Wednesday, August 27, 2008

Peter Spencer's Carbon Credits "Stolen" Legally: Federal Court

Peter Spencer is a farmer whose property near Cooma, NSW – “Saarahnlee” – has been “sterilised” by woody weed infestation under the NSW Native Vegetation laws. He refused to stand by as the Commonwealth Government used the trees they forced him to grow instead of pasture to meet their Kyoto commitments. The Government ‘nationalised’ the carbon credits that Peter believed were rightfully his.

He sued, seeking damages. He took on the Government, supported by a farmers’ grassroots movement called the Commonwealth Property Protection Association, led by Alistair McRobert. Peter has drained his personal wealth (know the feeling) to pursue justice for all landholders. It has consumed his life for 2 years. If it was a movie made out in Hollywood, the ending would see Peter succeeding for all of us. But today, in the Federal Court, Justice Emmett found Peter’s fairytale ending is not in the script.

That the Government had appropriated the farmers’ ‘carbon credits’ was very likely, said Justice Emmett. In Paragraph 149 he made a statement that could be used to defend a farmer’s rights to carbon stored in the landscape: he said there was every possibility that the Government had ‘acquired’ or ‘taken’ his ‘property’.

The Judge found that Peter lost on technicalities. In effect, by banning the management of woody weeds, the Government has blocked Peter’s ability to farm the land. Was this an ‘acquisition’? If so, it was the States’ Laws, not the Commonwealth’s, that did the deed. (My first lesson in the Law as a young legal student was: “The Law is not about Justice.”)

The Carbon Coalition supports Peter’s crusade for the rights of landholders.

However we felt there were obstacles in the ‘law of carbon’ that would block his claim: 1. Additionality – credits can only be created by activity that was conducted solely for the purpose of sequestration or emissions avoidance. Peter clearly had no intention of capturing carbon. 2. There was no market in operation at the time to give the credits a value. (The 1m acre deal that was concluded in QLD was possible because the landholder had permits to clear the land.)

Peter, in the words of Abe Collins, our American colleague, “Onwards!”

Tuesday, August 26, 2008

Trading soil carbon in the Deep North

The jungle drums drew us north to investigate rumours of a soil caarbon trading scheme in the Deep North, which is where we discovered the Townsville Carbon Exchange. Details yet are sketchy.

But the full story will be told at the 2008 CARBON FARMING EXPO & CONFERENCE IN ORANGE 18th-19th November.

A plan to position Townsville as a carbon neutral capital in regional Australia includes the creation of a Townsville Carbon Exchange to tap into the potential $1 billion carbon trading industry in northern Australia under a National Carbon Trading Scheme. Mayor Cr Les Tyrell said members of the special working group set up to develop the proposal Carbon Townsville include representatives of the Townsville City Council, TEL, Burdekin Shire Council, private enterprise, and the community.
"Carbon Townsville is proposing a community-based enterprise through which industry and the community can generate and trade carbon credits generated by the large scale use of carbon abatement measures. These include soil carbon sequestration in local council parks and gardens and the north's extensive agricultural industries, as well as energy efficient practices and uses of renewable energy in business and industry," saysthe Council. " Revenue generated through the Townsville Carbon Exchange will provide on-going funding for sustainability projects in the region."

Andrew McEwen, Economic Development Manager, City of Townsville says: "Townsville Carbon Exchange (TCX) is a community based, regionally focused, economically significant carbon exchange venture that will provide wholesale carbon credits to the Australian National Climate Exchange which will be registered on the National Environment Register. TCX is a carbon exchange model in that it works with local industry to develop carbon abatement capacity through various projects. TCX will also support local community groups through grants funding and provide the region with significant sustainability based industry opportunities. The collaborative partnership between Townsville Carbon and the Townsville Carbon Exchange is already sequestering carbon through biological methods on farming land and council parklands. The area covering will grow from 10,000 hectares to 100,000 hectares in 12 months with the carbon sequestered valued at current prices at $100m. The plan will see this grow to over $1B in 3-5 years. Carbon trading will insulate the NQ Region from the impacts of emission trading and lay the basis for sustainable agriculture."

The Council's literature includes the following:
"The Townsville Carbon Exchange (TCX) Soil Carbon program offers an opportunity for regional farmers and other landholders to improve the quality of their soils in a manner that sequesters (stores) carbon from the atmosphere. The amount of carbon
sequestration can be calculated and farmers financially rewarded for their involvement in the project. TCX has developed processes that enhance soil carbon sequestration and tools for the ongoing measurement of the amount of carbon units stored. Farmers joining the TCX Soil Carbon program will sign a contract requiring them to use soil conditioning products and follow an application method that has a track record of successful soil improvement and carbon enrichment while providing better soil structure, water holding capacity and soil health. Farmers who sign the agreement and follow the recommended use of these products will be eligible to claim TCX carbon credits against the sequestration of carbon in their soils.

