information about Ecofund can be found on their website: www.ecofund.net.au.
The Kyoto Protocol

The Kyoto Protocol is the primary international agreement that outlines measures for reducing carbon emissions, including land sector abatement activities that can be counted toward a countrys emission-reduction target. Under the Kyoto Protocol, developed nations are required to cut overall greenhouse gas emissions by an average of 5.2 per cent below 1990 levels over the period 20082012. The activities accounted for by Australia against its target will determine whether that activity is eligible to earn Kyoto or non-Kyoto carbon credits under the CFI. The Kyoto Protocol requires its signatories to account for emissions and sequestration from: afforestation (converting land cleared for more than 50 years to forests) reforestation (converting land cleared as at 1990 to forests) deforestation (clearing of forests resulting in land use change after 1990). Australia also accounts for the following agricultural emissions in its national accounts: emissions from livestock (such as cattle and sheep) emissions from manure soil emissions from the use of fertiliser or the burning of residues emissions from savanna burning. The Kyoto Protocol also has an optional category of land sector abatement, which Australia currently does not account for. These include: revegetation (that does not meet the criteria for afforestation or reforestation above) forest management (managing existing forests, for example by changing logging rates) cropland management (including reduced fertiliser use and minimum tilling) grazing land management (through practices that increase carbon stored in vegetation and soil, such as reducing stocks of cattle and sheep or rotational grazing). Other activities such as harvested wood products and biochar are not currently recognised under the Kyoto Protocol due to difficulties with measurement and verification. The first commitment period of the Kyoto Protocol expires in 2012, and activities that are currently not covered may be covered in the future. Updated rules for land sector greenhouse gas abatement continue to be negotiated internationally, either as part of a new commitment period under Kyoto or as part of a new international agreement. Further information on the United Nations Framework Convention on Climate Change can be found at: www.climatechange.gov.au/en/ government/initiatives/unfccc/how-unfccc-works. aspx.
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3.4 The Carbon Farming Initiative (CFI)

The CFI is the Australian Governments framework for accrediting land sector abatement. Under the CFI, rural landholders that participate in recognised abatement activities can generate tradeable carbon credits. The scheme will commence in December 2011. Carbon Farming in Rural Queensland aims to maximise opportunities for Queenslanders under the CFI.
3.4.2 What are the requirements for participating?

CFI activities involving biosequestration will require a project proponent to demonstrate a legal carbon right. This ensures obligations to maintain carbon can be enforced on the project proponent. This is covered further in Section 5.1 (Ensuring all landholders can benefit from the CFI). In addition to having the legal carbon right, the project proponent must demonstrate they have obtained the consent of all persons who have an interest in the area of land where the biosequestration project will be carried out. Examples include registered interests, mortgagees, easement holders, owners of leased land and holders of a mining lease. As with the carbon right holder, an obligation to maintain carbon may also affect these other interest holders; therefore, it is important they too are made fully aware of the scheme requirements and obligations. The CFI also requires project proponents to have obtained the necessary state water, planning and environmental approvals, including taking account of regional Natural Resource Management plans. The Queensland Government will make further information available on the process of obtaining the relevant state consents required under the CFI.
3.4.1 What activities are included?

The CFI will enable carbon credits to be generated from a wide range of biosequestration and emission avoidance activities. Such activities may include: reforestation and managed regrowth (collectively referred to as carbon forestry) soil carbon (reducing carbon loss or increasing sequestration) reduced methane emissions from livestock reduced fertiliser emissions manure management savanna fire management avoided deforestation burning of stubble/crop residue reduced emissions from landfill waste. Before an activity is eligible to generate credits under the CFI, it requires an approved method for counting and verifying abatement. The Australian Government is actively developing such methods for a number of activities, and the market will be encouraged to develop new and improved methods, allowing additional activities to be added to the scheme over time. Queensland is active in the development of methods for activities with strong potential in Queenslandsuch as managed regrowth. Further information on this work can be found in Section 5.5 (Improving the science around land sector greenhouse gas abatement).
3.4.3 What credits can landholders generate?

Under the CFI, the Australian Government will issue different credits depending on the activity. Eligible land sector abatement activities will receive either Kyoto CFI credits or non-Kyoto CFI credits depending on whether the greenhouse gas abatement activity is recognised internationally.
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What is the difference between Kyoto and non-Kyoto CFI credits?

The CFI provides two classes of carbon credits to differentiate between activities that are covered by the Kyoto Protocol and those that are not. Whether an activity is eligible under Kyoto or not will influence who will buy the credits and how much they will pay for them. Generally, Kyoto CFI credits are expected to have a higher value than non-Kyoto CFI credits. CFI credits generated from activities that are (or that come to be) recognised internationally, such as under the Kyoto Protocol (Kyoto CFI credits) can generally be traded on mandatory carbon markets. Potential buyers for Kyoto CFI credits include companies with a liability under the Australian Governments carbon pricing scheme, international governments with obligations under the Kyoto Protocol and foreign companies with compliance obligations under a national emissions trading scheme (such as the European Union and New Zealand emissions trading schemes). CFI credits generated from activities that are not recognised under the Kyoto Protocol (non-Kyoto CFI credits) can generally only be traded in voluntary carbon markets. Potential buyers for non-Kyoto CFI credits include companies with offsetting obligations under state government regulations (including development approval conditions) and companies, organisations and individuals voluntarily offsetting their emissions. To support investment in the voluntary offset market, the Australian Government is providing $250 million over the first six years under the non-Kyoto Carbon Fund to purchase non-Kyoto carbon credits for activities such as soil carbon and revegetation.
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4 Queenslands land sector greenhouse gas abatement opportunities
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The level of carbon farming undertaken in Queensland will depend on the eligibility of certain activities under the CFI and the technical and economic viability of activities considered. These are covered in further detail below.
Table 2: Attainable greenhouse gas abatement potential for key agricultural and forestry activities
Activity Queensland (Megatonnes CO2-e/year) Attainable Potential Forestry Total carbon forestry (on land cleared pre-1990). Includes managed regrowth, hardwood monoculture plantations and environmental plantings Managed regrowth Hardwood monoculture plantations (for primary purpose of biosequestration) Environmental plantings Agriculture Rehabilitate overgrazed rangelands, restoring soil and vegetation Reduced methane emissions from livestock Reduced emissions from savanna burning Increased soil carbon and reduced fertiliser emissions
Source: derived from CSIRO 2009
4.1 Attainable land sector abatement

There are significant potential carbon savings opportunities to be achieved in Queenslands rural sector, particularly from carbon forestry. An analysis undertaken by the CSIRO for the Queensland Government in 2009 found that with appropriate policy settings, concerted efforts in technical and management changes, and shifts in current land management priorities, Queenslands landscape could abate approximately 140 million tonnes of CO2-e2 per year by 2050. To put this figure into perspective, there could be potential to offset most of Queenslands total emissions of 155 million tonnes CO2-e produced in 2009. Although the estimate of 140 million tonnes CO2-e contains a combination of biological, technical and implementation uncertainty, it illustrates the sheer long-term potential of a carbon industry in rural Queensland. Table 2 highlights some land sector greenhouse gas abatement activities that can be undertaken in Queensland. Some activities are more prospective than others. For example, a shift in agricultural practices from overgrazing to building carbon stores in rangeland systems could yield approximately 18 million tonnes CO2-e per year, whereas increasing soil carbon stores in cropped landwhich still faces technical barriersis shown to have relatively low sequestration potential in Queensland. By far the most significant biosequestration opportunity in Queensland is from carbon forestry activities, including reduced land clearing with management of regrowth, hardwood monoculture plantations and environmental plantings. These activities have attainable potential to collectively reduce emissions by around 84 million tonnes of CO2-e each year. Most importantly, these activities also have relatively low technical barriers to implementation.
84
7 49 28
18 7 1 0.4
Land clearing is the states third highest source of emissions. Figure 1 (below) shows that land clearing in Queensland resulted in 22 million tonnes of CO2-e in 2009, but that, as a result of Queenslands vegetation management laws, there has been a significant downward trend in emissions of around 74 per cent from land clearing since 1990.
Emissions from land clearing 1990 and 2009

