Terry’s river of cash: will it flow?

“A river of cash is set to flow through the bush, with agriculture’s long quest to be part of a carbon trading market to be realised by year’s end,” says Country Life, a Queensland farm journal. “It has come about, not through lobby groups or government frameworks, but through rural Queensland entrepreneur Terry McCosker.”

Mr McCosker is not holding back. “We’re talking megabucks. This will change the face of agriculture within the next five years.” He said the area of land and volumes of carbon potentially available could together massively change he economy of rural Queensland – from land use to farm cash flows to property values – for decades to come.

When the Carbon Coalition briefed Terry on the soil carbon market opportunity exactly 12 months ago, we should have expected that RCS would act quickly to capitalise. Can Terry do it with his CarbonLink system?

If there is to be trouble with any system, it is always likely to be found in the methodology for MMV – measurement monitoring and verification. The methodology used by RCS to measure and verify tonnages of soil carbon was revealed yesterday in Country Life. The “paired fenceline samples” system is the technique used by the AGO. (But the AGO used the technique for estimating soil carbon losses across Australia over time, as part of a National Carbon Accounting System, not for quantifying soil carbon sequestered for sale as abatements.) On properties that have been managed using ‘cell grazing’, soil samples are “taken in both a paddock that has been subject to improved management practices and from a neighbouring paddock that has been grazed with conventional continuous methods.” This means taking samples from a neighbour’s paddocks. These paired samples provide “an indication of the impact of what changes to soil carbon have happened since the changes in management for those paddocks and an indication of what will happen in the future,” says the report. This means the system is ‘indicative’, relying on estimations rather than ‘direct measurement’. The actual amount of sequestered carbon in the paddock is not calculated by measuring the same soil over time. The difference between an indicative or estimated offering and a direct measurement offering is the amount of money per hectare the grower can earn. The difference can be dramatic. The RCS system appears to be a hybrid of the proxy system run by the CCX and a direct measurement system such as Christine Jones’s Australian Soil Carbon Acreditation Scheme.

“An indication” is not an accurate measurement for the purposes of trading – which is the barrier the Carbon Coalition has been campaigning to break through. At no stage is there an exact, strict verification of soil carbon amounts in the RCS system, despite it being touted as ‘strictly verified’. There is a baseline survey costing $20/Ha, with comparisons made over the fenceline and an estimation. This price indicates a level of testing that may not be sufficiently robust for trading. The next measurement takes place at year 5 and year 10 “to verify that the promised volume of carbon is actually sequestered. This is of vital importance to both the value of carbon and the credibility of the CarbonLink program.” Does this mean the soil carbon is sold before it is sequestered. Ie., not on delivery but on a promise?

The Country Life report also indicates that there will be some modelling done: “From the thousands of samples taken, an average difference in soil carbon levels can then be calculated, giving an indication of how much new carbon is being sequestered”. Even if RCS was able to recruit all 4000 landholders it has trained over the years, their combined data would not be sufficient to populate a calculator that could be relied upon for predicting soil carbon in every location.

A major snare for the RCI system could be found in the Kyoto principle of “Additionality”. If the carbon is sequestered as a result of ‘business as usual’, ie. the land management decisions were taken for reasons other than sequestering soil carbon, it does not qualify as a legitimate offset. The RCS system aims to sell ‘carbon vintages’ going back as far as 1990. As this was before most people had heard of carbon credits, RCS may have a solution to additionality that is unknown to us.

The RCS system is complex. Only 90% of “net carbon in the soil” will be offered for sale, with 10% held back for a margin of error. Then a further 25% of the carbon is not sold until after the 5 and 10 year tests ‘as insurance against a shortfall’. [Does this mean 75% of the 90% to be offered will be sold before it is sequestered?] A further 20% of the value of the contract is held in trust until after the 10 year period of the contract. Then RCS takes 20% in commission, when the contract is exchanged. This complexity is not good for dealing with farmers.

RCS has tests on five properties in QLD and NSW. It expects to be able to sell 100,000 tonnes of CO2e by Christmas. This doesn’t sound like many farmers, but CO2, the main forestry carbon abatement operator has only signed contracts with 15 farmers so far in more than 3 years of operation.

Despite the questions, we welcome the entry of RCS, and say “Good Luck, Terry”.