Federal Register of Legislation - Australian Government

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Other as made
This instrument provides for the crediting of emissions reductions from projects that improve the production efficiency of pasture fed beef cattle herds.
Administered by: Environment and Energy
Registered 24 May 2017
Tabling HistoryDate
Tabled HR25-May-2017
Tabled Senate13-Jun-2017
Date of repeal 26 May 2017
Repealed by Division 1 of Part 3 of Chapter 3 of the Legislation Act 2003

Explanatory Statement

Carbon Credits (Carbon Farming Initiative) Act 2011

Carbon Credits (Carbon Farming Initiative-Beef Cattle Herd Management) Methodology Variation 2017

Background                                                    

Emissions Reduction Fund                                     

The Carbon Credits (Carbon Farming Initiative) Act 2011 (the Act) enables the crediting of greenhouse gas abatement from emissions reduction activities across the economy. Greenhouse gas abatement is achieved either by reducing or avoiding emissions or by removing carbon from the atmosphere and storing it in soil or trees.

In 2014, the Act was amended by the Carbon Farming Initiative Amendment Act 2014 to establish the Emissions Reduction Fund (ERF). The ERF expands on the Carbon Farming Initiative (CFI) by extending the scope of eligible emissions reduction activities and by streamlining existing processes. The ERF has three elements: crediting emissions reductions, purchasing emissions reductions, and safeguarding emissions reductions.

Emissions reduction activities are undertaken as offsets projects. The process involved in establishing an offsets project is set out in Part 3 of the Act. An offsets project must be covered by, and undertaken in accordance with, a methodology determination.

Subsection 106(1) of the Act empowers the Minister to make, by legislative instrument, a methodology determination. Subsection 114(1) of the Act empowers the Minister, by legislative instrument, to vary a determination. The purpose of a methodology determination is to establish procedures for estimating abatement (emissions reductions and sequestration) and rules for monitoring, record-keeping and reporting. These methodologies will ensure that emissions reductions are genuine – that they are both real and additional to business as usual.

In deciding to make a methodology determination the Minister must have regard to the advice of the Emissions Reduction Assurance Committee (ERAC), an independent expert panel established to advise the Minister on proposals for methodology determinations. The Minister will also consider any adverse environmental, economic or social impacts likely to arise as a result of projects to which the determination applies.

The ERAC must include in its advice to the Minister the Committee’s opinion on whether a proposed determination complies with the offsets integrity standards set out in section 133 of the Act. The offsets integrity standards require that an eligible project should result in carbon abatement that is unlikely to occur in the ordinary course of events and is eligible carbon abatement under the Act. In summary, the offsets integrity standards also include that:

(a)    amounts are measurable and capable of being verified;

(b)   the methods used are supported by clear and convincing evidence;

(c)    material emissions which are a direct consequence of the project are deducted; and

(d)   estimates, assumptions or projections used in the determination should be conservative.

Offsets projects that are undertaken in accordance with a methodology determination and approved by the Clean Energy Regulator (the Regulator) can generate Australian carbon credit units, representing abatement from the project.

Project proponents can receive funding from the ERF by submitting their projects into a competitive auction run by the Regulator. The Government will enter into contracts with successful proponents, which will guarantee the price and payment for the future delivery of emissions reductions.

Further information on the Emissions Reduction Fund is available at: www.environment.gov.au/emissions-reduction-fund.

Beef Cattle Herd Management

The Determination made in 2015 is titled the Carbon Credits (Carbon Farming Initiative—Beef Cattle Herd Management) Methodology Determination 2015 (the Determination). It provides for crediting emissions reductions from projects that improve the production efficiency of pasture-fed beef cattle herds.

Beef cattle production is a major livestock industry and contributes around 60 per cent of emissions from agriculture and up to 11 per cent of national emissions.The main source of emissions from beef cattle is methane from enteric fermentation (the digestion processes in ruminant animals). Beef cattle also produce nitrous oxide emissions from dung and urine. Enteric methane emissions from pasture-fed beef cattle rose by 6 per cent between 1990 and 2013, in line with an increase in the size of the national herd. The number of pasture-fed beef cattle grew from 21.9 million in 1990 to 25.7 million in 2013. It has subsequently fallen to around 21.5 million after widespread drought in northern Australia.

The Determination provides for emissions reductions through adoption of measures to reduce the emissions intensity of beef production. Emissions intensity can be measured as emissions per kilogram of beef produced. Emissions intensity can be reduced through taking steps to improve productivity. For example, separating bulls from breeding stock with new fencing allows calving to be coordinated with feed supply, thus improving the reproductive rate (calves weaned per 100 cows mated). In turn the numbers of breeding cattle required can be reduced, reducing emissions from the herd.

Productivity improvements delivered an overall decline in the emissions intensity of production for a large portion of the national beef cattle herd from the 1980s to the mid-1990s. However, while productivity improvements continued into the mid-2000s, emissions intensity has remained flat over recent decades, demonstrating the potential for further improvements. Data on the number and weight of beef cattle produced nationally for domestic consumption and export is available from the Australian Bureau of Statistics and Australian Bureau of Agricultural and Resource Economics and Sciences. Since around 2004-05, total factor productivity of Australian beef production has been flat.

The ERF credits emissions reductions resulting from improvements in emissions intensity—reductions in emissions per unit of output—as a practical way to support economic growth while reducing emissions. An emissions intensity approach rewards deliberate effort by crediting reductions in the emissions intensity of each unit produced, regardless of whether production is expanding or contracting.

The Determination provides for crediting of total emissions avoided compared to the baseline as a result of undertaking new management actions that reduce emissions intensity. Such actions can reduce emissions intensity in the following ways:

(a)    Increasing the ratio of liveweight (LW) for age in the herd. Improving cattle productivity enables target weights to be reached earlier, thereby reducing the number of days for which cattle produce emissions. The LW of cattle relative to their age could be either the same as, or higher than, it was before the project began. Similarly, the age at which a particular weight can be reached could be earlier than it was before the project began.

(b)   Reducing the average age of the herd, which also results in cattle producing emissions for fewer days and avoids emissions from older cattle with declining productivity.

(c)    Reducing the proportion of unproductive animals in the herd, for example by removing heifers that fail pregnancy testing. Such actions provide more grazing area for productive animals, and can help increase birth rates and survival.

(d)   Changing the relative numbers in each livestock class (e.g. bulls, cows and steers of different ages, as described in the National Inventory Report) within the herd to increase the herd’s liveweight gain (LWG). For example, actions to improve weaner survival can reduce emissions because a smaller herd with fewer breeding cattle can produce the same or greater LW. Fattening unfinished cattle rather than increasing breeder numbers can avoid emissions which would have occurred through delayed finishing on poor quality pastures.

The Determination does not specify particular types of project activity to achieve such outcomes. However, proponents must identify in the section 22 application (see below) at least one activity that can reasonably be expected to deliver such outcomes. To be eligible for this Determination a project activity in the reporting period must be a new activity or a variation of an activity that was not being carried out before or during the emissions intensity reference period. When reporting on this new activity the proponent must report on how the activity led to emissions abatement.

Project activities could include: sowing improved pasture; introducing superior genetics; introducing feed supplements; and installing water points and fencing on rangeland properties to allow alignment of mating and calving times with favourable seasonal conditions.

Activities can be changed during the project, as long as the requirements of the Determination are met.

The following activities are ineligible under the Determination:

(a)    land cleared of perennial woody vegetation for the purposes of the project (unless the clearing is required by law);

(b)   feeding of non-protein nitrogen such as urea or nitrates;

(c)    a project activity that comprises only grazing cattle on a different area of land; and

(d)   cattle in feedlots.

Project proponents who could use the Determination include beef cattle graziers producing cattle for live export or slaughter, sale to another producer for finishing, or breeding. Enterprises with single or multiple beef cattle grazing operations can also undertake a project. Aggregators may use the Determination to develop projects comprised of the herds of multiple entities or may manage a single project with multiple herds on behalf of an entity. Thus a new project may comprise multiple herds, either at the outset of the project or by addition of new (limited data) herds having at least 2 years of historical data on emissions intensity of liveweight production. Each new limited data herd must, however, have at least one full data herd under the same management to establish the baseline.

The Determination’s flexibility in relation to eligible activities recognises the diversity of beef cattle production operations and the range of avenues for improving production efficiency. Activities adopted in extensive rangeland operations may differ from those used in more intensive operations in temperate regions.

The Determination recognises that the number of cattle managed by a business operation is likely to change from year to year in the normal course of events. Numbers may be reduced during droughts and increased under favourable conditions. Cattle may also be transferred between separate properties owned by an entity, and sold on to other cattle producers. The Determination recognises that cattle production may occur in a value chain from breeding to fattening operations and that not all managers of individual business operations in the chain controlled by an overall entity (i.e. having an ABN) may wish to participate.

Given these variables, the Determination does not prohibit changes in herd composition and the location in which the herd grazes during a project. However, each herd in a project needs to establish itself and to be maintained as the boundary for assessment of emissions for that part of the project. The herd needs to be tracked over time to enable estimation of baseline and project emissions and to ensure that emissions reductions are delivered only through project activities. The Determination therefore includes requirements linking each herd with a business operation and the records and livestock inventory of the business.

While a reduction in the number of animals in a herd may be one outcome of a project, the Determination enables emissions reductions to be achieved through increased productivity per animal and does not incentivise reduced production. The Determination also does not preclude an increase in the number of animals in a herd, but any associated change in emissions intensity would be reflected in the net abatement amount.

Productivity improvements achieved through a project could result in a proponent selling larger numbers of cattle, for example to enterprises that finish cattle for slaughter as a result of an increased reproductive rate. However, project activities that result in an increase in the number of animals leaving the project property are unlikely to lead to an increase in the size of the national herd. The size of the national herd is constrained by factors such as the carrying capacity of grazing land, availability of land, and environmental influences, for example drought. These factors, as well as market factors, such as the price of beef, will have a far greater influence on management decisions of other beef cattle producers than the actions of project proponents.

Abatement is calculated for a reporting period as the difference between baseline and project emissions for each herd and each year in the reporting period. Where a project comprises multiple herds, total abatement is the sum of the abatement for each herd.

The baseline is recalculated for each project year to reflect the variation in herd size for that year. Baseline emissions for each year in a reporting period represent the emissions that would have occurred in the absence of project activities for the amount of LWG produced. To transform the historical estimate of emissions intensity into a project year baseline, the historical intensity is therefore multiplied by the project year LWG.

For example: a herd of 20,000 cattle with 40% breeders and 70% weaning rate in Northern Australia.

Historical Intensity of LWG = 15 tonnes CO2-e/tonne LWG

Project year LWG = 2500 tonnes

Gross Baseline emissions for the project year = 15* 2,500 = 37,500 tonnes CO2-e

To allow for the possible effect of annual variation in weather providing over or under-crediting in the project period, negative abatement is not accumulated but positive amounts are discounted by imposing a 4 per cent discount on the baseline. The discount is based on 25 years of data from the Australian Bureau of Statistics on herd composition and slaughterings used to estimate background variations in Australian herd emissions intensity. The discount is reflected in the results page of the Beef Herd Management Calculator (the Calculator) as a 4 per cent discount to the baseline emissions.

Project emissions are the total emissions of the entire herd for each year.

In the case above, if project emissions from all sources were 31,000 tonnes, the abatement would be:

(37,500*0.96) - 31,000 = 5000 tonnes CO2-e

Only enteric methane emissions and nitrous oxide emissions from dung and urine are accounted for in abatement estimates. These emissions are related to feed intake per day, the duration of that feed intake and the protein content and dry matter digestibility of the feed. These factors are incorporated in abatement calculations, and where a change in diet is a project activity, details of the change are required as an input to calculations.

Proponents are required to use the Herd Management Calculator to calculate abatement annually. The Determination sets out the inputs required by the Herd Management Calculator. Abatement estimates require information on the weighted average LW and LWG for each “weighing group” of animals (e.g. steers 1- 2 years old). Schedule 1 of the Determination explains how the weighing groups may be accumulated and averaged over a month for animals sold or transferred within a year. At the beginning and end of the year, weights for each weighing group may be accumulated and averaged over a period of +/- 6 weeks around an annual muster, an increase from +/- one month in the 2015 Determination. There are additional requirements to apply linear projection to estimate the average weight on the assessment day for the first assessment day of the project and the last assessment day of the project when weights are collected outside a period of +/- 2 weeks. These changes increase flexibility in the collection of data around the annual muster while improving accuracy of estimated average weights on the assessment days at the start and end of a project.

Information required for cattle numbers includes each class of cattle (e.g. all classes of heifers, steers and bulls) and the duration of their presence in the herd each year. Historical values for LWG may be obtained by weighing animals or, where this is not practical, through verifiable alternative means specified in the Determination. Project year LWG in most cases involves weighing with the exception of mature cows and bulls >3 years of age.

            The Variation

The Carbon Credits (Carbon Farming Initiative—Beef Cattle Herd Management) Methodology Variation 2017 (the Variation) simplifies the 2015 Determination in several ways.

1.    Establishing and maintaining the herd as the project boundary.

(a)               The herd is specified from the inventory of cattle on the books of a business operation. A business operation does not need to be a separate legal entity, as long as its associated herd is managed as a discrete set of animals over time. Thus it may not necessarily have an ABN but is linked to an entity which does have an ABN so that its inventory can be verified against that of the entity. These provisions replace earlier provisions for an entity/sub entity structure. However, the inventory of the business operation must be maintained separately over time;

(b)               The herd must be managed and pastured separately from herds not in a project unless a written, arm’s length agistment arrangement is in place between the proponent and the management of the other herd;

(c)               In order to maintain the integrity and transparency of emissions calculations, cattle cannot be transferred outside of the project boundary unless it is to a project herd (either of the proponent or another proponent) or a herd in a business which is linked to it (as in a value chain) in a larger business structure. If the destination herd is not a project herd, the transfer must be for a genuine business purpose with the transaction recorded at fair value. The cattle must physically move within six months of the transfer. All other movements of cattle to businesses not linked to the project business (such as to a different entity), must be as a sale at market price.

(d)              Increased transparency is also provided by no longer removing herds either voluntarily or compulsorily from a project if they fail to satisfy the requirements for a herd of a project. If it fails to satisfy the herd continuity requirement the herd will still exist but will taken to have zero members for the remainder of the creding period. If a herd fails to meet any of the other requirements identified in section 9(3) during the life of the project it is taken to have zero members throughout the relevant assessment year. This means that the herd will still exist and offsets report will still be required, but no abatement will be calculated.

2.    Adding more herds to a project after the Section 22 application.

The Variation provides for the inclusion in a project of herds acquired by the proponent before or during the project with less than 3 years of historical intensity data. Baseline emissions for each year in a reporting period are estimated by different methods. Full data herds have three years of historical baseline data compared to limited data herds which have a minimum of two years of historical data.

For Full data herds

(a)           Calculate the emissions intensity of the historical LWG as total emissions of all animals in the herd for three emissions intensity reference period years divided by total LWG for those years.

(b)          Multiply the result of (a) by the LWG for each year in the reporting period to calculate the baseline emissions of all full data herds for each year.

(c)           Project emissions for a herd are the total emissions of the entire herd for each year.

For Limited data herds

(a)           Calculate emissions intensity of the historical LWG as total emissions of all animals in the limited data herd for the number of emissions intensity reference period years for which data is available, divided by the total LWG of the herd for those years.

(b)          Calculate the emissions intensity of historical LWG as the total emissions of all animals in the full data herd (or herds combined if more than one) for the three most recent EIRP years divided by the total LWG of all herds for those years.

(c)           Compare the emissions intensity calculated by (a) above with emissions intensity calculated by (b) above. The baseline emissions intensity of the limited data herd will be the lower of the two values

(d)          Multiply the result of (c) by the LWG for each year in the reporting period to calculate the baseline emissions of the limited data herd for each year;

There is no limit to the number or size of individual herds added as limited data herds but there must be more cattle in full data (reference) herds than in limited data herds

3.    Flexibility in the duration of mustering around the assessment day

The Variation increases flexibility for data collection around the “assessment day” through four mechanisms. The assessment day for each herd is set at the beginning of the project and is likely to be the anticipated date of the peak of mustering for the herd.

(a)           The window for estimation of numbers and liveweights around the assessment day has been increased from +/- 4 weeks to +/- 6 weeks. However, for the first and the last assessment days of the project only, if the weights are collected outside a period of +/- 2 weeks, then linear projection backwards or forwards to the assessment date must be applied to estimate the average weights for the relevant weighing classes on that day. These changes increase flexibility in the collection of data around the annual muster while improving accuracy of estimated average weights on the assessment days at the start and end of a project. To apply linear projection requires two known weights collected at different times, through which a linear projection can be established. For the first assessment day the known weight from the later date must be that from the following assessment day. For the last assessment day the known weight from the earlier date must be that from the previous assessment day.

(b)          Linear projection can also be used to estimate liveweight in relation to another input date where a liveweight is available both before and after the assessment day, from a method applicable to the relevant animal class. However, in this case the two weighing points cannot be more than 12 months apart. Linear projection is already used in the Determination to estimate emission intensity in the Emissions Intensity Reference Period (EIRP). It is also used in the Determination within an assessment year to estimate liveweight gain of animals not resident in the herd for the whole year. The provision allows proponents to reduce muster numbers where there is no other reason to muster cattle than to estimate liveweight for an assessment day.