140 Emission (Mt CO2-e) 120 100 80 60 40 20 0 1990 Year Australia Queensland 2009
2 CO2-e is a measure that allows for the comparison of different greenhouse gases in terms of their global warming potential.
Figure 1: Queensland (and national) emissions from land clearing in 1990 and 2009
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There is potential to reduce land clearing emissions further. From the levels outlined in Table 2, the CSIRO estimated that managed regrowth has the potential to save seven million tonnes CO2-e per year, equal to around one third of Queenslands land clearing emissions in 2009.
For carbon forests established by planting (hardwood monoculture and environmental plantings), uptake is likely to be much slower than for managed regrowth. These activities may become attractive in some areas at carbon prices between $30 to $40, depending on the other potential uses for the land. The cost of land is an important determinant of economic viability. When land values are not included as an input cost, carbon forestry is likely to be attractive in some higher rainfall areas of Queensland (typically coastal) at lower carbon prices between $20 to $30. However, when land values are taken into account, both hardwood monoculture and environmental plantings are, on average, unlikely to be economically viable in most areas at low to moderate carbon prices. This indicates that landholders who have areas of land that are unsuitable for pastoral or agricultural use are going to be most likely to undertake carbon forestry plantings. It is important to note that the economic viability of individual carbon forestry projects will be sitespecific and will change in the future as both the carbon price and the returns from various land uses change. Particular locations will have higher biosequestration rates and lower land values or costs than the average indicated. This means that carbon forestry may be profitable in many locations where the analysis otherwise indicated a negative average return across a broad area.
4.2 Economic opportunities for carbon forestry

While CSIRO describes carbon forestry as having significant attainable potential in Queensland, the economic conversion of opportunities for many landholders under the CFI is likely to occur over the longer term. Of the different types of carbon forestry, managed regrowth is expected to be the most viable activity in many areas. Ultimately, the decision to participate in carbon forestry will primarily be an economic one. A recent analysis undertaken by the Australian Government concluded that taking into account the economic and other uptake constraints (such as the rules of the CFI), between 5 and 15 million tonnes of CO2-e will be sequestered annually in Australia as a result of the CFI by 20203. To better understand the likely uptake of carbon forestry in Queensland under the CFI, the Queensland Government undertook similar analysis to indicate which areas were likely to be economically suitable. In Queensland, as in the rest of Australia, the prevailing carbon price will be a significant driver of activity under the CFI. Figure 2 (next page) shows areas of land available for carbon forestry in Queensland, defined as land that is capable of growing a forest and not constrained by the Vegetation Management Act 1999, strategic cropping lands, essential habitats, urban areas, RAMSAR and World Heritage Areas. Areas shaded purple contain the most available land, and pink the least available land. Areas in the Brigalow Belt, through to the lower Einasleigh Uplands have the most available land for carbon forestry. Queensland Government analysis indicates that the greatest economic opportunity in Queensland is for managed regrowth of native vegetation. Managed regrowth is likely to be attractive in a number of areas in Queensland at a starting carbon price of $23, particularly throughout Central Queensland.
Examplepossible economic returns for carbon forestry using environmental plantings

It is not possible to say with certainty how much a landholder will earn, given returns will be site specific and will be dependent on a range of variables as outlined above. However, to give an indication of the potential from carbon forestry, a 50 hectare block planted in a high rainfall area of Queensland could, on average, earn revenues of around $14 000 per year based on a starting carbon price of $23.
Note: these are average figures calculated over the first 50 years of a project. Revenue will be variable (higher or lower) over time. When determining the economic viability of participating in the CFI, landholders would need to compare the costs (e.g., establishment, ongoing management, project registration etc.) with the benefits of carbon sequestration before making a decision to participate.
3 Carbon Farming Initiative preliminary estimates of abatement, Department of Climate Change and Energy Efficiency 2011.
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Figure 2: Area of land available for carbon forestry
The economic viability of carbon forestry projects in Queensland can be considerably improved by further research into the biosequestration potential of local native species. This issue is addressed in Section 5.5 (Improving the science around land sector greenhouse gas abatement). In addition to the importance of more accurate carbon sequestration rates to the economic viability of carbon forestry, there are several other non-financial factors operating that will ultimately determine whether a landholder participates in the carbon market.
Motivations for undertaking carbon forestry can range from maximising return on investment, improving environmental outcomes, to philanthropic reasons. Understanding which landholders are likely to be interested in carbon farming, their motivations, and what they need to help them participate is a key step in designing policies to increase carbon forestry in Queensland. Further research into understanding these socioeconomic factors would complement the work currently being done to improve biosequestration rates for biodiverse carbon forestry.
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4.3 Opportunities for other land sector abatement activities

While carbon forestry is expected to be a major activity under the CFI, the scheme has been designed to encourage land sector abatement from a broad range of activities. Queensland landscapes differ greatly from region to region, and certain regions will be better suited to some land sector abatement opportunities than others. The map shown in figure 3 broadly outlines the range of land abatement opportunities available in different regions of Queensland.
There are numerous examples of land sector abatement activities already occurring throughout Queensland. As outlined in the case studies on pages 1819, projects undertaken by these early movers are supporting the development of a common understanding of land sector abatement opportunities in Queensland for the long-term benefit of all Queenslanders who want to participate in the CFI.
Savanna burning, livestock emissions abatement and rehabilitation of grazing lands
Most options but main gains from biofuels, changes to management of regrowth, carbon forestry, plantations and biochar.
Carbon forestry, plantations, some biofuel production, biochar and rehabilitation of grazing lands
Narrower range of options with main benefits from limited biodiversity plantings and rehabilitation of grazing lands
Broadest range of options, but main gains from livestock emissions abatement, management of regrowth (carbon and biodiversity), plantations and soil carbon (grazing and cropping)
Figure 3: Map indicating best terrestrial carbon management options by region
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Case study 1Reforestation through Managed Regrowth, Fitzroy Basin, Central Queensland
Regional natural resource management organisations are well placed to maximise the social and environmental benefits of carbon farming projects. The Fitzroy Basin Association (FBA) is updating their new generation NRM plan to target areas of cleared land where natural regrowth vegetation can be managed to achieve carbon and biodiversity outcomes. To help identify particular locations within the catchment where management of regrowth will be of most benefit, the FBA is developing a cutting-edge mapping tool with the support of the Queensland Government.
The mapping tool incorporates land uses and the location of vegetation patches, plus threatened species distributions. Areas that are identified as suitable for biosequestration can then be assessed for their additional biodiversity values, such as establishing corridors and increasing species habitats. The new generation NRM plan can then incorporate biodiversity outcomes to help direct future investment in regrowth promotion and management that could be funded with CFI credits earned from regrowth forests. The FBA is now using the mapping methodology to identify suitable areas to proceed with managed regrowth projects in association with partners BIOCARBON. FBA has been approached by both a purchaser for the carbon credits and a landholder interested in selling the credits through brigalow regrowth on their property.
Case study 2Reforestation using Environmental Plantings, South East Queensland

