Additionality is a legislative requirement that ensures a project is only rewarded for emission reductions ‘additional’ to the business-as-usual, and would not have occurred in the absence of the Australian Carbon Credit Unit (ACCU) Scheme.
This is a core component of every project, upheld under the Carbon Farming Initiative’s Carbon Farming Act 2011. This legislative requirement is one of many components that ensure that all ACCU Scheme projects meet and maintain the highest credibility, and result in real and additional removal of greenhouse gases from the atmosphere.
There are three core components to the additionality requirement. These are:
- Newness: The project activities, and related activities such as site prep and the purchasing of project related assets, cannot begin until the project has been approved by the Regulator. There are some exceptions to this, which we will explore later
- Regulatory additionality: The project or project activity is not required to be carried out by or under the law of the Commonwealth, a state or territory (other than the National Greenhouse and Energy Reporting Act 2007)
- Government program requirement: The project is not receiving funding from another government program that excludes its participation in the ACCU Scheme
Newness Requirement
The Act outlines the core activities permissible and prohibited, for your project to meet the newness requirement. Individual methods can offer an “in lieu of newness provision” which permits certain activities to occur differ from the overarching Act requirements. We’ve outlined both generic and method-specific requirements below:
Activities prohibited before project declaration
Making a final investment decision
A final investment decision occurs when an organisation enters an agreement they must follow through on. In the context of a carbon project, this is determined to be signing off on a contract for project activity works without the appropriate termination clauses. The CFF operate with transparent exit pathways to provide you flexibility if your project is rejected by the regulator, or you simply want to discontinue with your project at any stage.
Acquiring or leasing a tangible asset
Excluding land, this includes any asset that is for use wholly or mainly for the purposes of the project (e.g. seeds, seedlings or machinery), unless the acquisition is conditional on the approval of the project.
Commencing construction work for the purposes of the project starting plantation activities:
- Undertaking site preparation for seeding or planting.
- Seeding, planting or fertilising plants.
- Installing irrigation or drainage system.
Activities permissible before project declaration
Conducting feasibility assessments of the project
Due diligence is an important first step to any project, so there’s no limit to undertaking feasibility assessments to determine your projects, and other key figures. Learn more about our feasibility services.
Planning and/or designing the project
Planning can involve engaging foresters to assess the capacity of the area to grow trees, or agronomists to determine the soil carbon sequestration potential of your farm. Planning what activities you will undertake, and designing the project area are all permissible activities.
Obtaining regulatory approvals for the project
Regulatory approvals can take time, so acquiring these early means you can dive straight into your project once declared.
Obtaining consents
This includes engaging eligible interest holders (e.g. mortgagees), and parties with legal right to the ACCUs generated from the project (e.g. landowners or leaseholders). Legal right must be obtained prior to the submission of your project application, so this is a key component to take into consideration when planning ahead.
Obtaining advice
This may be legal, tax, financial or other advice relating to the project.
Conducting negotiations
To prepare third-party assistance, be it foresters, agronomists, soil sampling organisations, or any other contractors related to the project, you are allowed to obtain quotes and negotiate contracts. However, you must ensure that any contracts have a termination clause (or similar) in the event the project does not get approved. If a contract is locked in before project registration, this may be seen as a “final investment decision” which is prohibited under the Act. We recommend obtaining legal advice on all contracts and ensuring transparent exit pathways, as this can be a grey area.
Sampling to establish a baseline for the project
For example, the soil carbon method requires that a baseline soil sampling round is undertaken prior to starting the project activity. In this case, you are allowed to undertake this sampling, if you meet the requirements of the soil carbon method. However, whilst sampling prior to approval allowed, you undertake this as at your own risk – the Clean Energy Regulator (CER or Regulator) is not responsible if your project registration is ineligible.
Other method-specific permissible activities
Soil Carbon Method
Under the soil carbon method, the following applies:
- You must prepare the land management strategy before the eligible land management activity commences.
- Soil baseline sampling can occur before project declaration but must occur after the submission of the project registration, and if the Regulator has received the sampling plan.
Plantation Forestry
Under the plantation forestry method, the following applies:
- You may commence the preparation of the Forest Management Plan before the management action begins.
- For each plantation Schedule, the following activities can be undertaken after project application submission or area variation submission, but before project declaration:
Additionality
Regulatory Additionality
Projects or project activities that are required by law are not eligible to participate in the ACCU Scheme. This stops projects from receiving ACCUs for something that they are legally obliged or mandated to do.
When you apply to register your project, the Regulator will ask you whether your project (or any part of that project) needs to be carried out under a Commonwealth, State or territory law, or a form of requirement set by a similar agency or body. The Regulator assesses these on a case-by-case basis, and essentially needs to be satisfied that the activity goes beyond (i.e. is additional to) the legal obligation.
Common activities that won’t meet the regulatory additionality requirement include:
- Undertaking revegetation activities as part of a biodiversity offset.
- Planting trees to satisfy a condition of a development or planning approval – i.e. public open space provisions or screening.
- Rehabilitation of a mine site when this mandated.
Government Programs
Your project must not receive funding from certain government program that excludes its participation in the ACCU Scheme. This ensure that projects don’t receive ACCUs if they are already receiving funding elsewhere.
This can be difficult to navigate, as ‘in-kind’ funding or grants are often supported. These may also have some timing constraints – many grants will be eligible to apply for so long as these are sought after your ACCU project is declared. As this has a tendency to feel like a bit of a grey area, we recommend seeking advice if you are unsure.
If you have any additionality concerns about your project’s newness or additionality requirements, head over to the CER website for further guidance, or book in a call to speak with our team.
