Thursday, July 14, 2011

Insider's Guide To Carbon Tax Support For Farmers

This analysis of the Carbon Tax funding for farmers is brought to you by the Carbon Farming & Trading Association.

We told Minister Combet last February that the Soil Carbon Research Program would provide only 20% of the data needed to make trade in soil carbon offsets possible, he seemed surprised. When we asked him was there any more money to finish the job, he said “No!” Something happened between then and last Sunday when the Carbon Tax detail was released. Blame it on the Independents and Greens.

The headline: $1.5 billion for landholders to switch to more climate friendly activities on farm.

In summary, this is how the $1.5 billion is divided up:

• $201 million for research into “new ways of storing carbon and reducing pollution in the land sectors.”

• $20 million to “convert research into practical methodologies which are recognised under the Carbon Farming Initiative

• $99 million “for landholders to take action on the ground, including testing new ways to increase soil carbon and reduce pollution.”

• $250 million for the Carbon Farming Initiative non‑Kyoto Carbon Fund will be used by the Government to purchase carbon credits that will create “incentives to undertake land-based action such as the storing of soil carbon, revegetation and forest conservation.”

• $946 million from the Biodiversity Fund “for landholders to undertake projects that establish, restore, protect or manage biodiverse carbon stores.”

• $44 million will provide "a refundable tax offset to encourage the uptake of conservation tillage farming techniques and participation in soil carbon sequestration research”.

A total of $1.5 billion for land sector activities. Stupendous. Let’s look a little more closely at the numbers. First, divide it all by 6 to get the annual figure as all amounts are to cover 6 years (except the conservation tillage 15% tax offset – it is for 3 years).

The $201 million for research amounts to $33 million per year. By comparison, the Soil Carbon Research Program (SCRP) had a total of $25.5 million over three years. But this new funding is not solely for soil carbon. It has to be shared between projects “to improve soil carbon, reduce pollution from livestock and crops, and enhance sustainable agricultural practices. Novel approaches, including biochar, biofuels and new crop and grazing species, will be targeted”. If the SCRP achieved 20% of it’s task with $25.5 million, it would need an additional $100 million to complete it. (The Commonwealth contributed $8 million to the initial SCRP budget, the balance coming from partners such as GRDC. The Commonwealth contribution would therefore be $32 million.) Will soil carbon get the funds? Not without a fight. Is it the research we want?? Good question. Populating models with “monopractice” data* on the grounds that it will help guide farmers’ decisions about whether to 'invest' in soil carbon activities does not translate into a trading regime. However it could be the basis for a scientifically-respectable CCX-style estimation system; ie. assigning a fixed rate of sequestration to a certain practice in a certain climate zone. The resulting data is the best a scientist can do, not the best a farmer can do. Carbon farmers are “poly-practitioners”; ie. they apply a suite of soil management practices to enrich their soil. Simply adding the results for the separate practices together does not add up, because the mechanism is ecological; the dynamic is geometrical, not arithmetic. Ie., it grows by multiplication, not addition.

$20 million will be available to convert research into practical methodologies which are recognised under the Carbon Farming Initiative. This will speed up the development of methodologies because right now there is no incentive to produce meths other than good citizenship.

$99 million will be provided “for landholders to take action on the ground, including testing new ways to increase soil carbon and reduce pollution.” This could mean there is money for farmers to hire scientists and do the research that is being neglected. ie, demonstrating true potential for sequestration.

The $250 million to be spent buying voluntary market offsets (Non-Kyoto) for “the storing of soil carbon, revegetation and forest conservation” implies that a soil carbon methodology is passed by the Domestic Offsets Integrity Committee (DOIC). Yet the document says soil carbon will emerge ‘over time’, which betrays a belief that only science can provide a solution. (A reference to ‘engaging more scientists and independent experts’ to do research could indicate that the Government is willing to broaden the skillsets and perspectives applied to the wicked problem of soil carbon.)

