Sequestration projects generate credits by removing CO2 from the atmosphere, absorbing it and then storing it permanently. Forms of sequestration include the absorption of carbon by plants as they grow and increase organic matter in the soil.

Table 2.3 summarises sequestration project types on the positive list. Sequestration activities include reforestation, revegetation, restoring rangelands and protecting native forests or vegetation that would otherwise be cleared.
 

Carbon sequestration in plantings can generate ACCUs only if the carbon is stored permanently. If it is subsequently released back into the atmosphere, for example because vegetation is cleared, it does not offset emissions and does not generate an ACCU.

For this reason, under the original CFI legislation, sequestration projects were subject to a 100-year permanence obligation.

The permanence obligation ensures that credits are for a genuine form of abatement. If carbon stores are not maintained, or the vegetation is cleared, the emissions are released again into the atmosphere and the project would have had no net effect on emissions. 

2.3.1 Permanence under the ERF

The permanence obligation has been modified under the ERF, allowing the option of a 25-year permanence requirement.

Proponents of sequestration projects can nominate a 25- or 100-year permanence period. Projects with a 25-year permanence period will be subject to a 20% discount on the number of credits that would otherwise be issued for the project.

Existing sequestration projects can request a 25-year permanence period and relinquish credits as necessary to reflect the 20% crediting discount.