In 2010, Ecofund, in partnership with Noosa District Landcare Group, established a project to plant 15 000 trees from local native species at the Bellbird Homestead approximately 30 km north of Nambour in the Sunshine Coast hinterland. These trees will be planted to help balance the greenhouse gas emissions of Queensland motorists participating in the Queensland Governments Reverse the Effect program.
The project has been calculated to save approximately 6750 tonnes of CO2 over 30 years, with an average sequestration rate of 15 tonnes per year. The plantings are part of a new 130 hectare nature refuge that will expand Queenslands protected areas and link to the West Cooroy State Forest. In addition to the carbon sequestration benefit, the project will deliver protection and enhancement of riparian vegetation habitat for the giant barred frog, Mary River cod, cascade tree frog and tusked frog.
Case study 3Reduced emissions through managed savanna burning, Western Cape York Peninsula
Savanna fires are a major emission source for Australia, accounting for between one and four per cent of annual emissions, depending on fire activity. The emissions from savanna fires can be reduced through the use of strategic burns carried out early in the dry season when fuel loads are lower. Trials in the Northern Territory under the West Arnhem Land Fire Abatement (WALFA) project have helped to refine methods, and indicated a cost of abatement of around $12 per tonne CO2-e. This makes savanna fire management potentially amongst the most cost effective abatement options under the CFI.
Based on the success of the WALFA, the North Australian Indigenous Land and Sea Management Alliance (NAILSMA) has prioritized five regions for further work, totaling 300 000 km2 with an abatement potential of 1 Mt per year. Two of these are in Queensland, in the Gulf of Carpentaria and western Cape York. Assuming a carbon price of $23, the five priority regions may potentially contribute $23 million annually to Indigenous communities in revenue from fire management. This project will have a range of benefits, including Indigenous employment, maintenance of biodiversity in areas sensitive to wildfire, easier hunting and harvesting, and overall better landscape management. Active management of country is also likely to enhance Indigenous social and physical health and well being.
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Case study 4Reduced methane emissions from cattle, North Queensland

Blanncourt Station, 40 km west of Georgetown in Etheridge Shire, is host to a demonstration project that has highlighted the strong potential for methane emissions from livestock as a CFI activity. Blanncourt Station is a typical family-run breeding enterprise with 2600 head of cattle. When purchased in 1996, only 15 per cent of the property was in good condition, weaning rates were low and greenhouse gas emissions were 25.1 kg CO2-e per kilogram of live weight sold. Fifteen years later, with improved pasture management and herd management, 85 per cent of the property is in good condition, weaning
rates have increased, live weight gains per head have doubled and greenhouse gas emissions per kg of live weight have halved (down to 11.7 kg CO2-e per kilogram of live weight sold). This represents an overall reduction in emissions over the property of 15 per cent. Results from projects like Blanncourt Station help target government research into options to make long-term deeper cuts to livestock emissions, led by the Queensland Enteric Methane Hub.
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Case study 5Reduced emissions through biochar from sugarcane residue, Burdekin Shire
Biochar is the solid charcoal-like by-product from bioenergy production. It is produced by heating organic matter at very high temperatures in a process known as pyrolysis, through which it is converted to a highly stable form of carbon. This can then be added to soil where it may deliver agricultural productivity benefits and retain carbon for more than 100 years. Biochar production in Queensland, particularly produced from sugarcane trash is gaining a lot of interest. In its 2009 report, CSIRO assessed that carbon capture of 4 Mt CO2-e per year could be attained by utilising Queenslands sugarcane trash and bagasse to produce biochar. The Burdekin Bowen Integrated Floodplain Management Advisory Committee Inc., the Burdekin Dry Tropics NRM, Canegrowers Burdekin, NQACC, Burdekin Shire Council, CSR Sugar and NSW Department of Primary Industries (DPI) have partnered in a project to test the feasibility of a Burdekin pyrolysis industry. In late 2010, testing on samples of sugarcane trash, bagasse, mill mud and infield juicer fibre found all four to be suitable for pyrolysis. NSW DPI are about to start pot trials with the four different biochar to determine what effect each of them have on greenhouse gas emissions when incorporated into Burdekin soil. If the results of the pot trial are positive, the next steps are to produce larger quantities of biochar for field trials and conduct a scoping study.
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5 Helping landholders prepare for a carbon marketQueensland Government actions under Carbon Farming in Rural Queensland
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While the CFI is a national initiative, state governments can play a key role in determining how carbon investment transforms their rural landscapes. Carbon Farming in Rural Queensland recognises that the State has a range of responsibilities in land use planning, natural resource management and primary industries development that will shape rural land use change. It uses these policy levers to prioritise market-ready activities with the largest sequestration potential (particularly carbon forestry), to manage potential social and environmental impacts, and build the knowledge base required to unlock other opportunities over the longer term. Carbon Farming in Rural Queensland describes a range of actions that aim to prepare Queenslanders by addressing the following key policy issues: 1. ensuring all landholders can benefit from the carbon market 2. supporting carbon forestry 3. getting the balance right: carbon and agriculture 4. increasing Indigenous opportunities from carbon markets 5. improving the science around biosequestration 6. improving carbon outcomes from the timber industry. By addressing these policy areas, the Queensland Government has ensured, as far as possible, its policies and relevant legislation are aligned with (or not inconsistent with), national requirements under the CFI. Queensland landholders wishing to participate in the carbon market will be well placed to take advantage of these new economic opportunities. The following sections provide more detailed information on the 20 actions the Queensland Government has undertaken to help landholders prepare for the new opportunities ahead.
Carbon stored in trees is already recognised under existing state law. The Forestry Act 1959 allows landholders and lessees to enter into contracts about the ownership, use and economic benefit of natural resource products, including carbon. This provides the legal framework for Queensland landholders to establish and own carbon reforestation projects and then sell the carbon offsets they generate. Under the Forestry Act, landholders of freehold tenure are eligible to voluntarily participate in the CFI as they own the carbon rights on their land. The legal entitlement to carbon rights on leasehold land has been less clear, however, given that the state owns the trees and vegetation.
Action: Recognising carbon rights on leasehold land