How does it work?

The total soil carbon from a farm following the TCX process is estimated to increase by approximately 1% over a two year term. This calculates to a total increase in the volume of soil carbon in the top 15 centimetres at 15 tonnes of carbon per hectare. 15 tonnes of sequestered carbon is equal to 55 tonnes of CO2 equivalent (CO2e). The farmer is paid for the sequestered carbon minus the brokerage fee – part of which isredistributed to community groups via a grants program.
Carbon credits are sold by TCX to financial markets. The introductory price for the soil carbon will be $7.50 per tonne CO2e or about $412 per hectare. A portion of the payment is made at the point of initial sale of the credits and the balance upon the successful completion of the contract term (2 years). At the end of two years a final measurement is taken and the farmer or land holder is paid for additional carbon sequestered above the estimated 1% increase."

Stay tuned.

Small change from CCX-style system?

What can a farmer or grazier expect to make from a voluntary soil carbon trading scheme like that run by the Chicago Climate Exchange (CCX)?

Not much, if the American experience is a guide. Last month, more than 2,300 American farmers received their cheques in the mail for capturing and storing carbon in their soil through the National Farmers Union Carbon Credit Program. They received, on average, $2,500 each for their efforts in 2006 and 2007 to sequester carbon by using no-till cropping practices and by converting cropland to long term grass stands.

This represents $1,250 per year income from soil carbon credits, typical revenue for farmers enrolled in a Chicago Climate Exchange program. Producers are credited with 0.2-.6 tonnes of carbon for each acre of no-till cropping and 0.4 - 1.0 tonne per acre for qualifying grass stands each year of the 5-year contract. On native rangeland, producers can earn .12 to .52 tonnes per acre with an implemented grazing plan to improve the range vegetative growth. These values are “based on the best peer-reviewed soil science available”, or what scientists will agree upon.

These values are likely to be even lower for Australia because the scientific community has no research which reveals the full potential of soils when managed by ‘carbon farmers’.

The price per tonne on the CCX has varied between $1 and $7 for farm soil credits. These prices reflect the risk the buyer faces when it comes to how reliable are the amounts of carbon sequestered. The amounts estimated per acre are also low for the same reason. The risk is based on the way soil carbon is ‘measured’ or ‘estimated’.

The Chicago Climate Exchange adopted an “Indicator” method of estimating the amounts of carbon captured by a farmer in a particular location who adopts a particular form of land management. If the practices of no-till cropping, grass seeding, range management or forestry are carried out during the contract, storage of carbon at the agreed upon amounts is assumed to have occurred. No soil testing protocols are needed to fulfill the contract (as in a “Direct Measurement” system), just certification and verification that the practices are implemented. The program covers only certain states and each area has its own price per acre.

At the amounts paid to each farmer, the speed of take-up by landholders will be slow. This runs counter to the Carbon Coalition’s goal of 85% of agricultural soils manage by “Carbon Farming” methods by 2013… a stretch target that will require the incentive of full value carbon credits at market prices.

A farmer who lifted carbon in soil by 1% (at bulk density 1.3 and 30cms depth) could sequester 150+tonnes of CO2e/Ha – worth more than $3500/Ha when CO2e is priced at $25/t. It has recently been around $40/t.

Why, then, does the National Soil Carbon Strategy, published recently, recommend that landholders get involved in Voluntary Carbon Markets of the CCX type? There are several answers:

1. It starts the inevitable process that we set out to achieve: to see soil carbon traded an farmers paid for what they grow.
2. It give us a chance to test drive a soil carbon market.
3. It delivers extra revenue, if only small amounts, to farmers.
4. It is the stepping stone to the Compliance Market.

And that’s where we want to be. Where the big money is because e want the majority of farmers to make the change that builds soil carbon as soon as possible. Any attempt to seek to stall us at the lowball end of the incentive scheme runs counter to our objectives: sifting agriculture as an industry onto a climate change war footing within Stern’s decade.

“Stewardship payments” and extension programs promoting ‘best practice’ will not do it. The CCX system is seen as a stewardhsip program in the US: National Farmers Union President Tom Buis said “Now, through innovative soil stewardship activities and the carbon offsets market through the Chicago Climate Exchange, producers are being rewarded for their environmental stewardship.”

