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A National Energy Guarantee is just one piece of a broader emissions puzzle

Following Tuesday’s announcement of the National Energy Guarantee, we may have a way out of the energy policy stalemate. But what does this mean for agriculture, and for Australia’s abatement challenge more broadly?

On Tuesday, the Government announced that it will accept the recommendation of the Energy Security Board (ESB) to implement a National Energy Guarantee (NEG).  The objective of the NEG is provide a more affordable and reliable National Electricty Market, while also providing a pathway for the electicity sector to meet its share of the Australia’s emissions reduction task under the Paris Agreement.

The proposed mechanism (should it garner the support of the opposition and the states) shows real potential, though the National Farmers' Federation (NFF) has reserved its judgement until more detail on the proposal is made available.

Early indications are that the NEG will aim to set an emissions guarantee that reflects the electricity sector’s prorate share of the 26-28% emissions reduction by 2030 commitment that Australia has made under the Paris Agreement by 2030. This is the same share as that assumed by Dr Finkel, in his report recommending a CET.

The public commentary has quickly turned to exploring how the balance of emissions reduction task will be achieved - which is ultimately the question which the Government’s 2017 Review of Climate Policy is seeking to answer.

There is a great opportunity for the agriculture sector to contribute to our emissions reduction efforts
Jack Knowles, National Farmers' Federation

The NFF recognises that climate change poses a significant challenge for Australian farmers. As a nation, we must act to ensure that our economy is well placed to cost efficiently reduce our national greenhouse gas emissions profile.  In the past, Australia has taken an economy wide approach to achieving its emissions targets – rather than setting a sector by sector target – which enables us to make the transition most efficiently.  The levers of Government policy must work in a coordinated way – so that we pursue policies that are lowest cost and avoid unintended consequences.

There is a great opportunity for the agriculture sector to contribute to our emissions reduction efforts – but we need the policy settings that will enable the agriculture sector to contribute to our national emissions reduction task, to maintain our international competitiveness and to allow us to reach our potential of a $100 billion industry by 2030.

A key challenge in shaping climate policy settings is the need to reconcile the competing objectives of food and fibre security for a growing global population while also reducing the emissions from the sector. The Preamble to the Paris Agreement recognises this challenge, and in Article 2, the agreement acknowledges the need to adapt to the adverse impacts of climate change, and foster resilience and low greenhouse gas development in a manner that doesn’t threaten food production.

This is a complex challenge, especially considering that Australia must maintain international competitiveness in the process.

Farmers need a regulatory environment that fosters growth, productivity, innovation and ambition
Jack Knowles, National Farmers' Federation

While the NEG offers a policy solution to fix the broken National Electricity Market and to ensure an electricity supply that is affordable, reliable and has a clear pathway to lower emissions, it is but part of the wider suite of policies required in order to achieve our international obligations, both now and into the future. In order to achieve these we must also unlock the potential of the land sector of farmers to contribute to our national emissions reduction goals. There are number of options available to government in order to achieve this.

The NFF would like to see Government policies encourage co-investment in agriculture research, development and extension of climate smart practices and technologies that concurrently reduce emissions and improve productivity and profitability. These will be adopted by farmers as it makes business sense to do so, and in time will drive down the emissions resulting from agriculture production. This will help drive the overall performance of both the land and agriculture sectors in the national greenhouse gas inventory.

Government also needs to do more to unlock the full carbon potential of Australian farms by improving the design of carbon offset markets – like the emissions reduction fund - to make them more accessible and more attractive for farmers to participate and reduce emissions or sequester carbon in soils, vegetation and plantations. We also need to overcome the barriers in the marketplace. This means dealing with trusted advisers and partners and having easy to access information, tools and resources available to make sound business decisions about participation.

Reductions in land clearing, resulting from the imposition of native vegetation management regulation on land managers by State Governments, have been the biggest sectoral contributor to emissions reductions in Australia since 1990, and a key to Australia achieving its past emission reduction goals. What continues to be largely ignored in the public policy debate is the fundamental inequity of unfair regulation of vegetation. The small percentage of Australian farmers who wish to develop land and are unable to, due to regulation, have worn most of the cost of meeting Australia’s past emissions reduction goals without access to a market or payments to deliver this service. It is time to recognise and reward, rather than penalise, farmers for sequestering carbon in native vegetation – and, at the same time, reward them for delivering biodiversity and other environmental services to the Australian community.

Farmers need a regulatory environment that fosters growth, productivity, innovation and ambition – not one that impedes. Getting the settings right means we can achieve a sustainable agricultural industry with increased productivity and profitability, improved natural capital and genuine emission reductions.

As the Government has shown with their commitment to embrace the NEG, we are looking to the 2017 Climate Policy Review to deliver the policy settings that will enable the Australian agriculture sector to remain competitive and grow production, and play our part in meeting Australia’s international obligations.

Jack Knowles is Manager of Natural Resources Policy with the National Farmers' Federation

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