Moin Morris Schaefer Lawyers - Carbon Farming Law

Carbon Farming Law

Moin Morris Schaefer is experienced in assisting our clients with negotiating and advising on carbon farming projects. We understand farming and business and can guide you through the legal issues that are relevant for such projects.

We work with leading agricultural, ecological and tech/scientific advisors and consultants to provide the best outcome for your project. We understand the legislation underpinning the sector.

We understand the types of concerns that arise and can address these with you, including:

What legal obligations and rights am I signing up for?
What are the legal risks and liabilities associated with carbon abatement projects?
Is there any chance I may have to give back my ACCUs?
Where can I get advice with regards to ACCU prices?
Can I sell my property if there is a registered carbon project on the land?
How will my bank view my carbon project?
What are the long term legal implications of this project?

As a rurally based firm, we have considerable experience in matters involving farms and agricultural pursuits and act for major organisations in the sector.

We also work with our clients on sustainable energy projects such as wind farming agreements and solar farming projects.

CARBON FARMING FAQs

How do I register a carbon project with the Emissions Reduction Fund?

Once you have identified a method of carbon farming to register a project with the Emissions Reduction Fund (ERF), you need to be able to show the Clean Energy Regulator (commonly referred to as the Regulator) that you have:

the legal right to carry out the project activities on the project site; and
a lawful and exclusive right to be issued all ACCUs that may be created as a result of the project activities.

LANDOWNERS

If you own the land or are the leaseholder and wish to be the Project Proponent and register the project under your name, showing the Regulator you have the legal right to carry out the project should be relatively straightforward.

If you are the landowner but you do not wish to bear

the legal responsibility for carrying out the project

and meeting all the legal obligations for the duration

of the project, you may wish to engage a 3rd party

such as a project developer to take on the role of

Project Proponent.

3RD PARTIES

If you engage a third party such as a carbon service provider to register a project under the ERF with the Regulator on your behalf, you will need to give that party the ‘legal right’ to register and carry out the project for you.

You should seek legal advice before entering into an agreement with any third-party to ensure the terms of the

agreement are fair.

Who bears the risk of the project, the farmer or project developer?

It depends! The party under whose name the project is registered (ie the Project Proponent) holds the legal relationship with the Regulator. The Project Proponent is not only responsible for ensuring the project activities and obligations are met, but is also the one who is entitled to be issued the ACCUs by the Regulator throughout the life of the project.

The project contract between the land owner and the project proponent will usually address the division of ACCUs between the parties involved in the delivery of the project.

The Project Proponent will therefore bear most of the

risk of the project. This is because they are the party

who the Regulator will hold legally accountable for

meeting all obligations under the relevant legislation

for the duration of the project.

The Project Proponent will also bear the burden of any

adverse events on the land that may reduce the ACCU

entitlements or require relinquishment of ACCUs after

the ACCUs have issued.

In the event of relinquishment, if the ACCUs have been transferred from the Project Proponent to the landowner or others, the risk is then on the Project Proponent, as they maybe penalised under the Act if they cannot arrange the relinquishment by the parties who have received the ACCUs.

These issues should be dealt with in the legal documentation entered into by the parties at the outset of the project so that nobody can be left bearing the risk disproportionate to their interest in the project.

How do I protect my interest in ACCUs if I'm not the project proponent?

It is vital that the legal documentation entered into by the parties at the outset of the project includes provisions that protect your rights to ACCUs. In addition to the legal documentation, you need to consider if you need registered securities over the ACCUs, being a security on the Personal Properties Securities Register (PPSR).

ACCUs are considered intangible property (ie. you can’t touch them or pick them up). There are specific provisions in the PPSR Act dealing with intangible property which means an ordinary PPSR registration will not achieve the usual level of protection and you need to take extra steps to have an effective security.

Ideally your security will rank ahead of other security holders, such as the farmer’s financier, so that you are not at the end of the queue in the event of financial misadventure.

Who owns the data collected on the farm?

Under intellectual property (IP) law, the creator of

the IP, including data, is the owner of that IP. This

means, for example, with soil testing services, unless

the services contract addresses the issue, the

laboratory which conducts the testing owns the soil

test results, and the farmer is only entitled to use

this data for the purposes implied in their

arrangement.

Every time someone exerts creative effort in the data chain, IP is created, and that IP is owned by the creator. For more information about this issue, refer to our brief on 'Farm Data'.

Can I sell my property before a registered carbon project is complete?

Most project agreements will allow the land owner to sell their property during a project, and ought to also set out whether the vendor retains any ownership of ACCUs.

If you have any intention of selling your property before the end of your carbon project, you should seek legal advice on this issue prior to entering into any carbon farming agreement.

Can I withdraw from or vary a carbon project?

Participation in the Emissions Reduction Fund is

voluntary and as a result, it is possible to apply to

the Regulator to revoke or vary your project at any

point in time. It is important to note, however, that

in the event you do choose to revoke your project

and you have already been issued ACCUs under

that project, you may need to relinquish the

number of ACCUs already issued.

We stand by all of the legal information above.

However it is important to understand that it is

not legal advice for you. Advice must be tailored