GreenCollar’s Lewis Tyndall and James Schultz discuss the Government’s Direct Action climate policy and the Carbon Farming Initiative on ABC Landline.
PIP COURTNEY, PRESENTER: Last week, the Senate breathed life into the Abbott Government’s Direct Action climate policy, which features a $2.5 billion Emissions Reduction Fund.
It ends months of uncertainty in the wake of the carbon tax being axed. But what does it mean for the Carbon Farming Initiative? How will farmers and Aboriginal communities with existing carbon abatement schemes adapt? And will the new system deliver Australia’s promised 5 per cent cut in emissions by 2020?
Sean Murphy reports.
SEAN MURPHY, REPORTER: On his two stations near Cobar in western New South Wales, Peter Yench harvests about 4,000 feral goats a year. At $40 to $50 each, it’s a handy, opportunistic income, but he’s keen to get rid of goats altogether on his combined 53,000 hectares.
PETER YENCH, BALGOO STATION: With the goats, they’re good, they’re feral, they come in off the mountainous country and also your rough country. However, you’ve got to run them up to two years before you can get a decent return. But, by that time, if you run a sheep, you can have two or three lambs and sell them at $80 to $100 each, so, the mathematics just don’t add up. You’re better off getting rid of the goats and running sheep.
SEAN MURPHY: To make his stations free of feral animals and natives, such as kangaroos and emus, Peter Yench has invested heavily in total grazing pressure fencing. It costs $4,000 a kilometre and he’s installed about 40 kilometres so far. It’s expensive work and comes at the same time as he’s been engineering his paddocks to better use his meagre annual rainfall. All this despite two years of drought. He’s done it with money earned from carbon farming.
PETER YENCH: With the carbon farming coming in, that gives you the opportunity to make money out of your harder country and then to reinvest it in better country and make it even better again.
SEAN MURPHY: Peter Yench has pledged to conserve native forest on half of Balgoo Station for the next 100 years. In return, he’s been promised an annual income for the first 20 years.
So after 20 years and when you’re long gone or if you want to sell the property, does the carbon conservation become a liability?
PETER YENCH: No, it certainly doesn’t. And the reason being that you’ve got access to funds for 20 years. If you can’t improve that 25 – 50 per cent of your property in that 20 years to far outweigh the cost, well then you’re not much of a manager. You should be living in town.
SEAN MURPHY: Peter Yench is in a scheme run by the Sydney-based company GreenCollar. It’s owned by barrister Lewis Tyndall and former World Bank consultant James Schultz, who met while working to conserve forests in Indonesia. Their company has written up 95 per cent of Australia’s native forest carbon abatement, most of it in the Western Division.
JAMES SCHULTZ, GREEN COLLAR: What the property owner is obliged to do is not clear land that he would have been otherwise been clearing. It doesn’t mean he can’t continue to graze. In fact we encourage that and we want to see the property managed as a whole of property land management plan, as opposed to locking up country and throwing away the keys.
Our expertise as a company is in how you can extract values from other markets like carbon finance, ecosystem services, biodiversity, watershed management and so we share in any of the revenues that we’re able to generate from those activities.
SEAN MURPHY: The Carbon Farming Initiative, or CFI, evolved under the previous Labor government, where Australia’s 250 biggest polluters were encouraged to buy carbon credits to avoid paying the now-defunct carbon tax. The CFI generated trades worth $160 million over the last four years.
NEWSREADER: The Abbott Government and the Palmer United Party have done a deal on climate change. The $2.5 billion Direct Action plan would pay businesses to reduce their emissions.
SEAN MURPHY: In the Senate last week, the once market-driven system was replaced by Direct Action, a government-funded scheme with a $2.5 billion Emissions Reduction Fund to buy carbon credits over the next four years.
LEWIS TYNDALL, GREEN COLLAR: The difference is that the Government is buying them under a reverse auction process, and before, the polluting companies were paying for them. We need policy certainty and by having the Emission Reduction Fund passed by the senators recently, that gives certainty for us to go ahead. In the future there might be a different kind of carbon price mechanism, but at the moment we’re content that we’ve got certainty and we can go ahead.
SEAN MURPHY: The new system will feature a reverse auction where the lowest privately-tendered bids will win contracts, usually for seven years.
CHLOE MUNRO, CLEAN ENERGY REGULATOR: We expect that we’ll buy at a range of price points. Not all projects will be able to deliver abatement at the lowest possible price, and really all that the benchmark price is doing is saying, “Well above this price we think it will be unreasonable to pay that,” and we’re confident that we’ll be able to get enough abatement below that price for it to be a reasonable discipline on the market.
SEAN MURPHY: Chloe Munro heads the new Clean Energy Regulator. Its benchmark price will not be made public and Ms Munro won’t speculate about how low the carbon price could go. Under the previous system, carbon credits were traded for about $20 a tonne. Some observers fear the new price could go as low as $5 a tonne.
CHLOE MUNRO: So we’ll find that out as the market develops and we certainly don’t have any preconceptions here at the Clean Energy Regulator about what that could be.
SEAN MURPHY: For companies already running projects like native forest protection, the first auction will be early next year.