The vast majoritymore than 63 per centof Queensland rural land is leasehold tenure. This means that in order for Queensland to reach its biosequestration potential, the Queensland Government needs to make amendments to state legislation to ensure that lessees can participate in the carbon market. In August 2009, the Queensland Government committed to amending relevant state legislation to transfer carbon and forestry rights from the State to lessees. This commitment formed part of the governments climate change strategy, ClimateQ. While the subsequent deferral of the Commonwealths Carbon Pollution Reduction Scheme (CPRS) in 2010 prevented immediate implementation of this commitment, the legal recognition of carbon rights on leasehold land remains a central feature of the Queensland Governments policy response. The CFI provides the new basis for the Queensland Government to recognise carbon rights on leasehold land. The Carbon Credits (Carbon Farming Initiative) Act 2011 was introduced into the Australian Parliament in March 2011 and, following assent, provides the clear basis for the Queensland Government to recognise carbon rights on leasehold land. To ensure lessees do not miss out on opportunities to participate in the CFI, the Queensland Government passed legislation in October 2011 to allow the transfer of such rights, in anticipation of the Commonwealth legislation commencing at the end of 2011. The Department of Environment and Resource Management is currently developing guidance material on the process for transferring these carbon rights on leasehold land.
5.1 Ensuring all rural landholders can benefit from the CFI
To participate in biosequestration under the CFI, the Australian Government requires that participants demonstrate a legal entitlement to the carbon right. Ensuring that carbon rights are clearly recognised in Queensland law is therefore vital to enable landholder participation in the CFI.
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5.2 Supporting carbon forestry

Carbon forestry was estimated by the CSIRO to have the greatest technical potential of any activity and represents the most immediate opportunities for landholders under the CFI. Carbon forestry can also achieve a range of additional benefits such as biodiversity enhancement, salinity/soil erosion mitigation, providing shelter and shade and producing sustainable timber products. Where properly designed, carbon forestry projects could restore degraded or cleared ecosystems, increase habitat for wildlife and expand vegetation connectivity in the landscape. Projects with tree species native to the regional ecosystem will also be more resilient to both climate change and nonclimate disturbances such as pests and weeds. To maximise these additional benefits, it is important the government work with landholders and other stakeholders, such as natural resource management (NRM) bodies, to provide clear and accessible information about opportunities under the CFI and how to participate.
Action: Investigating incentives for biodiverse carbon forestry

Biodiverse environmental plantings generally have higher establishment costs than monoculture or timber plantations. This may see the market favour these types of forestry over more biodiverse forms. Large-scale monoculture plantations have the potential to adversely impact biodiversity, particularly where they replace intact ecosystems such as open downs or natural grassland systems. There is some evidence that buyers in the voluntary carbon market are prepared to pay more for carbon offsets from projects that support biodiversity outcomes. However, buyers in a mandatory market are expected to be less prepared to pay extra for biodiversity benefits. In recognition of the need to provide additional incentives for biodiverse carbon forestry, the Australian Government announced a $946 million Biodiversity Fund as part its carbon price package. The fund will provide finance to landholders to undertake projects that establish, restore, protect or manage biodiverse carbon stores. As Queensland is one of Australias most biodiverse states, the Queensland Government is committed to ensuring that an adequate share of the Biodiversity Fund can be secured for Queenslandbased biodiverse carbon forestry projects. Although details about the timing and process for allocating this funding are yet to be finalised, the biodiversity strategy for Queensland, Building Natures Resilience, released in the second half of 2011, will be a major driver for progressing these opportunities. This action will complement those in Section 5.5 (Improving the science around land sector greenhouse gas abatement), aimed at improving the data around the carbon productivity of biodiverse carbon forestry.
Action: Investigate economic opportunities for carbon forestry in Queensland

While the CSIRO indicated there are likely to be large areas of Queensland that are suitable for carbon forestry, uptake will ultimately be determined by the profitability of carbon forestry versus that of competing land uses. To better understand the likely uptake of carbon forestry in Queensland under the CFI, the Queensland Government undertook a high-level analysis to determine where in the state carbon forestry may be economically suitable. The analysis covered different types of carbon forestry, including managed regrowth, hardwood monoculture plantings and mixed species environmental plantings. The analysis indicates where activity under the CFI is likely to occur first, and will help the Queensland Government determine where more detailed regional-scale assessments might be required. The results of the analysis are discussed further in Section 4.2 (Economic opportunities for carbon forestry).
Action: Developing online information for landholders about biodiverse carbon forestry
To assist landholders to establish biodiverse carbon forestry projects under the CFI, there is a need for coordinated information on carbon market opportunities, native biodiversity and regional ecosystems, and optimal land management practices. Via its ClimateQ program of initiatives, the government is investing $3.5 million in a Carbon Accumulation Through Ecosystem Recovery (CATER) program to research and develop the necessary information and deliver it in an online system.
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CATER is undertaking field measurement of carbon stocks in Queensland native forests and studying how fast carbon accumulates in regrowing forests. Collaborations with universities, CSIRO and other research institutions are developing knowledge of reforestation practices that maximise carbon and biodiversity benefits. Management guides for key Queensland forest types are being developed which synthesise knowledge of land management suitable for biodiverse carbon forestry, with an emphasis on encouraging natural regrowth. The CATER web site will be operational in 2013 and will include a map interface that will allow users to compare different land areas to maximise biosequestration and biodiversity benefits. CATER users will be able to map areas on their own property and generate site-specific information including estimates of biosequestration rates, fact sheets about threatened species that may be supported by biodiverse carbon forestry in that area, and land management advice about how to recover carbon and biodiversity based on the Regional Ecosystems that were present prior to clearing.
The Queensland Government has included carbon forestry in the range of priorities in its 201112 investment strategy under the $17.1 million Q2 Coasts and Country program. Others include biodiversity, coastal risk and water quality. This approach is designed to encourage regional NRM bodies to plan for carbon forestry projects, but ensure that regions not suited to carbon forestry are not unduly penalised.
Action: Develop reference materials and a regional-scale spatial mapping methodology to help NRM Groups incorporate carbon forestry in NRM plans
Regional NRM plans will need to be updated to incorporate carbon forestry opportunities. Given that NRM bodies vary in their capacity to do this, the Queensland Government will help build capacity by developing a package of resource materials including guidance on project requirements under the CFI and management guidelines. Updating NRM plans to incorporate carbon forestry opportunities will require more explicit and effective landscape planning at a sub-catchment scale. As such, the Queensland Government will also develop a methodology for undertaking fine-scale spatial mapping to identify specific locations within a region where carbon forestry is suitable and likely to deliver multiple benefits. In early 2011, the Queensland Government provided Terrain NRM with $700 000 under the Q2 Coasts and Country program to develop reference materials on the CFI and pilot a fine-scale spatial mapping methodology. It is expected Terrain will complete the guidance materials and pilot the spatial mapping methodology in the Fitzroy Burnett region in early 2012. Once finalised, these products will be explained to NRM bodies via a series of regional workshops. The high-level statewide maps of economic opportunities for carbon forestry developed by the government will help NRM bodies determine the value of undertaking fine-scale spatial mapping within their region. This voluntary, incentive-based approach will assist the uptake of carbon forestry by NRM bodies in regions where strong opportunities exist, without requiring bodies in less prospective regions to undertake costly spatial mapping exercises or unnecessarily update their NRM plans.
Action: Prioritise carbon forestry in Natural Resource Management (NRM) funding