(c)           Provision is made for exceptional circumstances such as very wet conditions, which prevent muster around the required assessment day. In that event that the use of this provision is approved in writing by the Regulator, the two points against which liveweight on the assessment day can be estimated using a linear projection, may be up to 15 months apart. This option is not available for the final assessment day of the project.

(d)          A herd can be sub-divided into two or more separate herds at the outset of a project with each herd assigned a separate assessment day. However, this requires that the livestock inventory can be separated for each herd both for the emissions intensity reference period and for the duration of the project as each herd must reflect a genuine separate business operation. Taking this approach has implications for the subsequent movement of cattle between herds, with transfers only allowed for a genuine business purpose, recorded as a business transaction at fair value, and requiring a physical movement of cattle from one herd to the other. To obtain a mustering benefit from having several smaller herds with different assessment days rather than one larger herd is likely to require them to be kept physically separate for the duration of the project.

Apart from these provisions, the Variation continues to allow the liveweight of bulls and cows older than 3 years to be estimated using data from carcass weights (e.g. of cull cows or bulls) converted to liveweight. The allowance further reduces the number of cattle which must be physically weighed annually. The emphasis is on the younger, faster growing animals where the greatest potential for emission reduction exists.

The Variation also continues to allow a statistically valid sample of weights for each weighing group to be used rather than necessarily weighing every animal. Sampling of a group of animals in the yards at muster is used in the Variation to minimise the cost to proponents of meeting the requirements of the Variation for annual liveweight measurements. Individual liveweights are not required and the weighted average weights of a group of animals can be determined by sampling from the group (e.g. a group of animals bought during a month).

A well designed sampling strategy can enable statiscially valid sample groups to be weighed from a herd where the muster happens sequentially over a longer period than the 12 week interval allowed around the assessment day. For example: a herd in northern Australia is mustered over a four-five month period starting in mid-March or April annually. The assessment day is the 31st May, so the interval for weighing cattle extends from the 19th April to the 12th July. Selecting a statistically valid sample from groups mustered during the interval would allow a proponent to input the total number of cattle mustered over the longer period while complying with the method.

A new worksheet has been added to the Calculator to allow proponents to estimate the numbers of cattle required in a sample of a herd or group of animals to meet a targeted precision of estimation. The procedure is described under Section 30 of the Variation. The guidance page has been updated to incorporate all changes.

4.    Provisions to ensure a full seven year crediting period for each herd

Additional provisions are made for estimating annual abatement of each individual herd in a project. By doing so the Variation ensures that all herds entering the project in the year of declaration of an eligible offsets project will have access to a full seven years of abatement crediting. In order to achieve these outcomes, several conditions need to be met:

(a)           Proponents could commence abatement calculation for the first herd mustered in the year of declaration of a project before the declaration date. The proponent would set a commencement date for crediting of the overall project after the mustering of the last herd in that year. Each herd would then be credited for seven annual cycles ending at the seventh anniversary of the commencement of abatement calculation for an individual herd.

(b)          The project would be completed at the seventh anniversary of the commencement date for the project as a whole.

(c)           Audit would be required in the final year of the project.

(d)          A schedule of movements of cattle between herds after the completion of crediting for an individual herd and up to the completion of crediting for the project (seventh anniversary of the commencement date for the project) would be required for audit.

(e)           No crediting would be allowed for cattle transferred between a herd which had completed its crediting period and another herd which had not completed crediting, in the final year of the project. Such transfers may occur as part of BAU, but they could not be entered into the calculator. They would be entered into the schedule of movements of cattle in the final year of the project described above. Audit would check the calculator entry pages against the schedule.

An example of how the sequence of dates might occur to enable all herds of a project to achieve a full seven years of abatement crediting is provided in Figure 1.

An illustration of the relationships between the emissions intensity reference period, baseline reference date, application and declaration days and crediting and assessment periods referred to in the method is provided in Figure 2.

For ease of navigation, Figure 3 provides an outline of the overall structure of the varied determination.


 

 

Figure 1: Illustration (with example dates only) of how the annual cycle of abatement calculations for a herd and for the project would apply to enable a full seven years of crediting for each herd of a project.

 

Figure 2: Illustration of the sequence of relevant dates referred to in the method.


 

Figure 3: An outline of the structure of the varied method.


Purpose

The Carbon Credits (Carbon Farming Initiative-Beef Cattle Herd Management) Methodology Variation 2017 (the Variation) amends the Carbon Credits (Carbon Farming Initiative-Beef Cattle Herd Management) Methodology Determination 2015.

The Determination was made on 9 September 2015 and sets out the rules for implementing and monitoring Beef Cattle Herd Management projects on eligible land.

The Variation clarifies and simplifies requirements throughout the Determination, and implements several operational changes.

It simplifies the definition of a herd as the project boundary by removing provisions for non- inventory cattle, making the herd only the animals on the inventory of the business operation of the proponent. Herds of a project are no longer voluntarily or compulsorily removed if the requirements for a herd are not met. Herds remain in a project for the project duration but will be taken to have zero members for the purposes of abatement calculations either for the relevant assessment year or for the remainder of the crediting period, as relevant, if they fail to meet the requirements for herds of a project. Offsets reports must continue to be submitted for each herd for the duration of the project.

In response to a trend to mergers and acquisitions by larger companies in the industry, the Variation amends the Determination to replace the requirements to provide three years of emissions intensity data for all herds entering a project, by including the herds which have only two years of data. Such herds may enter the project on or after the date of the section 22 application. Conservative size and baseline restrictions apply. The effect of the change is to facilitate greater abatement through incorporation of additional herds into a project.

The movement of cattle to non-project herds is now permitted only through transparent purchase/sale at fair value and to linked herds by reason of a genuine business purpose and a involving a physical movement within 6 months. The provision replaces previous arrangements for incorporation of entities and sub-entities into the project herd. The effect is to ensure greater integrity and a simpler project boundary comprising only the cattle on the inventory of a discrete business operation whose records and cattle inventory must be maintained continuously over time.

Greater flexibility for mustering around an assessment day is provided by several mechanisms including a wider time window for data collection, and the use of linear projection from two known weights to estimate the weight on an assessment day in specific circumstances.

Legislative provisions

The Determination was made under subsection 106(1) of the Act.

The Variation amends the original Determination and is made under subsection 114(1) of the Act, which empowers the Minister to vary, by legislative instrument, a methodology determination.

Operation

The Variation amends the Determination to make explicit the arrangements for projects that are already declared as eligible offsets projects that move to the ‘varied Determination’ – that is, the Determination as varied by the Variation. Proponents of projects that are already declared eligible and whose crediting period has already commenced would need to apply to the Regulator under section 128 of the Act to have the varied Determination apply to their project. This is because under section 126 of the Act, a methodology determination continues to apply to projects that are already declared eligible under it and whose crediting periods have already commenced, even if the determination is subsequently varied.

It is intended that projects that are declared eligible under the Determination would be readily able to transfer across to the varied Determination. If, however, a proponent has commenced reporting under the Determination, they may choose to continue to report under that Determination until the end of the crediting period.

If a proponent has applied to the Regulator for declaration of a Herd Management project as an eligible offsets project, but a decision on the application has not been made when the Variation comes into force, the application would be assessed under the varied Determination rather than under the Determination that was specified in the application for declaration.

Public consultation

The Variation has been developed by the Department of the Environment and Energy. An exposure draft of the Variation was published on the Department’s website for public consultation on two occasions: from 4 August to 16 August, 2016. Additional consultation occurred through a stakeholder workshop held in Brisbane on 16 February 2017.

Details of the submissions received after public consultation are provided on the Department’s website: www.environment.gov.au.

The Department has also consulted closely with the Regulator when developing the Variation.

Determination details

Details of the determination and an explanation of the changes covered under the Variation are given in Details of the Determination and Schedule 1 of Amendments to the Determination. A complete description of the varied methodology determination is provided in Schedule 2. This is based on the original explanatory statement to the determination and is intended to assist the interpretation of the Determination as amended by the Variation. A statement of compatibility with human rights is set out at Attachment A. Numbered sections and items in this explanatory statement align with the relevant sections and items of the Variation and the Schedule. The definition of terms highlighted in bold italics can be found in the Variation or the varied Determination.

For the purpose of subsections 114(2), (2A) and (7B) of the Act, in varying a methodology determination, the Minister must have regard to the advice of the Emissions Reduction Assurance Committee (ERAC) as to whether the Minister should vary the determination, and is not able to make the variation if the ERAC has advised the Minister that the varied methodology determination does not comply with one or more of the offsets integrity standards. The Minister must be satisfied that the carbon abatement used in ascertaining the carbon dioxide equivalent net abatement amount for a project is eligible carbon abatement from the project. The Minister also must have regard to whether any adverse environmental, economic or social impacts are likely to arise from the carrying out of the kind of project to which the varied methodology determination applies, and other relevant considerations.

Note on this explanatory statement

Numbered sections in this explanatory statement align with the relevant sections of the variation instrument.


Details of the Variation

Part 1—Preliminary

1                 Name

Section 1 of the Variation sets out the full name of the Variation, which is the Carbon Credits (Carbon Farming Initiative-Beef Cattle Herd Management) Methodology Variation 2017.

Section 126(2) of the Act specifies that the version of a determination as it existed prior to a variation continues to apply to a project even if a variation is made during its crediting period. Proponents of projects registered under an earlier version of a determination may apply to the Regulator to have the varied determination applied to their project.

2                 Commencement

The Variation will commence the day after it is registered on the Federal Register of Legislation.

3                 Authority

The variation is made under subsection 114(1) of the Carbon Credits (Carbon Farming Initiative) Act 2011 to amend a methodology determination made under subsection 106(1) of the Carbon Credits (Carbon Farming Initiative) Act 2011.

4                 Variation of the Herd Management Methodology Determination

Section 4 provides that the Determination is amended as set out in Schedule 1 to the Variation.


Schedule 1—Amendments to the Carbon Credits (Carbon Farming Initiative-Beef Cattle Herd Management) Methodology Determination 2015

[1][1]           Subsection 5(1)(1)-subsection number

Item 1 of Schedule 1 omits the subsection number which is not required.

[2][2]           Section 5—definition of arm’s length agistment arrangement

Item 2 of Schedule 1 repeals the definition of an Arm’s length agistment and replaces it with a new definition. This change to the definition of an arm’s length agistment arrangement is made because if entities are linked, they may exchange grazing freely but, because they must be part of a project, their emissions can be accounted for separately. Linked entities in, for example, a supply chain will not require written contracts for use of spare grazing capacity. The change also clarifies the logic for treating agistment and co-grazing differently.

[3][3]           Section 5—definition of associate

Item 3 of Schedule 1 repeals the definition of associate which is no longer required.

[4][4]           Section 5—before definition of business operation

Item 4 of Schedule 1 inserts a definition of an assessment day. An assessment day of a herd is specified as the time for calculation of abatement based on an annual muster. Note that this time applies to an individual herd within a project and must fall within the project crediting period. However, the first assessment day must occur after the section 22 application has been adequately considered and can fall before the declaration of an eligible offsets project.

Item 4 of Schedule 1 also inserts a definition of an assessment year. An assessment year is a 12 month cycle within which the abatement due to a herd in the project is measured from one assessment day to the next. The 12 month cycle must be within the crediting period of the project, which the proponent should choose so that the commencement date for crediting in the project (in the first project year) encompasses the first mustering date of all herds in that year. In this case there will be seven assessment years for each herd in the project. A herd may complete its individual assessment period before the completion of crediting of the project as a whole.

In addition, Item 4 of Schedule 1 inserts a definition of the baseline reference date, for a herd of a project. The baseline reference date marks the end of the seven year period from which data can be gathered for the emissions intensity reference period (EIRP). It can be any time in that period up to the section 22 application date which satisfies the requirements of subsection 16(1).

[5]           Section 5—definition of business operation

Item 5 of Schedule 1 inserts a note to clarify that a business operation that defines a project herd must satisfy the separate business operation requirement and the herd continuity requirement.

[6][6]           Section 5—definition of emissions intensity reference period

Item 6 of Schedule 1 omits “subsection 14(2)”, and substitutes “subsection 16(4)” as the definition of the emissions intensity reference period to allow for this period to apply to both full and limited data herds.

[7][7]           Section 5—definition of entity

Item 7 of Schedule 1 adds a note after the definition of an entity to clarify what the definition covers.

[8][8]           Section 5—definition of herd

Item 8 of Schedule 1 replaces the definition of a herd with definitions for both a full data herd and a herd. The change to the definition of a herd removes the need to distinguish between inventory and non-inventory cattle. A herd relates to a business operation and is simply all the cattle that are on the livestock inventory of the business operation at a particular time. Provisions for non-inventory cattle on the inventories of associate businesses to be included in the cattle of the herd are no longer required. The effect is to greatly simplify the project boundary.

[9][9]           Section 5—paragraph (b)(ii) of the definition of Herd Management Calculator

Item 9 of Schedule 1 replaces ‘are of a minor nature’ with ‘have a minor effect on the calculation of abatement’ to clarify that it is the impact to abatement calculations which is most relevant when considering whether changes are minor or not.

[10][10]         Section 5—definition of inventory cattle

Item 10 of Schedule 1 repeals the definition of inventory cattle which is no longer required.

[11][11]         Section 5—before the definition of livestock class

Item 11 of Schedule 1            inserts a definition of a limited data herd. A limited data herd has only 2 rather than 3 years of EIRP data as is the case for a full data herd. Limited data herds may enter a project at the section 22 application or at a later date by applying to the Regulator under section 8(3) of the determination.

Item 11 of Schedule 1 also inserts definitions of linked entities, linked business operations and linked herds.

linked, of an entity, if: 

(a)   two entities are members of a group that constitutes the parent entity of a business operation; or

(b)   two entities are related entities within the meaning given by section 9 of the Corporations Act 2001; or

(c)   two entities are both linked to a third entity under paragraph (a) or (b);

the two entities are linked to each other.

A parent entity and the businesses in it constituting the whole operation may all have GST obligations. Part (a) above prescribes that the individual business are nevertheless linked by their common relationship to the parent entity.

The Corporations Act deals with the effective control of businesses as a means of deciding whether they are separate or not. In this determination, part (b) above refers to two entities which are regarded as having common control.

Part (c) above means that a link is cascading across all entities.

linked, of a business operation: if:

(a)   two entities are linked to each other; and

(b)   each entity is, or is part of the parent entity of, a different business operation;

  the two business operations are linked to each other.

Under this provision, linkage is cascading from linked entities to business operations.

linked, of a herd: if 2 business operations are linked to each other, their respective herds are linked to each other.

The definition of linked in relation to a business operation, entity or herd in section 5 has implications for the transfer of cattle between business operations. Where two herds are linked, the destination herd may not be a project herd but the transfer must be for a genuine business purpose with the transaction recorded at fair value. The cattle must physically move from the location of one herd to the other within six months of the transfer. The definition replaces the concepts of primary and secondary businesses and is a more robust basis for considering relationships between business operations than the looser concept of an associate.

[12][12]         Section 5—after the definition of livestock class

Item 11 of Schedule 1 inserts definitions for a monthly input day and for a monthly period. Use of these terms is to clarify data input arrangements as specified in Schedule 1.

[13][13]         Section 5-definition of non-inventory cattle

Item 13 of Schedule 1 repeals the definition which is no longer required.

[14][14]         Section 5—definition of parent entity

Item 14 of Schedule 1 repeals and substitutes the definition of a parent entity reflecting that sub-entities are no longer reflected in the determination and to clarify the relationship between entities and business operations.

[15][15]         Section 5—definition of primary business operation

Item 15 of Schedule 1 repeals the definition of a primary business operation which is no longer required.

[16][16]         Section 5—after definition of registered entity

Item 16 of Schedule 1 inserts a definition of a relevant application which now includes either the section 22 application or another application made under subsection 8(3).

[17][17]         Section 5—definition of secondary business operation

Item 17 of Schedule 1 repeals the definition of secondary business operation which is no longer required.

[18][18]         Section 5-definition of section 22 application

Item 18 of Schedule 1 changes the definition of a section 22 application to distinguish between a section 22 application and another relevant application for a herd as defined in subsection 8(4).

[19][19]         Section 5—definition of sub-entity

Item 19 of Schedule 1 repeals the definition which is no longer required.

[20][20]         Section 5—subsection (2), including preceding subheading, but not including following note

Item 20 of Schedule 1 repeals the subheading and subsection which are no longer required.

[21][21]         Section 6

Item 21 of Schedule 1 omits “a herd of cattle that are ordinarily grazed together”, and substitutes for “one or more herds of cattle” to reflect that a project can involve more than one herd of cattle and that herds do not necessarily need to be grazed together.

[22][22]         Boxed note before section 7

Item 22 of Schedule 1 omits the boxed note before section 7 and substitutes with a new boxed note that summarises the project requirements. The focus of the new note is on ensuring the project is kept as simple, not only the herd, and that it provides guidance on undertaking a project as a result of changes made in this Variation.

