Thursday, December 09, 2010

What's in the Carbon Farming Initiative for you?

The Commonwealth Government’s Carbon Farming Initiative (CFI) aims to give farmers, landholders and forest owners access to domestic and international carbon markets. There are many opportunities for farmers and landholders in the CFI. They can earn offsets from a long list of activities, including:

• reforestation and revegetation – eg. plantations, integrated farm forestry and regrowth;
• reduced methane emissions from livestock – eg. diet management, rumen inoculants, etc.;
• reduced fertiliser emissions – eg. precision application, alternative fertilizers, etc.;
• manure management – eg. composting, anaerobic digesters and methane flaring;
• reduced emissions and/or increased sequestration in agricultural soils (soil carbon) – eg. no-till cultivation, grazing management, pasture cropping, nutrient management;
• savanna fire management –eg. avoiding large destructive fires while retaining environmentally-positive use of fire;
• avoided deforestation – eg. reduced land clearing;
• burning of stubble/crop residue - eg. stubble retention/incorporated, etc.;
• reduced emissions from rice cultivation – eg. reducing water levels in paddies to reduce methane emissions;
• reduced emissions from landfill waste – eg. composting, applying compost on soils.

Carbon Farmers of Australia recommend that Farmers decide which of the activities on this list are relevant to them and take a portfolio approach to them: Revenue from offsets will be maximized and opportunities won’t be missed. A typical ‘portfolio’ of activities could include fertilizer reduction/substitution + reduced methane from livestock + reduced landfill/farm composting + soil carbon sequestration.
While the scheme is scheduled to start on 1 July, 2011, not all the options will be ready. The forestry options were trading prior to the CFI and so will start early. Other ‘low hanging fruit’ includes reduced fertilizer usage and manure management/landfill waste. The others will come on stream as they have “Methodologies” approved.
Farmers and landholders have three options:
1. Running a project of their own, gaining the approvals and reporting on their progress.
2. Hiring a specialist to manage the reporting and administration.
3. Allow an offset aggregator to include their activity with others for trading.
Example: Farmer A chooses to undertake a project to reduce fertiliser use on the farm. Finds the relevant CFI methodology, applies to the CFI Scheme Administrator to become a recognised offsets provider and has their project approved. The farmer reduces fertiliser use (by precision application or biofertiliser substitution or other method). Each year the farmer completes a report, has it audited, then submits it to the Administrator. Credits are issued into the farmer’s account in the Offsets Registry. These are then able to be sold via a broker. The farmer can appoint an agent to handle all the adminstration. Or they can join other farmers as part of a ‘aggregation’ or pool.

No Get Rich Quick Scheme
The CFI is not a get-rich-quick scheme. Instead it is an incentive program that aims to help land managers make the shift to lower emissions practices.
The Carbon Farming Initiative first saw daylight as an election promise - which could make it a fragile prospect for ever being delivered. But when seen in context, it is a sure thing (as sure as anything can be in a 'balanced Parliament' environment)... When the CPRS was defeated, Australian consumers and corporates wanting to 'abate' their emissions were offered the voluntary market in the form of the National Carbon Offset Standard. It covers all offsets not covered in Australia's Kyoto commitment - which is mainly farm carbon offsets. Alas, forestry is covered by our Kyoto commitment and its promoters were looking forward to a bonanza under the CPRS. Instead they had the floor fall away from underneath them and the forests ceased marching across the countryside. The CFI plugs that gap for forests because it applies to both Kyoto and non-Kyoto offsets. So the CFI and the NCOS fit together.

What is the difference between the CFI and NCOS and CPRS and ETS? It's simple: The CPRS (Carbon Pollution Reduction Scheme) was a proposal by the Rudd Government for a "Compliance"-based "Cap & Trade" market for emissions offsets. That is an ETS or Emissions Trading Scheme. "Compliance" means 'compulsory'. "Cap & Trade" means emitters must change their business practices to reduce their emissions to reach a target level or 'cap'.. If they cannot reach that target in the timeframe given (called a Compliance Period, eg. 2008-2012) they must purchase 'offsets' or 'permits' from emitters who exceeded their targets and earned credits by doing so, or from companies earning credits by generating renewable energy or from companies earning credits by sequestering or capturing and holding CO2 in forests. Under the Rudd CPRS scheme only 1000 companies were required to meet a target in each compliance period. They were the 1000 top emitters. They could purchase offsets from local or international companies. The NCOS (National Carbon Offset Standard) was designed to operate alongside the CPRS 'compliance' market by providing a "Voluntary" scheme. It makes available to Australian companies and consumers a source of Australian offsets that they can purchase to offset their emissions so that they can make an advertising claim that their products etc. are carbon neutral or simply to make contribution to the climate change effort by offsetting a family's emissions. The NCOS covers only domestic offsets offered to voluntary buyers. The Carbon Farming Initiative completes the set. It covers domestic and international markets, both compliance and voluntary. The only market not covered is the market that is yet to start: the CPRS or the national domestic compliance market.

Who are the buyers?
Demand for CFI credits is expected to come from foreign governments seeking to meet their Kyoto obligations, as well as companies overseas seeking to meet their obligations under national or regional schemes, such as the EU Emission Trading Scheme. CFI credits could also be attractive to companies operating in markets dominated by the voluntary market, such as Australia's traditional trade partner Japan. One important category of buyers not mentioned in the Consultation Paper are consumers overseas who are fans of the country and have a soft spot for Aussie farmers. Back at home, some companies need offsets to meet obligations where State Governments have introduced their own compliance schemes.

