CSIRO sounds the alarm

It's official. CSIRO says Australia is experiencing significant climate change as a result of global emissions of greenhouse gases from human activities. And it says we need to reduce emissions by 60% by 2050 to avoid catastrophic results. The Prime Minister denounced the report and said reductions of that order would destroy the Australian economy. The report was written for the Australian Business Roundtable on Climate Change is by CSIRO's Dr Benjamin Preston and Dr Roger Jones. They report that rainfall in regional Australia has already been affected and this will get worse. We stand to lose the Great Barrier Reef with only slight warming. Water availability will become a bigger problem than it is already. "The declines in precipitation projected over much of Australia will exacerbate existing challenges to water availability and quality for agriculture as well as for commercial and residential uses," they say. "Future changes in climate extremes, such as tropical cyclones, heat waves, and extreme precipitation events, would degrade Australian infrastructure and public health, for example, through increased energy demands, maintenance costs for transportation infrastructure, and coastal flooding."

Cap and trade closer in US

US Senator Dianne Feinstein will introduce a bill proposing a national cap-and-trade scheme for greenhouse gases on the first day of the new Congress in January 2007. The scheme proposes to slash US emissions by 10 per cent by 2025. The last bill before the Congress for mandatory regulations failed by only a handful of votes. The Republicans are expected to lose control of Congress in the up-coming elections.

More power companies call for credits trading

Power companies in Australia and the US have gone public in favour of carbon trading systems. The Australian Gas Light Co., the nation's largest energy retailer, which also owns power plants, said the States' proposed trading system is "positive'' because it gives an incentive to curb emissions, says Managing Director Paul Anthony. Origin Energy set the pace for support by its membership of the Business Roundtable on Climate Change which has also called for regulation. The two biggest power companies in the US, Duke Energy Corp. and Exelon Corp., have called for federal regulation of carbon emissions to help guide power-plant development, reports the international Bloomberg news service. Power plants emit 39% of all greenhouse gases in the US.

It's only a matter of time

"Emissions trading will exist in Australia. It's only a matter of time," says Martijn Wilder, a partner specializing in climate change at the law firm Baker & McKenzie in Sydney. The international Bloomberg media service reports that the move by States in Australia and the US to develop trading systems to curb greenhouse gases will see both countries enter the global trading system. In the US, seven northeastern states agreed on a plan that would begin in 2009, with the goal of cutting carbon dioxide emissions from power plants by 10 percent over 10 years. Other states are likely to join. In Australia, electricity companies in all eight states and territories will have to hold tradable permits to emit greenhouse gases starting in 2010. "The states can take action without the federal government,'' said Madeleine Tan, a counselor specializing in the Kyoto protocol at the law firm Brown Rudnick Berlack Israels LLP in New York. "You'll see a few more states interested." IN Australia, three states are hesitating. The US states in the Regional Greenhouse Gas Initiative are New York, New Jersey, Connecticut, Delaware, Maine, New Hampshire and Vermont. Maryland will join the group by next June. California, Oregon and Washington are also considering trading systems.

NSW to introduce mandatory cap: Let the trading begin

The NSW Government will legislate mandatory emissions targets until 2020, updated every 15 years, reports The Australian Financial Review. The government has previously pledged to cut carbon dioxide emissions by 60 per cent by 2050. The NSW scheme sets annual targets for electricity retailers and generators to cut greenhouse gas emissions. They can offset emissions by investing in forestry and energy-efficiency measures, or by buying carbon credits (currently traded at between $12 and $15 a tonne).
Known as "GGAS", it was the first scheme of its kind in the world in January 2003, settinh targets in line with the Kyoto Protocol on climate change. It was due to expire in December 2012.
Several industry players, including Origin Energy, have previously criticised the lack of certainty on carbon offset agreements.
Other companies have been holding off on investing in carbon offsets until the extension of the scheme.

States’ Greenhouse paper angers farmers

A new farmers’ lobby group has expressed disappointment at the Greenhouse Scheme discussion paper released on the 16 August, 2006 by the State and Territory Governments. “The paper ignores the enormous contribution agricultural soils can make to storing carbon,” says Michael Kiely, the convenor of the Carbon Coalition Against Global Warming, a lobby group that believes the best way to store carbon is to reward farmers for land management techniques that can sequester vast amounts of carbon in agricultural soils. “While millions of trees are being planted and various solutions are being investigated, none has the capacity to sequester sufficient CO2 in the next 50 years to meet the Greenhouse challenge. Only soils can do it. Yet the only mention of soils in the discussion paper is the emissions that can occur when it is disturbed (ploughed) or artificially fertilized. Once again the poor old farmer is painted as the bad guy when in fact he is a hero.”

