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JULY 2009 AFIA
What, when and how will agriculture
be affected by the CPRS
JULY 2009 AFIA
Overview
Markets for Carbon and their drivers
• Voluntary
• Compliance
Australian Government CPRS
• The policy effects
• Challenges for agriculture
• Emerging trends and opportunities
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“The topic of climate change is not a new one for farmers; adapting to change in climate has always been a part of the agricultural industry.”
Peter Kenny (former AgForce president)
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“The pessimist sees difficulty in every opportunity. The optimist sees opportunity in every difficulty.”
Winston Churchill
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Carbon Markets
• Generate efficiencies by maximising the volume of abatement per dollar – emissions trading
• Units – CER, ERU, RMU, NGAC, AEU, RECS, AAU – all represent 1 tonne of carbon dioxide prevented from entering or removed from the atmosphere
• Compliance market is over 117 times greater than the voluntary market
JULY 2009 AFIA
Carbon Markets
• CPRS is an elegant model of upstream sectoral coverage
• 75% of emissions covered with six gasses
• Agriculture is uncovered at present
• Forestry is an opt-in
• Old credits are out and AEUs are in
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Total Net Emissions By Gas
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Total Emissions - Agriculture
1990
(Mt CO2 e)
2000
(Mt CO2 e)
2006
(Mt CO2 e)
87.7 95.5 90.1
Source: http://www.climatechange.gov.au/inventory/2006/index.html
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20552005
14
7
Billion of Tons of Carbon Emitted per Year
1955
0
Currently
projected path
Flat path
Historical emissions
1.9
2105
Seven “wedges”
Wedge Theory
JULY 2009 AFIA
Energy Efficiency
Decarbonized Electricity
Fuel Displacement by Low-Carbon Electricity
Forests & Soils
Decarbonized Fuels
Stabilization Triangle
2004 2054
7 GtC/y
14 GtC/y
Seven Wedges
Methane Management
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Carbon Pollution Reduction Scheme
• Only forestry can be counted as an offset• Tax incentives to establish sinks• More favourable model to permanent plantings• Less favourable for harvesting• 100 year permanence• No accreditations – registration required• NCAS is the only approved methodology
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Arnie Sells the Hummer!
California – the first US state to impose a cap on expulsion of carbon dioxide and other gases
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Foresty Carbon Sequestration Potential
0
50
100
150
200
250
300
0 25 50 75 100
Years from planting (Tube stock planted at 1,000 stems per hectare)
Cu
mul
ativ
e to
nnes
CO
2e p
er h
ecta
re
Wagga Wagga (river flats)Tumut (slopes)Tumut (flats)TemoraNarranderaWagga Wagga (away from river plain)Henty
JULY 2009 AFIA
Carbon Pollution Reduction Scheme
• Agriculture ‘uncovered’ until 2015 with a decision made in 2013
• Large CfoC investment in soil carbon• Voluntary initiatives gaining interest• Price impacts on energy use and inputs
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Emerging trends
• Large capacity for soil carbon sequestration• Methane controls through grazing regimens, vaccines,
feed and genetics• Nitrous inhibitor application, stand off pads and herd
homes (dairy)• Biochar/agrichar• Algae production• Measurement tools such as
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Lower Value $ Higher Value $ Highest Value $
Voluntary scheme or
project offsetting
Retail Scheme with Govt or third party
endorsement
Domestic Compliance
Regime
EU/Kyoto Compliance
Regime
Voluntary Purchaser
Compliance Purchaser
Compliance Purchaser
Contractual Carbon
Commodity
Statutory Carbon
Commodity
International Carbon
Commodity
Carbon Property Right(legal basis for carbon commodities)
No Underlying Property Right
JULY 2009 AFIA
Methane Emissions / Feed Digestibility
“We are yet to come to grips with the variability of emissions that exist at the farm scale, due to the significant impact diet has on an animal’s production of methane”
Former DAFF Minister Peter McGauran
JULY 2009 AFIA
Methane Emissions / Feed Digestibility
• Reduced methane production AND increased soil carbon sequestration can be achieved at the same time through management
• Balance of C3 and C4 plants• Fodder selection for lower C:N ratio –
lucerne has 10 fold lower ratio than wheat stubble
• Timing rather than time (duration) of grazing
JULY 2009 AFIA
Options for Agriculture
• Project based – schemes for nitrous oxide reduction, soil programs and methane reduction
• Accountability upstream – processors• Free permit allocation• Non-coverage with policy support for
reductions• SECTORAL NO-LOSE TARGET
JULY 2009 AFIA
Sectoral No-Lose Target (SNLT)
• All abatement and emissions covered• All agri activities• Obligation with the Australian
Government – consistent with the upstream nature of the CPRS
• Benefits reallocated to the sector • Equitable – all farmers benefit, supports
all industries and can generate broader sustainability practices
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TARGETt
PERMITS
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Contact Details
Matthew Reddy
Executive Director
Carbon Advantage
Email: [email protected]
M: 0416 270 478
