Carbon Farming Initiative - Update on Scheme Progress

Written by Network member: Sara Gipton, Greenfleet

Greenfleet is a not for profit charity that began planting biodiverse forests as carbon sinks in 1997.  We encourage our supporters to AVOID, REDUCE and OFFSET their emissions.  Planting native forests also contributes to restoring habitat, protecting waterways and our precious soils.  Our aim is to provide a credible offset.  Greenfleet, as a charity, does not have huge amounts of capital to establish forests in anticipation of a compliance market.  We use our supporters’ funds to establish forests which, as they grow, take carbon from the atmosphere and to date, we have planted in excess of 6.8 million native trees in hundreds of sites across Australia.  These forests will meet our promised commitment within 20 years of planting and our modelling suggests that the growth is forward of the target. 

The Carbon Farming Initiative (CFI) provides us with the opportunity to demonstrate that the forests and the carbon they store are additional and credible.  By allowing retirement of carbon credits from forest sinks across Australia, the Government is committing to not count this carbon for themselves. 

At the moment, the Federal Government measures the forests across the country using satellite imagery and counts the associated carbon towards Australia’s national targets.  The proposed Carbon Pollution Reduction Scheme allowed for forest carbon to be measured and permits issued and retired, however its delay and subsequent postponement, together with the demise of Greenhouse Friendly™, meant that there was no mechanism for accrediting forest carbon (or any other type of Kyoto compliant abatement) in Australia... worse still, it could be argued that the 6.8 million trees Greenfleet has planted are no longer additional as the Government is counting the carbon for themselves towards their Kyoto target.  The CFI overcomes this dilemma by committing to the retirement of AAUs (Kyoto units) to prove the additionality of the projects. 

Greenfleet has been active during the consultation period for the CFI and the Department of Climate Change & Energy Efficiency is well advanced in preparing relevant tools, seeking further feedback and we understand that the legislation will be tabled shortly in Parliament, with draft regulations soon to be released.  Given that the CFI is set to commence on 1 July 2011, this is a very tight deadline. 

Questions remain as to the scope of the Carbon Farming Initiative and how CFI credits can be used.  There has been concern from some quarters that there will be a flood of low cost abatement onto the market that will make it ‘too easy’ for the ‘large polluters’ and not send a sufficient price signal to drive structural change in energy production or consumption.  There is also concern that establishing forests as carbon sinks will displace food production thereby driving up the price of food.  Let me address these concerns separately.

First of all, the design of the CFI allows for abatement from agriculture including soil carbon.  There have been numerous reports on the potential for soil carbon abatement in Australia.  In fact Prof. Garnaut, in his recently updated report, stated that Australia has the highest potential abatement per capital in the world.  The key word here is potential.  At present, there is no routine way of measuring soil carbon that would make the cost of abatement economic.  Even if there were, and much more carbon became available than was originally envisaged, it is possible to make abatement targets harder to account for the increase in supply.  My view is that climate change is so challenging, and the required targets to meet safe greenhouse levels so aggressive, that we need everything to work and it is risky to stifle innovation in a potentially huge source of abatement. 

As to food production, establishing forest sinks costs involves a high initial capital investment of anywhere between $2,000 to $10,000 per hectare depending on the planting approach.  Carbon yields in the first few years are very low until active growing periods commence.  If the average site generates 300 tonnes of CO₂-e per hectare (at 20 years), and the price of carbon is $25 per tonne of CO₂-e, the potential income to the project originator is $7,500 – over 20 years that’s an average of $375 per hectare per year.  Compare this to a hectare of wheat that produces say 1.8 tonnes per hectare each year, at say $300 per tonne – that is an income of $1,140 per hectare per year with much lower capital investment and income anticipated every year for 20 years.  It is unlikely that we will see huge productive areas of farmland planted with forests for carbon alone.  However, landholders may plant some areas to hedge themselves for future markets.  The price of food is much more likely to be impacted by global supply and demand, biofuel policy and as we have recently seen, major natural disturbances.  Forests remain part of a suite of actions to take meaningful and lasting action on climate change and biodiverse forests have the benefit of increasing the landscape’s resilience to climate change. In the International Year of the Forest, we think it’s a great option.