Carbon + Biodiversity Pilot

The Carbon + Biodiversity Pilot (C+B Pilot) trials market arrangements for farmers to create new income from plantings that deliver biodiversity improvements and carbon abatement. Through the C+B Pilot, we are testing the concept of buying and selling biodiversity services from farmers. Farmers can gain multiple benefits and diversify their income by completing a C+B project.

The C+B Pilot has been designed and delivered in partnership with the Australian National University and Natural Resource Management organisations in each trial region.

How it works

Farmers who participate in the C+B Pilot are offering to deliver long-term biodiversity improvement (a plantings project) in conjunction with an ERF environmental plantings project.

To complete a C+B project farmers must undertake a new Emissions Reduction Fund (ERF) environmental plantings project to plant native trees and shrubs in line with ERF requirements as well as the C+B Pilot planting protocols.

• the ERF Environmental Plantings method involves the planting or direct seeding of native tree and shrub species on land that has been clear of forest for more than 5 years. The purpose of these plantings is to store carbon.
• the C+B planting protocols set out rules about the location, dimensions, configuration and composition of plantings to ensure projects generate biodiversity benefits.
• Farmers must maintain C+B projects for 25 years.

The Australian Government will pay you a biodiversity payment for the biodiversity improvement and you will retain the carbon credits generated by the project. The biodiversity payment will be made in two instalments as you establish your project.

Through participation with the ERF, you will receive Australian Carbon Credit Units (ACCUs). Each carbon credit represents one tonne of carbon dioxide stored or avoided by your project. You will be issued credits over the 25-year course of your ERF project. You can then sell these credits to the government or private buyers.

Successful applicants will also be provided with a grant to help them access financial, legal, agronomical or other relevant professional advice.

Planting projects also support farms by providing shelter for animals. The plantings may also protect dams and waterways and reduce erosion. Your community may also benefit from increased climate and biodiversity sustainability.

Eligibility

To be eligible:

• your land must be predominantly used for agricultural purposes
• you must be the owner, leaseholder or exclusive native title holder of the land
• your project must be contained entirely within one of the six NRM regions noted below
• your project area must be between 5 and 200 hectares in total
• you must be able to undertake and register a new environmental plantings method project under the ERF.
• You must meet the participant obligations under the ERF as outlined on the CER’s website
• you must commit to protect and look after your C+B Project for at least 25 years once established.
• You must act with the utmost good faith in your engagements with the pilot.
• More details about eligibility requirements are contained within the C+B Pilot guidelines below.

Round 2 regions

Round 2 is open to applicants from six eligible Natural Resource Management (NRM) regions. Please select your region from the list below for further information.

• Fitzroy Basin in Queensland
• Riverina in New South Wales
• Goulburn Broken in Victoria
• Southern in Tasmania
• Northern and Yorke in South Australia
• South Coast in Western Australia

How to apply

Applicants will draw their project area using an online mapping tool on the National Stewardship Trading Platform. You will then need to submit the estimated costs for establishing and managing your project across several categories such as project establishment, soil preparation, planting and other fields. The C+B pilot price guide can help you estimate your costs.

Your submitted costs will help us calculate your Biodiversity Payment Offer. You can also submit a bid offer for the Biodiversity Payment you are willing to accept to make your project more competitive.

To apply:

• Read the C+B Pilot guidelines, the planting protocols and price guides for your NRM region. These documents are also available on the GrantConnect website. Any alterations to these documents will be published on GrantConnect and by registering on this website, you will be automatically notified on any changes. GrantConnect is the authoritative source for grants information.
• Plan the project and how it will work with your existing farm business.
• Contact the Agricultural Stewardship team (1800 329 055) or your local NRM association if you have any questions or concerns
• Complete your application and submit through agsteward.com.au
• Before you commence you may want to look at this C+B pre-application checklist - PDF [207 KB] or DOCX [357 KB].

Applications close: 3 March 2022

Application assessment process

All eligible applications will be given a biodiversity benefit score, which is a modelled score of the projected regional biodiversity improvements that are likely to result from the project activities proposed by the applicant.

Eligible applications will then receive a benefit cost score, where the modelled biodiversity benefit score is divided by the biodiversity payment offer (cost). Applications are then ranked from highest to lowest benefit-cost score. Successful applicants will be those with the most competitive benefit costs scores. The assessment panel will also consider the objective of properly trialling the pilot across a diversity of regions and settings

Successful applications

Successful applicants will be notified in writing and provided a biodiversity payment offer. Applicants will have 6 months to consider their offer and sign a C+B project agreement. During this 6 months participants should seek professional advice and, if they choose to proceed, must register their project with the ERF (note that ERF registration can take 4 months).

The C+B project agreement will require the applicant to establish a C+B project within 9 months of signing the agreement, unless an extension is provided due to drought or other factors that are beyond the control of the applicant such as unavailability of seedlings in that time.

