Your Carbon Right
THE Carbon Rights Act, Tree Plantation Agreements Act and relevant amending legislation commenced on March 23.
Under this new legislation, carbon right interests in land, carbon covenant interests in land and plantation interests in land are created by the registration against the land title of an instrument.
The rights recognised in these instruments are transferrable.
Industry considering voluntary emissions offset programs that register a carbon right interest in land will at least have certainty as to the nature of a carbon right created.
The features of the legislation are:
- Only one carbon right can be registered against the same area of land;
- A carbon covenant is intended to ensure continuation of the trees or other land-based resources that underlie the carbon sequestration by the registered carbon right. A carbon covenant will affect land owners and others who have an interest in that land who agree to give a covenant in favour of the holder of the carbon right;
- A plantation interest is an ownership interest in trees that is separate from the land; and
- The proprietor of a carbon right has the legal and commercial benefits and risk arising from the changes to the atmosphere that are caused by carbon sequestration and also in carbon release in or on the land in respect to which the carbon right is registered.
The legislation does not provide for a regulated, State-based carbon trading system.
A "cap" and allocation of emissions is required, in addition to a mature carbon accounting system, to establish a trading market.
The value of carbon rights will lie in their ability to offset "capped" greenhouse gas emissions from other sources.
The current national and State position, not to introduce a cap and trade system, reflects industry concern that a mandatory scheme will reduce domestic and international competitiveness.
In the context of strategic planning, the Government’s decision may be short-term.
Those industries that have not already done so have an opportunity to adopt a "no regrets" approach to the climate change debate and may need to consider the following in forward planning:
- Advantages/disadvantages (production efficiencies and commercial competitiveness) in developing greenhouse gas abatement strategies;
- Contractual considerations in mergers and acquisitions – who receives the benefit/bears the risk of climate change technology?;
- Ensuring appropriate in-house greenhouse gas accounting methods;
- Implications for overseas projects;
- The possibility of climate change class actions and associated finance and insurance issues; and
- The benefits of early voluntary offset arrangements.
Greta Lee 9429 7606
Rob Campbell-Watt 9429 7685