Carbon Markets

BRIEFING: The future of HIR – The impact of tighter restrictions on regeneration issuance

The Department of Climate Change Energy, the Environment and Water (DCCEEW) is developing an Integrated Farm and Land Management (IFLM) method, combining the activities of several existing soil and vegetation sequestration methods – and the expired Human Induced Regeneration (HIR) method – into a single method.

Notably, the new method will also seek to address concerns raised in the Independent Review of Australian Carbon Credit Units (Chubb Review), specifically for regeneration activities, and continued scrutiny of HIR additionality by academic groups.

Originally announced as a priority method for 2022, the IFLM method was initially delayed due to the Chubb Review, and the need for evidence to support its consistency with the Offsets Integrity Standards. In March 2024, DCCEEW informed an industry working group that the new method will be delayed to Q4 2024, and ‘re-framed’, with a narrower scope method proposed, limiting regeneration activities to land that has previously been cleared (where there is more consensus on the link between clearing suppression and regeneration).

While DCCEEW has since walked back from its proposed change, considerable uncertainty remains over the final scope of the IFLM new method – particularly the tightening of regeneration activities – as the Department seeks to ensure that future issuances are both additional and credible.

In this briefing, we model three scenarios for the potential tightening of regeneration activities under the new IFLM method, including more stringent gateway checks (for both new and existing projects) and restricted project development in arid and semi-arid regions with lower rates of rainfall.

Results indicate that tighter controls for HIR activities could reduce regeneration-based IFLM issuance by up to a half (46%) by 2030 relative to our Central Case, also impacting the cost of production for regeneration ACCUs. The landing point for the scope of the new IFLM method therefore presents as a key watch for industry stakeholders, with implications for long-term supply and overall pricing dynamics.

This analyst briefing (PDF) ” The future of HIR – The impact of tighter restrictions on regeneration issuance” is published under our Australian Carbon Intelligence service.

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