[23][23]         Sections 8 to 16

Item 23 of Schedule 1 repeals the sections and substitutes with new sections 8 to 16 that outline requirements for specifying herds of the project and requirements for herds of the project at the time of application and over the life of the project. These changes enable additional herds to be added to a project, including limited data herds, allow for different herds to have different assessment days, simplify the project boundary, and improve transparency around cattle movements and herds that fail to meet all the requirements of a herd during the life of a project.

[24][24]         After section 18

Item 24 of Schedule 1 inserts a new section 18A that specifies arrangements for projects transitioning from earlier versions of this determination.                       

[25][25]          Subsection 19(1)

Item 25 of Schedule 1 inserts a note to reflect the changes to the Determination allowing for different cycles of abatement calculation for each herd within a project reporting period. Under section 77A of the Act, a proponent may choose to report separately on each part of a project, in this case, a herd of the project. If the option of reporting, for example, every six months is chosen, then a report on every herd which has completed a 12 month cycle within that period is possible. Herds which have not finished a 12 month cycle would not be included.

[26][26]         Subsection 19(2)

Item 26 of Schedule 1 omits “all years y in the reporting period”, and substitutes with “all assessment years y that end during the reporting period” to reflect the changes to the Determination allowing for different cycles of abatement calculation for each herd within a project reporting period.

[27][27]         Subsections 19(2) and 19(3)

Item 27 of Schedule 1 omits “year y of the reporting period” wherever occurring, and substitutes with “an assessment year y of the herd that ends in the reporting period” to reflect the changes to the Determination allowing for different cycles of abatement calculation for each herd within a project reporting period.

[28][28]         Subsection 19(3), note

Item 28 of Schedule 1            omits “subsection 21(1)”, and substitutes with “section 21” to reflect the distinction between the baseline annual emissions intensity for a herd and the historical annual emissions intensity of a herd resulting from the substitution of section 21 referred to in Item 29.

[29]         Section 21

Item 29 of Schedule 1            repeals the section, and substitutes with a new description of how to calculate baseline emissions (section 21), historical annual emissions intensity (section 21A) and reference emissions intensity for a limited data herd (section 21B) as a result of allowing limited data herds to be added to a project.

[30][30]         Paragraph 23(a)

Item 30 of Schedule 1 replaces paragraph 23(a) to reflect the changes to the Determination allowing for different cycles of abatement calculation for each herd within a project reporting period. and to clarify that the version of the Herd Management Calculator that must be used is the version in force at the end of the relevant reporting period.

[31][31]         Subsection 24(1)(1)

Item 31 of Schedule 1 adds a note to clarify what are the input dates in relation to the calculation year which has been clarified in changes to Schedule 1 of the varied Determination.

[32][32]         After subsection 24(3)

Item 32 of Schedule 1 adds a new subsection 24(4) to clarify that if the average livewight of any input group is not available in accordance with sections 24 and 25, the abatement amount for the herd as an input to the Calculator is taken to be zero for that assessment year.

[33][33]         Section 25

Item 33 of Schedule 1 repeals the section including the heading and substitutes with a new description of how to determine inputs relating to the crediting period as a result of greater flexibility being provided for data collection in the Variation including a wider time window for weighing and the use of linear projection in particular circumstances.

[34][34]         Section 26—heading

Item 34 of Schedule 1 repeals heading and substitutes with “26 Inputs relating to the emissions intensity period” to improve clarity.

[35][35]         Paragraph 26(1)(a)

Item 35 of Schedule 1 omits “the crediting period were a reference to”, and substitutes with “an assessment year of the herd were a reference to a year of” to reflect the changes to the Determination allowing for different cycles of abatement calculation for each herd within a project reporting period.

[36][36]         Paragraph 28(a)

Item 36 of Schedule 1 omits “each year in the reporting period”, and substitutes with “each assessment year of the herd that ends in the reporting period” to reflect the changes to the Determination allowing for different cycles of abatement calculation for each herd within a project reporting period.

[37][37]          Paragraph 28(c) and (d)

Item 37 of Schedule 1 repeals the paragraphs which are no longer required due to changes which simplify the project boundary and replaces with requirements to identify the assessment day of a herd, and for the first offsets report only any change in assessment day for a herd where that has occurred.

[38][38]          Paragraph 28(e)(i)

Item 38 of Schedule 1 repeals the subparagraph and substitues with “(i) identifies the land on which the herd grazed in each year of the reporting period; and” to reflect changes which simplify the project boundary and correct an error where an exception to this requirement was previously made for land on which the cattle grazed under an arm’s length agistment arrangement.

[39][39]          Before section 29

Item 39 of Schedule 1 inserts a new section 28A in Division 3 describing additional record keeping requirements to enable facilitation of an audit. These are necessary due to the introduction of separate annual cycles of abatement crediting for each herd and changes to movement of cattle requirements between a project herd and a linked herd.

[40]         Subsection 30(3)

Item 40 of Schedule 1 repeals the subsection, and substitutes with a new subsection which clarifies monitoring requirements to reflect changes which simplify the project boundary and correct an error where an exception to this requirement was previously made for land on which the cattle grazed under an arm’s length agistment arrangement.

[41]         Schedule 1

Item 41 of Schedule 1 omits all words after the heading and before the table and substitutes with a description providing greater clarity around inputs required by the Herd Management Calculator.

[42]         Schedule 1, item 1

Item 42 of Schedule 1 repeals and replaces item 1 of the table to clarify the requirement to input a start day for the calaculation year in the Herd Management Calculator.

[43]         Schedule 1, note following the table

Item 43 of Schedule 1 removes the note following the table as it now appears under subsection 9 of the Schedule to which it directly relates.


Schedule 2 – Details of the varied methodology determination

Schedule 2 provides an explanation of the Carbon Credits (Carbon Farming Initiative—Beef Cattle Herd Management) Methodology Determination 2015 as varied by the Carbon Credits (Carbon Farming Initiative—Beef Cattle Herd Management) Methodology Variation 2017. It is intended to assist in the interpretation and implementation of the Determination.

Part 1—Preliminary

1                 Name

Section 1 of the varied Determination sets out the full name of the varied Determination, which is the Carbon Credits (Carbon Farming Initiative-Beef Cattle Herd Management) Methodology Determination 2015.

Section 126(2) of the Act specifies that the version of a determination as it existed prior to a variation continues to apply to a project even if a variation is made during its crediting period. Proponents of projects registered under an earlier version of a determination may apply to the Regulator to have the varied determination applied to their project.

2                 Commencement

The varied determination will commence the day after the Variation is registered on the Federal Register of Legislation.

3                 Authority

The variation is made under subsection 114(1) of the Carbon Credits (Carbon Farming Initiative) Act 2011 to amend a methodology determination made under subsection 106(1) of the Carbon Credits (Carbon Farming Initiative) Act 2011.

4                 Duration

Section 4 specifies the period during which the varied determination remains in force. In accordance with subparagraph 122(1)(b)(i) of the Act, section 4 of the Variation sets out the time that the varied determination would expire, that is, until the day before it would otherwise be repealed under subsection 50(1) of the Legislation Act 2003. Instruments are repealed under that provision on the first 1 April or 1 October following the tenth anniversary of registration on the Federal Register of Legislation.

If the varied determination expires in accordance with section 122 of the Act or is revoked under section 123 of the Act during a crediting period for a project to which the varied determination applies, the varied determination will continue to apply to the project during the remainder of the crediting period under sections 125 and 127 of the Act.

Under section 27A of the Act, the Emissions Reduction Assurance Committee may also suspend the processing of applications under a determination if there is reasonable evidence that the methodology determination does not comply with one or more of the offsets integrity standards. This does not affect applications for declaration already received by the Regulator before such a suspension or declared eligible offset projects which apply to the determination.

5                 Definitions

This section defines a number of terms used in the varied Determination. Under section 23 of the Acts Interpretation Act 1901, words in the varied Determination in the singular number will generally include the plural and words in the plural number include the singular.

Key definitions in section 5 that are incorporated by the varied Determination are set out below. In this determination:

arm’s length agistment arrangement means a written contract:

(a)     under which a party with more grazing available than is needed for its own cattle allows the other party to use the spare grazing capacity; and

(b)     where the parties are not linked entities.

Item 1 of Schedule 1 repeals the definition of an Arm’s length agistment and replaces it with a new definition. This change to the definition of an arm’s length agistment arrangement is made because if entities are linked, they may exchange grazing freely but, because they must be part of a project, their emissions can be accounted for separately. Linked entities in, for example, a supply chain will not require written contracts for use of spare grazing capacity. The change also clarifies the logic for treating agistment and co-grazing differently.

            assessment day, for a herd of a project, means the day of the calendar year specified as the assessment day for the herd in accordance with subsection 8(4), or as varied under subsection 8(5).

An assessment day of a herd is specified as the time for calculation of abatement based on an annual muster. Note that this time applies to an individual herd within a project and must fall within the project crediting period. However, the first assessment day must occur after the section 22 application has been adequately considered and can fall before the declaration of an eligible offsets project.

assessment year, for a herd of a project, means a period of 12 months that:

(a)     begins on or after the date of the relevant application for the herd; and

(b)     begins on the day after one assessment day and ends on the next assessment day; and

(c)     ends during the crediting period.

An assessment year is a 12 month cycle within which the abatement due to a herd in the project is measured from one assessment day to the next. The 12 month cycle must be within the crediting period of the project, which the proponent should choose so that the commencement date for crediting in the project (in the first project year) encompasses the first mustering date of all herds in that year. In this case there will be seven assessment years for each herd in the project. A herd may complete its individual assessment period before the completion of crediting of the project as a whole.

baseline reference date, for a herd of a project, means the day of the calendar year specified as the baseline reference day for the herd in accordance with paragraph 8(5)(e) and 16(1). The baseline reference date marks the end of the seven year period from which data can be gathered for the emissions intensity reference period (EIRP). It can be any time in that period up to the section 22 application date which satisfies the requirements of subsection 16(1).

business operation means an operation consisting of the whole or a part of an entity or group of entities:

(a)     that involves pasture grazing of cattle; and

(b)     in relation to which a livestock inventory of those cattle is maintained.

Note:       A business operation that defines a herd of cattle for a project must satisfy the separate business operation requirement (section 10) and the herd continuity requirement (section 11).

The note added at the end of the definition of a business operation broadens the scope of operations allowed in the determination provided that the business operation satisfies the separate business operation requirement and the herd continuity requirement. The provision allows a business operation which is not an entity in its own right but a part of a parent entity (e.g. a farm or station which maintains its own records separate to the parent entity) to be the business operation for the purposes of the project. A business operation must be described so that an initial inventory of cattle is available for the purpose of participating in a herd management project. That inventory may later be supplemented by cattle of an additional but discrete herd in the project which may be added after the Section 22 application for a project if all conditions are met.

entity has the same meaning as in the A New Tax System (Goods and Services Tax) Act 1999.

Note:    See section 184.1 of that Act.  The definition covers all kinds of legal persons and other things that in practice are treated as having a separate identity in the same way as a legal person does, and so can be registered for GST. These include an individual, a body corporate, a corporation sole, a body politic, a partnership, any other unincorporated association or body of persons, a trust or a superannuation fund.

The note added at the end of the definition of an entity provides clearer definition of the scope of operations allowed under the determination following the removal of the less rigorous concept of an associate. It provides detail on the provisions of Section 184(4) of the A New Tax System (Goods and Services Tax) Act 1999. Section 184(4) of that Act allows a variety of persons, businesses, body corporate, superannuation funds among others to be registered for GST. The note thus allows all forms of organisation of a business operation to have a separate identity and facilitates the separate accounting of emissions of that business operation without the need to determine whether two businesses are associates or not.

emissions intensity reference period, for a herdsee subsection 16(4).

full data herd— see subsection 16(2)

The meaning of a full data herd is explained in more depth at subsection 16(2). It is primarily a herd for which three full years of EIRP data. Full data herds are reference herds in relation to limited data herds for the purpose of estimating the baseline emissions intensity under section 21.

herd of a business operation, at a particular time, means all cattle that are on the livestock inventory of the business operation at that time.

Note:    An animal in utero will not be a separate member of the herd

The change to the definition of a herd removes the need to distinguish between inventory and non-inventory cattle. A herd relates to a business operation and is simply all the cattle that are on the livestock inventory of the business operation at a particular time. Provisions for non-inventory cattle on the inventories of associate businesses to be included in the cattle of the herd are no longer required. The effect is to greatly simplify the project boundary.

Herd Management Calculator means the Calculator that is published from time to time on the Department’s website with a statement that:

                 (a)     it is the Beef Cattle Herd Management Calculator for this determination; and

                 (b)     if it differs from the version that was on the website at the time of commencement of this determinationthe differences consist only of one of more of the following:

                                 (i)    updates to inputs and variables used by the Calculator that are consistent with either or both of the following:

                                        (A)  the National Inventory Report;

                                        (B)  the carbon dioxide equivalence and applicable methods under subsection 10(3) of the National Greenhouse and Energy Reporting Act 2007;

                                (ii)    updates that have a minor effect on the calculation of abatement;

                               (iii)    updates that are necessary or incidental to updates referred to in subparagraph (i) or (ii).

The change to the definition of Herd Management Calculator at (b)(ii) is to allow changes to be made to the Calculator even if they may be reasonably substantial changes, as long as the effect on abatement calculations is minor. This would allow improvements to the operability and useability of the Calculator in giving effect to the varied determination.

limited data herd—see subsection 16(3).

A limited data herd has only 2 rather than 3 years of EIRP data as is the case for  a full data herd. Limited data herds may enter a project at the section 22 application or at a later date by applying to the Regulator under section 8(3) of the determination.

linked, of an entity: if: 

(a)   two entities are members of a group that constitutes the parent entity of a business operation; or

(b)   two entities are related entities within the meaning given by section 9 of the Corporations Act 2001; or

(c)   two entities are both linked to a third entity under paragraph (a) or (b);

the two entities are linked to each other.

A parent entity and the businesses in it constituting the whole operation may all have GST obligations. Part (a) above prescribes that the individual businesses are nevertheless linked by their common relationship to the parent entity.

The Corporations Act deals with the effective control of businesses as a means of deciding whether they are separate or not. In this determination, part (b) above refers to two entities which are regarded as having common control.

Part (c) above means that a link is cascading across all entities.

linked, of a business operation: if:

(a)   two entities are linked to each other; and

(b)   each entity is, or is part of the parent entity of, a different business operation;

the two business operations are linked to each other.

Under this provision, linkage is cascading from linked entities to business operations.

linked, of a herd: if 2 business operations are linked to each other, their respective herds are linked to each other.

The definition of linked in relation to a business operation, entity or herd in section 5 has implications for the transfer of cattle between business operations. Where two herds are linked, the destination herd may not be a project herd but the transfer must be for a genuine business purpose with the transaction recorded at fair value. The cattle must physical move from the location of one herd to the other within six months of the transfer. The definition replaces the concepts of primary and secondary businesses and is a more robust basis for considering relationships between business operations than the looser concept of an associate.

monthly input day—see subsection (6) of Schedule 1.

monthly period—see subsection (5) of Schedule 1.

parent entity, of a business operation, means:

(a)      if the business operation (whether or not it is itself an entity or group of entities) is only a part of a larger entity or a group of entities—the entity or group of entities of which it is a part; and

(b)     otherwise—the business operation.

The change in definition allows a single business operation to be a part of a parent entity or to be the parent entity in itself without necessarily having an Australian Business Number (ABN). However, either the business operation or its parent entity must be registered for GST. The business operation needs to be carefully defined to meet the requirements of subsection 8(1) and section 10, to demonstrate how it meets the separate business operation requirement.

relevant application, for a herd—see subsection 8(4).

section 22 application, in relation to a herd management project means application under section 22 of the Act for the declaration of the project as an eligible offsets project.

The change to the definition of a section 22 application is to distinguish between a section 22 application and another relevant application for a herd as defined in subsection 8(4).

Part 2—Herd management projects

6                 Herd management projects

For paragraph 106(1)(a) of the Act, this determination applies to an emissions avoidance offsets project that can reasonably be expected to result in eligible carbon abatement through reducing emissions from one or more herds of cattle by one or more of the following outcomes:

(a)           Increasing the ratio of liveweight for age in the herd. Improving cattle productivity enables target weights to be reached earlier, thereby reducing the number of days for which cattle produce emissions. The liveweight of cattle relative to their age could be either the same as, or higher than, it was before the project began. Similarly, the age at which a particular weight can be reached could be earlier than it was before the project began.

(b)          Reducing the average age of the herd, which also results in cattle producing emissions for fewer days and avoids emissions from older cattle with declining productivity.

(c)           Reducing the proportion of unproductive animals in the herd, for example by removing heifers that fail pregnancy testing. Such actions provide more grazing area for productive animals, and can help increase birth rates and survival.

(d)          Changing the relative numbers in each livestock class (e.g. bulls, cows and steers of different ages, as described in the National Inventory Report) within the herd to increase the herd’s liveweight gain (LWG). For example, actions to improve weaner survival can reduce emissions because a smaller herd with fewer breeding cattle can produce the same or greater liveweight. Fattening unfinished cattle rather than increasing breeder numbers can avoid emissions which would have occurred through delayed finishing on poor quality pastures.