Someone has to pay the Greenhouse bill

The attack on the Australian States's proposed Greenhouse Gas Abatement Scheme by the federal government and some industry groups ignores one critical fact: someone will have to pay for global warming. The Australian Financial Review - the voice of Australian business - disagrees with the attacks on greenhouse trading: "An international trade in emission rights (and other environmental services) is the way of the future... Australia, with its comparative advantage in the production of fossil fuels, has a very strong interest in the adoption by the global community of rational, market-based greenhouse strategies." And writing in BRW, Professor Paul Kerin, who teaches strategy at Melbourne Business School, said recently, "Howard says that, as Australia is (just) on track to meet its target, there is no need for market mechanisms. He is wrong: a market would ensure Australia meets its target at least cost, and would provide information to help decide whether we should overshoot our generous target. By comparison, the EU is already 5.5% below its 1990 emission level... Howard's claim that market trading would cost jobs by raising energy costs is also nonsense. The emission trading price is just a transfer between two emissions generators - overall, the industry's net cost is unchanged. High-cost polluters pay more (as they should) but low-cost players gain by reducing emissions and selling allowances.
"The Federal Government should join the states and territories to start a national carbon dioxide emissions market. The low trading prices that are likely to emerge, given our current overly generous emissions target, should persuade the Government to set a much lower emissions target, and then stand back and let market participants work out how to achieve it."

We meet with the NFF

If "bad science" is science you disagree with and "good science" is science you agree with, and charming, intelligent people are people you agree with, then the new President of the National Farmers' Federation, David Crombie, is a charming, intelligent man. The Coalition's Convenor Michael Kiely met with Mr Crombie and his natural resource management expert Dr Vanessa Findlay in Canberra on 15 August, 2006. Mr Crombie was eager to hear of the Coalition's mission and progress to date. The NFF is in full listening mode after releasing a paper called "Emissions Trading and the Land" in April 2006. (It is available on www.nff.org.au). Mr Crombie practices what communications expert Hugh Mackay calles "Active Listening". He engaged fully with our message. He explained that "Sustainability" is one of 4 key focus areas for the NFF and he could see how farming with an eye to increasing soil carbon could move farming in that direction. Even better, he liked our message about carbon farming as low input/high regeneration, revealing that he has sown perennial pastures with great results just recently. But the bell really rang when he said his personal philosophy of agriculture is based on the concept of "stewardship". This concept sits smack in the sweet spot of the Carbon Coalition's mission. We hope to use carbon credits to enable farmers to act upon their innate feelings of stewardship or sense of responsibility for leaving the natural resource base of their farms in better condition than when they first took over. David Crombie believes there should be and will be some economic incentive for this to happen. Dr Findlay is right across this issue and knows of the work we have been doing. Both were aware of the contribution Dr Christine Jones has made to this issue. The Coalition will continue to liaise with the NFF and the NSW Farmers' who also gave us a great deal of encouragement. Encouragement is all we can hope for and all we really need.

Forests killing rural communities

The Financial Review
Tree schemes stir deep-rooted ire
Author: Narelle Hooper with Fiona Buffini
Date: 12/08/2006
Words: 1957
Source: AFR
Publication: The Financial Review
Section: Perspective
Page: 22
Tax incentives that favour plantations over other land uses are distorting the value of land and resources.

Robert Gerard just loves timber. The controversial Adelaide businessman, Liberal Party donor and former Reserve Bank of Australia board member describes his 2000 hectares of pine at Rosewood near Tumbarumba in southern NSW as a nest egg. He says the forestry has been good for the farmers and fantastic for the region and in coming years the carbon credits to be had from trees would be a goldmine for Australia.

"Not many people set out with a 30 year business planting 100 hectares a year," he told The Weekend Australian Financial Review in July. "I did that. I believe in timber, but I'm a bit of a queer bloke. I believe timber is a good investment."

But Gerard has a lot less timber to love than he used to have. And around Tumbarumba in the foothills of the Snowy Mountains, the locals don't like Gerard very much at all.

To farmers in the Lower Bago Valley, Gerard is the neighbour they never see but for occasional sightings of his helicopter, who sold them out to the enemy - pine plantation operator Willmott Forests Ltd.

The deal, finalised with Willmott just days after Gerard's resignation on December 2 from the Reserve Bank board over a multimillion-dollar tax scandal, halved Gerard's land holding. On December 16 last year, he booked a tidy $6.7 million selling two prime cattle properties of 1610 hectares to Willmott to convert into pine plantations for its Managed Investment Scheme.

