CARBON COALITION COMMENT:

EMISSIONS TRADING STAKEHOLDER CONSULTATION
AGENDA PAPER: OVERARCHING DESIGN PRINCIPLES -
COVERAGE AND SCOPE FOR OFFSETS

CARBON COALITION COMMENT:

The Carbon Coalition welcomes the opportunity to contribute to the Department of Climate Change’s thinking on the shape of Australia’s Emissions Trading Scheme and acknowledges the Commonwealth Government’s proactive position on soil carbon.

1. OUR MISSION: The Carbon Coalition’s Mission is “To see soil carbon credits traded and farmers paid for what they grow.” Whether inside or outside the Emissions Trading Scheme, the Mission remains the same.

2. WHAT CAN BE TRADED? The principle that “offsets can only come from projects that reduce emissions that are outside the scheme” seems to contradict the description given by the IPCC in the Glossary of Terms used in the Third Assessment Report. The term “Emissions trading” is defined as: “A market-based approach to achieving environmental objectives that allows, those reducing greenhouse gas emissions below what is required, to use or trade the excess reductions to offset emissions at another source inside or outside the country.” This indicates that companies that can reduce their emissions below their cap can trade the offsets they can create by extending the reductions they can achieve. The issue of double counting is not inevitable because the offset credits are not awarded for reducing emissions “included in the scheme”. As the emissions reductions are outside the scheme (ie. below the cap or ‘what is required’) they are not being counted in the first instance. The Coalition would like this issue clarified.

3. “ALTERNATIVE MITIGATION” The Carbon Coalition believes that Agriculture should play its part in mitigating Climate Change. While “alternative mitigation” is not defined in the issues paper, it implies a mechanism that encourages behaviour change that will result in emissions reduction. The highest degree of compliance will be achieved from farmers when they are paid for what they grow (carbon). Stewardship payments are no substitute for soil carbon offsets. They are handouts. They come with handcuffs. They can stop any time, ie. when government’s change. They will never be worth as much as selling carbon. They are paternalistic. They limit your freedom to farm. Legislated enforced change is even less likely to encourage collaboration.

4. COVERAGE PRACTICAL? MEASUREMENT DIFFICULTY: The main practical difficulty arising from soil carbon is measurement. Measurement of soil carbon per se is not difficult. Scientists do it every day. They take core samples of various depths (10cm – 110cm) and analyse the soil samples by a number of different laboratory methods. They can get data on various forms of carbon in the soil as well as bulk density (a factor which can affect the readings). The results are deemed appropriate for scientific enquiry, so we assume the methodology published by the Australian Greenhouse Office (McKenzie, 2002) is sufficient for commercial purposes. The process as conducted by scientists may be expensive, but it is not difficult. A government senior scientist (NCAS author) who wishes not to be named, advises the following sampling regime: “To characterize the soil carbon on a paddock, you would be unwise to have less than 10 profiles based on our results, especially in the top 30 cm .” There are standard protocols for this process. No matter what ongoing auditing or monitoring methodology chosen, we believe ground level core measurement is essential for ‘baselining’ a property. To make the task of monitoring easier, predictive models have been developed. They can be used to short-circuit the measurement process. They rely on location-specific data to be useful. This data has not been gathered in sufficient quantities to make such a system workable. The data could be gathered quickly, given a national baseline initiative. (See below) “The difficulty is that the amount of carbon sequestered at each location will vary according to the climate and land management. However, this can be predicted reasonably well with a modelling approach. This probably requires some kind of cross checking between the modelled output and the measured soil carbon.’ (Senior scientist.)

5. MEASUREMENT ACCURACY
The variation of readings taken from different parts of the same paddock or at different times of the day is called “flux” and is used to characterize soil carbon as essentially uncontrollable. But this view overstates the magnitude of the changes. “It is not true to say that the variability of soil carbon is so high that no reliable estimate of carbon density can be given for a paddock in terms of tonnes per hectare and to give an appropriate trading value.” (ibid.)

