Submission

To:Federal Department of the Environment
re: Emissions Reduction Fund (ERF) Green Paper

Date : 5 February 2014

General Comments

EFN is pleased to note that the major elements of the CFI have been retained. However we do have a major concern that the amount of funds allocated to the ERF are insufficient given the previous level of trading activity reported by the Carbon Market Institute where active trades were roughly 4 billion dollars compared to several hundred million mentioned in the Green Paper.  
The experience of EFN members is that the impact of climate change is far worse than realised by the general public and the Government. We can only conclude that to maintain productive farming enterprises, more dramatic reductions in greenhouse gas emissions are required.
Australia is particularly vulnerable to the impact of climate change. Very large areas will be inhospitable  and impossible to farm viably unless we take more drastic action now. Much traditional farming land will become marginal. The white paper must address how large areas of Australia will be managed into the future where normal farming becomes practically and economically unviable due to climate change. Where this is the case the only alternative will be various forms of land management that assist in sequesting carbon. Whilst the methodology for cool burns is a good start the returns need to adequately compensate those undertaking the work. This applies to other methodologies especially environmental plantings where the maximum amount of carbon to be sequestered is sacrificed to achieve other environmental outcomes.
While we strongly believe that the reduction of emissions from industrial and domestic activities should be the primary focus of any program, our comments focus on land based sequestration to help buffer the existing blow-out in atmospheric carbon dioxide. The Climate Works paper (Low Carbon Growth Plan 2010) indicates that land based sequestration (eg planting trees) is one of the most efficient ways to sequester carbon at $20 to $30/tonne (see cost curve page 13 Green Paper) and has the potential to deliver many millions of tonnes of sequestration. The opportunity to sequester carbon with land based methodologies should also take into account the other public benefits provided by ecosystem services through revegetation.
For widespread uptake any returns to farmers will have to be commensurate with returns from traditional agriculture. If land based CFI uptake is limited by poorly conceptualised and realised programs, a large part of the opportunity to reduce gas emissions by sequestering carbon is lost.
Many farmers are deterred from getting involved in the CFI as they believe they may end up having to use their revegetation sites as carbon offsets for the farm in the future.  Perhaps some reassurance that this will not be the case would also see uptake of the CFI improve?

Comments using format proposed by the Department

1. Design principles and sources of emissions reductions
Whilst this is an admirable economic approach it may deter participants in areas where opportunity costs are high and public benefits of taking action are not counted. For example in high recharge areas it may be most desirable to encourage tree planting but alternative returns from traditional agriculture would mean negligible uptake of carbon farming.

In fact, a single economic focus on achieving the lowest cost emission “benefits” could miss associated beneficial externalities, both in terms of encouraging the development of sustainable energy sources, and the landscape productivity benefits of sequestering carbon within the ecosystem

2. Crediting emissions reductions
Measurement should be based on scientific research.

Adequately fund research into new land based methodologies such as sequestering carbon in soils.

Consider the aggregation of credits by CMA’s on a project basis.

3. Purchasing emissions reductions
The green paper implies that polluting industries will receive advance payments to purchase reductions compared to the land abased sequestration where landholders will only be paid in retrospect. This is not a level playing field!
Given very low participation rates experienced to date in CFI for some methodologies (for example Environmental Plantings Methodology), the carbon price should reflect other benefits (salinity mitigation, biodiversity enhancement etc) obtained by the public when a lower carbon offset option is taken.
The value of land based ecosystem services needs recognition. Carbon sequestration is but one of these services. Other services of improved water quality, salinity mitigation, biodiversity enhancement, and clean air, are just as important, and (opportunistically) linked intimately to carbon use. It is a wonderful policy opportunity to realise these linkages and gain valuable multiple benefits.
We also firmly suggest that the imposition of complex measurement and auditing requirements  for participation in these programs especially for small projects,  results in the  costs significantly outweighing the benefits. The result is frustration, loss of program credibility and low participation rates.

4. Safeguarding emissions reductions
No comment made

5. Carbon Farming Initiative
Regional Catchment Management Authorities are the logical bodies to use as aggregators and auditors for tree planting/reforestation projects and also to ensure that trees are planted in a way to avoid negative catchment impacts. 20 million trees funding should be linked to these activities and targeted to biodiverse plantings to provide salinity and biodiversity outcomes. Carbon price offered to farmers must be sufficient to encourage participation.

In order to compete with traditional land based agricultural activities a reasonable  and reliable (it may need to be guaranteed for individual landholder projects) carbon price is needed. This requirement is essential where higher carbon sequestration rates are sacrificed for other benefits such as salinity mitigation and biodiversity enhancement.

When opportunities arise Government needs to act quickly to take advantage of natural events such as la nina floods as happened in the summer of 2010. Incentives for farmers to fence off and protect natural regeneration on floodplains and provide alternative income through carbon credits was an opportunity lost. We will only have a chance of coping with climate change if we are able to be opportunistic and flexible. Farmers will be required to do so to survive. So will society. A new role for government will be to facilitate this

6. Administration
Our members have had positive experience with the Clean Energy regulator.

 

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