The anger about the Gerard sale encapsulates the growing conflict between established rural landholders and the new breed of absentee tax-driven owners.

The friction is becoming an increasing issue for the federal government review of the tax treatment of MIS timber plantations and agribusiness schemes being conducted by assistant treasurer Peter Dutton.

Plantations have long been established in this part of NSW. It is their rapid spread that has been the main cause of the recent friction. MIS offers attractive tax deferrals for investors. The rapid expansion of the tree schemes has sparked growing opposition in rural communities and concern in investment markets about the long-term viability of the sector.

"It was a bolt out of the blue," says the deputy mayor of Tumbarumba Shire Council and a Rosewood neighbour, Graham Smith, of the Gerard sale.

Lower Bago angus cattle and merino sheep farmer Jeff Grady, who is affected by the change in land use, says he and his neighbours were devastated. MIS operators such as Willmott and Gunns Ltd in the nearby Maragle Valley had started to get a toehold in the area and the Gerard sale gave the plantation company a huge foothold in a prime agricultural valley.

"They've wrecked this valley," Grady says. "We were shocked for weeks because it changes your whole future. He has basically destroyed this valley and the community for his own personal gain.

"It's only tax breaks that are driving it and it's too high-value a country to be used for generating tax breaks for those blokes."

Gerard's employees were surprised too. Just weeks earlier they'd cut and stored masses of silage on the property for winter feed and hired a contractor to fix up the fences. Local stock and station agents also had to scramble to find buyers for 2000 cattle as the breeding herd Gerard had been building up was dispatched for about $1.5 million.

There has been plenty of speculation as to what prompted the sale. Gerard had spent five years buying up the best cattle properties in the area. He'd weathered a lengthy battle with neighbours and the council against his plans to expand his private pine plantations.The betting among locals is that Gerard needed cash following his $75 million settlement with the Australian Taxation Office in late 2003 and welcomed an attractive deal with Willmott after his exposure in the media over his tax affairs.

Despite Gerard's professed love for his trees, Willmott didn't think the 100 hectares of eight-year-old pine trees on the Gerard properties were such a great investment, and judged them fit for liquidation. In February, Willmott brought in the bulldozers, windrowed the trees and burnt the lot. They quickly made way for rows and rows of pines that were owned by a new crop of Willmott's tax-driven investors.

Willmott chief executive Marcus Derham, who claims he wasn't close to the arrangement, says: "He may have had some young trees that we may have come and knocked a few over. It depends how mature they are and if there's less than optimal spacing."

Derham confirms that Gerard has also been an investor in Willmott MIS plantations. But despite local talk that Gerard is a big Willmott shareholder, neither he nor his private companies appear on Willmott's register of shareholders.

When contacted, Gerard's office said he was away from his office and unable to respond to requests from The Weekend AFR for further information. In July he said he was a big supporter of Willmott. In his submission to the government, Gerard sided with the MIS operators and urged the federal government to maintain special tax treatment for timber plantations.

Derham describes Gerard as a big supporter of agroforestry who likes what Willmott does and a pretty-boots-and-all kind of guy.

"Rob's been a great absentee member of the Tumbarumba community," Derham says.

"He has been involved. It's a pretty tight-knit community. He's had cattle and sheep and trees and he understands how they can co-exist."

But to the locals, the Willmott deal embodies everything they see as wrong with the fast-expanding managed-investment scheme sector, which raised more than $1.14 billion from investors last year. For starters they can't see the economic logic in how there can be more money in planting new trees than in allowing existing ones to grow and mature.

Neighbouring farmers say they're doomed now to be surrounded by pine trees and fear the loss of productive farms and families from the community.

Jeff Grady says: "He's quoting employment opportunities but it's not happening.

"They neglect to deduct the jobs they've robbed from the community by pushing out the farmers and the business the farmers put through the towns during the year."

Grady says there are also serious concerns about the impact on environmental water flows. Tree plantations are thirsty. "It's good country for pine trees but it's also very good country for agriculture and by planting this high-rainfall land to pine, you are affecting your water yield further down the river."

A 1989 NSW Forestry Commission paper warned about the impact of extensive pine plantations in reducing environmental water flows. A number of other recent studies have raised similar issues.

Deputy mayor Smith expresses concerns at the loss of farmers, who are the major ratepayers in the area, while the council faces an escalating bill for road infrastructure for the timber industry.

"We walk a knife edge where your major ratepayers are your farmers and the timber on the other."