6. MEASUREMENT COSTS:
The cost of measuring soil carbon is not a barrier to trade: Even under existing conditions, the costs could easily come down from where they are today: “If we can get some predictions of bulk density using ‘pedotransfer functions’ accepted, the costs of carbon measurement can come down dramatically.” (ibid.) “Lab measurements are actually reasonably cheap and possibly getting cheaper -bulking can also bring down costs…” (ibid. “Bulking” is the process of combining samples from several ‘cores’ into one to come up with a figure for a piece of land.) There are several other options for reducing the ost of measurement:

A. Commercial Model: The current price of sampling is high on a per unit basis because it is based on a science model – limited funding, low volumes, sporadic usage. But a commercial model, with revenue resulting from the process, high volumes, and constant usage, is likely to have a much lower per unit cost. (Some farmers are already buying their own ute-mounted hydraulic soil core sampling units so they can take their own samples. Eg. John Muller, Collarenabri, NSW. With training they could form a national network of sampling operatives.)

B. Buyers groups: Each landholder is not likely to be negotiating with a laboratory for sampling services. They will form buyer groups. Aggregators will negotiate on behalf of large numbers of landholders. The cost per sample analysed could become dramatically cheaper.

C. National Soil Carbon Baselining Programing: The Government could play a role in slashing the cost of sampling by tendering the entire Australian sampling opportunity to get the lowest per unit cost. What price for core sampling 130,000 properties in Australia? Average 5 paddocks baselined. 10 profiles per paddock. The Australian Government spent $15billion between 2000 and 2007 on environmental and NRM action, and ear-marked a further $10billion for the Murray-Darling rehabilitation. A significant part of this expenditure could be avoided if Australian landholders change their land management practices to grow soil carbon. Against this saving, the Government could consider offering carbon baselining to every landholder as a means of encouraging them to change their practices, by linking access to Government support and tax concessions to the direction of the landholder’s soil carbon score. (Soil carbon is a good key performance indicator for measuring land stewardship, soil fertility, biodiversity, and a range of ecological and environmental indicators.)

D. Hybrid MMV system: The number of core samples could be reduced if a combination of visual audit and/or remote sensing were incorporated. An annual visual audit could cover the following “Indicators” or proxies: • increased groundcover and therefore biomass
• increased perenniality & therefore produce more biomass
• increased biodiversity of plants species and wildlife in and on the soil
• reduced soil disturbance and compaction. (Such a system has been developed with the Central West Catchment Management Authority.)

E. Revenue Context: Any cost for sampling should be considered against the price of carbon. This has ranged from $1 to $40 and some estimate it will reach $100 when the big 3 emitters (USA, China, India) finally enter the market. . Many difficulties melt away when the price is right. Or the buying terms suit the buyer. The costs of measuring soil carbon are currently assessed on the existing science model, which has cost disadvantages built into it. A trading model would strip costs out and add revenue into the equation. Making trade possible.

7. “COSTS OUTWEIGH BENEFITS?”
This statement implies a low price for Carbon and an unusually high cost of administration for a commodity market. Measurement costs are not an insurmountable barrier when seen in context (see above). Administrative costs for involvement in any commodity market will be much the same. In carbon markets there are pool managers, aggregators, auditors, brokers, and exchange owners. Benchmark administrative costs for the Chicago Climate Exchange agricultural soils program started at 30% and have since been reducing as the program matures.

8. ARE ALL BENEFITS BEING WEIGHED?
A cost/benefit analysis of soil carbon as a tradeable commodity would be dramatically deficient if it failed to account for the array of economic, social and environmental benefits it inevitably brings with it. These benefits were recognised by the Australian Greenhouse Office in a paper published in 2002. “Degradation of natural resources affects agricultural productivity, conservation of biodiversity and viability of regional communities and infrastructure… Practices to maintain soil organic matter are important for all agriculture and imperative in the more arid regions… The flows of carbon, nitrogen, and water through the landscape affect not only greenhouse gas emissions but also some of the major land degradation issues in Australia.”

