Legislation has been introduced to Parliament to deliver the Gillard Government’s election commitment to establish the Carbon Farming Initiative (CFI) and start rewarding farmers and other landholders taking action to reduce carbon pollution.

The Carbon Farming Initiative is a market mechanism that will begin to unlock the potential for carbon abatement in the land sector, which accounts for around one quarter of Australia’s emissions.

The Minister for Climate Change and Energy Efficiency, Greg Combet, said the legislation is critical to providing long-term investment certainty and enabling the land sector to be part of Australia’s climate change solution.

"Up to now, we have not had a lasting framework for rewarding land sector abatement. We want to encourage private and commercial investment in areas such as carbon sinks forests, native forest protection, landscape restoration and more sustainable, carbon efficient farming practices."

The Minister for Agriculture, Fisheries and Forestry, Joe Ludwig, said the Carbon Farming Initiative would assist the agricultural sector to build resilience to deal with the impacts of climate change.

"Under the Carbon Farming Initiative, farmers and other landholders who make changes to their current practices that result in emission reductions will be rewarded for their efforts," Minister Ludwig said.

"Farmers will be encouraged to generate carbon credits from a range of activities such as fertiliser management, reduced livestock emissions, soil carbon and reforestation.

"This initiative provides us with the opportunity to be at the forefront of global developments in land sector offsets."

The Government consulted extensively on the design of the Carbon Farming Initiative.

"We received around 280 submissions and have made a number of changes to the draft legislation to reflect stakeholder views," Mr Combet said.

Mr Combet said the key changes include a streamlined additionality test, improved investment certainty and extra protections against adverse impacts on food production, water availability, employment and biodiversity. The Government has clarified that abatement activities that enhance agricultural productivity can meet the additionality test.

"The price that buyers are willing to pay for carbon credits will depend on their environmental integrity," he said.

"Carbon credits have to represent real, permanent abatement if they are going to be treated as genuine offsets for carbon emissions."

The Government is aiming to pass the legislation before 1 July 2011.

Further information on the CFI is available on the Department of Climate Change and Energy Efficiency website.