Carbon rights as new property: the benefits of statutory verification

This paper examines the different ways in which carbon rights have been verified as property interests. A carbon right is a new and unique form of land interest that confers upon the holder a right to the incorporeal benefit of carbon sequestration on a piece of forested land. Carbon sequestration refers to the absorption from the atmosphere of carbon dioxide by vegetation and soils and the storage of carbon in vegetation and soils. Innovative legislation has been introduced in each state seeking to separate the incorporeal benefit of carbon sequestration from the natural rights flowing from land ownership. The fragmentation of land ownership in this way is a constituent of broader climate change strategies and is particularly important for an Australian emissions trading scheme where carbon rights will acquire value as tradable offsets. This paper will explore the different legislative responses of each state to the proprietary characterisation of the carbon right as a land interest. It will argue that verifying the carbon right as a new statutory property interest, in line with the approach set out in the Carbon Rights Act 2003 (WA), is preferable to aligning it with preconceived categories of common law servitude. By articulating the  carbon right as a new form of statutory interest, unique in status and form, its sui generis character is more accurately reflected. Further, statutory validation of the carbon right as a new land interest is more efficient as legislative rules are more visible and therefore come to the attention of other market participants more quickly and at a lower cost without the burden and complexity associated with expressing the right through the prism of pre-conceived and non-responsive common law forms.