Relinquishment is a requirement to hand Australian carbon credit units (ACCUs) back to the Clean Energy Regulator (CER). It protects the integrity of the ACCU Scheme where units should not have been issued, or where the carbon they represent has been lost. The rules sit in Part 7 of the Carbon Credits (Carbon Farming Initiative) Act 2011.
Key points
- Relinquishment means handing ACCUs back to the Clean Energy Regulator
- Applies where ACCUs were issued on false or misleading information
- Applies to preventable or unmitigated carbon losses
- A carbon maintenance obligation can be declared over the land
False or misleading information
The CER can require relinquishment where ACCUs were issued on the basis of false or misleading information.
Project revocation
Relinquishment can also be required when a project’s registration is revoked in certain circumstances.
Loss of stored carbon
Sequestration projects carry a permanence obligation to keep carbon stored for 25 or 100 years. If a significant reversal occurs, the proponent must relinquish ACCUs if it failed to take reasonable steps to prevent the loss, caused it deliberately, or did not adequately mitigate the effects of a natural disturbance.
Carbon maintenance obligations
Where relinquishment is unlikely, the CER can declare a carbon maintenance obligation over the land under Part 8 of the Act. This restricts what landholders can do, so that carbon stores do not fall below the level existing when the obligation is declared. It can be enforced through the courts.
Relinquishment of SMCs
A separate regime applies to Safeguard Mechanism credit units (SMCs). The CER can require SMCs to be relinquished where they resulted from false information or NGER reporting errors, and a court can order relinquishment for fraudulent conduct.
Permanence period choice
Sequestration projects choose a 25-year or 100-year permanence period at registration, and the choice cannot be changed later. A 25-year period attracts a 20 per cent discount on the ACCUs issued, or 25 per cent for certain plantation forestry projects.
Audits and reporting
Scheduled audits help confirm that reported abatement is accurate. The first project report must include an audit report, and the Clean Energy Regulator schedules at least three audits over a project’s life.
References & sources
Primary regulatory documents and authoritative references underpinning this answer.