Proposed establishment of national Biodiversity Market

Introduction

The Commonwealth government recently introduced into the Parliament the Agriculture Biodiversity Stewardship Market Bill 2022 (Bill). The Bill seeks to legislate a national voluntary agricultural stewardship market that will recognise and financially reward efforts to restore, enhance or protect biodiversity.

The Bill is before the lower house where the second reading was moved on 9 February 2022.

What will the Bill do?

The objectives of the Bill are to:¹

1. Create a nationally consistent framework to describe and measure biodiversity outcomes;
2. Enable biodiversity certificates describing projects to be purchased, transferred, claimed, used and publicly tracked; and
3. Establish project assurance and compliance systems to provide certainty to the market.

The Bill contributes to the Australian Government’s Ag2030 vision, which includes a target for the agriculture sector to reach $100 billion in production by 2030. The Bill also facilitates private sector investment in projects, through enabling the purchase of biodiversity certificates which represent certified biodiversity outcomes.

The Agriculture Minister will have primary responsibility for the legislation, and the Clean Energy Regulator (Regulator) will be the regulatory authority.

How can I get involved?

If the Bill is passed, farmers and other persons may be able to participate in the market by registering biodiversity projects and applying for the issuance of biodiversity certificates. The private sector may seek to purchase biodiversity certificates in order to make credible and verifiable claims around supporting biodiversity outcomes and local communities. It is very much contemplated that a biodiversity project may exist on the same land as an eligible offsets project under the Emissions Reduction Fund.

The Bill proposes the following process to obtain a biodiversity certificate:

1. An eligible person who has eligible land may apply to the Regulator for registration of a biodiversity project.
   
   a. An ‘eligible person’ is proposed to mean “an individual, body corporate (including registered native title bodies corporate), trust, or a corporation sole”. An eligible person must also pass a ‘fit and proper person’ test.
   
   b.‘Eligible land’ is proposed to include agricultural land in Australia (or as otherwise described by the rules).
2. Protocol determinations will be developed to facilitate the assessment and quantification of various types of biodiversity projects. They will set out various matters including:
   
   a. Conditions for project registration;
   
   b. Conditions that a project must meet before the project proponent may apply for a biodiversity certificate, and the basis on which a biodiversity certificate will be issued; and
   
   c. Activities that can be carried out for the biodiversity project.
3. A Biodiversity certificate may be issued once the relevant requirements under the protocol determination have been met.

The Bill contemplates that certain decisions can be reviewed internally by the Regulator and externally by the Administrative Appeals Tribunal (including a decision to approve or refuse to approve the registration of a biodiversity project, as well as a decision to issue or refuse to issue a biodiversity certificate). The Bill also incorporates various compliance and enforcement measures that are intended to maintain confidence in the integrity of the market.

Biodiversity Certificates

A biodiversity certificate will be personal property that is owned and traded separately from the land. It will remain valid for the life of the biodiversity project. Biodiversity certificates will detail the key aspects of the biodiversity project and identify the type of biodiversity outcome that is being delivered and maintained.

A public register will be established and maintained by the Regulator to track biodiversity projects and biodiversity certificates (including the issuance, ownership and transfer of certificates).

While there are some parallels between biodiversity certificates and the scheme for Australian Carbon Credit Units (ACCUs) under the Carbon Credits (Carbon Farming Initiative) Act 2011, some notable differences include:

• Carbon credits represent a tonne of CO2e avoided or removed from the atmosphere and have an equivalent value. The value of a biodiversity certificate will be informed by the type of project including the anticipated biodiversity gain or change.
• Multiple carbon credits are issued for each project. Only one biodiversity certificate will be issued per project.

What happens next?

The Bill is still in the initial stages of the law-making process in Parliament (the second reading in the lower house was moved on 9 February 2022). We anticipate that there may be some amendments to the Bill before it is enacted.

The explanatory memorandum to the Bill can be accessed via the following link which provides some more insight:

https://parlinfo.aph.gov.au/parlInfo/download/legislation/ems/r6832_ems_5931a93e-88e2-4aa4-b49a-826d7ebc187e/upload_pdf/JC004937.pdf;fileType=application%2Fpdf

If you have any questions, would like some further information or advice on this proposed new scheme, please feel free to contact a member of our team.