Carbon Farming in Rural Queensland identifies a strengthened role for NRM bodies in supporting landholders participation in carbon forestry activities. This position is supported by the Commonwealth Governments announcement under the carbon price package to provide $44 million to help NRM organisations plan for climate change impacts. The purpose of this fund is to help NRM bodies update plans in each region to guide where carbon farming projects should be located in the landscape. There are 14 regional NRM bodies responsible for protecting and managing natural resources in Queensland. These NRM bodies prepare regional NRM plans that identify the regions major NRM issues and ways of addressing them, including land and water management, biodiversity and sustainable agricultural practices. Underpinned by strong established relationships with rural landholders, NRM bodies have a capacity to use NRM plans to harness carbon market investment for projects designed to improve landscape values. The Queensland Government will use NRM funding arrangements as a lever to encourage NRM bodies to incorporate carbon forestry opportunities into regional NRM plans.
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Action: Statutory regional plans to include a policy principle to allow the consideration of carbon forestry where opportunities are identified in relevant NRM plans; and Action: Review how carbon forestry is being addressed in local planning schemes twelve months after commencement of a national carbon market, and determine what additional guidance local governments may require
Statutory regional plans can also play an important role in guiding carbon forestry uptake in optimal locations and away from areas in which it could have detrimental environmental impacts or compete with other vital land uses. Regional plans establish a 20-year regional development framework and aim to integrate economic development objectives with the objectives of regional NRM plans. Consistent with the aims of the Federal funding provided for NRM bodies, to ensure carbon forestry can occur in locations that deliver optimum natural resource and biodiversity outcomes, Carbon Farming in Rural Queensland will ensure that all regional plans are aligned with regional NRM plans. The Queensland Government will achieve this via inclusion of a policy principle in statutory regional plans to allow for the consideration of carbon forestry where opportunities are identified in the relevant NRM plan. Under this approach, local governments will still be able to determine the extent to which they have regard to a NRM plan in their planning schemes. The Queensland Government will review how carbon forestry is being addressed in local planning schemes 12 months after the commencement of a national carbon market and what, if any, additional guidance local governments may require to deal with carbon forestry in local planning schemes. These actions under Carbon Farming in Rural Queensland will establish three-way connectivity between NRM plans, statutory regional plans and local planning schemes to support carbon forestry.
5.3 Getting the balance right: carbon and agriculture

Queenslands agricultural industries generate around $10.5 billion annually4 and help form the backbone of the state economy. Some concerns have been expressed, however, that a shift from more intensive agricultural land uses to large-scale carbon forestry could result in changes to rural employment opportunities, with possible broader effects on rural communities. In particular, concerns have been raised by some agricultural industry sectors in Queensland that carbon forestry could replace cropping on good quality agricultural land, displacing food production and affecting food security for both domestic international markets. There is also concern that without proper controls, large-scale reforestation of the landscape may impact on water resources. The economic analysis undertaken by the Queensland Government and outlined in Section 4.2, suggests that the uptake of carbon forestry under the CFI is likely to be gradual and will initially occur on marginal grazing land. Although farmers may elect to undertake carbon forestry on a limited scale and integrate it with existing activities (i.e. farm forestry), it is not expected to be cost effective to undertake on a large scale on prime cropping land. Farm forestry is the practice of establishing and managing trees strategically placed with agriculture on rural lands. Farm forestry has the advantage of sequestering carbon out of the atmosphere, reducing the net amount of greenhouse gases released by agricultural land use, increasing soil fertility, reducing erosion and salinity, and producing timber without displacing agriculture. As with any new industry, the growth of the rural carbon industry must still be properly managed. This section outlines constraints on carbon forestry to ensure that prime agricultural land and other finite resources such as water are not adversely impacted.
4 Total farm gate, including livestock and horticultural products, Prospects Update March 2011, Department of Employment, Economic Development and Innovation.
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Action: Managing carbon forestry on Strategic Cropping Land (SCL)

The Queensland Government recognises the tension between economic opportunities for farmers to diversify from agriculture into carbon forestry, and the permanence of carbon forestry as a competing land use. Under the CFI, carbon forestry projects will carry a 100-year carbon maintenance obligation. As this is effectively permanent, there is a clear need to protect prime agricultural land from large-scale carbon forestry. However, the need to protect prime agricultural land needs to be balanced with the governments objective of maximising opportunities for farmers under the CFI. The Queensland Government recognises that on a limited scale (no more than 10 per cent of a property), and appropriately configured, carbon forestry can enhance agricultural productivity. For example, integrating carbon forestry into a farming enterprise can enhance carbon stores in soil, reduce erosion, reduce run-off and improve water quality. Other co-benefits from carbon forestry may include providing windbreaks for crops or shelter for grazing livestock. With the release of the Strategic Cropping Land (SCL) policy framework in August 2010, the Queensland Government announced its intention to protect and manage Queenslands best cropping land from development with permanent impacts. The Queensland Government aims to pass legislation before the end of 2011 implementing its SCL policy.
Action: Manage the impact of carbon forestry on water through the implementation of review processes for Water Resource Plans under the Water Act 2000
Research conducted in Australia shows that in some locations, large-scale plantations could increase ground and surface water withdrawals, leading to reduced environmental flows in river catchments. This could have serious long-term impacts on water availability for downstream users and compound other climate change impacts, such as long-term changes in rainfall. Currently, Queensland does not require that water entitlements be acquired for agricultural or forestry activities. Queenslands Water Act 2000 establishes a framework for water resource planning and the allocation and trading of water entitlements. The Act ensures adequate environmental flows to maintain aquatic ecosystems. Under the Act, Water Resource Plans are reviewed every 10 years, including an assessment of the risks to water availability as a result of activities that are likely to increase water extraction. Carbon forestry activities under the CFI will be considered during this review process, as well as any future requirements under the Murray Darling Basin Planning regime in order to take into account increases in water interception and any consequential impacts.
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5.4 Increasing Indigenous opportunities from carbon markets

The Commonwealths Carbon Credits (Carbon Farming Initiative) Act 2011 contains provisions to facilitate Aboriginal and Torres Strait Islander participation in carbon markets. Queensland supports Indigenous stakeholders participating equally in the scheme and that Indigenous land should be accorded the same rights relating to carbon as other tenure forms. Engaging Traditional Owners will be important to capitalise on the carbon storage potential of Queenslands landscape. Emerging carbon markets also represent opportunities to address the problem of Indigenous disadvantage. The Queensland Government has worked closely with the Commonwealth to maintain consistency between relevant state legislation and the CFI to enable Indigenous participation. As a complement to the CFI and as part of the Clean Energy Future plan, the Australian Government has committed $22 million over five years to an Indigenous Carbon Farming Fund that will assist Indigenous communities to benefit from the CFI. Funding will be provided for specialists to work with Indigenous communities on carbon farming projects. Funding for research and reporting tools for CFI methodologies will also create further opportunities for Indigenous Australians.
However, there will be no one-size-fits-all approach to promoting Indigenous carbon market opportunities. Indigenous communities across Queensland have differing cultural heritage, landholding status, administrative and governance arrangements, socio-economic conditions, and landscapes. These issues, combined with the complex land tenure arrangements for many Indigenous landholders, mean that targeted technical development effort, engagement and education action will be needed to identify opportunities appropriate for Indigenous community participation. To ensure the funding available under the Commonwealths $22 million Indigenous Carbon Farming Fund can be appropriately targeted, the Queensland Government proposes undertaking further work to more clearly identify which abatement activities could provide the most potential benefit for Indigenous communities. Queensland will also monitor the administration and application of the CFI and seek to resolve with the Commonwealth any implementation issues that may arise in the future.
Action: Monitor outcomes of the savanna fire management projects in the Western Cape York and Gulf Region
While savanna burning contributes a modest amount to Queenslands overall greenhouse gas emissions, it is proportionally more significant in Far North Queensland. Studies in the Northern Territory show that significant reductions in emissions can occur when fires are managed differently.
Action: Investigate opportunities for Indigenous participation in the CFI