It may look like a straight copy of Abbott’s Direct Action plan, but it is only a faint echo. The $40 million per year the Government intends to spend can purchase 4 million units at $10 (although the Government has not indicated a price). The Opposition’s Direct Action soil carbon solution, whereby the Government is the only buyer and farmers compete to offer the lowest price, expects to purchase 10 million units in 2012-3, rising to 85 million units per year in 2020. This “market mechanism” does not fit the Association’s idea of an ideal system because it operates to restrict returns to farmers and reduce the contribution that the soil carbon solution can make to addressing climate change and landscape restoration, both of which rely on widespread change of land management practice.

There is another likely farmer response depressant: the intrusion of Government bureaucracy into the marketplace. Seeking to use a market to attract conservative farmers who would run a mile from anything that looked like government environmental program, the Association was shocked to read the following: “Natural resource management organisations will develop plans in each region to guide where carbon farming projects should be located in the landscape. These can be used by landholders to identify and develop activities to reduce carbon pollution.” This creates another level of decision-making to slow down the process and add costs.

The Big ticket item was the billion dollars for ‘BIODIVERSITY”. The Biodiversity Fund will support:

  • reforestation and revegetation in areas of high conservation value including wildlife corridors, rivers, streams and wetlands
  • management and protection of biodiverse ecosystems, including publicly owned native forests and land under conservation covenants or subject to land clearing restrictions
  • action to prevent the spread of invasive species across connected landscapes.

Trees and native vegetation can make a major contribution to landscape resilience and farm production, but this is a very narrow definition of Biodiversity. In farmland, Biodiversity can be found in the species density in pasture grasses, in the species density in soil microbial communities, in grassy woodlands, and in the edge effect of ribbon planting of crops. Biodiversity naturally increases with soil carbon. The two are interdependent. We will need to broaden this definition to gain funds for on farm biodiversity projects. The amount to be spent from the Biodiversity funds on mainly reforestation or forestation is gobsmacking when considered alongside the budget for soil carbon. The Government says the money is to be used “for landholders to undertake projects”, but there is a danger that the lion’s share of it will find its way into salaries with precious little left over for farmer incentives. The “extension/education/encouragement” model is very effective at changing behaviour in those open to the message. But this Conversion Model can be slow-acting and even ineffective with the conservative majority – failing to gain even consideration from minds made up after a lifetime immersed in a culture of traditional ways. The prospect of additional income from growing a new commodity in parallel with their existing enterprises is proven to gain attention long enough for consideration of the proposition. In doing so, this commercial return incentive would work faster because it offers the means to balance risk of experimenting with new business practices. The market model would add potency to the extension model, providing the agencies with access to groups of farmers formerly unavailable to them.

Given the amounts of money on offer and the broad terms of reference, there is likely to be a feeding frenzy by stakeholders who traditionally work in this space and who naturally feel entitled, and newcomers like ourselves (though 6 years is a lifetime in carbon issues) who are pursuing a paradigm shift and need resources to prove our contention. Soil Carbon will have to compete vigorously to not only get a fair share of the resources that we helped to make available, but also to avoid losing control of our destiny by having the agenda fall into unsympathetic hands.

There is a lot of hard work to be done and someone has got to do it – all day every day. This is the reason we formed the Carbon Farming & Trading Association. To give you the opportunity to play an active part in the effort, to build the resource base we need to field a team – because if we don’t turn up, you can be sure the others will, and 85% of success is simply in turning up.

*The Potential of Australian Farmers to Earn Income from Soil Carbon Sequestration has been estimated at unrealisticially low levels. The peer-reviewed science fails to replicate what farmers can achieve because it studies only monopractice (single practice change), it does not study polypractice (multiple practice changes) which is the real-world behaviour of farmers seeking to enrich their soils and increase their soil carbon levels.

The highest level of increase recorded by scientists studying monopractices is 0.5 tonnes of carbon. Experienced carbon farmers using multiple land management changes have recorded 30 tonnes and more per year for 10 years.
These tonnages are not recognised by government scientists because they have not studied it and have no plans to study it. Officially they don't exist. The studies, when they take place, can take up to 5 years. Years can pass before funding is available, then three year field trials, followed by a year getting the results published in an academic journal before it can be considered 'sound science'.
The Wentworth Group of Concerned Scientists have declared that there is no peer-reviewed science that reveals the potential of carbon farming for soil carbon sequestration. They are right. Public policy has not been informed by knowledge of the existence of the Hidden Tonnes of Soil Carbon.

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