A project is a herd management project if is covered by subsection 6(1) of the determination.

Part 3—Project requirements

The new boxed note inserted before Section 7 summarises the project requirements.

Summary

The project proponent must specify at least one herd for the project in the section 22 application, and may specify other herds later (these do not extend the crediting period).

A herd is specified by specifying the business operation to which it is attached—the herd consists, at any particular time, of the cattle that are on the livestock inventory of the business operation at that time. A business operation does not need to be a separate legal entity, as long as its associated herd is managed as a discrete set of animals over time that can be clearly identified by auditors in the records of its parent entity. 

Each herd has an “assessment day”, which the project proponent must specify in the application (although it may be changed if necessary before the start of the crediting period). Each “assessment year” (the annual cycle for measuring the abatement for the herd) will begin immediately after the assessment day of one calendar year and end on the assessment day of the next. The calculator requires data inputs of the weights of animals present in the herd at the end of an assessment day, and these normally require the weighing of the animals, or of statistically valid samples of the animals, within six weeks before or after the day. (There are alternative provisions for obtaining weights that apply in some circumstances, including where normal mustering is delayed by a natural disturbance.) Different herds may have different assessment days. The assessment day for the herd cannot be changed after the first offsets report relating to the herd has been given to the Regulator.

The calculator also requires data inputs of the weights of animals entering or leaving the herd during an assessment year. These may be aggregated monthly.

For each herd, the project proponent must have historical emissions intensity data that enables the baseline data to be calculated.  The historical data is calculated for annual cycles that fall within the period of 7 years that ends on the baseline reference date. This is likely to coincide with the assessment day for measuring abatement, but it is not required to.

The majority of the cattle must be in herds that have full historical data (data from 3 full years that are not more than 7 years before the first assessment year of the herd). The baseline emissions of such herds are calculated using the data from that herd only.

The remainder of the herds of the project may have only partial historical data (data from 2 previous years). When calculating the baseline emissions of such a herd, a cap is imposed that is based on historical data from full data herds.

To comply with this determination:

       (a)        for each herd, the business operation and its livestock inventory must be maintained separately from any others that are part of the project, and have continuity over time; and

       (b)        each herd must be managed separately and must not be pastured with herds not in a project except under an arm’s length agistment agreement; and

       (c)        when cattle are moved to or from the herd (by moving them into or out of the livestock inventory):

                (i)         if it is not a transfer from or to a linked herd, it must be a purchase or sale at fair value; and

                (ii)        if it is a transfer from or to a linked herd: it must be for a genuine business purpose; it must be recorded as a transaction at fair value, with a statement of the business purpose; and there must be physical movement of the cattle.

A project proponent with several herds may find it preferable to include all of them in the project, even if some are not expected to generate significant emission reductions, in order to allow joint pasturing and to simplify transfers from one herd to another.

Herds with different assessment cycles

The determination allows the project proponent to combine herds with different assessment days in a single project. 

The determination also allows each herd to have its own reporting cycle, providing a separate offsets report for each herd. However, it is not necessary to do this, even if the herds have different assessment days. If the proponent has a single reporting cycle with the same reporting periods covering all herds, the offsets report for a reporting period must cover the abatement calculations for each herd with an assessment year that finishes during the reporting period. The abatement is calculated for the whole of each such assessment year, even if it started before the reporting period.

In the last reporting period for the project, there will be no abatement calculated for a herd in relation to time after its last assessment year.

Setting a crediting period for the project

To ensure that the project proponent can get credit in relation to the full 7 assessment years for each initial herd, it should, in its section 22 application, specify a date for the commencement of the crediting period that is later than the declaration date for the project (which is the default date for the beginning of the crediting period under the Act).

The date specified should be after all the initial herds of the project will have had at least one assessment day. This will ensure that they all have one assessment year for each year of the crediting period (The first assessment year for each herd will begin before the crediting period).

7                                  Operation of this Part

Part 3 sets out requirements that must be met for a herd management project to be an eligible offsets project under paragraph 106(1)(b) of the Act. The key features are described in the summary box above.

8                                  Specifying  herds of the project

Subsection 8(1) requires the proponent to be matched to the business records of a specific business operation. The records could be, for example, taxation records, sales and purchase documents, profit and loss statements or any other material which defines a herd from the business records of its associated business operation.

Subsection 8(2) requires a project to have at least one full data herd. The provision is necessary to establish the integrity of abatement crediting for a three year baseline. The reference period intensity of the full data herd is used in section 21 to establish the baseline annual emissions intensity of a limited data herd.

Subsection 8(3) allows the proponent to apply to the Regulator to include another herd, from a separate business operation, in the project after the section 22 application. The provision caters for mergers and acquisitions by proponents involved in business expansion after a project has started. More than one herd may be allowed to enter the project after the section 22 application. Further provisions in section 9 deal with the case of herds without complete data for an Emissions Intensity Reference Period.

Subsection 8(4) requires that each herd have an assessment day, which is effectively the same day as the business-as-usual annual muster occurring for the first time after the section 22 application. It may also occur after the section 22 application but before the declaration date of the project as an eligible offsets project.

Subsection 8(5) allows the proponent to change the assessment day from one given in the section 22 application by notice given to the Regulator before the beginning of the crediting period. The intent of this provision is to allow a proponent to take advantage of a full seven years of crediting. It allows data from musters of all herds in the project in the first project year to be used regardless of the date on which the project was declared an eligible offsets project.

Subsection 8(6) requires that the relevant application for each herd contain certain information for each herd and its related business operation:

(a)   if the business operation consists of a registered entity or group of entities—details of the entity or entities;

(b)   if the business operation does not consist of a registered entity or a group of registered entities—a description of the business operation, including how it satisfies the separate business requirement under subsection 10(3);

(c)   if the business operation is different from its parent entity— details of the entity or entities that make up the parent entity;

(d)   if the entity or entities making up the business operation or its parent entity have changed since the beginning of the emissions intensity reference period—a description of the changes and details of all the entities;

(e)   the baseline reference date for the herd for the purposes of subsection 16(1). The requirement establishes the end of the EIRP as the basis for establishing that the limited data herds collectively have less cattle in them than the collective full data herds;

(f)   the number of cattle in the herd on the baseline reference day. As noted above, the numbers in both limited data and full data herds must be available as part of the requirements for providing limited data herds with a limit in size compared to reference herds to support the integrity of estimation of abatement;

(g)   the years constituting the emissions intensity reference period for the herd. The provision ensures compliance with section 16;

(h)   the land on which the cattle of the herd grazed in each year of the emissions intensity reference period. The provision is necessary to ensure correct specification of the Region applicable to the majority of the herd as the first step in abatement calculation in the Herd Management Calculator.

(i)    to the extent possible, the land on which the cattle of the herd are expected to graze during each year of the crediting period. The provision is required for the same reason as above for the EIRP but is also an auditable check against the co-grazing provision (section 13). That provision is intended to ensure that abatement calculation is on the discrete project herd and is not confounded by co-grazing which might limit animal intake and thus conflict with the assumption of full daily rumen fill which is inherent in National Inventory Report (NIR) calculations of emissions. The land on which the cattle are expected to graze should include any land they are expected to graze on under an arm’s length agistment arrangement.

9                                  Requirements for herds of the project

Subsections 9(1) to 9(3) describe the requirements for a herd at the time of the section 22 or other relevant application. Paragraph 9(1)(a) requires that the herd, must not be specified at either the section 22 application or in another relevant application under section 8(3) for additional herds joining the project, unless it has satisfied, from the beginning of the EIRP, all of:

                   (i)            the separate business operation requirement (section10);

                 (ii)            the herd continuity requirement (section 11);

               (iii)            the herd management requirement (section 14);

               (iv)            the animal identification requirement (section 15);

Paragraph 9(1)(b) requires that only limited data and full data herds (as defined in this section), may be specified.

Subsection 9(2) specifies that a limited data herd must have a reference full data herd that is or was specified in the section 22 application. The provision also limits the total size of limited data herds, which taken together must have had a smaller number of cattle on their baseline reference dates than the reference herds had together on their baseline reference dates. The size of limited data herds thereafter is not relevant, since once a limited data herd is accepted as a project herd on the basis of its baseline, it is effectively equal to a full data herd for purposes of abatement calculation.

Subsection 9(3) specifies that the herd must be expected to satisfy all of the requirements of the EIRP and must also satisfy the co-grazing restrictions (section 13) and the requirements relating to the movement of cattle (section 12).

Collectively, subsections 9(1) to 9(3) set the conditions for establishing the herd as a project boundary during the EIRP and for maintaining that boundary during the crediting period. Subsections (9)(4) and (5) describe the consequences if any of the conditions referred to in subsection 9(1) and 9(3) are not met.

Subsection 9(4) allows a herd to continue to exist with zero numbers even if the relevant business operation ceases to exist. The situation could arise, for example, due to drought, or death of a proponent in an aggregation. The intent of the provision is to avoid a situation where the project as a whole fails to meet the requirements of subsections 9(1) and 9(3) because of circumstances beyond its control. The note provides that an offsets report will be required to record the herd as existing, but as having had zero members.

Subsection 9(4) prescribes that failure to meet the requirements of section 12 for business continuity at any time between either the relevant application for the herd under section 22 of the Act or an application under subsection 8(3) of the Determination and the end of the first or another assessment year will mean that the herd will continue to exist as a herd of the project but with no members and thus no crediting. If the herd loses continuity by way of, for example, mixing with another herd but without adequate records of purchases, sales or transfers, it will lose the ability to claim abatement credits for the remainder of the project. The note provides that an offsets report will be required, but the herd which has failed to meet the herd continuity requirement will be taken for the purposes of abatement calculations to have zero numbers. Inputs to the calculator must reflect that the herd has zero members.

Subsection 9(5) states that if a herd fails to meet any of the other requirements under subsection 9(3) it will be treated as a herd with zero members for abatement calculation purposes and offsets reports only in that year. Inputs to the calculator for that year must reflect that the herd had zero members. There will be no credits issued for that assessment year. However, crediting may resume if the situation is rectified.

10                              Separate business operation requirement

Section 10 specifies the conditions that must be met for a project to meet the separate business operation requirement. The project must satisfy either the entire entities subsection 10(2) or the discrete operations subsection 10(3) at all times between the beginning of its emissions intensity reference period and the end of the crediting period, with one exception –  paragraph 10(3)(c) requires that managing the herd as a discrete group of animals over time only applies during the project period. Consideration as to whether these requirements have been met is based on the information provided in Section 8 for entities or separate business operations defined by their records including cattle inventories, management records and cattle transactions.

A business operation satisfies subsection 10(1) if it consists of a registered entity or a group of registered entities. In this case, the entity must have an ABN or ACN on which its taxation records (such as business activity statements, quarterly or annual income tax records) are based and provide clear definition of the entity and the nature of its operations.

Paragraph 10(3)(a) allows business operations which are not an entity in their own right but a part of a parent entity registered for GST (e.g. a farm or station which maintains its own records separate to the parent entity) to be the business operation for the purposes of the project. The effect is that the data of a business operation without an ABN and thus tax records, can be verified by a greenhouse auditor by reference to records of the parent entity.

Paragraph 10(3)(b) requires a business operation to have a separate inventory of cattle available for the purpose of participating in a herd management project. A separate inventory is taken to have been maintained throughout the Emissions Intensity Reference Period if the relevant data for different livestock classes can be separated-out over this period, even if the data was not actually kept as separate files or records during that period. The effect of this is that a herd can be sub-divided into several smaller herds at the start of a project. However, only if it is possible to determine the separate emissions intensity of each of the smaller herds over the Emissions Intensity Reference Period by separating out the relevant data for each group of animals over that period.

The herd(s) must be managed as a discrete group over time during the project period (but not necessarily over the emissions intensity reference period)(paragraph 10(3)(c)) and it must be possible to account for all cattle entering or leaving the herd. Those movements are defined by the data input requirements of the Herd management Calculator as described in Schedule 1. This condition can be met with appropriate invoices, receipts and cattle movement data which must be kept for taxation purposes anyway or to meet traceability requirements in business-as-usual operations. The examples at section 10 identify that several properties may be maintained as separate business operations or a single property may maintain several business operations and therefore herds, but any division of an entity which satisfies subsection 10(3) is an acceptable basis for defining a business operation.

11                              Herd Continuity Requirement

Herd continuity is an essential requirement for the integrity of the method because emissions intensity in the EIRP and in the crediting period must be comparable on the basis of the same herd and not completely different herds in different business-as-usual locations.

Subsection 11(1) requires that the project must be one in which the business operation for each herd satisfies herd continuity requirements when business structures, management and ownership of the business operation change. The requirement is met for any period if a series of conditions are met during that period. The conditions are outlined under paragraphs (a)-(d) of subsection 12(1) for all times between the beginning of its emissions intensity reference period and the end of the crediting period.

Paragraph 11(1)(a) applies where the business operation consists of a registered entity or a group of registered entities—at any change in the entities, the livestock inventories of the entities must be transferred in such a way that the same animals are on the livestock inventory of the business operation before and after the change.

This provision ensures that at a change in structure of a business operation consisting of an entity or group of entities, a completely new inventory of cattle (a different herd) cannot be used to continue the project.

Paragraph 11(1)(b) applies to a business operation at any change in the registered entity or entities that constitute its parent entity, the livestock inventories of the entities are transferred in such a way that the same animals are on the livestock inventory of the business operation before and after the change.

As for paragraph 11(1)(a), the provision ensures that at any change in the parent entity for a business operation, a completely new inventory of cattle (a different herd) cannot be used to continue the project.

Paragraph 11(1)(c) requires no break in the continuity of the livestock inventory of a business operation and, in particular, its livestock inventory continues to be maintained separately from other livestock inventories of its parent entity;

This provision allows changes in the ownership of a business operation and its management, provided that the inventory of livestock, consisting of the same animals before or after the change, is maintained and can be attributed directly to the business operation before and after the change.

Subsection 11(2) relates to the case of a herd which is temporarily reduced to zero for all or part of an assessment year. Herd continuity in this case relies on the intent to resume the project by purchasing cattle when circumstances permit. Evidence of intent would be, for example, a project report even if abatement is zero.

12                              Requirement relating to movements of cattle

It is important to understand the differences between various types of movements between project and non-project herds from the point of accounting for emissions. If an animal moves out of the emissions boundary of a project, as is the case when sold to a new owner whose herd is not in a declared herd management project, then there is no need for further accounting. If an animal moves from one herd management project to another, its emissions are continuously accounted for regardless of whether there is a change of ownership. But if animals can move to a non-project herd temporarily, without accounting for their emissions, the integrity of abatement calculation is lost. It is accepted that movements occur, as business-as-usual between business operations of an entity and may or may not involve a financial transaction.

The provisions of section 12 apply to every movement to or from another herd from the section 22 application date or the application under subsection 8(3) for the herd. They remove the need for the concept of secondary businesses and non-inventory cattle because a secondary business can no longer be created through transfer of animals from one herd to another (non-project) herd unless that herd is linked to the project herd. The provisions of section 12 do not apply to cattle that enter the herd by birth or are discovered as feral or cleanskins. Further guidance on these two situations is provided below in reference to Schedule 1 to the varied Determination.

Paragraph 12(1)(a) notes that if the movement is into or out of a business operation which is in a project to one which is not and is not linked by business structure, the movement must be as a sale/purchase (i.e. with financial records to prove the transaction). A sale or purchase places the livestock firmly out of the ownership of a proponent, preventing any temporary transfer.

Paragraph 12(1)(b) notes that if the movement is between a project herd and a linked but not project herd, several conditions must be met. Subparagraph (i) requires that the movement must be for a genuine business purpose such as transfer along a value chain. Subparagraph (ii) requires that a transaction involving movement between herds, for example, one which affect the profit and loss statement of each herd, must be a transaction recorded at “fair value” (i.e. supportable to a financial auditor). In addition, subparagraph (iii) requires that a physical movement of cattle must take place within six months, when a transfer of cattle between herds is recorded in the calculator. The six month timeframe allows for wet/dry season fluctuations and the completion of agistment or allowance for delayed delivery.

The term ‘genuine business purpose’ in relation to herd transfers indicates that the transfer occurred for a reason that corresponds with typical and generally accepted livestock management, such as the transfer of weaner cattle to backgrounding or finishing properties in a vertically integrated supply chain, or the transfer of replacement breeder cattle into a breeder herd. Transfers intended to manipulate herd structure in such a way that emissions intensity is manipulated, while making no genuine change to abatement across the herds, is not a legitimate reason for transferring cattle. For example, simply dividing two herds that breed and grow cattle into one breeder herd and one backgrounding/finishing herd, for the purposes of reducing the emission intensity in the finishing herd and generating apparent abatement in this herd would not be a legitimate business purpose.

