About Kyoto Compliant and Non-Compliant Carbon Credits

In 2007, Australia ratified the Kyoto Protocol and committed to limiting human-induced CO₂-equivalent emissions to 108% of our 1990 emissions between 2008 and 2012 (first commitment period).

To ensure compliance with the 108% target, the Kyoto Protocol requires Australia to account for certain sources of greenhouse gas emissions and storage of carbon from reforestation. Kyoto ACCUs (Australian Carbon Credit Units) are those generated from activities in the agricultural sector that are included in our Kyoto accounts. Kyoto ACCUs can be sold in a “mandatory” market (i.e. those with an obligation under the Clean Energy Act).




Activities not included in our Kyoto accounts include changes in soil carbon, certain instances of human-induced regeneration of native vegetation or permanent plantings, and feral animal management. These activities were not included in Australia’s accounts because of the potential impacts to carbon stores from natural disturbances such as fires and drought. These activities can earn non-Kyoto ACCUs.

Non-Kyoto ACCUs cannot be used to meet a company’s obligation under the Clean Energy Act.  However, these credits can be sold in voluntary markets to other companies looking to voluntarily offset their emissions. It is more difficult to forecast the sale price and demand for voluntary ACCUs. Demand has typically been light in the market for voluntary credits, and they typically trade at a lower price than compliance credits. However, some voluntary carbon projects may have ancillary environmental or societal benefits that may make investing in them more attractive.   

The Australian Government will buy some non-Kyoto ACCUs using revenue collected from permits purchased by the 500 top emitters. The $250 million CFI non-Kyoto Carbon Fund will be operational from July 2013. The Australian Government will purchase these via competitive tender. The price the Australian Government will pay for non-Kyoto ACCUs will be no higher than the price of Kyoto ACCUs.

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Acknowledgements: Aust. Dept. of Climate Change and Energy Efficiency; Tim Moore, Northwest Carbon