Overview

What is the Reef Credit Scheme?

The Reef Credit Scheme is an innovative, market-based solution offering a new way to improve the quality of water entering the Great Barrier Reef.

The Reef Credit Scheme was conceived in response to the emerging consensus that a market-mechanism to incentivise water quality improvements across catchments of the Great Barrier Reef was urgently needed.

The Reef Credit Scheme will enable land managers to undertake projects that improve water quality through changes in land management to generate a tradeable unit of pollutant reduction or ‘Reef Credit’. A Reef Credit represents a quantifiable volume of nutrient, pesticide or sediment prevented from entering the Great Barrier Reef catchment.

The relative value of pollutant reduction from nutrient, sediment or pesticide is set using the reef wide pollution reduction targets described in the Reef 2050 Water Quality Improvement Plan (2018). These values will be periodically amended by the Reef Credit Secretariat to reflect changes to the pollution reduction targets.  A Reef Credit can then be sold to those seeking to invest in water quality improvements, such as government, private industry and philanthropists.

Natural resource management organisations, Terrain NRM and NQ Dry Tropics, have teamed up with environmental markets investor, GreenCollar, to develop the Reef Credit Scheme. The Scheme has been developed in collaboration with industry groups, research organisations and regional communities.

With financial support from the Queensland Government, the partnership is focused on setting up a framework to support the Reef Credit Scheme. This framework includes independent governance arrangements that will ensure that the Reef Credit Scheme is founded on delivering the highest standards of environmental and financial integrity. Integrity is further strengthened through a number of safeguards, including the requirement that Reef Credit projects are audited against robust methodologies to verify reductions in sediment, nutrients or pesticides into the Reef.

Benefits of the Reef Credit Scheme
  • Clear and robust rules to ensure water quality improvements credited are real, additional and permanent.
  • Farmers and land managers earn diversified and regular income over 10- 25 year time frames.
  • Research and knowledge linked to on-ground practice through peer reviewed methods designed to suit local conditions.
  • Attracts investment from government, corporate and philanthropic sources.
  • Investors buy verified water quality outcomes when they are delivered and audited.
  • A single administrative platform with independent, transparent and accountable governance oversight to achieve water quality improvement.
  • Delivers consistent measurement and monitoring tools to track progress toward water quality targets across the entire Reef.
  • Funds Projects designed to suit local conditions, agribusiness requirements and land manager’s plans.
  • Complements other key services such as extension, agribusiness, catchment management and other ecosystem services.
History

In early 2017, work began on designing the Reef Credit Scheme by foundation partners Terrain NRM, NQ Dry Tropics and GreenCollar as part of two reef water quality Major Integrated Projects (MIPs) funded by the Queensland Government. The initial concept and early consultations on mechanisms underlying the Reef Credit Scheme were first held in the in Wet Tropics and later introduced to the Burdekin Dry Tropics.

An initial feasibility study was conducted as part of a consultation phase of the Major Integrated Projects. The study demonstrated the viability of the Reef Credit Scheme.

In mid 2017, the Queensland Government committed support to the development of the Reef Credit Scheme, funding the establishment of a Reef Credit Secretariat for the start-up phase. Work then commenced on establishing the Secretariat and drafting of the Reef Credit Standard, Program Guide and foundation Reef Credit Methodologies. In late 2017, a Reef Credit Interim Steering Committee, comprising the CEOs of Terrain NRM, NQ Dry Tropics and Green Collar, was established to guide the development of the Reef Credit Scheme.

In February 2018 the Reef Credit Interim Steering Committee sought expressions of interest to develop an Options Paper for the Reef Credit Scheme. In particular, the Interim Steering Committee sought advice on how best to design, establish and operate a crediting system aimed at reducing pollutant loads to the Great Barrier Reef.

US based Winrock International was subsequently engaged to develop the Options Paper. Winrock International is a global leader in environmental markets and international development, providing solutions to some of the world’s most complex social, agricultural and environmental challenges.

A final Options Paper was completed in September 2018. This document has provided the basis for development of the Reef Credit Scheme. In mid-2018, the Interim Steering Committee also engaged with a number of operating water quality market programs, participants and founders, and standard development organisations in North America. These, together with discussions with key Australian stakeholders, have further shaped the design of the Reef Credit Scheme.

Throughout 2018 a number of project sites have been identified across the catchments of the Reef to test application of the foundation Reef Credit Methodologies. At these sites, management activities will be undertaken to generate Reef Credits including agricultural and grazing practice change, wetland restoration and gully restoration.

Current Consultation

Public Consultation Summary – March 2019

Thank you to everyone who contributed a written submission or comment and to all those who attended a meeting. All your input is extremely valuable.