Both paragraphs 12(1)(c) and 12(1)(d) deal with provisions for the final year of the project to ensure that cattle in a herd which has finished its assessment period are not simply transferred to a herd which has not finished its assessment period thereby gaining an extra period of abatement assessment for those animals. Transfers between herds which have completed crediting and those which have not, may occur as part of business-as-usual management. However, animals that are transferred cannot contribute to abatement by entry into the Calculator. The record keeping requirements of part 5, section 28A require a summarised, easily accessible schedule of all transfers in the final year for comparison against calculator entries in that year by the auditor.

Subsection 12(2) makes an exception in regard to all transfers where a transfer to an abattoir, export facility or any other facility will remove the animal from the national emissions boundary. Such a transfer might occur, for example, to an abattoir owned by the parent entity of the business operation (i.e. it is linked to the business operation) but which is not in itself part of an eligible abatement project.

13                              Requirement relating to co-grazing

Paragraph 13(1)(a) limits co-grazing to animals which are each members of a project herd and are therefore accounted for separately. The provision applies after the first assessment date for a herd in the project crediting period for either a herd specified in the section 22 application or a herd which has entered the project under section 8(3) during the project crediting period. The subsection prohibits grazing project and non-project animals together unless an arm’s length agistment agreement for either the project cattle or the other cattle is in place to allow grazing together to use surplus grazing capacity. Cattle are frequently separated in such circumstances for ease of management and agistment is not usually undertaken unless there is surplus feed available. Feed intake is not limited and the estimation of emissions based on duration of grazing days, class, weight and feed type remains valid.

In addition, paragraph 13(b) requires that all animals in a group of animals be identifiable as a member of the herd (see also section 16) and paragraph 13(c) requires that liveweights of cattle be available for the period in which co-grazing occurs so that impacts on emissions can be estimated by entering data according to Schedule 2.

These provisions are intended to prevent inaccurate accounting of emissions of project cattle as a result of their inability to maintain maximum intake for the quality of feed available, which is an assumption of the calculations behind the method based on the NIR. If cattle are co-grazed in a situation of limited feed supply, the two groups will limit the potential daily intake of each other. Since the emissions of the non-project cattle are not accounted and the emissions of project cattle would be inaccurately accounted, the practice cannot be allowed.

14               Requirements relating to the management of herds

Section 14 sets out the location, feed and types of farming systems which satisfy the requirements for management of herds during the project. These provisions are not intended as initial eligibility requirements but apply during the project crediting period.

Paragraph 14(a) requires that the project beef cattle herds must be grazed in Australia.

Paragraph 14(b) requires that the majority of feed for the herd must come from grazing on pastures (which may be naturalised, improved or native) or from forage crops (e.g. grazing oats, grazing triticale, forage sorghums). In the Herd Management Calculator (see below), the extent of supplementation is thus limited to 50 per cent of feed intake.

Paragraph 14(c) requires an eligible herd to be managed in a way consistent with one of the following:

(a)    ANZSIC class 0142 (beef cattle farming); or

(b)   ANZSIC class 0144 (sheep-beef cattle farming); or

(c)    ANZSIC class 0145 (grain-sheep or grain-beef cattle farming).

These ANZSIC classes provide standard classifications for different types of cattle grazing based activities. The first note to section 14 notes that herds managed in specialised feedlots (ANZSIC class 0143; beef cattle feedlots) are not eligible. Feedlot cattle are not eligible as their diets consist of high levels of dry matter digestibility (DMD) and crude protein (CP) supplied via hand or mechanical feeding and they spend little to no time grazing on naturalised pasture.

The second note to section 14 recognises that in the normal course of managing a herd, some individual animals will leave the herd and some will be added to the herd.

15                              Animal identification requirement

Section 15 sets out requirements for identifying animals in a herd. Identification needs to be able to determine, with record keeping, the livestock class and date of entry of each animal (e.g. when bought) or discovery (e.g. when mustered on properties with porous boundaries) or exit from the herd to meet the requirements of Schedule 1. For any period in the emissions intensity reference period and crediting period, the project proponent must be able to identify the date at which an individual animal, as a member of a group of animals of a particular animal class, enters or leaves the herd. This could be done using, for example, NLIS tag numbers recorded as the date of entry/exit in a herd book. Identification of entry and exit dates is required so that the duration of emissions of an animal within a group of sale animals, for example, can be accurately estimated.

16                              Baseline reference date and emissions intensity reference period

Subsection 16(1) requires the project proponent to choose for each herd a date (the baseline reference date) during the 12 months preceding the section 22 application or application for the herd under section 8 which effectively specifies the end of the EIRP for the herd. (Paragraph 8(6)(e) requires a proponent to nominate the baseline reference date). The provision is made for conservatism in assessment of emissions in combination with the provisions of Section 21 which requires conservative estimates of the baseline for herds with less than three years of EIRP data. By setting a baseline reference date, the total initial size of limited data herds can be established relative to the total initial size of their full data reference herds.

Subsection 16(2) and paragraphs 16(2)(a) to 16(2)(d) specify a full data herd as one containing three years of data in which liveweight gain was greater than zero derived from the seven years ending on the baseline reference date. The effect of these paragraphs is that where three years of data are available, the herd must be specified as a full data herd. The three most recent years preceding the baseline reference date for which data is available must be used.

Similarly, paragraphs 16(3)(a) and 16(3)(b) specify a limited data herd as one containing two whole years of data, as required by section 26, and no more, from the seven years prior to the baseline reference date. The two most recent years preceding the baseline reference date for which the data is available must be used.

For both full data and limited data herds, the notes to subsections 16(2) and 16(3) note that when data for a year or years immediately preceding that date is not available, data for the next year preceding the baseline reference date, sequentially for up to seven years preceding the baseline reference date, may be used.

For this determination, the Emissions Intensity Reference Period (EIRP) for a herd is defined in subsection 16(4) as:

(a)           for a full data herd—the 3 years mentioned in paragraph 16(2)(d); and

(b)          for a limited data herd—the 2 years mentioned in subparagraph 16(3)(b)(iv).

The years in the emissions intensity reference period need not be consecutive, particularly since data for a year with a LWG greater than zero may not be available. Each herd in the project must have its own EIRP. Each such EIRP might consist of a different set of years. However, the resulting emissions intensity estimate for the limited data herd will have to meet  the baseline requirements of Section 21.The second note to the section allows that each herd may have a unique EIRP.

Subsection 16(5) defines liveweight gain for the purposes of the section as follows:

liveweight gain for the herd for the year means the LWG calculated using Equation 5 (section 21C).

The calculation in section 21C excludes the liveweight (LW) present at purchase by subtracting the LW present at sale and thus provides an estimate of incremental annual LWG.

17                              Project activity

Section 17 sets out the requirements for eligible project activities.

Subsection 17(1) requires that proponents must undertake at least one project activity for each year in the crediting period and for each herd in a project.

A project activity is an agricultural practice that complies with the requirements of subsection 17(2).

Paragraph 17(2)(a) requires a project activity to be an agricultural practice that can reasonably be expected to reduce emissions from the herd through one of the measures specified in paragraphs 6(1)(a) to 6(1)(d).

Project activities may include, but are not limited to:

(a)    feeding supplements containing higher levels of DMD and CP, particularly in dry seasons when naturalised pasture can have low nutritional value;

(b)   changes that influence the age of the herd, such as culling of unproductive animals or reducing the number of breeders to produce the same weight of livestock sold or a higher survival rate of weaners;

(c)    installing new fencing to ensure joining can be timed to occur when feed is most plentiful, thereby improving the survival and health of heifers and calves; and

(d)   genetic improvements that increase the productivity of the herd.

Proponents may choose to undertake multiple project activities, but only one project activity is required for a herd management project to be eligible. As indicated in the note to subsection 17(1), if a project involves more than one herd, different project activities may be adopted for each herd. In addition, project activities can change over time as long as they comply with subsection 17(2).

Paragraph 17(2)(b) requires that a project activity must either:

                             (i)            have not been undertaken during the emissions intensity reference period; or

                           (ii)            be a variation of a practice that was undertaken during the emissions intensity reference period.

A variation of a practice that was undertaken during the emissions intensity reference period could be, for example, a substantial increase in the number of cattle fed supplements. It may also involve the substantial expansion or rehabilitation of improved pastures or an intensification of an existing practice, e.g. a doubling of the establishment of watering points from previous practice. The proponent must be able to demonstrate in the section 22 application that the extent of the proposed variation can reasonably be expected to reduce emissions from cattle.

Allowing for activities that are variations of previous practices recognises that an increase in production efficiency of the herd can be achieved through incremental improvements to existing management practices, beyond the level that would otherwise have occurred in a business as usual situation.

Paragraph 17(2)(c) provides that feeding non-protein nitrogen to a herd is not an eligible project activity. The feeding of non-protein nitrogen supplements for cattle includes urea and nitrates. Urea is a commonly used supplement in some regions, while nitrates are not commonly used. The Carbon Credits (Carbon Farming Initiative) (Reducing Greenhouse Gas Emissions by Feeding Nitrates to Beef Cattle) Methodology Determination 2014 provides for crediting emissions reductions from projects that feed nitrate supplements to cattle, either in place of, or in addition to, urea. That determination provides specifically for this particular activity, and therefore the activity is not eligible for herd management projects. However, the Determination does not preclude feeding of non-protein nitrogen to a herd involved in a herd management project. Separate projects using the two determinations could potentially be undertaken for the same herd if all requirements of both determinations can be met.

Paragraph 17(2)(d) provides that simply moving the herd to graze on a different area of land is not an eligible project activity. Moving a herd to a different area of land does not meet the Determination’s requirements regarding agricultural practices that can reasonably be expected to reduce emissions. However, the Determination does not preclude grazing a herd on a different area of land if an eligible agricultural practice is undertaken.

Subsection 17(3) provides that at least one agricultural practice must be nominated in the section 22 application.

Subsection 17(4) provides that, for each practice nominated, the section 22 application should include the following information to demonstrate that each practice can reduce emissions through one of the measures in subsection 17(1) and meet the other requirements of subsection 17(2).

(a)           A description of the practice.

(b)          An explanation of how the practice can reasonably be expected to reduce emissions from the herd through one of the measures specified in paragraphs 6(1)(a) to (d).

(c)           Evidence to support the explanation. Types of evidence could include scientific papers, industry guidance documents or state/territory advice/guidelines amongst others. For example, state and territory government agencies and organisations such as Meat and Livestock Australia (MLA) publish information on a range of improved herd management practices, and industry advisers may provide written advice in support of a practice.

(d)          For any practice not undertaken in the emissions intensity reference period, a statement indicating that fact.

(e)           For any practice that is a variation of a practice undertaken in the emissions intensity reference period, a description of the previous practice and how the practice represents a variation of that practice.

(f)           A statement that the practice does not consist of feeding non-protein nitrogen to a herd.

(g)          A statement that the practice does not consist only of grazing the herd on a different area of land.

Subsection 17(5) provides that, where a subsequent decision is made to implement a different agricultural practice as a project activity, the practice must also meet the requirements of subsection 17(2).

A suggested approach for describing project activities is provided in Table 1. The examples included are indicative, and should not be considered as recommended actions or a comprehensive list.

Proponents are not required to provide information on other activities undertaken as part of managing the herd that are not directly related to the project.


Table 1: Suggested approach for describing project activities in accordance with eligibility requirements

Project activity

Corresponding activity in the emissions intensity reference period

How is this a new practice not previously undertaken or a variation of a previous practice?

How the project activity can reasonably be expected to reduce emissions

Supporting evidence of the potential effect on emissions

Evidence to verify the action was undertaken*

Supplement feeding

Pasture feeding only

Feed is purchased and supplied to the herd during the dry season, improving the diet compared to the previous practice of providing pasture only.

Improved diets, particularly in the dry seasons, can increase LWG and prepare cattle for market at an earlier age. Better nutrition also improves animal health, survival and reproduction; reducing the proportion of unproductive animals in the herd.

Industry guidance documents

Journal papers

Documented consultant advice

Invoices and receipts from feed suppliers

Management records of feeding

Phosphorus supplements as required

Little or no  Phosphorus supplementation

Phosphorus supplementation in the diet delivers productivity benefits particularly in young stock.

Supplementation in phosphorus deficient areas improves growth rate, reducing time to slaughter. It increases heifer survival, reduces the average age of the herd and improves survival to weaning. It also results in a change in herd structure that increases the proportion of animals in the herd with higher LWG rates.

Documented consultant recommendation

Journal papers

Industry guidance documents

 

Invoices /receipts from feed suppliers

Management records of the amount and timing of feeding

Installation of new fences to enable improved management of joining time

Minimal fencing and limited management of joining time

New fences allow bulls to be separated from heifers and more effective control over joining.

By controlling joining calves can be born when feed is available increasing survival of heifers and calves to weaning. Survival of heifers/calves reduces the average age of the herd.

State or territory government information materials

Invoices/ receipts for purchase of fencing materials

Invoices from fencing contractor

Greater density of watering points

Low watering point density resulting in overgrazing areas close to water and uneaten feed at the outer limits of stock movement.

The rate of watering point establishment is increased, improving access to a wider feeding area and providing faster turnoff.

More watering points allow the herd to graze over a greater distance, increasing the rate of feed intake and reducing wasted energy in seeking water and feed. The outcomes reduce the time to slaughter, increase survival of calves and heifers, resulting in a reduced average age of the herd and a higher proportion of animals with higher LWG rates.

Published industry case studies

Invoices/ receipts for purchase of materials used to store or distribute water

Invoices from contractor

Date-stamped photographs of watering point installation

Use of Estimated Breeding Values to select bulls

Use visual, subjective assessment for selection.

Increased efficiency of feed conversion to reduce the average number of days from birth to slaughter in the herd.

Bulls selected using estimated breeding values will produce progeny with more efficient feed conversion, reducing number of days from birth to slaughter.

Published research

Invoices/receipts and catalogues with genetic information on bulls

Increased planting of improved pastures

Smaller areas of improved pastures, with pastures dominated by native species.

Improved pastures are of better nutritional quality and result in increased cattle growth rates.

Increase the percentage of improved pastures to improve the quantity and quality of pasture per hectare, thus increasing production efficiency and reduce the number of days from birth to slaughter.

Published studies

Invoices/receipts for purchase and planting of improved pasture species

*Evidence verifying that actions were undertaken is not required to meet eligibility requirements but must be provided when reporting for the project. Examples have been included to show how the suggested approach could also assist with meeting reporting, record-keeping and monitoring requirements (see Part 5).


18                              Project not to involve feeding of cattle on cleared land

Subsection 18(1) provides that a herd management project must not involve the feeding of cattle on land that has been, for the purposes of the project, partially or wholly cleared of perennial woody vegetation.

This requirement avoids the potential for clearing to be undertaken for the specific purpose of carrying out herd management project activities, such as pasture establishment. Clearing woody vegetation releases carbon dioxide that had previously been sequestered in the vegetation biomass. If the clearing of vegetation occurred for the purposes of the project then this release of carbon would offset project emissions reductions.

Subsection 18(2) provides an exception whereby a project could be undertaken on land where clearing was required by law. For example, the clearing of a declared woody weed species may be required by law. In this case, the land could be used for project activities following clearing.

Subsection 18(3) provides that where land has been partially or wholly cleared of woody perennial vegetation and the land would have been cleared if the project had not been undertaken, then the clearing is taken not to have been for the purposes of the project. This provision recognises that clearing for agricultural purposes may be undertaken, for example, in accordance with a previously approved vegetation management plan or clearing permit providing for clearing over a period of time. The Determination does not prevent such activities that would have been undertaken in the normal course of business.

18A         Transition from earlier version of this determination

The note added to new section 18A clarifies that an existing project that transitions to the new version of the determination before having submitted an offsets report under the previous version of the determination will be able to re-set the start of the crediting period for the project in accordance with section 69 of the Act. If the crediting period is re-set to start after all herds of a project have had their first assessment day within the 12 months before the crediting period starts this will enable all herds of the project to generate seven years of credits. Section 69 of the Act, in certain circumstances, allows a project proponent to vary the start time previously set for a crediting period to another time up to 18 months after the declaration of the project.

Subsection 18A(1) allows herds of a project registered as part of an eligible offsets project under the 2015 determination (‘pre-transition herds’) to satisfy the requirements of the variation where relevant information has already been provided. The section allows a herd which has already been approved by the Regulator under the 2015 determination to be included in the project after the proponent’s application to transition to the varied determination has been accepted by the Regulator. However, the section requires that as part of the application to transition, the proponent must supply any extra information required by section 8 of the varied determination, which had not already been supplied, to the Regulator.

Subsection 18A(2) provides that all information required under the section 22 application for the varied determination is taken to have been originally supplied for the earlier determination.

Subsection 18A(3) provides that any herd from an existing project transitioning to the variation, will be a full data herd because provisions for limited data herds did not exist in the earlier determination.

Subsection 18A(4) clarifies the herds that these transition arrangements refer to, being herds that were part of the project at the time of the request to the Regulator under section 130 of the Act, and not herds that are added to the project at the time of transition. Subsection 18A(4) also defines the transition date as the date on which the Carbon Credits (Carbon Farming Initiative—Beef Cattle Herd Management) Methodology Variation 2017 commenced.

 

Part 4—Net abatement amount

 

Division 1—The net abatement amount

19                              Method for calculating the net abatement amount

Subsection 19(1) prescribes that abatement be calculated according to the equations of the section. It notes that Part 4 specifies the method for working out the carbon dioxide equivalent net abatement amount for a reporting period for a herd management project that is an eligible offsets project.

