Carbon Markets

UPDATE: What’s the latest on changes to the IFLM method?

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The Department of Climate Change, Energy, the Environment and Water (DCCEEW) informed an industry working group last Thursday that the development of the Integrated Farm and Land Management (IFLM) method will be re-framed, with the Department to instead focus on a new Landscape Restoration Method (LRM), which would considerably tighten the scope of vegetation suppression through grazing that was central to the former Human Induced Regeneration (HIR) method.

Many carbon project developers have expressed significant concern with the change to focus on the narrower scope of the LRM, and the withdrawn commitment to the IFLM method. After pushback from key stakeholders, the Government has softened its position, suggesting that it will listen to feedback on the IFLM method – with an extended timeline to consider evidence on the link between grazing management and regeneration on land that has not been previously cleared.

As we noted in our recent update, irrespective of what method is now adopted to encompass regeneration actions (LRM or IFLM), the key watch for market participants is the scope of allowed grazing management activities, with significant implications for the cost of medium-term ACCU supply that is brought to market to meet our forecast for increasing compliance demand.

In this update we discuss the changes put forward by DCCEEW last week and the potential implications for ACCU supply and market dynamics.

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