Methane $1 per cow

The Scaremongers are wrong. It won’t cost you $120 per cow for your methane bill. It will be closer to $1 per cow. And that’s from the horse’s mouth: DR Richard Eckard, who leads the Greenhouse and Climate Change Program at the University of Melbourne and the Victorian Department of Primary Industries. He is a methane specialist.

Dr Eckard will be a major attraction at the 2008 CARBON FARMING EXPO & CONFERENCE on 18th/19th November in Orange, NSW.

"There’s been a lot of people scare mongering around saying it’s going to be $120 per cow. That’s only if you’re actually looking for total carbon neutrality, then you’re talking about those types of figures. We’re actually only talking about less than a dollar per cow type of figure because we’re only at the inception of the scheme, only looking at a small percentage," he told an audience last month.

Dr Eckard argues the tree planting and land care activities that most farmers have been engaged in will offset their liabilities in the early years.

CARBON FARMING EXPO & CONFERENCE, Orange NSW, 18-19 November 2008

The 2008 Carbon Farming Conference is to be held in Orange, NSW on 18-19 November. The theme of the conference is: “Soil Carbon: The New Cash Crop” because the Voluntary Market is likely to be in operation in Australia by then*.

*(According to Professor Peter Grace of QUT)

Sessions include:
• Launch of a new community-based soil carbon trading system
• Results from soil carbon trials across Australia
• Reports from two senior scientists working on ways to reduce the cost of measuring soil carbon and make trading possible.
• News of a “Catchment Carbon Calculator” which the CSIRO is hoping to load up with data that will make Voluntary Market trading a reality.
• Amazing soil carbon increases in biologically-farmed properties.
• Methane reality check from the scientist leading the Australian research into how big your abill will be for on-farm emissions.
• State-of-the-art farm data systems for the serious carbon farmer.
• The City Sponsors Carbon Farmers

Features include: Official Conference Dinner with entertainment
Carbon Cocky of the Year Award
Electric Farm Vehicles

9.00 – 9.30 The Global Food Crisis and Soil Carbon
(Dr Rattan Lal by webcast)
9.30 – 10.00 Policy, Participation & Prospects (Blair Comley,
Assistant Secretary, DECC)
10.00 – 10.30 The Research (Dr Michael Robinson, Director,
National Climate Change Research Strategy for
Primary Industries)
10.30 – 11.00 Morning Tea
11.00 – 11.30 The Question: Measurement or Estimation?
(Tony Lovell, Soil Carbon Australia)
11.30 – 12.00 The Two Markets (Louisa Kiely, Carbon Farmers
of Australia)
12.00 – 12.30 The Cost of Measurement (Dr Brian Murphy
12.30 – 1.30 Lunch
1.30 – 2.15 Reducing the Cost of Measurement (Prof. Alex
McBratney, University of Sydney)
2.15 – 3.00 The Farmer’s Experience (Scott MacCalman,
Carbon Farmer)
3.00 – 3.30 Afternoon Tea
3.30 – 4.00 Organic Carbon Farming (Andre Leu, Chairman,
Organic Federation Australia)
4.00 – 4.30 Close Day 1: Ian Packer (Soils Officer, Lachlan
7.00 – 10.00 Gala Dinner
Day Two – 19th November 2008
8.30 – 8.40 Chair Introduction (Gary Allan, DPI)
8.40 – 8.45 Welcome to City (Mayor John Davis)
8.45 – 9.00 Welcome to Day 2 (John Lawrie, CW CMA)
9.00 – 9.45 The Frontier: Western Australia (Dr Tim Wiley,
Dept. Agriculture, WA)
9.45 – 10.30 The Farmer With Data (Eric Harvey, Carbon
10.30 – 11.00 Morning Tea
11.00 – 11.45 The Catchment Calculator (Dr Jeff Baldock)
11.45 - 12.30 The Rangeland Calculator (Dr Peter Grace)
12.30 – 1.30 Lunch
1.30 - 2.15 The Science of Farm Emissions (Dr Richard
Eckard, University of Melbourne/DPI VIC)
2.15 – 3.00 The Management of Farm Emissions(Dr Bill
Slattery, Acting Director, Emissions Management,
3.00 – 3.30 Afternoon Tea
3.30 – 4.00 The Measurement of Farm Emissions (Farmer’s
Experience, Speaker TBA)
4.00 – 4.30 Close Day 2: The Future (Michael Kiely, Carbon