The note to subsection 19(1) reflects the changes to the Determination allowing for different cycles of abatement calculation for each herd within a project reporting period. Under section 77A of the Act, a proponent may choose to report separately on each part of a project, in this case, a herd of the project. If the option of reporting, for example, every six months is chosen, then a report on every herd which has completed a 12 month cycle within that period is possible. Herds which have not finished a 12 month cycle would not be included.

The carbon dioxide equivalent net abatement amount is calculated as the sum of abatement for all herds in the project across all assessment years that end in the reporting period of the herd (Equation 1). The change is made to reflect the different cycles of abatement calculation for each herd during the project.

Equation 2 calculates the carbon dioxide equivalent net abatement amount for each herd and for each assessment year in the reporting period for the herd that ends in the reporting period for the herd, as used in Equation 1. These equations demonstrate how to calculate abatement as the difference between the baseline emissions for each herd and each assessment year that ends in the reporting period and the project emissions for each herd and each assessment year that ends in the reporting period.

These calculations show the change in total emissions as a result of the project. Changes in emissions intensity resulting from project activities are incorporated in the calculation of baseline emissions (see section 21).

In some circumstances, emissions for a year in a reporting period could be higher than baseline emissions, as a consequence of natural variation or a disturbance event. For example, cattle scheduled to be sold or transferred at a particular time may need to be retained for a longer period because their condition is poor due to a drought. Any annual abatement amounts for herds that are less than zero are not deducted from the carbon dioxide equivalent net abatement amount according to the provisions of paragraph 19(3)(b). Instead, any negative abatement amounts are taken to be zero. Abatement is calculated by summing all amounts that are zero and greater than zero. This means that proponents are not liable for an increase in emissions in a project year.

Environmental variations could also result in positive effects on emissions reductions. The exclusion of negative abatement amounts from the net abatement amount calculation would generate an over-crediting risk in the absence of a discount applied to positive abatement amounts. In the Determination the exclusion of negative abatement amounts from the net abatement amount calculation is possible because of the application of a 4 per cent variance discount on positive abatement amounts to the baseline under section 21. The application of this discount reduces the risk that abatement is generated, and consequently credits are issued, for an emissions decrease that is the consequence of natural variation, and not improved management.

The note at Subsection 19(3) has been amended to reflect the repeal and replacement of Section 21.

20                              Gases accounted for in abatement calculations

Section 20 lists in a table the greenhouse gases and emissions sources that are accounted for in order to determine the net abatement amount for a herd management project. The emissions sources and greenhouse gases that need to be taken into account when calculating the carbon dioxide equivalent net abatement for the project are enteric methane emissions and nitrous oxide emissions from dung and urine.

A number of emissions sources are excluded from the abatement calculations, for the following reasons.

(a)           Emissions from fossil fuel use in farm vehicles and equipment. These emissions are small relative to livestock emissions. Published information shows that use of fossil fuels for all purposes in beef production represents approximately 2% of enteric emissions of an adult animal. Improvements in efficiency of diesel engines contribute to this low proportion. Any change in emissions from these sources due to project activities would be immaterial.

(b)          Emissions from the production and transport of supplementary feed, where feed supplementation is a project activity. The cost of growing and transporting cattle feed, particularly to northern Australia, is considerable compared to benefits and there is little evidence of this type of feeding except when driven by drought situations. In southern Australia the emissions from this source would occur anyway for alternative markets in the absence of the project.

(c)           Emissions from animal feed production and transport from off-site sources. Such emissions are highly variable and difficult to quantify. For example, nitrous oxide emissions associated with irrigated grain production will be higher than for dryland production because of the use of higher rates of nitrogen fertiliser. In addition, proponents may not be able to identify the source of feed supplements, for example when purchased as bulk grain.

(d)          Emissions from nitrogen fertilisers used in pasture establishment are not likely to be material because most pastures used in beef cattle production rely on legumes (which do not require nitrogen fertiliser) for their nitrogen requirements.

(e)           Emissions from the operation of the property and routine marketing of cattle such as cattle breeding, husbandry, transport and processing. These emissions will not change materially between the baseline and project. Projects are likely to be managed within a given property carrying capacity and focus on the production of the same or fewer numbers at the same or higher LWG in less time.

Division 2—The baseline emissions

21                              The baseline emissions

The calculation of baseline emissions for herds with three years of EIRP data is the same as in the Determination made in 2015. It includes the discount for natural variance in emissions intensity seen in the Australian herd during 1994 to 2014 on the basis of Australian Bureau of Statistics data. However, the Variation applies a conservative approach to estimation of the baseline in the case of limited data herds with two years of EIRP data. The baseline emissions in that case are calculated using the lower of the two values for baseline emissions intensity of the full data reference herd(s) or the limited data herd.

Proponents should carefully consider the addition of limited data herds with high emissions intensities into a project with an existing reference herd having low emissions intensity. More carbon credits would possibly be generated by gathering data for an additional year before incorporating the herd into the project. Similarly, there is no advantage in incorporating a limited data herd with low emissions intensity into a project with full data herds of higher intensity.

21A            Historical annual emissions intensity

Subsection 21A(1) provides the equation used for estimation of historical annual emissions intensity (i.e. the emissions intensity of the EIRP) for either full or limited data herds. Historical annual emissions intensity is the sum of emissions for each of the years in that period divided by the sum of incremental annual LWG for those years. The definition of LWG at section 21C is applied and explains the basis of incremental annual gain.

Paragraph 21A(2)(a) requires the proponent to take into account only emissions from the emissions sources specified in the table in section 20 when calculating emissions intensity.

This assumption for diet in the EIRP in paragraph 21A(2)(b) is made because it is not considered likely that proponents would be able to supply data on where animals grazed in the EIRP and on the quality of pasture. The assumption provides overall conservatism of abatement estimates to the determination because if the herd had been fed higher quality feed for the LWG recorded in the EIRP, the emissions intensity would have been higher than estimated.

21B            Reference emissions intensity for a limited data herd

Section 21B provides the basis for estimating average emissions intensity for one or more reference herds in the project. The average emissions intensity is the sum of emissions across all herds for all three years of the EIRP divided by the sum of incremental annual LWG for all herds and all three years of the EIRP. The formula provides the weighted average reference emissions intensity for herds with varying emissions intensities and total emissions.

21C            Liveweight gain for a year

The formula in section 21C ensures that only the incremental annual LWG within the herd is estimated, excluding the effect of LW purchased into the project by subtracting LW purchased from LW sold and deducting opening LW from ending LW.

Division 3—The project emissions

22                              Project emissions

For each year in the reporting period and for each herd in the project, the project emissions are the methane and nitrous oxide emissions from the sources referred to in the table in section 20, expressed as their carbon dioxide equivalent.

Division 4—Use of Herd Management Calculator to perform calculations

23                              Requirement to use Herd Management Calculator

Paragraph 23(a) requires that proponents use the Herd Management Calculator for any calculation for which it can appropriately be used in relation to each herd and for each  assessment year of the herd that ends in the crediting period and each year of the emissions intensity reference period. The version of the Herd Management Calculator that is used must be the one that is in force at the end of the relevant reporting period.

Paragraph 23(b) requires all inputs to be entered into the Herd Management Calculator in the manner described in the Calculator. Schedules 1 and 2 specify the required inputs. The Herd Management Calculator includes all the calculations required to determine the net abatement amount in accordance with the Determination. This Calculator will use data inputs entered by proponents to automatically calculate emissions for the project and the change between baseline and project emissions. Emissions are calculated for methane emissions from enteric fermentation (according to diet, duration of emissions, animal numbers and class, LW and LWG) and nitrous oxide emissions from dung and urine, as listed in section 20.

Further, paragraph 23(c) notes that reference factors applied in the calculator will be those applying at the end of the relevant project reporting year. For example, if the last revision of the NIR was made in  the year before the project year, that revision will still apply at the end of the following (project reporting) year.

The Herd Management Calculator has two main entry pages for inputting herd data. Entry page 1 requires data on cattle present in the herd for the whole of the year, including numbers and LW of cattle for each year of the emissions intensity reference and project periods. Data on cattle entered in the first entry page corresponds to the data for Item 2 of Schedule 1. Data for this entry page is only available at the end of the project year when both the opening numbers and LW by class of animals identified as being in the herd at the start of the year and their corresponding closing weights and numbers at the end of the year are known.

Entry page 2 is for cattle that are in the herd for only a part of the emissions intensity reference period or project year. These cattle may be present at the beginning of the year, the end of the year or during the year. They include births, transfers within the herd or purchases into or sales out of the herd to non-project herds. Data on cattle entered in the second entry page corresponds to the data for Items 3–7 of Schedule 1.

Note that in the calculator, when a movement of cattle is entered as a “transfer” it is taken to be a movement from or to an eligible offsets project or one which had been included in the section 22 application but the transfer had occurred before the declaration date (an anticipated project herd). Proponents should not enter movements of cattle between project herds as sales or purchases, even if, in business-as-usual, such a movement may be recorded on the profit and loss statement. The ability of an auditor to track movements of cattle between project herds, particularly in the final year of the project, depends on adherence to this principle.

For both data entry pages, factors such as deaths or unaccounted losses or gains are estimated by difference from the opening stock, purchases, sales, births and closing stock (for data entry page 2) or opening stock and closing stock (for data entry page 1). Their entry date or exit date is assumed to be the middle of the year. All such animals must be immediately identified by means such as electronic ear tags. All deaths are also assumed to occur at the midpoint of the reporting year and are estimated by difference between opening stock, transactions and closing stock. This assumption is adopted because proponents are unlikely to be able to determine the date of death of all animals with reasonable accuracy. Ear tagged animals identified as being from another herd could be entered in the transient herd page of the calculator as “transfers in” to one herd and “transfers out” to another. However, if routine mixing of herds owing to lack of fencing or other limitations occurs, adequate accounting of numbers and classes in herds would be problematic and a project is unlikely to succeed.

Paragraph 23(c) requires that calculations using factors or parameters from an external source are to be taken from the version of the source in force at the end of the reporting period. Examples of such factors or parameters are the global warming potentials for methane and nitrous oxide prescribed by the National Greenhouse and Energy Reporting Regulations 2008

24                              Assessment of average liveweight for inputs into the Calculator

Accurate estimates of LW of all classes of animals from the beginning of the emissions intensity reference period to the end of the crediting period are necessary for estimating abatement. Section 24 provides the framework for grouping animals to assess average LW for inputs to the Herd Management Calculator. This framework informs detailed provisions for assessing average LW for the crediting period and emissions intensity reference period in sections 25 and 26 respectively.

Subsection 24(1) provides that, for specified inputs in Schedule 1, each livestock class of a group or subgroup of animals is an input group. The dates of the arrival and departure of the animals, or class, weight and age at the beginning and end of the project or EIRP year for the resident herd, which are required inputs in Schedule 1, are defined as input dates.

Subsection 24(2) allows for estimating LW of a class of animals in an input group either as a single group or, for greater accuracy, several weighing groups according to the dates of arrival in, and/or departure from, the herd. A weighing group is an input group, or a part of an input group, for which LW is determined separately. A project proponent might wish to divide an input group into different weighing groups if they intend to apply different methods for weighing to different animals in the input group. The note under this subsection clarifies that input dates for the project are both the assessment days that begin and end the calculation year and either the days on which animals entered or left the herd or the days on which the animals are taken to have entered or left the herd which is the mid-point of each month.

Example 1 in the notes at the end of subsection 25(1) demonstrates how this provision gives greater accuracy of estimation according to age and date of arrival into and departure from the herd.

Subsection 24(3) provides that the average LW of animals in several weighing groups is the weighted average of the weights in each group. It is assumed that normal best practice in weighing will involve prior calibration of scales using standard weights according to the manufacturer’s directions.

Subsection 24(4) clarifies that if the average livewight of any input group is not available in accordance with sections 24 and 25, the abatement amount for the herd as an input to the Calculator is taken to be zero for that assessment year.

25                              Inputs relating to the crediting period

Section 25 sets out the methods and timing for ascertaining liveweight (LW) in the crediting period. For clarity the following boxed note is inserted.

Sections 25 and 26, as well as Schedule 1, allow for some flexibility in how the proponent can obtain the average liveweights that are to be entered into the calculator. However, it is expected that in most cases, the proponent will follow the following procedure.

For inputs to the calculator, whenever animals enter or leave the herd:

       (a)     they are treated as having entered or left at the mid-point of the month in which they entered or left;

       (b)     if they enter or leave by being bought or sold, the sale weights are used.

Animals that are born into the herd are entered into the calculator as having entered the herd by birth in the month in which they were branded, and are assigned a weight at branding of 75kg. Animals over 3 years old will be taken to have the weights derived in accordance with paragraph (1)(e).

In addition, there will be an annual muster at which all animals that are less than 3 years old, but are expected spend more than 12 months in the herd, will be weighed (or suitable samples of them will be weighed). The muster will take place within the period from 6 weeks before to 6 weeks after the assessment day. For the first and last assessment days only, weights that are taken outside the period from 2 weeks before to 2 weeks after the assessment day must be adjusted by linear projection. This is because weights taken outside that period could produce discrepancies in the calculations for one assessment year that are not automatically corrected in the next.

For animals that that are expected to spend less than 12 months in the herd, the proponent will wait until they are sold, and will then use linear projection under paragraph (1)(h) to derive weights for the assessment day. Note that dates used for linear projection must in all circumstances be after the date of application and before the end of the crediting period.

If the animals recorded by the muster are the same as the animals on the livestock inventory on the assessment day, these figures will be used as the input figures for the end of one year and the beginning of the next. However, if any animals enter or leave the herd:

       (a)     between the muster and the assessment day, where the muster is earlier; or

       (b)     between the assessment day and the muster, where the muster is later;

the arrivals and departures will be entered into the calculator in the normal way, for the assessment year in which they occur, and the input figures for the assessment day will be adjusted accordingly.

In general, direct measurement is required except for mature weight animals and for young cattle entering the herd where a default for weight at branding, tagging or other first-time identification procedure, is used. Although the section refers to weights, the provision covers the requirements of Schedule 1 for all inputs, since numbers, age, class etc. are monitored at the same time. Cattle that are discovered at muster (as ‘ferals’ or ‘cleanskins’), not having been on the livestock inventory of the business operation at an earlier time are taken to have entered the herd by ‘other management action’ at that muster with a starting weight obtained by direct measurement in accordance with the methods below.

To ascertain liveweight in the crediting period the following methods are used.

Paragraph 25(1)(a) provides for weighing all animals in a weighing group and calculating the average.

Paragraph 25(1)(b) allows for the use of a statistically valid sampling procedure as an alternative to weighing all animals in a weighing group. Further details on a suitable procedure are given under section 30 of this Explanatory Statement. The accuracy required in sampling is not prescribed, because it will vary according to local industry practice and is usually determined according to environmental and management conditions at a financial audit. The first note under subsection 25(1) indicates that values ascertained consistently with Accounting Standard AASB 141‑Agriculture would be expected to meet the requirements of this method. Proponents may wish to seek the advice of a financial auditor with experience of local industry standards when determining the required degree of precision in sampling.

Paragraph 25(1)(c) allows the LW for a weighing group in the herd at the beginning of the first assessment year of the herd to be determined from the average weight of all members of the same livestock age category and class as a whole. This approach applies average LW of all animals of that age and class in the herd, calculated in accordance with subsection 25(2). This provision recognises that information to identify weights of separate groups from historical data at the end of the EIRP may not be available and that accurate measurement of a starting weight is essential.

Paragraph 25(1)(d) allows for the use of LW at the end of the previous year as an adequate estimate of LW at the beginning of the next assessment year. The paragraph refers to subsection 25(5), which requires that when this method is used all animals in the weighing group must have been included in the input group at the end of the previous year.

Paragraph 25(1)(e) provides for the use of hot standard carcase weight of cull animals in the reporting year (converted to LW using the dressing out percentage supplied by the abattoir) as an exception to the use of direct measurement in the crediting period. This covers bulls and cows greater than 3 years of age that are not normally weighed because they usually reach a mature weight at 3 years old. Subsection 25(6) provides further details on this method.

Paragraph 25(1)(f) allows an exception to direct measurement on farm. Instead, measured weights from purchase and sale documentation may be used where the animals in the weighing class were bought or sold within one month before or after the input date.

Paragraph 25(1)(g) recognises that a weight at branding/tagging of newly born animals is not usually taken and allows for a default weight of 75 kilograms (kg) to be entered into the Herd Management Calculator.

Paragraph 25(1)(h) allows liveweight for an assessment day to be estimated by a linear projection based on two known weights. Details are given in subsection 25(7) and explained further below.

Note 1 to the subsection provides for estimation of fair value at any time. This means that numbers and liveweights must be assessed to the accuracy acceptable to a financial auditor for normal business-as-usual reporting.

Note 2 to the subsection clarifies that animals bought or sold within one month before or after an assessment day can have weights used for both the assessment day input as well as the input for entering or leaving the herd.

