Greg Hunt’s carbon illusion

Like Labor, the Coalition has committed to reduce carbon emissions 5 per cent by 2020. But the Libs’ ‘Direct Action’ plan has been dubbed ‘soil magic’ because over 60 per cent of reductions – 85 million tonnes of CO2 per year – are to be taken up by soil.

A scant page in their 30-page policy tells us this will be achieved for the amazingly low price of $10/tonne but offers no more detail. Greg Hunt does mention, in a media release, that it will be acquired by ‘reverse auction’; farmers will tender carbon uptake for sale and the government will buy it at the lowest price.

There is a simple reason why the Libs won’t tell us more. The cheap soil carbon ‘offsets’ they plan to create will be not be measured and neither will they be permanent. In short, the Direct Action plan is constructed on the premise of bogus soil carbon offsets.

The Libs make the questionable and misleading statement that “any new global emissions reduction agreement is expected to include soil carbons.” The fact is that if soil carbon abatement is ever included, there will be compliance rules. These requirements simply cannot be met for $10/ tonne CO2; any soil offsets created for this price will be non-compliant and will never be an acceptable means of reducing a nation’s carbon emissions.

First and foremost carbon abatement must be measured before it can be claimed and guaranteed permanent, which requires a 100 year covenant on the land. It must also be additional (not already common practice) and verified (an accredited practice is proved to be happening). All of these rules are part of the existing Kyoto rules and the Liberals’ now defunct Greenhouse Friendly standards (which, paradoxically they say they will reinstate).

The grain of truth in the Liberals’ fiction is that ‘CCX Soil Offsets’ were once sold for several dollars per tonne in a now defunct private scheme run by the Chicago Climate Exchange (CCX).  These offsets only required the improved management practice to continue for five years and there was no measurement of soil carbon but instead possible future carbon sequestration was estimated. Investors soon realised that since they were not measured, not permanent and not Kyoto compliant. They were in fact a sham.

The price dropped from several dollars to a few cents per tonne CO2 and they have not been traded since 2010. Another private scheme based on the CCX Soil Offsets – ‘Australian Soil Carbon Accreditation Scheme’ (ASCAS) – has been initiated here. Could the Coalition have played a part in this? Not surprisingly, ASCAS is still conceptual and is not generating real carbon offsets. 

How much does it cost to create compliant soil carbon offsets?

To produce compliant soil carbon offsets, the carbon price would have to be of $25 - $200 per tonne CO2, depending on the soil management practice used.  The costs of accreditation, a 100 year covenant ($7,000-$10,000) and baseline carbon measurement must be met ‘up front’. Then verification, reporting ($5,000-$10,000) and carbon measurement are incurred each time carbon is sold (about 10 yearly).  Measurement is the biggest cost, averaging about $3.50/ ha / year. Statistically significant soil sampling entails at least one sample to at least 30cm depth per 2 ha. These must then be analysed in a laboratory (cost $60/sample).

Add to this the annual costs of implementing the carbon farming practice, which range from about $20/ha for pasture management to $600/ha for mulch crops or bio-char. Farmers must spend this money before they can claim any carbon; they must take the risk that the amount of carbon they will be able to sell will cover costs.

For example, take a typical high rainfall beef farmer. He has estimated that rotational grazing of perennial pastures will cost him $20/ha/year and it will enable him to sell 1.6 t CO2/ ha/yr. The practice will not increase net beef income otherwise he would already be doing it. To make a reasonable margin and allow for risks, he needs to cover costs plus 50 per cent i.e. he will need to make 1.5*(20+4+3.50) = $41/ha per year. To make this, the carbon price has to exceed $26/tonne.

McKenzie et al, 2010 estimate that for carbon trading to be economically attractive for Australian dairy farmers, the carbon price would have to be at least $200 per tonne CO2 due to the high feed value of pasture that would have to be left to decompose in the soil.