Methodologies: Make Your Own
A “Methodology” is a step-by-step plan for helping farmers earn offsets. There is no limit to the number of Methodologies, because the Carbon Market is a free enterprise system. Individuals are free to trade with each other, so long as they don’t break the law. The Government is developing methodologies, with the help of industry. Private project developers can also design their own.
A Methodology has the following parts:
1. A description of the activities that will either avoid emissions or capture greenhouse gasses. The carbon sinks and carbon sources touched Eg. soil, livestock.
2. How the baseline (starting point) and amounts of Greenhouse Gases removed or avoided.
3. How buyers can be reassured that the activities in one location don’t create more emissions somewhere else.
4. How the performance of the program will be measured.
5. How the project will be monitored.
The decision to approve a Methodology is taken by the Minister for Climate Change and Energy Efficiency on the advice of the members of the Domestic Offset Integrity Committee - an independent expert panel appointed by the Government.

Integrity Standards Under Review
The Carbon Farming Initiative Consultation is just that: a Consultation. Your input is requested. The paper includes “Integrity Standards”. They are a list of ‘rules’ that are proposed to give buyers confidence that the abatement offsets they are buying aren’t just smoke and mirrors – that they are real. These rules include:

Additional - the emissions saved or extracted would not have happened without the offset, but are genuinely additional to other efforts.
Permanence – the emissions saved or extracted are not released for the period of the active life of the particular Greenhouse Gasses, eg. CO2 – 100 years
Leakage – the project does not create increases in emissions somewhere else that cancels out the inititial saving.
Measurable and verifiable – all activity must be accurately measured or estimated; each offset credit must stand for one tonne of CO2-e; auditing must be independent.
Conservative – assumptions, figures, and measurement must be conservative to avoid over-claiming.
Internationally consistent – methodologies and reporting practices aligned with those adopted by the United Nations Framework Convention on Climate Change.
Supported by peer-review science – scientific evidence submitted must be ‘peer-reviewed’ which means it has been approved by other scientists in the same field as those doing the research and that it has been accepted for publication in a scientific journal.

Integrity Standards Vs The Urgency
The Integrity Standards focus on making the transaction possible by making sure the consumer is confident that they are getting what they paid for. No confidence, no market, no abatement, no sequestration of CO2. It’s as simple as that… when you look down on end of the telescope and all you can see is the transaction.
Turn the telescope around and you see the global impact of 6 million farmers changing their practices to begin drawing down billions of tonnes of CO2. Some of the world’s leading scientists say that we need as many farmers as possible sequestering as much carbon as possible in their soils and vegetation as quickly as possible because there is little chance that global warming can be held to a increase of less than 2°C without it. They are saying that the rate at which clean energy infrastructure can be built compared to the rate at which global demand for energy will grow make it now impossible to meet the 2°C target without a big soil carbon component.
Scientists, including the world’s most famous Climate Change scientist, NASA’s James Hansen, agree that renewables will not be ready to supply the world’s energy demands for up to 50 years, if then. In Smart Solutions to Climate Change, Chris Green of McGill University and Isabel Galiana look at current rates of progress and conclude that by 2050 alternative energy sources will produce less than half the power needed to stabilise carbon emissions. By 2100, the gap would be even wider.
Australian scientists point to soil carbon as the solution: “It will be next to impossible for Australia to achieve the scale of [emissions] reductions required in sufficient time to avoid dangerous climate change unless we also remove carbon from the atmosphere and store it in vegetation and soils,” the Wentworth Group of Concerned Scientists told the recent Victorian Inquiry into Soil Carbon. Even the CSIRO agrees Dr Michael Battaglia, Theme Leader, Sustainable Agriculture Flagship, CSIRO told the inquiry: “What [soil carbon sequestration] actually gives us is time to make those adjustments [transition from burning coal].”
Emissions reductions won’t slow down the process of climate change because they are your Grandfather’s emissions - the carbon released into the atmosphere 70 years ago - that are causing Global Warming. Luckily, we have the only process for Extracting billions of tonnes of CO2 every year for 50 years, fully deployed and scaled up, ready to start: Photosynthesis, in the form of 5.5bn hectares of farmland around the globe. Scientists such as soil carbon authority Professor Rattan Lal estimate the process can remove 3billion tonnes of CO2 annually for 50 years. He testified before the US Senate that soil carbon can be a “bridge to the future” that “buys us time”.
James Hansen and Rattan Lal agree that the world’s farmers can draw down the CO2 equivalent of 50ppm and hold it for 50 years. With the globe racing towards 400ppm, hoping to stop it at 450ppm (to hold the increase to 2°C), soil sequestration is attractive and available and relatively cheap. It would forestall the need for deeper, faster cuts in the future and it would protect the economy from damage. So why is it not activated immediately? Because people are looking down the wrong end of the telescope.

Remodelling the Integrity Standards
The Department of Climate Change & Energy Efficiency uses the current Kyoto definition of Standards such as Additionality as a starting point for innovation. The Consultation Paper makes this request: “Stakeholders are invited to comment on this approach to assessing additionality and whether alternative approaches should be considered.”
Carbon Farmers of Australia has set out its response to the Integrity Standards under the following headings:

Standard – current definition
Questions arising from current definition
Principles on which Standard should be redefined
Suggested Action Points

This is an important opportunity which should not be missed. Email or a copy of our submission. Please feel free to comment on, add to, strike out, disagree with… what we have proposed.

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