Note 3 to the subsection provides guidance for input data relating to animals that enter the herd by birth, refering to the Herd Management Calculator input requirements in Schedule 1.

Note 4 to the subsection provides that if any input required for an input date is not available, no credits will be allowed for the whole herd. This provision applies particularly where mustering exceeds the 12 week window so that the inputs are not available. The provisions for alternative means of assessing weight and managing muster numbers (such as dividing herds at the outset of a project or using linear projection) should be considered carefully for that reason.

Two examples of application of methods for ascertaining inputs are provided under subsection 25(1).

Paragraphs 25(2)(a) and 25(2)(b) and subsection 25(3) specify the time windows around an input date when weighing must be done in order to include that data in the project:

(a)     for the first assessment day and last assessment day (beginning of the first assessment year and end of the last assessment year) the time window is 2 weeks before or after the assessment day (a total of 4 weeks); and

(b)    for any other assessment day the time window is 6 weeks before or after the assessment day (a total of 12 weeks).

Although the time window for data to be collected on the first assessment day and last assessment day is limited to within +/-2 weeks of the assessment day, for each of these assessment days linear projection can be used to estimate the weight on the assessment day using weights collected outside of +/-2 weeks but within 6 weeks before or after the assessment day. Subsections 25(9) and 25(10) describe how this works.

A well designed sampling strategy can enable statistically valid sample groups to be weighed from a herd where the muster happens sequentially over a longer period than the 12 week interval allowed around the assessment day. For example: a herd in northern Australia is mustered over a four-five month period starting in mid-March or April annually. The assessment day is the 31st May, so the interval for weighing cattle extends from the 19th April to the 12th July. Selecting a statistically valid sample from groups mustered during the interval would allow a proponent to input the total number of cattle mustered over the longer period while complying with the method.

Weighing for an input date which is not an assessment day (subsection 25(3)) must be done within the monthly period in which the input date falls. As identified in Schedule 1, the year (for abatement calculation purposes) is divided into 12 monthly periods, each of which has a monthly input day at the mid-point of the monthly period.

These provisions enable greater flexibility around an input date at the beginning or end of the year, compared to the one month before or after allowed in the 2015 Determination, but ensure increased accuracy of weighted average weights entered into the calculator for the first and the last assessment days of the project by making a correction for the estimated difference in weight due to an early or late muster.Subsection 25(4) allows for calculating average LW of a livestock class at the beginning of the first assessment year of a herd by weighing either all the animals in the class or a sample of the animals in the class. The provision is made to arrive at a measured weight for the beginning of the first assessment year. Note that the sampling approach does not require a separate muster but can be done on animals already in the yards. The sampling procedure is outlined in Division 4 and can be applied using the sampling tool tab in the calculator. All that is required is to take a random sample of the weighing group of animals rather than weighing them all at annual muster. Usually a 10 per cent sample is a good starting (but not necessarily ending) point for a sample. The first 20 steers in a mob of 200, through a gate, for example.

Subsection 25(5) deals with the provisions of paragraph 25(1)(d). It allows weight at the end of one year to be used as an estimate of weight at the beginning of the following (first assessment) year if the weighing group was accounted for in the input group entered at the end of the previous year. Any sales or transfers out of the weighing group at the end of the previous year would negate this option, because the average weight of the group would change between the end of the previous year and the beginning of the new year.

Subsection 25(6) provides, for the purposes of paragraph 25(1)(e), for estimating LW of mature cows and bulls using hot standard carcase weight and either an actual dressing out percentage of cull animals or a default parameter of 55 per cent dressing out weight. The provision recognises the use of the 55 per cent default in the industry and the possibility that individual abattoirs may not report dressing out percentages. Dressing out percentages reflect the carcase resulting from removal of particular portions of the animals such as the hide, hooves, head and tail and a weight taken before chilling. LW may be calculated by dividing the hot standard carcase weight by the dressing out percentage expressed as a fraction.

The provisions of Subsection 25(6) should be noted particularly for difficult to measure weighing groups such as old mature steers and bulls over 3 years which can be impossible to weigh safely.

Subsection 25(7) allows for the use of linear projection to estimate the average weight of a weighing group on an input date from known average weights of the group on two other days (Date 1 and Date 2). There are 4 circumstances in which linear projection can be used, set out in subsections 25(8), (9), (10) and (11). In each of the 4 cases, each date for the known average weights must be either:

(i)                 an input date for the same group (i.e. a date for which input data for the group was entered into the Calculator), for which the input average weights were established by one of the methods described in section 25 other than linear projection; or

(ii)               the midpoint of one of the 12 monthly periods into which each assessment year for the herd is divided (a “monthly input day”), for which the average weights can be established by paragraph 25(1)(a), (b) or (f) (i.e. using receipts from sale records or by weighing all animals in the weighing group or a statistically valid sample from the weighing group).

In addition, for each of the 4 cases:

(i)                 there must be no other input date between the two dates for which known weights are available for the group in accordance with this section; and

(ii)               both Date 1 and Date 2 must be between the date of the section 22 application and the end of the crediting period for the project (this will affect herds differently if they have different assessment days).

Subsection 25(8) provides for the case where Date 1 and Date 2 are either side of the input date and no more than 12 months apart as illustrated in Figure 4.

Figure 4: Illustration of how linear projection is applied in subsection 25(8) when Date 1 is before the assessment day and Date 2 is after the assessment day and Date 1 and Date are no more than 12 months apart.

Subsection 25(9) will apply where the project proponent cannot comply with the general muster provision in subsection 25(2) for the first assessment day of the abatement calculations for the herd (which requires weights or sample weights to be taken within 2 weeks before or after the first assessment day), but is able to get the weights within 6 weeks before or after the assessment day. In this case, the weights can be used for a Date 1 that is the monthly input date before or after the assessment day and Date 2 can be as late as the next assessment day. In some cases, both Date 1 and Date 2 will be after the input date, and the projection will be back to the input date. In other cases, Date 1 and Date 2 may be as much as 13 months apart (Figure 5).

Figure 5: Illustration of how linear projection is applied in subsection 25(9) when data is collected outside two weeks before or after but within six weeks before or after the first assessment day. Note that Date 1 can be before or after the assessment day and Date 2 must be no later than the following assessment day.

Subsection 25(10) makes similar provisions to 25(9) in relation to the last assessment day, as illustrated in Figure 6.

Figure 6: Illustration of how linear projection is applied in subsection 25(9) when data is collected outside two weeks before or after but within six weeks before or after the last assessment day. Note that Date 2 can be before or after the assessment day and Date 1 must be no earlier than the previous assessment day.

Subsection 25(11) will apply where the general muster is delayed more than 6 weeks after an assessment day for the group (other than the last assessment day) because of a natural disturbance or the expectation of one. In this case, Date 1 must be before the assessment day, but Date 2 may be delayed up to 3 months after the assessment day, allowing up to 15 months between Date 1 and Date 2. A natural disturbance event may include record heat, heat and humidity combinations, flooding, storms etc.

In this situation the Regulator has the discretion to allow an extension of the period for data collection. A project proponent should apply to the Regulator to have Subsection 25(11) apply as soon as reasonably practical after the natural disturbance, or the expectation of one, and provide relevant supporting material. Subsection 25(12) provides that an application to the Regulator for consideration under the provision would only succeed if supported by:

·           evidence from a government or local government authority to justify the change to the input date based on a warning of an event or and/or a post event report such as a flood report. For example, a flood warning is provided for local flooding of the Darling River at Bourke, NSW by May 1 as a result of rainfall in north Queensland catchments during February-March. A proponent decides to weigh on March 15 instead of May 1 before the flood arrives. The application to the Regulator would be made on May 1 on the basis of the warning and the information on the local flood level achieved; and

·           evidence that the earlier and later date weights had been collected (indicating intent to weigh for that year).

26                              Inputs relating to the emissions intensity reference period

Subsection 26(1) provides a hierarchy of methods to estimate LW for the emissions intensity reference period. The methods include options recognising that direct measurements using on-farm scales may not have been made. The first method in the hierarchy for which relevant data is available must be used.

Paragraph 26(1)(a) provides that any of the methods available for an assessment year can be used in the EIRP.

Paragraph 26(1)(b) provides the option of converting total value and animal numbers from sales or purchase documents to an average LW using an indicator price, as described in subsection 26(2). Animals in the weighing class must have been bought or sold within one month before or after the input date.

Paragraph 26(1)(c) allows for the use of a linear projection between a beginning and an ending weight to estimate a weight during the EIRP, particularly for the beginning and end of each year. Further, the projection can be between two points up to 12 months before the beginning or after the end of the emissions intensity reference period. The method involves subtracting an assumed birth weight of 35kg from an opening weight and then calculating the liveweight gain rate per month between that modified opening weight and the end weight. A weight at any time after the opening weight date is then derived by multiplying the liveweight gain rate by the number of months involved.

Paragraph 26(1)(d) allows for an estimate of average LW of a class to be obtained using the method described in subsection 26(4) from an average of data from either all sales, purchases or an indicator price. This option can be used to provide an estimate of LW for the beginning of the emissions intensity reference period when no scale weights, sales or purchase information or hot standard carcase weights for the first emissions intensity reference period year is available.

Subsection 26(2) describes the use of an indicator price from Meat and Livestock Australia (MLA) as the industry marketing body under the Australian Meat and Live-stock Industry Act 1997. The numbers sold and the total value of sales from receipts, available from the MLA website, may be used to estimate LW. The data can be used to determine the appropriate average price for the class of animal in the nearest reference sale location to the project in a particular week of the year in which the animal was sold. Prices are available for young cattle (calves and vealers), trade steers, medium steers, medium cows and feeder steers.

Subsection 26(3) allows for the use of the default 55% dressing out parameter in combination with an indicator price where the price is quoted on a carcase weight basis.

Subsection 26(4) describes a method for estimating average LW of a class for an input date in the emissions intensity reference period from the average of all purchase, sale or indicator price data. As noted above, this method is a last option where application of the Determination would otherwise not be possible until new data had been collected.

Part 5—Reporting, record‑keeping and monitoring requirements

Division 1—Operation of this Part

27                              Application

Subsection 106(3) of the Act provides that a methodology determination may require the project proponent of an eligible offsets project to comply with specified monitoring, record‑keeping and reporting requirements.

Under Parts 17 and 21 of the Act, a failure to comply with these requirements may constitute a breach of a civil penalty provision, and a financial penalty may be payable.

The reporting, record-keeping and monitoring requirements specified in Part 5 of the Determination are in addition to any requirements specified in the Act and subordinate legislation.

Proponents are required to monitor and keep records to demonstrate that the project meets the eligibility parameters listed in Part 3 of the Determination. 

Division 2—Offsets report requirements

Note:       Other reporting requirements are prescribed in the Rule.

28                              Information in each offsets report

For paragraph 106(3)(a) of the Act, the following information must be included in each offsets report in relation to each herd:

(a)           a description of the project activity or project activities undertaken in each assessment year of the herd that ends in the reporting period;

(b)          all inputs and outputs from the Herd Management Calculator for the reporting period;

(c)           the assessment day for the herd;

(d)          in the first offsets report relating to the herd, if the assessment day for the herd is a new assessment day specified in accordance with subsection 8(5) – the assessment day priginally specified for the herd in the section 22 application or the application under subsection 8(3);

(e)           a statement that:

                           i.            identifies the land on which the herd grazed in each year of the reporting period; and

                         ii.            indicates that the land was not cleared, for the purposes of the project, partially or wholly of perennial woody vegetation except as allowed under section 18.

Proponents should assume that any data presented on the herd, the business operation or the land associated with such operations may be subject to audit and a request for independent data and information for verification.

Note that under the Act, a proponent has up to six months after the end of any reporting period to provide the project report. This provision is particularly relevant to multiple herds and to aggregated projects, because, for example, an aggregator may have project herds to report on that have different dates for the end of the project year.

Division 3—Record‑keeping requirements

Note:       Other record‑keeping requirements are prescribed in the Rule.

28A            General

The project proponent must keep separate and self-contained records for each herd, which are easily accessible to an auditor, that demonstrate that sections 10 and 11 (the separate business operation and herd continuity requirements), the restrictions on transfer of cattle between a project herd and linked herds (paragraph 12(1)(b) and the transfer of cattle restrictions in the final year (paragraphs 12(1)(c and d)) are satisfied at all times. This information is not specified but should include the calculator runs for each herd and the data supporting the entries required in Schedule 1. This information will demonstrate the management of a discrete herd continuously over time. Records describing business structure and location and management changes in the EIRP and the project would satisfy the separate business operation requirement. For the transfer restrictions, the proponent should keep a schedule of transfers between all herds in the final year for comparison with the calculator entry sheets by the auditor. Sales outside the project do not need to be kept separately as a discrete set of records for that period, but invoices or receipts may be requested by an auditor as a routine practice.

29               Records that must be kept for purchased feed

Subsection 29(1) requires that records must be kept for activities involving a change in the diet of the herd or part of the herd when the change in diet involved purchased feed.

Subsection 29(2) requires that if feed was purchased from a commercial supplier, a fodder declaration form, commodity vendor declaration form, or equivalent record containing data on the CP and DMD of the feed constituting the dietary change must be kept.

Subsection 29(3) requires that if the feed was purchased from a non-commercial supplier, the proponent must keep a purchase invoice that describes the type of purchased feed. For example, lucerne hay, sorghum silage, distiller’s grains or feed barley are some of the feed options available. This information is used in the Herd Management Calculator through default tables to estimate the change in emissions related to modified diets.

Division 4—Monitoring requirements

Note:       Part 17 of the Rule sets out record‑keeping requirements that relate to showing that monitoring requirements for the project are being complied with, and to collection of data while monitoring the project.

30               General

Subsection 30(1) requires that a proponent must conduct sufficient monitoring of the herd to determine the inputs required under Schedule 1. Monitoring methods are not specified but the data collected must satisfy Regulator and auditor requirements for factors such as collection method, reliability and compliance with the Determination.

Subsection 30(2) requires that in the crediting period, if the project activity involves a dietary change, the project must undertake sufficient monitoring to comply with Schedule 2.

Subsection 30(3) specifies monitoring requirements relating to the specification of a herd as described under section 8. These requirements are that for each herd, the project proponent must monitor the following:

                     (a)   the land on which the herd grazed in each year of the reporting period (other than land on which the cattle grazed under an arm’s length agistment arrangement); This information is related to the requirements of section 13 on co-grazing.

                     (b)   the cattle of the herd during each year of the reporting period;

                     (c)   any changes to the entity or entities that constitute:

                                 (i)    the business operation for the herd during the reporting period; or

                                (ii)    the parent entity of the business operation.

The following recommendations are provided to assist proponents in deciding on appropriate monitoring methods.

Use of a previous audit

In deciding whether existing records are adequate to satisfy the monitoring requirements, a proponent should consider whether available data has already been audited and provided for another purpose. For example, a registered auditor other than an auditor engaged to review an Emissions Reduction Fund project may have previously examined a parameter in Division 4 for another purpose such as taxation prior to project commencement. In this case, if the opinion of that auditor was not an adverse opinion, the Regulator may consider whether the requirements of the Determination have been met for the monitoring of that parameter.

Use of secondary data

Alternatively, to meet the monitoring requirements for the project, it is recommended that, where possible, the proponent has two records or more available to support the determination of each parameter. Records that could be recorded by the proponent could come from a livestock agent, a carrier, from a purchase or sale, or derived from the NLIS tag system. It is the responsibility of the proponent to have the records required to validate emissions and emissions reductions produced in the project.

The data monitoring methods that could be used by a project proponent or collected from an independent source are set out below for the parameters in sections 24, 25, 26 and 29.

Number and average age of cattle in each livestock class

Records from a proponent could include:

·         data from a herd book from an annual muster to account for entries to and exits from the herd and attrition factors such as deaths in the herd;

·         taxation records of the opening and closing inventory of stock to support the herd book; and

·         the data input page of the Herd Management Calculator.

Records from an independent source may include:

·         records from the NLIS;

·         abattoir receipts indicating numbers of cattle slaughtered;

·         records of cattle exported overseas;

·         receipts from sales or transfers of cattle with the name of purchaser/transferee and the date of sale/transfer; and

·         cartage contractor receipts indicating date of cartage, cattle numbers and destination.

LW and LWG

Records for LW and LWG from a proponent may include:

·         data from the herd book recorded at an annual or seasonal muster and at point of sale; and

·         the data input page from the Herd Management Calculator.

Records from an independent source may include:

·         abattoir receipts indicating hot standard carcase weight converted to LW;

·         Eastern States Daily Indicator Prices published on the MLA website and converted to LW based on the total value of sales or purchases and the numbers of animals in each class that were sold or purchased at a particular time and location. A default dressing out percentage of 55% may be used where prices are quoted as carcase weight;

·         receipts from exporter indicating weight at sale; and

·         saleyard receipts from point of sale for LW.

Diet

Records created by a proponent may include:

 

·         days on supplement/established pasture in each credit reporting year from herd book entries of date of entry and date of exit from supplementation for each class of cattle supplemented; and

·         a record of the time the cattle spend on feeding regimes in a herd book or feeding records from a delegate of the proponent supported by invoices/receipts, herd book records; and

·         the data input page from the Herd Management Calculator.