Of the impact on water flows, he says: "They deep rip on the contour and plant the trees, and that stops the run-off into streams. They'll tell you it doesn't, but it does. You can see the difference . . . there are creeks here are bone dry . . . we're worried because we are the catchment area for the Murray."

Merv Whittaker, whose 100 hectare block is caught in the middle of the land now owned by Willmott, chooses his words carefully. "There's a lot of worry and anxiety amongst the townspeople. It's not only this valley. The same thing is occurring in a dramatically short time in two other valleys nearby."

Gerard says he planted his first trees in 1983. By the late 1990s, he had expanded substantially in the valley by buying a number of prime cattle properties. His plans to expand the timber plantations brought increasing opposition from farmers and the council.

Graham Smith says Gerard has been low-key. "He's been a good employer of people in the Rosewood area. It was only this sale to Willmott that upset a few people in the valley."

Gerard argues in his submission that the expansion of timber scheme operators in the area has improved land values and provides employment. Jeff Grady retorts that it has been good only for a handful of farmers. Other farmers, he says, want to remain on the land but face a dramatically different environment.

Others say the local council has been bluffed by the timber lobby because the industry doesn't generate the huge employment they claim.

Tumbarumba Shire Council mayor George Martin says the expansion of the plantation sector in the area is proving difficult for council and the community. "There is a lot of emotion concerned. It's a difficult issue." He says when the plantation companies move into a valley they typically make an attractive "flagship" offer above the going rate. Early last year Gunns Ltd paid $2.5 million for 684 hectares in a neighbouring valley.

"The first one to sell gets the money and the last one gets very little," Martin says.

"We know we have major users who need the timber to be expanded. We also have grazing interests around who contribute to the local economy and we need them to be around. And we have a significant tourism industry and there are problems with wall-to-wall pine plantations blocking out the vistas."

The council has convened a working committee of grazing and pine representatives to try to resolve issues. But as plantation approvals have been in NSW government hands since 1999, Martin concedes this is basically a public relations exercise. "They don't have to bother with us at all, it's basically public relations."

In a phone call to The Weekend AFR in July in support of his submission to the federal government, Gerard said: "The big thing we haven't talked about is tax credits for carbon. When that becomes a [reality] they'll be worth a fortune. Once we can do carbon trading, my forests will give me enormous income. I might leave them there. You could make more out of credits than timber. Australia could make a goldmine out of credits."

Willmott's Derham says he's had discussions with Gerard about the possibilities for future credits. "It's something our business is looking at. We haven't done a carbon trade but we are certainly waiting for the right opportunity to do that."

Scheme operators have up to 12 months after raising the capital to find land and plant the trees for their investors, who gain attractive initial tax deductions.

The federal government has been consulting on proposed changes to the tax treatment of the schemes. The proposals include a cap of $6500 a hectare in first-year tax deductions, and extending the planting period to 18 months.

MIS opponents say this cap is still many times greater than the true cost of establishing plantations - and the real problem is that the tax incentives are all initial and there's no scrutiny of investment yields.

"Much of this vigour in the pine industry is caused by the 12-month rule, which seems to be working extremely well with lots of activity happening in my region," Gerard says in his submission.

"Personally, I cannot see why you need to change something that is working well."

Two big questions need answers

Coalition Member Bob WILSON sent the following message to our Members' Forum (www.carboncoalition@yahoogroups.com)

G'day all,
Haven't seen much action lately, so I thought I might get the ball rolling again. I was talking about Carbon Credits with a friend from the East (NSW) recently, who posed a couple of couple of points about the issue.

1. If we have a system of Carbon Credits introduced, then we will also have Carbon "Debits" as well. His comment was that as a cattle producer I would be up for much more Debit Tax than I would be receiving in Credits!!! Any thoughts?

2. He told me that the Long term Fertilizer Trial at Hamilton (vic) has not shown any major increase in soil C over 30 years. Those involved think that after 40 years it may be measurable. (we ran out of time, so I didn't get to quiz him on the pasture type in that trial, so they may be annuals) Does anyone know?

They are always a bit of a worry , these wise men from the east.......?

Bob

....................

We responded to Bob's questions:

Hi Bob,

Thanks for posting. I should post more often.

