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Meeting growing demand for emissions reduction

Over the past 5 years, much has been invested in the legal frameworks required for a functioning carbon farming market in Australia.

The Carbon Farming Initiative (CFI) resulted in the passing of laws to determine what activities generate bona fide Australian Carbon Credit Units (ACCUs) that are then saleable. This framework was extended across the economy under the Coalition Government’s Emissions Reduction Fund, and more and more approved “methods” for generating ACCUs are now available for farmers and other businesses to use.

With the exception of very large industrial businesses, the approved methods are single activity methods.  This means that for a farmer to apply more than one method – they would be required to implement multiple carbon projects, with their own partners, monitoring and reporting rules.  

With the Emissions Reduction Fund now 3 auctions old, we continue to see the same types of projects participating.  Vegetation projects (avoided clearing, native forest planting and managing regrowth) continue to be awarded the lion’s share of contracts with 98.5 million tonnes of abatement contracted across 185 projects nationwide.  Of the agriculture methods available only two methods have been used – methane destruction in piggeries and soil carbon sequestrating in grazing systems, for a grand total of 17 projects and a total of 8.8 million tonnes of C02 abatement. Similarly only 8 million tonnes of abatement have been achieved by savannah burning methods utilised in northern Australia.

Volume of abatement by method (millions of tonnes of CO2)

With the April ERF Auction price now down to $10.23 / tonne, the competitiveness of projects beyond vegetation management is starting to wane.

As is good practice, the federal Government will next year explore the national suite of emissions reduction policies, and as part of this will rightly question why farmers and other industries across the economy have not taken up the methods that have been approved to enable them to participate.  These include methods to reduce methane from dairies, those to reduce emissions from cattle by adding nitrates to feeds and those that reduce emissions of nitrous oxides from fertiliser use in cotton farming systems.

Often, the administrative costs and risks (such as reduced productivity or financial risks) of implementing a method far outweigh the financial benefits of the carbon price, and we see a number of methods barely or not even utilised.

NFF has long argued that fundamental barriers to farmers participating in the carbon market remain.

  • There is no easy way for farmers to bundle up and sell all the different sequestration and emission reduction activities that are on their farm.  This creates administrative costs and reduces efficiency.
  • There are a very limited number of methods available that are relevant to the majority of farmers.  The reality is that for most Australian farmers, cost-effect methods are not yet available.
  • Understanding the legal and financial risks to participating in the carbon market is difficult, and sourcing trusted and independent advice is difficult.  Emissions reduction projects are long term commitments of at least 7 years, and in the case of sequestration projects 25 or 100 years.

Commentators from far and wide continue to point to the “land sector” and farmers as key to achieving Australia’s commitment at the Paris Climate Conference of a 26-28% reduction in our national emissions by 2030.  There is also growing consensus from commentators that a cap and trade type model for reducing carbon emissions across the economy is inevitable.  Many commentators are suggesting that it will not be a particularly big step between the Coalition’s “safeguard mechanism” to an economy wide trading scheme. 

ACCUs issued by method (contracted and non-contracted)

So the question for government must become how do we unlock the carbon potential on Australian Farms?

There are three parts to answering this question.

First is a commitment to invest in the research and development that is required to bring new technologies and practices to market.  Farmers can’t participate in markets if we don’t have access to cost competitive emissions reduction methods.

Secondly, farmers need a low risk, low cost path to the market.  We need to overcome the barriers in the marketplace.  This means dealing with trusted advisers and partners.  This means having easy to access information, tools and resources available to make sound business decisions about participation.

And finally, there are opportunities for industry and government to co-invest in the research and development of cost-effective emissions reduction technologies and practices that also improve productivity or efficiency on farm. Mitigation options that improve productivity and profitability, in addition to those that require an additional incentive from the market or from Government initiatives, are more likely to be adopted by farmers as it will make business sense to do so.  This will help drive the overall performance of both the land and agriculture sectors in the national greenhouse gas inventory.

So now is time to start the conversation….are you involved in carbon markets and why?  If not why not?  How could we make it easier to participate in the carbon market?  What on-farm carbon opportunities are being missed and why?

Check out the Clean Energy Regulator’s Website for more information about the emissions reduction fund.

Photo: Jim Bendon, Flickr

This article was authored by Ms Jack Knowles. Jack is the General Manager, Natural Resource Management at the National Farmers' Federation.

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