The CFI provides for a diverse range of opportunities for Indigenous communities, including reforestation, reduced emissions from savanna burning and novel abatement activities such as the culling of camels and other feral pests.
Research in North Queensland is helping to improve the understanding of the links between savanna burning management and greenhouse gas emissions, biodiversity and pasture growth for cattle production. This information will inform the Queensland Governments approach to helping local Indigenous communities access opportunities from savanna burning under the CFI.
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5.5 Improving the science around land sector greenhouse gas abatement
In order to be included in the CFI, activities require a scientifically robust method for counting and verifying abatement. To enable the inclusion of more activities in the CFI over time, the CFI has been designed to allow the market to develop and update methods as more is learned about the dynamics of carbon in the landscape. New and improved CFI carbon accounting methods can also mean better financial returns for landholders. Queensland is conducting research into a wide range of land sector abatement activities, including livestock. A particular research priority, however, is improving understanding of the biosequestration rates of different types of carbon forestry. Further research in this area will help to improve CFI methods for measuring carbon sequestration in environmental plantings and managed regrowth in Queensland. The Australian Government also acknowledges the need to improve the science around land sector greenhouse gas abatement. Under the carbon price package the Commonwealth has established the Carbon Farming Futures initiative, through which it will invest $200 million for research into new ways of storing carbon and reducing pollution in the land sector. Funding will also be available to convert research into practical methodologies recognised under the CFI.
Carbon Queenslandthe Queensland Government and CSIRO working together on carbon science
Carbon Queensland was launched in 2010 as a research partnership between the Department of Environment and Resource Management (DERM), the Department of Employment, Economic Development and Innovation (DEEDI), and the Commonwealth Scientific and Industrial Research Organisation (CSIRO). Located at the new state-of-the-art Ecoscience Precinct in Brisbane, Carbon Queensland is developing a rich knowledge base to support the role that natural systems can play in reducing carbon emissions. DERM, DEEDI and the CSIRO all share an interest in carbon science and each possesses a suite of tools and capabilities amongst research teams to inform current policy and management debate around climate change and the implications of a carbon-constrained future. Carbon Queensland enables these scientists to capitalise on the opportunities and synergies created by multiple teams working together at the same location.
Action: Developing a CFI method for counting carbon from managed regrowth
Queensland has significant areas of previously cleared land which are now being actively managed for pasture production. Retaining regrowth (instead of managing it for pasture production) may represent a cost-effective way of restoring biodiversity in the landscape whilst earning landholders an economic return. Provided certain conditions are met, retaining regrowth via active management will be recognised by the Australian Government as an eligible activity under the CFI. However, there is currently no CFI method that enables carbon to be counted from managed regrowth. Furthermore, the default data to be used to count carbon sequestration (based on NCAS) is thought to underestimate biosequestration rates for some local native species, adversely affecting financial returns from managed regrowth reforestation. Queensland is addressing these issues by working closely with the Australian Government to develop
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a robust and accurate CFI method for measuring carbon sequestration in managed regrowth forests. The proposed CFI method will utilise the Queensland Governments own tools, systems and research. By drawing on research into native species growth rates conducted as part of the CATER project (outlined in Section 5.2, Supporting carbon forestry), the method can potentially improve financial returns from retaining regrowth vegetation. By employing the remote sensing method used in Queenslands Statewide Landcover and Trees Study (SLATS) to verify establishment, the method could enable additional age classes of regrowth to be eligible.
Action: Support Queensland Enteric Methane Hub Research

The beef industry in Queensland is worth around $3.4 billion5 each year, but also accounts for a significant percentage of the states emissions. Methane emitted from livestock via enteric fermentation produced 78 per cent of Queenslands agriculture emissions in 2009 and 13 per cent of the states total emissions6. To enhance research to reduce methane emissions from livestock, the Queensland Government has recently established the Enteric Methane Hub (QEMH). Current research indicates that modest reductions of around 10 to 20 per cent in methane emissions can be made through improving production efficiency and changes in management practices, but large reductions still require significant research effort over the longer term. The QEMH is the first research group with a major focus on the longer-term, leading-edge research that has the best chance to significantly reduce enteric methane emissions. It has brought together eminent scientific staff in this field and the group already contributes to international discussions on reducing agricultural emissions. Although only recently established, the QEMH has already progressed some of its signature research of investigating whether microbes found in the kangaroo gut can be used in sheep and cattle to reduce methane.
Action: Working with the Commonwealth to achieve better alignment between SLATS and NCAS
The Australian Government established the NCAS in 1998 to provide a complete accounting and forecasting system for sources and sinks of emissions from the land sector. The NCAS is continuing to be developed over several phases. The Queensland Government is supporting the ongoing development of the NCAS by drawing on its own system for monitoring the extent of vegetation and rates of clearing using SLATS. Although SLATS was not designed specifically to account for emissions, its unique approach to remote sensing could help the Australian Government improve carbon accounting for Queenslands land sector under the NCAS. Unlike NCAS, SLATS satellite imagery is verified on the ground for accuracy. The Queensland Government is actively working with the Australian Government to consider how SLATS mapping data could be incorporated into the NCAS.
5 Prospects update March 2011, Department of Employment, Economic Development and Innovation. 6 Australias national greenhouse gas accounts: State and Territory Greenhouse Gas Inventories 2009, DCCEE 2011.
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Action: Review and monitor research outcomes from biochar

Biochar has been attracting increasing interest for its potential to sequester carbon, provide energy and improve soil health. However, significant further research is required to answer numerous questions about its production and use. Biochar is a type of charcoal produced when organic matter, such as crop waste, wood chip, municipal waste or manure, is burned in a low oxygen environment in a process called pyrolysis. Biochar is very stable, compared with other forms of organic carbon and in some cases it can last in the soil for hundreds or thousands of years. CSIRO is leading a major collaborative biochar research project describing the properties of biochar produced from different feedstock and pyrolysis conditions. This work is being conducted under the National Biochar Initiative, worth $1.4 million and will analyse the properties and potential of different biochars to improve soil health and sequester carbon. In January 2011, another $2 million was invested through the CFI in the Biochar Capacity Building Program for research, on-ground demonstration of biochar use and the development of a suitable CFI method. The Queensland Government continues to monitor the outcomes of these programs and will participate in research where applicable for Queensland to assess the suitability of biochar in Queensland soils and as an option for Queensland landholders.
The Queensland Government continues to pursue national and international negotiations around the role of timber in carbon markets. Until barriers constraining most timber industry participation in carbon markets can be removed, the government will examine how industry codes of practise can be used to improve the retention of carbon in native timber forests whilst maintaining and enhancing rural socio-economic values, plus deliver wood supply commitments under the SEQ Forest Agreement and Statewide Forests Process (Western Hardwoods Plan).
Action: Continue to implement Queensland Timber Plantation Strategy (QTPS), including seeking to expand future opportunities for the timber industry under a carbon market
The Queensland Timber Plantation Strategy (QTPS) 2020 was released on 20 July 2010. The overall objective of the QTPS is to facilitate sustainable growth in the timber plantation sector in Queensland by providing an investor-ready environment. In addition to providing a range of commercial solid wood and fibre outcomes, QTPS also contains a number of actions designed to improve carbon market opportunities for the timber industry. There are two main factors limiting carbon market opportunities for the timber industry. Firstly, the current arrangements for the CFI requires that proponents demonstrate that a project would not have occurred in the absence of the CFI and have expressly excluded forestry projects established as part of a Managed Investment Scheme. Despite the significant carbon storage potential of timber plantations, these requirements will likely exclude a large proportion of the timber industry from participating in the CFI. Secondly, the carbon stored in harvested wood products from Kyoto-eligible forests is not currently recognised internationally but has the potential to increase the profitability of growing trees for carbon as well as timber. Under the QTPS, the Queensland Government is committed to working with the Australian Government and the commercial timber industry to see how new commercial timber plantation projects can meet the requirements of the CFI or new international rules in the future, as well as reviewing any Queensland legislation to ensure that businesses can participate.
5.6 Improving carbon outcomes from the timber industry