Answering your questions:

1. Carbon Debit Taxes: This has become clear to us just recently. We believe that there is no "If" about manditory limits to greenhouse emissions. It is "When". Australia won't be able to withstand the pressure once the US introduces limits on emissions. Record temperatures in the US this week have put global warming on top of that nation's list of crises. Eventually every business will be given an allocation of tonnes of Carbon it can emit, and if it needs to emit more, it will have to provide "offsets" by sequestering cabon itself (in soil or forests, etc.) or purchase credits from other companies that have sequestered carbon. Agriculture contributes 19% of all greenhouse emissions (compared to transport's 14%). How is it emitted? Ploughing, burning stubble, baring soil by over grazing, applying nitrogenous fertilisers, clearing native vegetation. How is it sequestered? Maintaining groundcover by time controlled grazing, minimum/no tillage, pasture cropping, encouraging grassy woodland, applying natural fertilisers, Natural Sequence Farming (leaky weirs, etc.) So farmers who do not earn carbon credits will have no other means of offsetting their carbon debits than putting their hands in their pockets. As for the assertion that you'll pay more than you'll get, how can anyone know that? Cattle emit methane from manure... We reported on US dairy farmers who are actually earning credits for using manure digesters. Bob, there are so many opportunities opening up with this issue, anyone who sprouts long term predictions is in need of a digester.

2. I don't know the facts of the Hamilton fertliser trial, but I can say this with confidence: Traditional nitrogenous fertiliser does not contribute to carbon. In fact it can deplete it. A 40-year trial can only be using traditional soil management techniques. These are carbon depleting. Under the regime being studied, many Australian soils have lost more that half their organic matter in 15 to 20 years. Soil carbon levels cannot be 'grown' using conventional farming techniques.
Conservation farming techniques are required.

You're right - the carbon credit caper is not all one-way traffic as we may have thought when we first came across it. But the benefits of carbon farming are many. But don't forget, everyone has the right to farm their soil anywhichway they want to. It is important that everyone knows the implications of all the choices available. For mine, I'd rather stay ahead of the game than have some government busybody telling me what to do.

Thanks for the questions. I'd welcome your feedback and I'll post this exchange on the blogsite for all to see.


Cheers!
Michael

Carbon Farming catching on

Victoria's DPI is promoting Carbon Farming, according to a report by Nick O'Halloran, Primary Industries Research Victoria (Tatura): "Farmers, agronomists and researchers from southern New South Wales and northern Victoria have gathered at Echuca to discuss the importance of organic matter for maintaining soil health. In the midst of international concern about the degradation of carbon levels in agricultural soils, the workshop was held as part of a DPI and Grains Research Development Corporation soil health project investigating the effect of different farming systems on soil carbon, microbial activity, soil structure and yield. More organic matter in soils leads to high carbon levels, which in turn improves soil health and increases nutrient availability, among other benefits. The project was initiated in response to growers' concerns about the sustainability of continuous cropping systems as a result of a decline in soil structure. It has revealed clear evidence that farmers can increase soil carbon by using a wide range of farm management systems. Participating farmers were generally confident about the benefits of increasing soil organic matter, but still seek information on specific management options and a stronger link between improved soil health and easier management or profit. The project will continue over the next 12 months. For more information contact Peter Fisher on 5833 5341 or email peter.fisher@dpi.vic.gov.au."

California and Britain bust the Kyoto trade barrier

"THE Governor of California, Arnold Schwarzenegger, and the British Prime Minister, Tony Blair, have struck an agreement to bypass the Bush Administration and work together to fight global warming," reports the Sydney Morning Herald.
California and Britain will create a market for the trading of carbon emissions, effectively punching a hole in the trade barriers between kyoto and non-Kyoto signatory countries. This move could opens the doors for Australians with carbon sinks to trade them in the high price Kyoto marketplace. The deal also includes sharing economic and scientific research on climate change and non-polluting technology.
"The evidence of climate change and its danger is overwhelming," Mr Blair said. "It is very hard for anyone to dispute it."
Gov. Schwarzenegger is running for his second term as governor. Despite being a staunch Republican, he attacked President Bush's refusal to recognise the problem: "We saw that there isn't leadership from the Federal Government when it comes to protection of the environment."

Present to support the deal were high profile corporate leaders, including James Murdoch, son of Rupert Murdoch; Anthony Pratt, chairman of the Melbourne company Pratt Industries USA; the co-founder of Google, Sergey Brin; and Virgin's Richard Branson. Sir Richard said: "I think businesses can influence leaders who are not worrying enough about our grandchildren.... I'm afraid that Bush and [John] Howard, when it comes to global warming, stand out somewhat. Even China is actually doing better than those two leaders."
Britain is fourth and California is fifth among the world's economies.
Google's Mr Brin said the presence of political and business leaders answered the claim by countries such as Australia and the US that the treaty would put them at an economic disadvantage. "Any signals, milestones, acknowledgement about this issue, particularly the acknowledgement that we can improve the environment and the economy at the same time, is a very strong message," he said.