THE carbon industry has been thrown into limbo in the past week, as the Federal Government proposes significant changes to a new methodology it has been working on more than three years.

The Federal Department of Climate Change, Energy, the Environment and Water has been working through the development of the new Integrated Farm and Land Management methodology and is expected to have it available at the end of the year,

However, carbon market information service Reputex Energy said in an article this morning that the committee responsible for approving new methodologies is looking at pausing the development of IFLM and moving forward with a stripped back version that would prioritise new soil carbon projects and tree plantings with few options for letting existing trees grow.

AgCarbon Central has been told the department is looking to buy itself some time on working through the more difficult parts of the methodology.

IFLM was first canvassed by former energy minister Angus Taylor in 2021 as a means of increasing supply of Australian Carbon Credit Units by allowing landholders to access more scale on their carbon projects and reduce their overall auditing costs.

An industry group has been working on the new methodology since early 2022 and was expecting it to be ready for use later this year.

But there appears to be issues with a methodology that was abolished in September last year and expected to be rolled into IFLM, called Human Induced Regeneration. It rewards landholders who change grazing practices to encourage the growth of vegetation.

HIR accounts for the majority of current carbon projects and the carbon industry has largely been on hold as it waits for IFLM and it can start similar projects again.

AgCarbon Central understands the Federal department contacted the working group developing IFLM last Thursday to say it was making the significant changes.

It put forward a new methodology, which limited the eligible activities to soil carbon, tree plantings and revoking ‘category x’ clearing permits in Queensland.

But the carbon industry was not on board with the proposed changes and wrote to Minister Chris Bowen to clarify the Government’s position and raise some of its concerns. The Government watered down its position on Friday night to say the changes to the methodology were only being put forward as an option.

The Department and the minister’s office were contacted this afternoon to see where they were heading with the methodology. AgCarbon Central understands the carbon industry is also working with the Government to understand the position.

While the department has not committed to a certain direction, a spokesperson said it was not scrapping IFLM.

“The department is continuing to progress the proposed IFLM method and working with stakeholders on the details of the method and evidence to support its consistency with the Offsets Integrity Standards,” the department said.

Planting new trees vs letting them grow

Coming up with suitable regulations to award carbon credits to landholders letting existing trees grow appears to be one of the biggest challenges facing the carbon industry.

A group of scientists has been raising concerns about the integrity of carbon credits from projects letting existing trees grow for several years now.

Additionality appears to be the main concern, which is the underpinning concept of the carbon market and means carbon credits need to be awarded for activities that are above business as usual. The line on whether existing trees would grow under business as usual is often blurry and quantifying increases in carbon sequestration is difficult.

With new tree plantings, additionality is clear and quantifying increases in carbon is a lot easier.

HIR allowing for changes in grazing practices as the additionality element has been one of the most controversial parts of the popular methodology in recent years.

• AgCarbon Central will update this story when more information comes to hand