The CSIRO found that hardwood timber plantations in Queensland had greater technical sequestration potential than any other activity apart from carbon forestry. However, there are presently national and international policy barriers7 constraining most of that potential.
7 Nationally under the CFI, eligible projects must demonstrate they would not have occurred in the absence of the CFI (the common practice test) and forests established under a Managed Investment Scheme are expressly excluded. International agreements currently do not recognise the carbon sequestered and locked up long term in harvested wood products.
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Although international accounting of harvested wood products is an issue for consideration for the second Kyoto commitment period and beyond, the QTPS also commits Queensland to work with the Australian Government to progress further analysis and methodologies in this area.
This phase-out will potentially result in a higher risk of unmanaged severe fire events, which are a key threat to the retention of carbon stocks in Queenslands state-owned native forests. The Code of Practice for Native Forest Timber Production on State Lands makes limited reference to carbon or fire management, and it is proposed that this be remedied through the upcoming 2012 Code review. As a starting point, it is proposed that where a state forest area is subject to a single further timber harvest only, a plan for the future management of the area be established that includes consideration of ongoing fire management. Planned burns in appropriate conditions reduce the risk of hotter and more extreme fires which can result in uncontrolled loss of carbon stocks.
Action: Review codes of practice for native forest timber production on freehold land to include mechanisms for enhancing the retention of carbon stocks
Forestry on freehold properties in Queensland supplies more than 50 per cent of the native timber harvested in Queensland. This activity not only generates significant socio-economic activity, particularly in rural Queensland, but has also resulted in significant carbon outcomes via the retention and enhancement of large areas of native forest on freehold land. Queenslands native vegetation framework allows for native forest practices to occur on freehold land in accordance with the Code Applying to a Native Forest Practice on Freehold Land (the Code). The Code defines the outcomes and practices required to lawfully conduct a native forest practice. Essentially, a native forest practice allows limited forms of sustainable forestry while conserving remnant regional ecosystems, maintaining ecological processes, preventing land degradation and the loss of biodiversity in the long term. An audit of forest practice activities in Queensland is being finalised. The audit will report on the effectiveness of the Code and scope potential measures to enhance carbon stocks in private native forests.
Action: Review codes of practice for native forest timber production on state land to include mechanisms for enhancing the retention of carbon stocks
Under arrangements applying in South East Queensland and western hardwoods regions, certain state-owned native forests will be subject to one further timber harvest operation before being removed from timber production to expand Queenslands permanent conservation estate.
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6 New Opportunities for the land sector and where to go for further information
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The Australian Governments plan for a clean energy future will provide new economic opportunities for farmers and help improve the profitability and sustainability of Queenslands agricultural industries. Farmers will not have to pay for greenhouse gas emissions from agricultural activities and the fuel they use for farm equipment and personal vehicles will not be covered under the carbon price. Instead, over $1.7 billion of carbon revenues raised from the top polluting companies in Australia will be invested in the land sector over the next six years, through new funding programs as part of the Australian Governments Clean Energy Future plan.
Through the CFI, Queensland farmers and land managers will have access to the carbon market and be able to generate revenue by reducing emissions or increasing carbon stored on their land. They will also have access to direct support to adopt new and innovative practices on farm that can reduce emissions and store carbon, while improving efficiency and productivity of their businesses. Through Carbon Farming in Rural Queensland, we are working to ensure that both farmers and the environment stand to benefit from long-term changes in the land sector. The following is a list of contact details for key government departments and organisations able to provide further information on the CFI and land management aspects more broadly.
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Contacts
Australian Government contacts
Because the CFI is a Commonwealth scheme, it is recommended that persons interested in further information on its operation directly contact the relevant Australian Government Departments. These include: the Department of Climate Change and Energy Efficiency (DCCEE): for information on the legislative requirements, its design, methodology development and funding available (e.g. $946 million Biodiversity Fund, $44 million NRM fund, and the $22 million Indigenous Carbon fund) under the Australian Governments carbon price legislation. For further information visit www.climatechange.gov.au/cfi or phone: 1800 057 590 the Department of Agriculture, Forestry and Fisheries (DAFF): responsible for administering a large component of the $429 million land sector packageCarbon Farming Futures (CFF) Program, including: $201 million Filling the Research Gap program: to provide competitive grants funding to support research into emerging abatement technologies, strategies and innovative management practices that improve soil carbon and reduce greenhouse gas emissions from the land sector and enhance sustainable agricultural practice $99 million Action on the Ground: to provide grant funding to regional landholders and research, industry and farming organisations across Australia to undertake projects to implement innovative management practices to achieve sustainable outcomes, reduce emissions and boost soil carbon stores. Outcomes from the Filling the Research Gap program will be applied on-farm, ensuring that laboratory results can be replicated on the ground in real farming situations influenced by business and economic signals. This also includes a 15 per cent tax offset for the purchase of minimum tillage equipment
$64 million Extension and Outreach: to fund coordinated communication across an expanded national network of extension providers to provide information and support for landholders to participate in the Carbon Farming Initiative (CFI). Utilising the extension skills and networks of groups and organisations such as Regional Landcare Facilitators and Caring for our Country Officers, farming and industry bodies, research and development corporations, universities and state governments, funding will be available for a range of activities including workshops, field days and the engagement of additional extension officers. For further information see the Climate Change Division website www.daff.gov.au/ climatechange/cfi or phone (02) 6272 3933. For more information on extension services and the CFI see the Caring for our Country/Regional Landcare Facilitator network website www.nrm.gov.au/contacts/landcare.html.
Queensland contacts
For general enquiries relating to any of the policy initiatives or actions described in this document contact the Department of Environment and Resource Management (DERM) www.derm.qld.gov.au or ph 13 74 68. For specific information on the CATER project contact the Queensland Herbarium (DERM), Mt Coot-tha on www.derm.qld.gov.au or ph (07) 3896 9326. For information on the timber industry, and Queenslands Enteric Methane Hub contact the Department of Employment, Economic Development and Innovation (DEEDI) www.deedi.qld.gov.au or ph 13 25 23. For information on the CFI, opportunities for carbon offsets in Queensland and carbon brokerage services contact Ecofund www.ecofund.net.au/index.html or ph (07) 3017 6460. For all of Queenslands NRM bodies visit the Queensland Regional NRM Groups Collective portal www.rgc.org.au or ph (07) 4699 5000.
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7 Glossary
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Afforestation
The direct human-induced conversion of land that has not been forested for a period of 50 years to forested land through planting, seeding and/or the human-induced promotion of natural seed sources. Must occur on areas that were clear of forest as of 31 December 1989.
Agricultural greenhouse gas abatement

