Wednesday, January 13, 2010

Carbon Farming "All Hype and Humbug," says Nuffield scholar.

"PUSHBACK" on Nuffield Scholarship?

"IT'S all hype and humbug" is David Drage's thoughts on carbon trading's potential for agriculture, after his three-month world study tour on the subject.' The Weekly Times reported. The Victorian mixed farmer visited the UK, Canada, New Zealand and the US last year on a Nuffield scholarship and brought home the following conclusions
• The capacity of Australian agriculture to help cut global emissions was insignificant. (This statement ignores the Federal Opposition’s claim that soil and vegetation can remove 150million tonne of CO2 from the atmosphere every year by 2020. Some scientists have put it as high as 1000 million tonnes, with the Queensland, Victoria and New South Wales Governments putting out similar reports. While our emissions may be negligible on a global scale, the landmass we have devoted to agriculture – hundreds of millions of hectares - makes us a major player in the global effort to ‘draw down’ CO2 via photosynthesis.)
• David warned farmers who locked themselves into carbon contracts could find themselves forced to repay their contracts. (If carbon markets worked that way, no farmer would get involved. The individual farmer is protected by the “Buffer Pool” or self-insurance system that operates. No farmer is left alone to sell direct. They can’t supply the 25,000 tonnes minimum trading unit. So they combine in pools of millions of units. Most systems put aside some tonnes for protection. The Chicago Climate Exchange requires that each farmer put aside 20% of what they deliver as a hedge. The Carbon Farmers of Australia system requires that for every 1 tonne traded that the grower put aside an additional tonne to cover the potential loss. These tonnes are spread across millions of units in the full range of climate zones and geographic regions. They are there to replace units lost for any reason. The President of the International Federation of Agricultural Producers (6 million members world wide) says buyers can rely upon the “Collective Persistence” of the pool that gives protection to the buyer and the grower.)
•"Many international investors I spoke to had no faith in the permanence of agricultural carbon sequestration," he said. (The issue of permanence is also resolved by this pool concept. It's not hard to find people who will bad mouth soil carbon anywhere in the world.)
• "And the science of measuring products like soil carbon is not sufficiently advanced to give them the confidence to invest." (Scientists have been measuring soil carbon for the purposes of scientific study for decades. Who is suggesting that the measurement of soil carbon for trade needs to be more accurate than measurement for science? Only someone with a vested interest in keeping soil carbon off the market or in being paid to chase the min-min light of accuracy beyond the needs of science. There are many such people. "Confidence to invest" is the right issue. Markets have a method of handling uncertainties in quantity or quality. It’s called “The Price Mechanism”. We have seen it working at the Chicago Climate Exchange where the low levels of measurement rigor has kept the price very low. This in turn encouraged the CCX to lift the bar in order to attract more farmers because the price was discouraging them.)
• "Australian agriculture can't offer much to the international efforts to reduce emissions, because we are already a highly efficient industry. (We may be an efficient industry from a cost management viewpoint, but we are not efficient when it comes to Greenhouse Gas Emissions. Opportunities to reduce emissions are everywhere: manure management and methane flaring, precision application of fertilizer, no-till cultivation, covering bare earth, feed supplements for cattle and sheep, biological soil treatments, grazing management, pasture cropping, cover cropping, and many more. Australian farmers have been offered the best emissions deal available to farmers anywhere in the world: Not taxes to cover methane and nitrogen emissions, but incentives to change the way we manage these gases. And we are free to trade our soil carbon.
If you believe that “it’s all hype” there is one fact that you should bear in mind: No one is forcing you to be involved. No farmer will be forced to trade their soil carbon. Or reduce their methane and nitrogen gas emissions.)

3 comments:

Michael Kiely said...

David is wrong about a lot of things but he's right about one thing: current Kyoto rules make soil carbon trading impossible for farmers. But those rules are as good as dead for Agriculture. They just didn't get the time to bury them at Copenhagen. To list all the 'current' problems as though they are set in stone is not useful. The facts are these: everyone except those working in the area of soil carbon are either ignorant or ill-disposed towards soil carbon. Green groups (NGOs) are ideologically opposed to it because they think it will be used as a 'get out of jail free card' by big emitters. It can't be. Traders are afraid of the billions of offsets that could flood the market. They won't. These people know their standard lines to dismiss soil carbon. They're in for a shock. "The cost and difficulty of accounting for soil carbon, and issues of permanency, mean that agriculture doesn't currently have a place in carbon accounting systems." So what? The world needs soil carbon to be sequestered. Trading is the most efficient way to do it. David's trip sounds like it was down Alice in Wonderland's rabbit hole. "In Canada, a power station that purchases carbon credits to offset its emissions told him that the flakiness of the assumptions that underpin soil carbon trading through the Chicago Climate Exchange (CCX), and doubts about permanency, mean that the business is only purchasing a minimum of agricultural-based carbon credits." Why buy any? It's bizarre.
"The overarching issue for Mr Drage is whether farmers, in signing over their carbon offsets to other businesses, take on an unacceptable level of risk. If the carbon disappears in drought or fire, the farmer is liable, not the polluter." No he isn't. Under what scheme of soil carbon trading is a farmer forced to take such a risk? None in this country. No one is forced to enter a contract. In the only program nearing launch - the Prime Carbon system - the buffer pool of offsets acts as an insurance policy for the grower. And as for this statement: 'Ultimately, Mr Drage said, using agricultural offsets is a "soft option" that allows big business to transfer risk to farmers, and drag out the bottom-line changes necessary to actually lower greenhouse gas emissions', I hope that is a misquote. If big emitters wanted our solution so badly they'd be funding us. Nobody funds our campaign.

TerryW said...

Michael,
I 100% support your comments and analysis. Soil carbon is easy to test. In fact a complete soil analysis only costs AUD 100-120 per test. A statistical test sample will provide reliable results from any block.
The soil carbon is not volatile from year to year and the retention as mentioned will cover the variability over time.
This is not rocket science. In fact application of statistics is all that is additionally required....Terry Weir

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