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 where ACCUs have been issued 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.
Choose a permanence period
If you choose a 25-year permanence period, a 20% discount applies to the ACCUs issued to your project. For certain plantation forestry projects that adhere to section 9A of the Carbon Credit (Carbon Farming Initiative) Rule 2015, a 25% discount applies.
You must choose the permanence period for your project when you apply. Once your project is registered, you can’t vary or change your nominated permanence period.
Permanence start date
Once your sequestration project is already running, the permanence period starts when:
Provide a permanence plan
To be eligible to claim ACCUs, you must meet the permanence obligation requirements. This includes providing a permanence plan, which is needed at these different stages of your project:
- 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.
Your permanence plan should explain how you have, or will, protect the carbon stored and credited by the project for the permanence period.
Review your plan
You should regularly review and update your permanence plan as needed, both during and after the crediting period. The permanence plan can be used to meet some of the requirements of an offsets report during the permanence period. In the event of a reversal of carbon stock, this document provides important evidence of the reasonable steps you plan to take to mitigate the effect of disturbance events.
To find out more about fire management and your permanence plan obligations, use our guide to reducing the risk of fire and preserving sequestered carbon in ACCU Scheme projects.
Monitor for reversal events
You must continue to monitor your project for natural disturbance or reversal events during the permanence period. A reversal event is when stored carbon from a project is released back into the atmosphere, which may be caused by:
- illegal thinning or clearing
- poor management practices
- livestock or feral animal grazing
- natural disaster, such as bushfire or flood.
If a reversal event affects your project, your obligations will depend on the type of reversal event, and whether ACCUs have already been issued.
Follow these steps to 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 either:
- at least 5% of the total project area by natural disturbances
- 5% of the total project area or 50 hectares, whichever is smaller, due to human actions.
We will assess the extent of carbon lost following the event and may issue a relinquishment notice to return ACCUs. 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 and you experience a significant reversal, you may need to either restore lost carbon stores or relinquish ACCUs to offset the loss.
You will be required to relinquish ACCUs if we determine that there has been a significant reversal of carbon stored by the project and:
- you didn't take reasonable steps to prevent the reversal
- the reversal was purposely caused by you, or someone controlled by you, and isn't part of reasonable bushfire risk reduction
- you didn't take reasonable steps within a reasonable period to mitigate the effect of the reversal where it was caused by natural disturbance, or someone not controlled by you.
If we issue you a relinquishment notice to return ACCUs and you don't comply within 90 days, pecuniary 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 for that area.
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 5% 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.
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. This risk of reversal buffer may be adjusted over time in the legislative rules.
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, the ACCUs that John receives 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.
Landholder and third party contracts
If you are a third party acting as project proponent under a contract with a landholder, you must make sure the landholder understands the obligations that the project, and any related third party contract, impose on their land. This is important for carbon stores to be maintained on or in the project area for the duration of the permanence period.
We don’t get directly involved in contracts between landholders and project proponents. Our legal relationship is with the project proponent, who is responsible for:
- carrying out the project and meeting all legislative obligations, including during the permanence period
- ensuring that post-crediting period permanence obligations are met.
Failure to meet these requirements may result in a relinquishment notice being issued to the project proponent. A carbon maintenance obligation may also be declared on the project area.
Maintaining carbon stores
As the project reaches the end of its crediting period and throughout the remainder of the permanence period, we encourage you to have regular conversations with the landholder about their obligations to protect the carbon stored in the project area.
If a significant reversal event occurs, the project proponent may need to relinquish or return ACCUs to offset the loss of carbon.
If ACCUs aren’t relinquished or we consider that relinquishment is unlikely, we may declare a carbon maintenance obligation on the project area. As a project proponent, you must then make sure the landholder understands their obligation after this happens – the carbon stores must not fall under the level existing at the time the carbon maintenance obligation is declared. Failure to do so may result in a civil penalty order being made against the landholder.
If you are a landholder and have given a third party the legal right to run a sequestration project on your land, you must understand the permanence period obligations imposed on you and your land by the project and any related third party contract. This includes an obligation to ensure:
- the carbon stores on your land are maintained
- appropriate actions are being taken to prevent the loss of carbon because of natural disturbance or deliberate conduct.
Failure to comply with those obligations may result in a carbon maintenance obligation being declared on the project area, which will impact what you can do on your land. Civil penalties may apply if you fail to comply with a carbon maintenance obligation.
Find out more about choosing a project proponent and working with carbon service providers.
Buying and selling property with permanence obligations
A project proponent remains liable for the permanence obligations after selling land with ACCU Scheme projects, unless the project proponent is varied after the sale to the new landholder. This is important to consider when selling your land or during estate planning.
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.
If you plan to sell or buy land with permanence obligations, you must consider the following:
- project requirements during the post-crediting period (including permanence obligations) and carbon maintenance obligations
- transfer of the project and the project proponent role
- if the current landholder is not the project proponent, any contractual obligations under the commercial agreement with the third party that will need to be met by the seller or buyer throughout the permanence period
- access to historical project information and record-keeping requirements.
Prospective buyers can find information about land subject to permanence obligations in the ACCU Scheme project register. You should only purchase land with ACCU Scheme projects if you are willing to meet the permanence obligations. This includes maintaining the carbon stores on the land and taking actions to prevent the loss of carbon because of natural disturbance or deliberate conduct. Failure to do so may result in carbon maintenance obligation being declared on the project area and this will impact what you can do on the land.
Find out more about selling or buying ACCU Scheme project property.
Executor obligations
Executors must follow estate management obligations if a project proponent ceases to exist during the permanence period.
For the project proponent’s estate, you may need to keep the project on track to ensure that it meets the permanence obligations until the estate is distributed to the beneficiaries or sold in accordance with the will.
For the landholder’s estate, which includes land with an ACCU Scheme project and a third party as the project proponent, you must contact the relevant agent or carbon service provider to ensure that any contractual obligations continue to be met throughout the project’s permanence period.
Prior to assets being distributed or sold, you must notify the beneficiary purchaser about the permanence obligations applying to the project property.
Find out more about estate management for executors.