Where appropriate, revisions have been made to the draft Reef Credit Standard and Guide which are now available in final version for use during the Beta phase (next 12months):

Reef Credit Standard Version 1.0
Reef Credit Guide Version 1.0

Compilations of all written submissions received by the Secretariat during the public consultation process for the draft Reef Credit Standard and Guide are available now. These documents include detailed responses to each suggestion, comment or question and are available below:

Reef Credit Standard Comments received during the Public Consultation Nov 2018-Dec 2018
Reef Credit Guide Comments received during the Public Consultation Nov 2018-Dec 2018

The Consultation Process

On 12 November 2018, the Reef Credit Secretariat published the draft Reef Credit Standard and Guide on the website (www.reefcredit.org) and invited comment on the draft documents. A series of public consultations were held over the ensuing four weeks in Canberra, Brisbane, Yeppoon, Rockhampton, Mackay, Townsville, and Cairns. Meetings were held with representatives from state, federal and local government, agricultural industry, environmental non-government organisations, and research institutions.

The Secretariat received a total of 22 comments on the draft Reef Credit Guide and 116 comments on the draft Reef Credit Standard, from multiple organisations.

Summary of submissions and responses

Some common questions raised in submissions related to the:
1. Additionality test (content and application);
2. Verification (auditing) process;
3. Process for establishing equivalence between different types of pollutants; and
4. Process for establishing baselines.

These comments were dealt with as follows:

1. Additionality test (content and application). The content of the additionality test is clarified to provide that “All Reef Credit generated pollution reductions and removals must be over and above:
1) a business as usual scenario;
2) legal requirements (e.g. regulatory standards threshold for compliance, or activities required by a conservation covenant); and
3) what is already funded to occur ( i.e. satisfy the financial additionality test).”

The definition of ‘business as usual’ has been revised to refer to “water pollutant reductions that would have occurred in the absence of the Reef Credit Project”. This is to make it clear that the change must be attributable to the incentive provided by the Scheme.

In a situation where there are overlapping programs (such as carbon projects), the financial additionality test will be applied by the independent verifier to determine whether the project is eligible to receive Reef Credits.

Further, Methodologies may adopt any of the following further approaches to the assessment of additionality: a. Implementation barriers (investment barrier, technology barrier or institutional barriers); b. Common practice; or; c. Performance benchmark.

2. Verification (auditing) process. The verifier must meet the eligibility requirements set out in the Standard for accreditation. The verifier attests that the requirements of the Standard and Methodology have been met in relation to the Reef Credit Project.

3. Process for establishing equivalence between different types of pollutants. The DIN amount is used as the base unit of measure or reference to create proportional equivalence or relative value (rather than functional equivalence) between pollutants in relation to the targets.

4. Process for establishing baselines. The process for establishing baselines will be dealt with in the Methodologies. A project must describe the project baseline scenario in accordance with the requirements of the relevant Methodology and must be reasonably assured during validation and verification.

Next steps

Appointment of Technical Advisory Committee
A Technical Advisory Committee will be appointed in March to provide advice to the interim Steering Committee and Secretariat on technical matters including:
a) selection of independent peer reviewers to review the draft foundation methodologies; and
b) compliance of the methodology development and approval process with the Standard.

Peer Review process for Draft Foundation Methodologies
Peer reviewers will be appointed by the Secretariat as subject matter experts to ensure methodologies are theoretically rigorous, scientifically robust and practically workable. It is anticipated that the peer review process for the draft foundation methodologies will commence in March and will be completed by April. The process for peer review of methodologies is set out in the Reef Credit Standard, Schedule 5.

The peer review process will include broader public consultation on the draft foundation methodologies. The Reef Credit Secretariat will be seeking this public comment on draft foundation methodologies in March. The public consultation period will run for 30 days in parallel with the subject matter expert review.

Establishment of Governing Body
An independent skills based Board of Directors will be established to provide oversight to the Reef Credit Scheme. It is anticipated that the Board will be established by May at which time the first Reef Credit Projects may be submitted for approval.

All components of the Reef Credit Scheme, including the governance arrangements, will be reviewed at the end of 2019 when the beta phase concludes. The revised arrangements will then be formally ratified by the Board.

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Scheme Timeline

The following outlines the proposed timetable for the development and establishment of the Reef Credit Scheme

Date Milestone
30th October 2018 Presentation of draft Reef Credit Standard and Guide to key stakeholders
12th November 2018 Public Consultation on draft Reef Credit Standard and Guide commences
Throughout November 2018 Targeted stakeholder briefings on draft Reef Credit Standard and Guide
12th December 2018 Public Consultation on draft Reef Credit Standard and Guide concludes
March 2019 Presentation of finalised Reef Credit Standard and Guide
March 2019 Peer review of foundation Methodologies
April 2019 Establishment of formal governance arrangements
April 2019 Commencement of Reef Credit Standard and Guide – Beta operation
May 2019 Registration of first Reef Credit Projects
June 2019 Issuance of first Reef Credits