Salinity: “Effective mechanisms to reintroduce perennial vegetation will help by storing carbon in vegetation.”

Water: “The effects of soil and vegetation management and water use on Australia’s water resources are a priority issue.”

Soil erosion: “For most of Australia the prime remedial action is improved
cropping and grazing systems to increase organic matter content and increase soil carbon levels.”

Soil acidity: “The main prevention method is the use of pasture types that soak up nitrates -- for example, by balancing the legume component with perennial grasses for an optimal carbon:nitrogen ratio -- which is also likely to have positive greenhouse outcomes.”

Rangeland degradation: “Landscape mapping work by the Bureau of Rural Sciences suggests that carbon is still being lost from arid and semi-arid grazing systems. The suggested remedial action is to reduce erosion and return biomass to soils through improved management and reduction of total grazing pressure. Since there are 400 million hectares under
this land–use, the greenhouse consequences could be substantial.”

Biodiversity: The complex relationship between increases in soil carbon and parallel increases in biodiversity above and below ground was presented in an FAO paper : “An increase in carbon sequestration causes an increase in the operational biodiversity and more effective soil biological functioning, which is normally very low in most agricultural soils. Aboveground biodiversity in cropping systems (vegetation, birds...) also depends on the type of management… Taking action on C sequestration under the Kyoto Protocol or any post-Kyoto treaty will not only stimulate important changes in land management but will also, through the increase in organic matter content, have significant direct effects on soil properties and a positive impact on environmental or agricultural qualities and biodiversity. The consequences will include increased soil fertility, land productivity for food production and food security. This economic tool will also make agricultural practices more sustainable and help prevent or mitigate land resource degradation.”

Food security: Carbon Farming is the only broadscale, low-cost means to meet the world’s food needs and restore the 70% of soil carbon stripped from the world’s soils by modern practices. “The world will need to produce twice as much food by 2050 as it does now, from about the same amount of land and water, or possibly less,” according to Andrew Campbell, a director of the Cooperative Research Centre for Future Farm Industries and former chief executive of Land & Water Australia. Developing countries could produce up to 40 million tonnes of additional food grains with only a 1 tonne of carbon per hectare increase in its soils, according to Dr Rattan Lal, the world’s leading soil carbon expert. Dr Lal has called for farmers to be allowed to trade the soil carbon they can store as ‘carbon credits’ as an incentive to change practices. Failure of food supplies in Australia’s region is a national security issue, according to authorities. Australian Federal Police Commissioner Mick Keelty: “Climate Change will be the security issue of the 21st century… We could
see a catastrophic decline in the availability of fresh water. Crops could fail, disease could be rampant, and flooding might be so frequent that people en masse would be on the move... It's not difficult to see the policing implications that might arise in the not-too-distant future… In their millions, people could begin to look for new land and they will cross oceans and borders to do it… Existing cultural tensions may be exacerbated as large numbers of people undertake forced migration.” Chief of Defence Force, Air Chief Marshal Angus Houston: The Australian Defence Force has identified climate change as a national security threat for the first time, as it predicted the military would become more involved in stabilising failing states than fighting conventional wars. ACM Houston said the military faced security challenges it had not envisaged before, specifically "climate change and the impacts of global demography". Pentagon Report (Schwartz and Randall 2003): A report commissioned by the United States Pentagon found that gradual global warming could lead to a relatively abrupt slowing of the ocean’s thermohaline conveyor, which could lead to harsher winter weather and lead to resource skirmishes and even wars because of food shortages, decreased availability of fresh water, and disrupted energy supplies. “The United States and Australia are likely to build defensive fortresses around their countries because they have the resources and reserves to achieve self-sufficiency…. Borders will be strengthened around the country to hold back unwanted starving immigrants… This report suggests that, because of the potentially dire consequences, the risk of abrupt climate change, although uncertain and quite possibly small, should be elevated beyond a scientific debate to a U.S. national security concern.” The report says Indonesia – home to 200 million Muslims – is likely to descend into disorder.

