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Coverage, Additionality and Baselines - Lessons from the Carbon Farming Initiative and other schemes

The Climate Change Authority has released a paper investigating the experiences of Australian and international baseline and credit schemes, and highlighting key lessons for the development of the government’s Emissions Reduction Fund.

This paper specifically looks at how other schemes have approached three central design features – what sectors or activities are covered; how to ensure emissions reductions are genuinely ‘additional’; and how baselines are set. Key lessons include:

  • With an objective of achieving least cost emissions reductions across the economy, most emissions reductions from the Emissions Reduction Fund are likely to arise from a subset of covered sectors, particularly the energy and industrial sectors.
  • Ensuring only genuine and additional emissions reductions are purchased can be resource-intensive and administratively time-consuming.
  • Clear rules on setting baselines can ensure consistent treatment of similar projects, reduce uncertainty for project developers and allow for scheme administrators to more easily approve projects.
  • Baseline and credit mechanisms do not suit all abatement opportunities. The Emissions Reduction Fund is likely to be most effective as part of a broader suite of policy measures.

The paper does not make recommendations to government.

The research paper is available here: (PDF 7.02MB)