Upon receiving the offer, applicants will be given the opportunity to propose good faith variations to the details of the project – for example, minor modifications to the size of the project area. Any proposed modifications will be accepted or rejected at the department’s discretion, to ensure that it does not compromise the integrity and fairness of the selection process. Where variations are made to the project, the payment offer may also change.

If successful applicants do not accept the biodiversity payment offer and wish to find alternative funding from a private buyer, the department can provide additional guidance on how to list a C+B project on the National Stewardship Trading Platform.

Professional advice payment

A small payment will be provided to successful applicants to offset the costs of seeking professional advice as appropriate for your circumstances (eg. financial, legal and/or project advice). This payment is intended to help you consider the various requirements and opportunities associated with proceeding with your C + B project. All applicants that are made an offer will be able to receive an amount up to $10,000 (and will need to sign a simple agreement to receive it).

Biodiversity Payment Offer

The Biodiversity Payment rewards you for planting a project which encourages biodiversity outcomes. It may cover a portion of your project establishment costs.

Up to 80% of the Biodiversity Payment will be provided to you once you provide proof that your project has been unconditionally registered with the ERF. The remaining amount will be dispersed to you once you provide proof that you have established the plantings.

The biodiversity payment offer will be calculated using a financial model that estimates:

• the projected carbon revenue a project could earn from credited carbon abatement and sale of carbon credits (ACCUs),
• the cost of establishing and maintaining the planting/s (a pricing guide will be published to help applicants estimate their costs),
• the cost of reporting associated with the project.

The model will consider the revenue and cost estimates to calculate a biodiversity payment offer, with the aim of providing efficient participants with an appropriate rate of return on their investment.

• Applicants also have the option to make their project more competitive by submitting their own bid price for the biodiversity payment they are willing to accept. If the applicant’s bid offer is lower than the calculated biodiversity payment offer, the bid offer will be used for the purposes of the assessment.

Emissions Reduction Fund

All successful C + B applicants will be required to register with the ERF and undertake a new mixed-species environmental plantings project using the Reforestation by environmental or mallee plantings FullCAM method. The department can support participants to do so, as well as guidance on reporting requirements and other elements of the ERF

Carbon Credits

Throughout the course of your planting project, you will report on its progress to the Clean Energy Regulator and be issued with Australian carbon credit units (known as ACCUs). Reporting and crediting timeframes are variable and based upon the details of your individual project. Reporting can occur as often as 6 months but must occur at least every 5 years. Typically for environmental planting projects, abatement peaks at year 6, this is when you will receive most of your ACCUs (though it varies for different projects).

Once issued to you, you may sell your carbon credits to generate income. This income is in addition to your Biodiversity payment. There are a number of ways you can sell your carbon credits. You could advertise your project on the National Stewardship Trading Platform to find a private buyer. The Department can provide you with guidance on how to do this.  Carbon credits can also be sold at auctions administered by the Clean Energy Regulator. More information about this process can be found on the Clean Energy Regulator website.

You may also wish to keep or cancel your carbon credits to offset your own emissions.

Project delays and changes

You will have a legal responsibility to manage your planting project once you sign the C+B Project agreement. Your project should be planned so that plantings are in the ground within 9 months of signing a C+B Project agreement. We can grant an extension for some situations beyond your control including drought and other factors.

The department may accept in good faith variations to your project.

Risk

Your Carbon + Biodiversity project agreement will commit you to maintain your planting for 25 years. If the environmental plantings are impacted due to a natural event that is beyond your control (e.g. drought or fire) so that the biodiversity outcomes are impacted you are asked to replant the vegetation to make up the loss.

If all or part of the plantings die or are damaged or cleared through your deliberate or reckless act or omission; or the ERF registration of your project is cancelled; or your breach the project agreement (for example by not planting in accordance with the planting protocols) you will be required to repay or forfeit all of the funding to the Department.

You will also need to meet the permanence requirements of the ERF, which will be for 25 or 100 years, depending on your choice at the time of registration

Carbon service providers

Carbon service providers are not eligible to apply for the C+B Pilot. Applicants must own the land, lease or native title where the project will take place. Carbon service providers can help farmers develop and apply for the C+B Pilot and register it as an ERF project.

Carbon + Biodiversity Round 1

C+B Pilot Round 1 offered $4 million to 65 successful applicants.

Applications were open to six pilot NRM regions:

• Burnett-Mary in Queensland
• Central West in New South Wales
• North Central in Victoria
• NRM North in Tasmania
• Eyre Peninsula in South Australia
• South West in Western Australia

Applications were assessed in partnership with experts from the Australian National University.

Projects are currently being registered with the Emissions Reduction Fund and plantings will commence throughout the coming months.