With a Liberal/National Party government now in power at the Federal level, what effect is this likely to have on the Carbon Farming Initiative and, in particular, the farm forestry sector? Given that the new government is committed to the repeal of carbon pricing in either tax or emissions trading forms but it has an emissions reduction target of 5% of 2000 levels by 2020 and is also committed to the continuation of the Carbon Farming Initiative through its Direct Action Plan (DAP), what changes are likely to occur to the Initiative through the new government’s policies?
Unfortunately, there is not a lot of detail available yet to put flesh on the bare bones of Coalition policy announced before the election. Those who wish for certainty in carbon pricing policy may still be waiting some time. Announcements can be expected soon, but the following is a summary:
To replace the Labour-designed scheme which was geared toward the creation of a market for carbon credits eventually capable of being traded globally, the incoming Minister for Climate and Environment Greg Hunt has foreshadowed that his government will implement a carbon abatement scheme known as the Emissions Reduction Fund, a taxpayer-funded buyback scheme capped at $300 million in its first year of operation, $500 million in its second and $750 million in its third year.
In a speech to the Grattan Institute in June 2013, Hunt likened the DAP to a Federal government buyback of water entitlements in the Murray Darling system and to Landcare biodiversity funding. He called it “a simple, low-touch market mechanism”. He said it will operate as a “reverse auction” just like a contract for sale of wheat in that government will pay only on delivery of actual abatement, at the lowest price it can obtain.
What this means for people still interested in investing in carbon farming and what sort of incentives will be offered to encourage participation may become clearer in a few months. Given that the CFI has now been available since 2011 with a carbon price of over $20 supporting it yet, even so, uptake has been slight at best, does the new government believe farmers will be attracted to abatement prices of around $6 (the current EU ETS price and global benchmark)? Will the government effectively create a subsidy with a price of around $12 to encourage participants?
Also, will the government enter into long term contracts to pay farmers who take the initial risk of investing in carbon farming or will the scheme change after 3 years since the commitment is only for that long? An ETS would have allowed farmers and emitters between them to take these long term risks and make commercial arrangements themselves in a market of buyers and sellers. The new government has pledged itself to emission reductions through using a capped amount of taxpayer funds that must send some sort of price signal (a carbon price?) to emitters and sequesters to attract their interest, but its plan does not directly impose a cost on polluters, so there is a risk of the DAP becoming a system of patronage cherry picking winning recipients of taxpayer funds while leaving heavily-polluting sectors untouched.
Hunt committed the new government to a program of calling for submissions on how to implement the DAP within 30 days of gaining office, consulting between 60 and 100 days, releasing a White Paper and draft legislation by day 100, receive further feedback and release final legislation by day 150, which means some time in March 2014.
Hunt promised to “unblock the approvals process” as well. What that means may also become clearer in time. He will introduce a 25 year option for land-based sequestration to replace the 100 year permanency requirement which has discouraged widespread participation in the environmental planting methodology that has been available from the outset.
Verification of the effectiveness of sequestration must always be a high priority in any scheme whose ultimate purpose is to permanently remove carbon from the atmosphere. It appears, but is not confirmed, that the new government will retain the machinery for creation of carbon credits from the Labour legislation in order to monitor that sequestration is real and not fraudulent. The distorted landscape management outcomes of the Managed Investment Schemes blue gum plantations are still a recent memory for many farmers.
It is recognised that accurate carbon sequestration accounting in broad Australian landscapes is affected by many variables such as soil types, rainfall, drought, fire and must be conservative to allow for these variables. Methodologies such as soil carbon favoured by the Liberal/National Coalition in the 2010 and 2013 elections promise much but difficulty in measurement has meant that large amounts of research funding have needed to be invested in these areas.
Prospective CFI methodologies in the pipeline already even before the change of government look promising. They include (with date of likely approval of methodology following):
Livestock Feed supplements to reduce dairy cattle emissions- July 2013
Nitrate feed supplements to reduce grazing beef cattle emissions- Late 2013
Feedlot finishing of beef cattle in northern Australia- Early 2014
Feed supplements to reduce emissions from grazing cattle and sheep- Mid 2014
Building soil carbon- Early 2014
Application of biochar (created from livestock waste) to agricultural soils- Mid 2014
Reduced fertiliser use in irrigated cotton crops- Early 2014
Passive landfill gas drainage and bio-filtration for small landfills- Mid 2014
Rangeland restoration- Late 2013
Managed regrowth of native forests- Late 2013
Long rotation forestry- Late 2014
Avoided harvest of native forest- Late 2014
Woodland restoration- Late 2014
The above methodologies show that progress is being made and opportunities for farmers interested in emission reductions and carbon sequestration are increasing. Although the Abbott government scheme could hardly be termed ambitious and it is unknown whether it will achieve even the modest 5% target by 2020 and it is generally acknowledged that it will be an unsuitable mechanism for the much deeper emission reduction commitments needed to keep global temperature increase to less than 2 degrees, nevertheless it is something and that is slightly better than nothing.
The politics of climate change are likely to remain fractious in Australia for some time because of this nation’s dependence on coal exports. Although most of the debate appears to be about our domestic emissions and methods to reduce them, in reality our contribution to global warming through coal exports dwarfs our domestic emissions. Although governments change, there appears to be firm bi-partisan agreement not to discuss this. If we are serious as a nation about our responsibility for global warming, it makes no sense for the major parties to refuse to discuss such an important issue.