The reduction of greenhouse gas emissions, or enhancement of greenhouse gas remo val from the atmosphere by sinks, relating to land management and agricultural practices.
Attainable biosequestration
Reference in the CSIRO report of attainable refers to the level of biosequestration that could be attained in the landscape provided concerted efforts are made to ensure the necessary policy settings, technical and management changes, and shifts in current land management priorities are put in place.
Bagasse
The fibrous matter that remains after sugarcane or sorghum stalks are crushed to extract their juice. It is currently used as a biofuel and as a renewable resource in the manufacture of pulp and paper products and building materials.
Biochar
A type of charcoal produced when organic matter, such as crop waste, wood chip, municipal waste or manure, is burned in a low-oxygen environment in a process called pyrolysis.
Biomass
In relation to carbon farming this refers to any plant or tree material produced as a result of plant growth via photosynthesis.
Biodiverse carbon forestry

A form of carbon forestry, generally made up of mixed species (usually native), that primarily provides biodiversity/ecosystem services enhancement and may include a range of other benefits such as salinity/soil erosion mitigation, shade/shelter, and sustainable, selective timber harvesting in addition to sequestering carbon dioxide out of the atmosphere.
Business-as-usual
Under the CFI the term business-as-usual is used in the context of applying the additionality test. A project must result in greenhouse gas abatement that would not have occurred in the absence of the scheme. If emissions reduction would have occurred in the normal course of business then the project (and emissions reduction) is not considered additional and is not eligible to join the CFI.
Biofuels
A wide range of fuels that are in some way derived from biomassbiological material from living, or recently living, organisms, such as wood, waste, (hydrogen) gas, and alcohol fuels. Biomass is commonly plant matter grown to generate electricity or produce heat. The term covers solid biomass, liquid fuels and various biogases.
Biosequestration
A biological process where plants capture and store atmospheric carbon dioxide.
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Carbon Farming Initiative

An Australian Government scheme that provides economic opportunities to farmers, forest growers and landholders for reducing carbon pollution. The scheme is voluntary and enables participants to receive carbon credits for reducing or storing greenhouse gases through eligible greenhouse gas abatement activities.
Carbon forestry
The establishment and management of new native or exotic, single- or mixed-tree-species forests (whether planted or established via the human inducement of natural seed sources) for the primary purpose of sequestering carbon out of the atmosphere. Carbon forests may include other multipurpose benefits such as salinity/soil erosion mitigation, shade/shelter, biodiversity/ecosystem enhancement and sustainable timber production.
Carbon offsets
Reductions or removals of greenhouse gases that are used to counterbalance carbon emissions elsewhere.
Carbon price
The price at which emissions permits can be traded, nationally or internationally.
Carbon trading
A market system for trading units (carbon credits) of greenhouse gas emissions (not just carbon dioxide) domestically and/or internationally.
Climate change
A change in the state of the climate that can be identified (for example, by using statistical tests) by changes in the mean and/or the variability of its properties, and that persists for an extended period, typically decades or longer.
CO2-e
Carbon dioxide equivalenta measure that allows for the comparison of different greenhouse gases in terms of their global warming potential.
CSIRO
The Commonwealth Scientific and Industrial Research Organisation is Australias national science agency and one of the largest and most diverse research agencies in the world.
Deforestation
The direct human-induced conversion of forest to non-forested land.
Emission avoidance activity

Activities that avoid generation of emissions that would have otherwise occurred. Such emissions avoidance activities may still be eligible to generate carbon offsets.
Enteric fermentation
Part of the digestive process of ruminant animals, such as cows and sheep, that results in the release of methane.
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Environmental plantings
Forests established via the planting of either native or exotic, single or mixed-tree species, established and managed for the purpose of achieving environmental outcomes including sequestering carbon out of the atmosphere, salinity/soil erosion mitigation, shade/shelter and biodiversity/ecosystem enhancement. These types of plantings may also include sustainable, selective timber harvesting.
Farm forestry or agroforestry

An integrated form of native or plantation forestry with grazing, horticulture and/or broad-acre cropping, using either native or exotic, single or mixed-tree species for a single or multi-purpose including sustainable timber production, sequestering carbon out of the atmosphere, salinity/soil erosion mitigation, shade/shelter, improved water quality and biodiversity enhancement.
Greenhouse gas
Any gas that absorbs infrared radiation in the atmosphere. Greenhouse gases covered by the Kyoto protocol are carbon dioxide, nitrous oxide, methane, sulphur hexafluoride, perfluorocarbons (PFCs) and hydrofluorocarbons (HFCs).
Hardwood monoculture plantations

The term is used in the Economic Mapping ProjectOpportunities for Carbon Forestry in Queensland to refer to planted forestry where the same species of hardwood (flowering e.g., eucalyptus) tree is planted across the total area and can be used for timber or carbon forestry.
Kyoto Protocol
An amendment to the international treaty on climate change, assigning mandatory emission limitations for reduction of greenhouse gas emissions. The agreement was adopted under the United Nations Framework Convention on Climate Change in 1997. It entered into force in 2005.
Land sector greenhouse gas abatement

See agricultural greenhouse gas abatement.
Managed regrowth
The human-induced increase in carbon stocks on deforested land through the rehabilitation of native vegetation that covers a minimum area of 0.2 hectares and will meet the definition of a Kyoto forest when mature.
Mandatory carbon market

A market where buyers have some legal or regulatory obligation to purchase carbon credits.
National Carbon Accounting System, NCAS

The Australian Governments system for accounting and forecasting sources and sinks of greenhouse gas emissions from the land sector.
Reforestation
The direct human-induced conversion of non-forest land to forest land through planting, seeding and/ or human-induced promotion of seed sources, on land that was forested but that has been converted to non-forested land and that was clear of forest on 31 December 1989.
Savanna burning
As a CFI activity, the strategically managed burning of fire-prone land to reduce fuel availability and minimise the impact of wildfires during dry periods.
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Statewide Landcover and Trees Study (SLATS)

The Queensland Governments remote sensing system for monitoring the extent of vegetation and rates of clearing.
Timber plantations
Planted forestry, using either native or exotic, single or mixed-tree species, established and managed primarily for the purpose of timber production (harvest), which can include other duel or multipurposes such as sequestering carbon out of the atmosphere, salinity/soil erosion control, shade/ shelter and biodiversity enhancement.
United Nations Framework Convention on Climate Change

The United Nations Framework Convention on Climate Change is the primary forum for negotiating a global agreement on how the world should deal with climate change
Voluntary carbon market

A market for offsets representing a certified removal of greenhouse gases from the atmosphere purchased by individuals or entities that are not required by law to purchase the offset.
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www.climatechange.qld.gov.au

Carbon Farming in Rural Queensland: Helping The Land Sector Prepare For Carbon Market Opportunities

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Carbon Farming in Rural Queensland: Helping The Land Sector Prepare For Carbon Market Opportunities

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Carbon Farming in Rural Queensland

Helping the land sector prepare for carbon market opportunities

State of Queensland (Department of Environment and Resource Management) 2011

Message from the Minister

Vicky Darling MP Minister for Environment