The carbon farming initiative: Removing the obstacles to its success

In December 2011, the Australian Government introduced the Carbon Farming Initiative (CFI), a project-based, baseline-and-credit offset scheme for emissions and removals from the land use, land use change and forestry, agriculture and waste sectors. The scheme is one of the most robust of its kind, having several innovative design features developed to deal with integrity and perverse impact risks, and promote co-benefits. Despite this, there are a number of issues undermining the capacity of the CFI to realize cheap abatement opportunities and improve environmental outcomes. This paper provides an overview of the CFI and an analysis of the obstacles to its success. Suggestions for improvements are made, including substituting a flexible permanence period-permanence deduction mechanism for the existing 100-year rule and modifying the risk of reversal buffer and leakage deduction processes to improve returns to project proponents.