JAMES SCHULTZ: The important thing for us is it provides a price and your ability to compete in that auction is like any other market that you’re competing in: if you compete on a cost basis, well then you’re going to be able to provide to that market, and if you can’t, you won’t.
Native forest protection projects are actually some of the most cost-competitive projects you have in the context of carbon and the Carbon Farming Initiative. But the important thing for us, the fundamental thing, is that there is actually a price there.
SEAN MURPHY: Uncertainty about how the Emissions Reduction Fund will evolve extends well beyond native forest protection schemes. It’ll also include tree planting, methane capture in piggeries and landfill and controlled burning to prevent major bushfires.
In the north Kimberley, helicopters are helping Aboriginal rangers with their traditional early season fire management. So-called savanna burning generates carbon credits by preventing major bushfires.
NOLAN HUNTER, KIMBERLEY LAND COUNCIL: The idea is that it’s a good program in terms of carbon abatement work that relates to people’s – Indigenous people’s cultural values, doing the work on country. You know, the mix of Western science and cultural-ecological knowledge, combining that. And, you know, it’s a good model, it’s a good fit for what our aspirations are.
SEAN MURPHY: Existing savanna burning projects will be unaffected, but the Kimberley Land Council fears new rules will make it harder for new projects to qualify and that they’re unlikely to be competitive.
NOLAN HUNTER: It means that smaller groups like ours can’t compete because the pricing is accepted by the lowest bidder – reverse auctioning is what it is. And so we’re not that viable in terms of the size of our businesses to compete against the bigger industry groups.
SEAN MURPHY: At risk may be other programs like these rangers at Cone Bay, north of Derby, who rely on the funds generated by the carbon credits.
WARREN BURUNGA, DAMBIMANGARI COMMUNITY: Well the ranger program sort of come about, I guess, concerns of people, visitors on country, the rubbish they leave behind, our rock art, places that are sacred to us. So we found that there’s a need to have a presence out on country to ensure that we’re looking after it in a way that we should be, how our elders have taught us how to look after country. I think that’s one of the biggest needs.
But also employment, building self-esteem – things like that. Getting boys off the streets, you know, and bringing them out to country and showing them – they feel more comfortable when they’re out on country, you know. You see the lights in their eyes, you know.
SEAN MURPHY: Qantas has supported the north Kimberley savanna burning program under its voluntary carbon abatement scheme and it says it will continue to support these projects regardless of any new rules for government-funded carbon credits.
LAURA BERRY, QANTAS: The fact that we can combine a project like this that supports Indigenous communities as well is really an exciting prospect for us. This program is irrespective and will continue irrespective of government policy.
It supports our voluntary carbon offset program. It’s a program that is the largest voluntary offset program for airlines in the world. It’s been going since 2007. We’re really excited about growing and developing that program going forward and giving our customers and our corporate customers the opportunity to make a meaningful contribution.
TERRY DUNNE, DOUBLE GATES STATION: This is part of the property. It’s a productive thing on your property – no different than the sheep and the cattle. You’ve got carbon credits – the same as.
SEAN MURPHY: But Terry Dunne may be forced to clear the native forest on his 22,000-hectare station near Cobar because he’s deemed too late to be part of the Emissions Reduction Fund. The Government says farmers have to have lodged a property vegetation plan before July, 2010 to qualify.
TERRY DUNNE: So I’m six months too late. My next door neighbour is of course eligible and a lot of other farmers in Cobar are eligible, but I’m not. And my alternative to this is clearing this country and making it more productive.
SEAN MURPHY: Drought has forced Terry Dunne to send most of his cattle away on agistment, but he reckons a carbon credit income could drought-proof his property and improve it for future generations.
TERRY DUNNE: I’d love to have this property much better for the kids coming along, particularly my own children, which I haven’t been able to afford to bring home. But, yes, I’d really like to see this property improved for the next generation. I think that’s what it’s all about. That’s what farmers are all about.
SEAN MURPHY: The sleeping giant of carbon farming will be coming up with a method for measuring carbon stored in soil. Department of Primary Industries research scientist Dr Cathy Waters has been examining nine sites in western NSW to see what impact better fencing and grazing management has on soil carbon.
CATHY WATERS, DEPARTMENT OF PRIMARY INDUSTRIES NSW: We’ve got the data now to show the changes in management that allow you to control the grazing intensity on the outside, so that’s external grazing pressure from the ferals and native animals, combined with rotational grazing gives you higher amounts of ground cover, perennial ground cover in particular and litter, and that translates directly to increases in soil carbon, in particular in that top first few centimetres of the soil.
SEAN MURPHY: For farmers like Ashley McMurtrie, it’s delivered a huge production bonus.
ASHLEY MCMURTRIE, GILGUNNIA STATION: It’s becoming particularly important now that we’re back in drought. We’ve been in drought for two years. Prior to doing these sorts of things, we would have been in big trouble 12 months ago, whereas now our livestock are all in good condition and we still have six months of feed in front of us, so it’s made a huge difference to the outcome for us.
SEAN MURPHY: For now, farmers like Peter Yench have secured their income from carbon farming, but the jury is out on if the Emissions Reduction Fund will deliver a 5 per cent cut in greenhouse gas emissions by 2020. There also remains a faint hope of a return to a market-driven emissions trading scheme with the Government now funding an investigation by the Climate Change Authority.