Under the Australian Carbon Credit Unit (ACCU) Scheme, all area-based projects have permanence obligations.
About permanence obligations
A permanence obligation is a requirement to maintain the carbon stored or sequestered by a project for a set period of time, either 25 or 100 years.
If carbon stored in vegetation or soil as part of a project is released back into the atmosphere, it can reverse the environmental benefit of the sequestration project. Permanence obligations ensure that ACCUs are only issued for carbon stored in soil and vegetation.
Permanence period
A permanence period can be either 25 or 100 years. Sequestration is considered permanent when maintained on a net basis for 100 years.
Choose a permanence period
You must choose the permanence period for your project when you apply to register.
Once you nominate a permanence period, you can’t vary or change it.
Permanence start date
Once your sequestration project is already running, the permanence period starts when:
Permanence obligation requirements
To be eligible to claim ACCUs, you must meet the permanence obligation requirements. This includes providing a permanence plan and taking certain steps if a reversal event affects your project.
Permanence plan
You must provide us with a permanence plan at different stages of your project.
Your permanence plan should explain how you have, or will, protect the carbon stored and credited by the project for the permanence period.
You must provide the permanence plan:
- when you apply to register your project
- with the first offset report after years 8 and 24 of the crediting period
- when supporting information submitted to us demonstrates that the project has reached its maximum carbon sequestration capacity
- if the permanence obligation period for a savanna sequestration or soil carbon project has ended and you’re applying for an exemption to provide further offsets reports.
To find out more about fire management and your permanence plan, use our guide to reducing the risk of fire and preserving sequestered carbon in vegetation projects.
Reversal events
A reversal event is when stored carbon from a project is released back into the atmosphere. This might be due to fire, failure in monitoring technology or poor management practices.
If a reversal event affects your project, your obligations will depend on:
- the type of reversal event
- if ACCUs have already been issued.
Follow these steps to ensure you meet your obligations.
If your project is affected by a significant reversal, you must notify us in writing within 60 days.
A significant reversal is where stored carbon is released from:
- at least 5% of the total project area for natural disturbances
- the smaller of 5% of the total project area or 50 hectares for reversals caused by human actions.
If the damage doesn't meet the definition of a significant reversal, you must report on your project as usual.
If ACCUs have been issued for your project, you may have to either:
- restore lost carbon stores
- relinquish ACCUs to offset the loss.
You have to relinquish ACCUs if we determine:
- the project didn't take reasonable steps to prevent the loss
- the fire was purposely caused by you, or someone in relation to you, and isn't part of reasonable bushfire risk reduction
- the project won't take steps to restore the lost carbon
- there's a risk of more carbon being lost.
We issue you a relinquishment notice to return ACCUs. If you don't follow the notice, penalties can apply. We may also impose a carbon maintenance obligation.
If ACCUs haven't been issued for the area affected by the reversal event, you don't have any permanence obligations.
Find out more about our approach in our guide to reducing the risk of fire and preserving sequestered carbon in vegetation projects.
The requirements for fire disturbance modelling, management actions, monitoring and record-keeping depend on your ACCU Scheme project method.
If the event isn't a significant reversal, you can use the requirements in the method to report and account for losses.
Risk of reversal buffer
A risk of reversal buffer is a discount applied to the number of ACCUs issued to sequestration projects. This protects the ACCU Scheme against potential loss of carbon and other risks that can't be managed by other permanence arrangements.
Risk of reversal doesn't insure you against:
- loss of income from selling ACCUs after a fire or other natural disturbance
- costs of re-establishing carbon stores.
Risk of reversal
Risk of reversal doesn't insure you against:
- loss of income from selling ACCUs after a fire or other natural disturbance
- costs of re-establishing carbon stores.
The risk of reversal buffer reduces the ACCUs issued during a reporting period by 5%. For projects with a 25-year permanence period, a 20% permanence discount also applies.
The risk of reversal buffer may be adjusted over time in the legislative rules.
Example of risk of reversal buffer
John started a new area-based project and chose a 25-year permanence period. At the end of the first reporting period, John calculated that the project achieved a net abatement of 10,000 tonnes of carbon dioxide equivalent.
Because the project was registered with a 25-year permanence period, John won't receive 10,000 ACCUs. ACCUs will be reduced by:
- 20% for the permanence period discount
- 5% for the risk of reversal buffer.
John will receive 7,500 ACCUs for the reporting period.
Buying and selling property with permanence obligations
Landholders with registered sequestration projects who are selling their property must inform prospective buyers and property agents of any permanence obligations associated with the property.
Prospective buyers can find information about land subject to permanence obligations in the ACCU Scheme project register.