Other records that can be used from an independent source are given in section 29.

LW Sampling Approach

LW and LWG for each livestock class in the herd can be determined from either direct measurement of the whole herd or sample herd or direct measurement of a random sample of all animals and classes in the herd. A suggested sampling approach is given below. It is available on the revised Herd Management Calculator by inputting the weights of a known number of pilot survey animals and following instructions thereafter.

The requirements of the Determination can be met with any statistically valid sampling approach that provides an accurate representation of the fair value of livestock at any time (see AASB 141 for details of fair value concepts). Fair value is based on the numbers and LW at any time plus an acceptable price per kg. In practice, multiple sampling is conducted over time, and a projection of future LW is obtained, which can be used, for example, to estimate fair value of livestock at a future merger or acquisition date. The difference between such an estimate and the actual numbers and LW reflects the degree of precision of the estimate obtained by sampling. A financial auditor may set a target precision considered acceptable for the local conditions. The following is a suggested approach to sampling that can be used to meet any desired Targeted Precision (see below) set by an auditor.

Step 1: Pilot survey

For each cattle class, undertake a pilot survey to estimate variance in LW in relation to each group in that cattle class.

To undertake a pilot survey it is recommended that the proponent start by weighing a random sample of 10% of the animals of the class. A 10% sample is often close enough to give an accurate estimate of LW. However, it is not, on its own, a guarantee of adequate estimation of true average LW for the group, as every group in every herd has different variability around a mean weight.

Where multiple groups of cattle are separated by subdivision, breed, feed quality or any other parameter that makes the group identifiable as a unit, each group must be sampled separately. A 10% random sample may be taken, for example, as the weights of 10 randomly selected animals, regardless of size or other characteristics, out of 100 to enter a weighing race. Every animal in the group must have an equal chance of being selected for weighing.

A well designed sampling strategy can also enable statistically valid sample groups to be weighed from a herd where the muster happens sequentially over a longer period than the 12 week interval allowed around the assessment day. To achieve this, the mean of the sample of cattle taken within the 12 week interval must be demonstrated to achieve a similar level of representativeness for the whole population as the mean of samples collected throughout the mustering period. This requires sampling across the whole herd, at least in the first year, to demonstrate that the means are equally representative of the full population.

Step 2: Number of animals to be sampled to meet targeted precision

In order to determine the sample size required to estimate LW of animals in each group, to a required precision, Steps 2.1 and 2.2 in this sampling method should be completed in relation to each group. These steps are intended to provide an estimate of the variability of weights around an average weight that is the variance of the weights of the group.

Step 2.1: Coefficient of variation of each group

Use the data from the pilot survey to determine the standard deviation of the sample taken from the group. The standard deviation is a numerical value used to indicate how widely individuals in a group vary. The standard deviation of a sample is the square root of the sum of squared deviations from the mean of the samples taken.

)2/N-1

Equation 1 (sampling approach)

Where:

 = sample standard deviation of LW from pilot or preliminary group (i) (kg LW).

x = individual weight of a sample animal in group (i).

 = sample mean weight from pilot data measured in group (i) (kg LW).

N= number of animals in a pilot sample of a group (i).

In order to determine the coefficient of variation within each sample taken from each group, the following formula must be completed:

Equation 2 (coefficient of variation)

Where:

= coefficient of variation of pilot sample in group (i).

 = sample standard deviation from pilot data in group (i) (kg of LW).

 = sample mean weight from pilot data measured in group (i) (kg LW).

Step 2.2: Number of animals to sample in each group

                LW of a sample of a group in a herd should be within the accuracy demanded by an auditor. For example, the standard may be ±5% of the true value of the mean of the groups in the class at a 90% confidence level. The level of accuracy required is usually chosen by an auditor using local knowledge to provide an estimate of fair value of livestock at any time (see “LW sampling approach” above for derivation of fair value). This is the approach used under the recommended provisions of the AASB 14 system.

                The standard of accuracy required is referred to as the Targeted Precision.

In order to estimate the required sample size to achieve the Targeted Precision in each group, the following formula should be used:

Equation 3 (sample size for target precision)

Where:

= estimated number of sample animals required to meet Targeted Precision ().

 = coefficient of variation in pilot data as calculated in Equation 5 (expressed as a percentage).

 = two-sided students t-value, at the degree of freedom equal to (n-1) where (n) is the number of animals, for a 90% confidence level.

 = desirable or allowed level of sampling error (expressed as a percentage (in this example it is fixed as 5%)).

When the number of animals required in a sample to obtain the targeted precision has been established, the sampling procedure to obtain a true estimate of LW in a group from a sample should be validated using Step 2. This step involves additional sampling to either supplement the sample survey data and thus achieve Targeted Precision, or reduce the numbers in the sample whilst achieving the desired level of Targeted Precision.

The determination requires that a minimum sample size for a group of animals will be 20. The provision is made to ensure that the sample is normally and independently distributed (i.e. with a net deviation from the mean of zero). That condition is required as part of the students t test on which the sampling method is based. Thus in the calculator sampling tool, if a sample size of less than 20 is calculated, the default value of 20 will automatically appear.

Step 3: Validation of sample size in a LW survey

Once the number of animals in a sample required to obtain the Targeted Precision has been obtained (Equation 3 sampling approach), the process of sampling should be repeated using that number of animals.

Step 3.1: Standard error

The actual standard error of LW of animals in the sample should be calculated using the following formula:

Equation 4 (Standard error of final sampling with required number of animals)

Where:

 = actual standard error of the LWs in the pilot survey in group (i) for reporting period (r).

 = standard deviation of the LW data in group (i) for reporting period (r) (kg LW).

 = number of sample animals from group (i) for reporting period (r).

i = group (i).

r = reporting period (r).

Step 3.2: Determination of Targeted Precision

In order to determine whether the survey has achieved Targeted Precision, the following formula should be used:

 *100

Equation 5 (actual target precision of estimate)

Where:

=Targeted Precision error limit of the LW of a group (i) for reporting period (r) (%).

 = standard error of the survey in group (i) for reporting period (r) (kg).

 = two-sided students t-value, at the degree of freedom equal to (n-1) where (n) is the number of animals sampled for a 90% confidence level.

 = sample mean from LW data in group (i) using for the reporting period (r) (kg).

i = group (i).

r = reporting period (r).

The 90% confidence level must be used when determining the t-value.

The final value of TPir must be less than or equal to the value required by the auditor (usually 5% or lower).

If the TPir error limit is greater than the required value, additional animals must be surveyed until the Targeted Precision error limit is less than or equal to the required value. It is recommended that the proponent use Step 2 to test whether the sampling procedure needs to be repeated to meet the Targeted Precision at the time of initial muster, so that re-mustering is avoided.

Proponents may choose to obtain LW data through opening and closing stocks of a breeding herd that remains on the property from year to year and/or from weights at entry and exit from the herd for turnover stock. Entry and exit weights can be measured on-farm, obtained from purchase invoices and sale receipts, abattoir data, or from other sources as approved by the auditor. The opening and closing stocks of a class can be within a month before or after the annual project date. The Herd Management Calculator will project data from actual dated opening and closing stocks of animals to an annualised basis.

In Entry Page 1, LW data from opening and closing stocks and entry and exit weights is used by the LW and LWG model in the Herd Management Calculator to provide seasonal estimates of LW by class in the project. The model uses the relationship between feed quality and consumption, geographic location and other biological variables to estimate seasonal variation in LW and LWG. The estimates are then validated against the opening and closing LW (and/or entry and exit LW for turnover stock) entered by the proponent. The seasonal value of LW and LWG, the time on supplement and the seasonal variation in supplement composition provide the data for calculating annual methane and nitrous oxide emissions from the herd.

In Entry Page 2, a linear approach is used to calculate seasonal LWG for all cattle classes.

Division 5—Reporting under section 77A of the Act

31               Requirements relating to reporting under section 77A of the Act

For section 77A of the Act, an overall project may only be divided into parts that consist of one or more whole herds.

A whole herd is required, as noted in section 8, based on business records as the project boundary. Division of the herd may create inaccurate estimates of overall project abatement, as recognised by the provisions of the business operation requirement.

A Reporting Period for a project may occur at any interval from 6 months to two years. In the case where a proponent chooses to report at a six month interval, for example, only the herds which have finished their 12 month assessment year during that period are used in the report. In the next six month report, the herds which had not finished their assessment year in the previous report, plus those which have completed their assessment year(s) between the last report and the current report should be included

Schedule 1—Inputs into Herd Management Calculator—general

Paragraphs (1)-(10) of Schedule 1 seek to clarify data input requirements for the Herd Management Calculator as specified in the table in Schedule 1.

Paragraph (9) of Schedule 1 requires that in the special case where the proponent harvests feral or cleanskin cattle and introduces these onto the herd inventory of the property, these are treated as entering the herd by ‘other management action’ and entered as ‘transfer in: external’ under movement type in the calculator. It is recognised in this case, the associated transaction records from a separate entity will not be available. The following requirements exist in this instance:

i)                    The proponent must clearly identify this group as a separate input group, entering the herd from the harvest of feral or cleanskin cattle.

ii)                  The cattle must be weighed on entry.

iii)                It is expected that the input group will reflect an unmanaged herd, with a variety of ages and classes of cattle, where older male cattle have not been castrated and other signs of identification are not present. These aspects ensure that managed cattle from other enterprises are not introduced and classified as wild cattle

The table in Schedule 1 describes the inputs required by the Herd Management Calculator, and the units (where applicable) to be used for each data input. Each data input is required for the emissions intensity reference period and crediting period. The inputs are derived as follows.

1.      Identification of a region primarily occupied by each herd in the project as well as the start date for the calculation year. The region may comprise a territory, state, or a state and a sub-region, such as the Pilbara region of Western Australia. The regions are specified in the National Inventory Report.

2.      For animals present in the herd at both the start and the end of the year:

(a)    cattle numbers for each livestock class must be recorded for each year of the emissions intensity reference period and the crediting period at the beginning and end of each year; and

(b)   average LW for each livestock class must be recorded for each year of the emissions intensity reference period and the crediting period at the beginning and end of each year.

This information is required separately for this part of the herd (identified in the Herd Management Calculator as the Resident Herd) because the emissions of the animals present throughout the year are calculated in a different manner from the animals present for only a part of the year (identified in the Herd Management Calculator as the Transient Herd). The difference is due to the fact that emissions are calculated on a seasonal basis in the Herd Management Calculator (in line with the National Inventory) based on changes in LW, feed quality and animal numbers. For animals present throughout the year the changes in LW are estimated in the Herd Management Calculator using a model based on the starting and ending weights and the location by region and diet of the animal. For animals present for a part of the year, the model is not required and a linear LW growth rate is assumed across seasons.

3.      For animals that were in the herd at the start of the year but left during the year:

(a)    the number of animals in each livestock class at the beginning of the year; and

(b)   The average LW of each class at the beginning of the year.

An estimate of the average weights of a group of cattle is required for section 24. Individual animals also need to be identified with their particular group to ensure an accurate calculation of LW and LWG. For example, if a group of steers was purchased at the beginning of the project year on, for example, 1 April and was sold or transferred, with other animals purchased at other dates, in two groups on 31 May and 15 July. It will be necessary to be able to identify, at the time of sale, when all the animals being sold, entered the herd. Methods of identifying the animals by purchase date could include NLIS ear tags (preferred for auditing), brands, breeds, sex or any other reliable and durable method.

4.      For each sub-group of sale or disposal animals, that were in the herd at the start of the year but left during the year:

(a)    the date(s) they left the herd;

(b)   the reason they left the herd (i.e. whether they left for live export/slaughter or for sale for another purpose (such as sale to breeding or transfer to another herd));

(c)    the number of animals by class in each sub-group that left the herd; and

(d)   the average LW of each livestock class in the sub-group that left the herd.

This information on animal numbers and LW is required to calculate their combined impact on emissions.

5.      For animals that entered the herd during the year:

(a)    the date they entered the herd;

(b)   how they entered the herd by origin (e.g. birth, purchase, internal or external transfer);

(c)    the numbers in each class and the date they entered the herd; and

(d)   the average LW of the animals that entered the herd on the date they entered.

‘Other management actions’ as a means of stock entry include transfers of animals from a herd outside the project.

6.      For the sub-group of animals described in point 5 above that entered the herd during the year and was present at the end of the year:

(a)    the number of animals in each livestock class at the end of the year; and

(b)   the average LW of animals in each class at the end of the year.

As noted for item 2 of the table, the opening and closing stocks of animals, including their LW, are required by the Herd Management Calculator to ensure accurate accounting.

7.      For the sub-group of animals described by point 5 above that entered and left the herd during the year:

(d)   the date(s) they left the herd;

(e)    the reason they left the herd (i.e. for live export or slaughter or for another purpose);

(f)    the number of animals by class in each sub-group that left the herd on each date; and

(g)   the average LW of each livestock class in the sub-group that left the herd at each date.

This information applies in particular to animals traded during the year. For example, store animals purchased and sold as fat animals. The difference in combined LW and numbers plus the duration over which the change occurs is used to calculate the change in emissions of the group between entry and exit from the herd.

The information required in items 1–7 is used to create a rolling account of animals that enter and leave the herd during the year, using their entry date as a starting point. When animals present in the herd for the whole of the previous year are sold or transferred in the project year, they are accounted for using this information.

When the complete inventory is considered, any discrepancies between opening and closing stocks are identified as unaccounted animal increases or attritions (e.g. deaths and unaccounted losses). Such animals may be unaccounted losses due to environmental factors, such as drought or unaccounted gains from animals that wander onto the project property due to the lack or poor quality of fencing in an adjacent property. Thus there is no need for entry of data on deaths. All unaccounted losses are assumed to occur in the middle of the year but unaccounted gains are assumed to have created emissions for the emissions intensity reference or project years.

 

 


Schedule 2—Inputs into Herd Management Calculator—dietary change

The note in Schedule 2 applying to paragraph 23(b) covers the method by which changes in the diet of the animal, from an assumed pure pasture diet in the reference period to a mixed pasture and supplement-based diet in the project, contribute to emission changes. The paragraph requires that the dietary change inputs to the Herd Management Calculator for DMD and CP for the crediting period are determined as a weighted average of supplementary feed and naturalised pasture feed (from seasonal values of the National Inventory Report).

Values for CP and DMD are established automatically in the Herd Management Calculator if the proponent specifies a particular supplement. The cattle feeds covered in the Herd Management Calculator are: grain, mixed grain, hay, cotton seed, improved pasture, leucaena, silage and crop. Values for northern Australia and southern Australia are included and are used according to the region specified by the proponent.

A proponent may provide for supplementary feed from the values given in a commodity vendor declaration form, fodder declaration form or equivalent (see section 29). If using unlisted purchased supplements, proponents must enter DMD and CP content from the records specified in section 29.

The weighted average provision is specified because a diet can be made up of several components such as grain and naturalised pasture. The Herd Management Calculator assumes that proponents would feed certain maximum proportions of the diet for each component entered into the Calculator. Example include grain (25%) (high levels are cost-prohibitive), cottonseed (20%) (owing to potential gossypol poisoning), and leucaena (30%) (due to potential mimosine poisoning). No more than two supplements in addition to a forage component may be selected. If two forage components (e.g. improved pasture and silage) are selected, the supplements will be limited to the balance required to make up 100% of the diet. Any further entries are ignored in calculation. The weighted average composition of the diet is then calculated.

In addition to diet quality information, item 3a of Schedule 2 requires the number of days in which the dietary supplement was fed. For simplicity to calculate nitrous oxide and methane emissions, it is assumed that if more than 50% of animals in any livestock class were supplemented, then all of the animals in that class were supplemented for the designated period. Proponents may consider keeping records of volumes and dates of supplement purchases as part of verifying the supplementation of a class of animals.

 


 

Statement of Compatibility with Human Rights

Prepared in accordance with Part 3 of the Human Rights (Parliamentary Scrutiny) Act 2011

The Carbon Credits (Carbon Farming Initiative-Beef Cattle Herd Management) Methodology Variation 2017

This Legislative Instrument is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.

Overview of the Legislative Instrument

The Carbon Credits (Carbon Farming Initiative-Beef Cattle Herd Management) Methodology Variation 2017 (the Variation) amends the Carbon Credits (Carbon Farming Initiative-Beef Cattle Herd Management) Methodology Determination 2015. The Variation allows for the entry of an additional discrete herd with less than three years of historical data into a project after the Section 22 application, using conservative assumptions of baseline emissions and restrictions on the size of the new herd. It also removes the provisions for non- inventory cattle and secondary businesses and requires all movements to cattle in non- project herds to be made as a transparent sale at market price.

Project proponents wishing to implement the Determination must make an application to the Clean Energy Regulator (the Regulator) and meet the eligibility requirements set out under the Carbon Credits (Carbon Farming Initiative) Act 2011. Offsets projects that are approved by the Regulator can generate Australian carbon credit units.

Human rights implications

This Legislative Instrument does not engage any of the applicable rights or freedoms.

Conclusion

This Legislative Instrument is compatible with human rights as it does not raise any human rights issues.

 

Josh Frydenberg, Minister for the Environment and Energy