Method of estimating Kyoto ACCUs. As discussed in section 2, the CFI is based on different accounting principles to those that apply under Australia’s FM reference level framework. In order for a FM project to be an eligible offsets project, it must satisfy the additionality requirements specified in s 41 of the CFI Act. The author understands that regulations will be made to ensure the creation of the ENGO reserves satisfies these requirements, allowing it to be declared an eligible offsets project.27 Once the project becomes an eligible offset project, the issuance of ACCUs will be determined on the basis of a baseline set in accordance with an approved methodology. At the time of writing, a relevant methodology had not been published for a FM project involving the avoidance or cessation of harvesting of native forests. However, the principle that is intended to guide the setting of the baseline is that it should represent an estimate of net emissions in the absence of the project activity.28 The CFI Act’s ‘offsets integrity standards’ also require that the method should provide for a deduction to be made from the project’s net sequestration amount to account for leakage.29 In addition, a 5% risk of reversal buffer is required to be deducted from the net sequestration number of a native forest protection project (and any other sequestration offsets project) to account for permanence risks (risks related to the fact that biologically sequestered carbon could be released back into the atmosphere at a later date).30 To estimate the Kyoto ACCUs that could be generated from the creation of the ENGO reserves, two additional scenarios were developed that incorporated these CFI requirements: • CFI baseline scenario, which approximates the baseline that would apply under the CFI; and • CFI-ENGO scenario, which provides the basis on which to estimate the project’s net sequestration number. CFI baseline scenario Given the requirements governing the setting of CFI baselines, the use of the reference level described in section 4 would be inappropriate as it would suggest that ACCUs could be issued for reductions in emissions and removals that would have occurred in the absence of the ENGO reserves. The best available information on what would happen in the absence of the TFIGA is that contained in the FT report’s 27 A relevant project type will have to be added to the ‘positive list’ for the purposes of s 41(1)(a). It may also be necessary to make regulations to exempt the project from the requiremen...
