Offsets upset Aussie farmers

Like their Kiwi counterparts, Australian livestock farmers are concerned about their government’s carbon farming initiatives which have seen a rapid rise in carbon credit prices as corporates seek to offset emissions.

The federal government has recently asked for feedback on proposals which could restrict the amount of land being used for this purpose as well as strengthen pest and weed control requirements.

Olivia Lawson, environment spokesperson for the Cattle Council of Australia said programmes that rewarded investment in agricultural land to be used solely for emissions abatement had led to poor land management in a number of instances.

Farmland bought for the sole use of offsets that was not actively managed was at risk of poor fire, water, pest and weed management which affects food production.

It was important all landholders had the same responsibilities for land management as the entire agricultural sector.

Australian carbon credit prices finished 2021 up 180% to a record A$47/tonne and there have been predictions they could go as high as A$60.

In mid-January the spot price sat at A$54/t, the increase fuelled in part by the tight supply of credits connected to the large volume of Australian carbon credit units (ACCU) contracted by the government to the A$2.55 billion Emissions Reduction Fund (ERF). This was established in 2015 and so far more than 1000 projects have been registered with yearly increases in approvals seen.

The initial price per unit was A$13.95 but after dropping back to A$10.23 this now sits at A$16.94, creating a floor price which most carbon credit producers try to avoid.

One or two auctions are held each year with decisions made on which projects put forward will be funded. So far out of 209 million tonnes of abatement approved agricultural projects make up 15.1m tonnes, vegetation projects account for 145.2m tonnes and landfill and waste, energy efficiency and transport make up the rest.

Avoid those emissions

The voluntary scheme was recently expanded to include carbon capture and storage projects, where carbon dioxide could be stored underground, but the Australian government has come under repeated pressure to adopt an avoid-emissions-first approach, which would leave carbon offsetting for processes that are difficult to quickly decarbonise.

It’s argued that while 80% of Australia’s emissions come from burning fossil fuels, 80% of ERF money has been spent on land carbon sequestration which is no replacement. A number of experts say a massive offset programme would be needed which can’t rely on bio-sequestration to reach the net zero by 2050 policy adopted after the recent climate summit in Glasgow.

Some say that with its changing climate Australia would be lucky to hold on to the soil carbon it already had and research estimates are that if the government was to directly fund emissions reduction offsets that would cost about A$16 billion a year.

Farmers can participate in two ERF schemes, human induced regeneration (HIR)and native forest from managed regrowth (NFMR).

HIR involves management of the timing and extent of livestock grazing as well as plants not native to the area and controlling feral animals. With NFMR there needs to be some vegetation to start with to show there’s forest potential, although existing trees aren’t included.

Data collection, validation, independent auditing and reporting are all required through the Clean Energy Regulator for ACCUs to be issued. Five-year gateway checks are also put in place to make sure the trees are growing as fast as forecast and that carbon abatement has been correctly estimated. Once they are certified ACCUs can be sold under the ERF.

To be approved by the Clean Energy Regulator and meet additional requirements, farmers need to demonstrate the activity is above and beyond normal management practices. Carbon estimation areas are used to ensure forest cover is achieved in 15 years and maintained for either 25 or 100 years, with ACCUs discounted by 20% for the lesser period.

Weeds, pests and fire a threat

With both schemes weed and feral animal control needs to be demonstrated to be above what would usually take place along with maintaining fire breaks and having a fire management plan, in order for payment to be made.

Farmers most concerned about present policies are graziers in southwest Queensland, worried about increased pest and weed threats, and a slip in community spending as the rural population shrinks.

An estimated 324,000ha in the Paroo area, much of it now owned by corporate investors, have gone into carbon farming projects. Locals argue that no one is now employed on the properties, meaning several million dollars of losses of income in the area’s towns. There are also worries about young people’s ability to take up farming if they have to compete with large companies for land. Some landowners believe that while carbon farming might be good in theory the practicalities haven’t been thought through and want corporate managers to be tied into pest control.

Late last year the Australian government asked for feedback on proposed measures it said would limit risks to agricultural production or local communities under the ERF.

Monitoring for compliance

The Cattle Council says it’s working with the government on its policy frameworks and supports further development of market-based mechanisms and financial incentives to reward beef farmers who choose to invest in emissions reduction, conservation, and regeneration activities. That would contribute towards the Australian beef industry’s carbon neutral by 2030 target. But Lawson said it wants to ensure any changes support environmental stewardship and lead to improved environmental outcomes.

However the Carbon Market Institute has urged the government not to rush the proposals, on which feedback closed in mid-January. It’s the independent industry association for business leading the transition to net zero emissions with 120 members which include farmers. It says the planned restrictions are unnecessary and could hinder landowners seeking to boost productivity as well as possibly threatening the growth and viability of carbon farming best practice.

Chief executive, John Connor says farmers have been the big winners from Australia’s carbon credits scheme which had added to their agricultural productivity. It’s involved in a study into carbon farming in southwest Queensland which is about to get underway.

“We should await results from some hard evidence rather than undocumented concerns, and avoid rushing this excessively bureaucratic government overlay on an already heavily regulated industry.”

CMI estimates the 57 carbon farming projects in the Paroo area mean around five million tonnes of carbon are captured or avoided each year, which equals taking around 1.5 million cars off the road.