Protection Against Climate Change: The word ‘buffer’ is often used to describe the effect soil carbon can have on a landscape under stress. By building soil carbon stocks rapidly and across the entire nation, the Government can provide the best protection against the worst conditions. A permanent change in land management could possibly be sufficient mitigation to maintain productivity at current levels – despite lower rainfall and higher temperatures. Soil carbon enables ecologies to withstand extremes of temperature and to eke out water supplies. A biodiverse ecosystem is more resilient and resistant to disease. To build this buffer in time requires a sense of urgency.

9. TIMEFRAME OF COVERAGE: WHY 100 YEARS
There can be no long term without a short term. The world needs immediate triage to stabilise its condition and allow the other emissions-reduction solutions time to reach critical mass. Neither solar, nor wind, nor clean coal, nor nuclear power, nor thermal energy solutions can be deployed within 10 years or even 20 years. The “Permanence” principle is irrelevant to soil carbon. This does not mean soil will leak all the carbon it sequesters within a short time. It means two things: 1. Soil can play its key role in the next 30 years – acting as a bridge to the future. Soil has a tendency to achieve equilibrium or steady state or saturation after a period of ‘dynamic disequilibrium’ caused by a change in conditions or management. A new disequilibrium can be created by a further change in land management. So the process of sequestration need not cease at the first plateau. 2. Soil carbon doesn’t leak, it “cycles”. It is by nature mobile. This doesn’t mean it is uncontrollable. A carbon-rich landscape is a precious asset for any farmer. The motivations to preserve the higher total carbon content (no matter which fraction or type of carbon – labile or non-labile) could range from greater productivity to government incentive programs. The Voluntary Carbon Standard recognises a 30-year horizon. This comment on Permanence is not an attempt, in the words of Brian Fisher, “to seek to change the rules to suit ourselves.” It is an attempt to change the rules to preserve a decent lifestyle for our children and grandchildren.


ABOUT THE CARBON COALITION: The Carbon Coalition Against Global Warming was formed in February 2006 to ensure Australian farmers and graziers gain maximum benefit from trading in soil carbon credits. The Convenors of the Coalition have been regular speakers at gatherings of farmers and graziers across Australia. They led a fact-finding delegation to the USA on behalf of Australian farmers in 2006. While there they negotiated the first order for soil carbon credits from the Chicago Climate Exchange. They attended workshops, briefing sessions and meetings with members of 3 of President George W. Bush’s 7 ‘regional partnerships’ of states. They carried the flame to New Zealand and saw the Government call a tender for the design of a voluntary market in soil carbon. They discovered the gaps in the data sets used for the National Carbon Accounting System, upon which the belief that Australian soils cannot sequester carbon was based. They initiated a series of ‘soil science summits’ between scientists and farmers, that culminated in the world’s first Carbon Farming Expo & Conference in 2007. They have appeared as expert witnesses before the NSW Premier’s Greenhouse Advisory Panel, the NSW Parliamentary Standing Committee on Natural Resources & Climate Change, and the NSW Dept of Primary Industries Climate Risk Management Project. They succeeded in getting soil carbon on the Election Platform of the ALP for the 2007 Federal Election. When PM Rudd declared an inquiry into soil carbon after the election, Matthew Cawood, Science & Environment Editor with The Land wrote: The soil carbon issue ‘would be still largely invisible if it wasn’t for your efforts. You and Louisa have barnstormed this issue into national politics. That's as good as it gets.”


Michael & Louisa Kiely, Convenors, Carbon Coalition Against Global Warming: RMB 384 Uamby Road, Goolma NSW 2852 (02) 6374 0329 www.carboncoalition.com.au