Australia Studies Rules for Farmers’ Carbon Offsets

Australia’s government will study rules for farmers to receive credits for steps that reduce or store carbon dioxide emissions, such as planting forests, the Minister for Climate Change and Energy Efficiency said.

The government set up a panel to establish terms for farmers to qualify for the credits, which can then be sold in Australian or international carbon markets, Greg Combet said in an e-mailed statement today.

Activities including reforestation, capturing emissions from landfill sites and improved management of livestock manure may qualify for credits, the minister said. The plan is known as the Carbon Farming Initiative. The committee is due to report back in the first half of next year.

“The Initiative should provide much-needed momentum for the offset market in Australia,” said Sebastian Henbest, a Sydney-based analyst with Bloomberg New Energy Finance.

As the credits will be backed by so-called Assigned Amount Units, a global standard within the Kyoto Protocol agreement, they can be sold in international markets before a domestic carbon trading program is established, Henbest said.

Former Prime Minister Kevin Rudd earlier this year shelved a cap-and-trade plan until after 2012 amid lawmaker opposition.

Australia’s Labor Party, which governs with the support of one Greens Party and three independent lawmakers, estimates about A$500 million ($490 million) of credits may be generated over 10 years, according to a statement from Prime Minister Julia Gillard posted on its website in August.

Gillard has established a committee to study options for introducing a price on carbon in a country where coal accounts for more than 80 percent of power production.