The numbers were all bad for the beef, sheepmeat and dairy sectors under the first version of the Rudd Government’s Carbon Pollution Reduction Scheme (CPRS); now, ABARE says, they are all good.
In a recent report, ABARE reviewed the Government’s November 2009 policy change which excludes agriculture from paying for emissions under the proposed CPRS, but allows the sector to earn additional income by producing greenhouse gas offsets.
The report concluded that not only would the policy mix reduce emissions, especially from the red meat industries, but across most sectors agricultural production would increase and production costs decrease out to 2030.
The authors base their optimistic forecast on the likelihood that generating offsets will improve returns to agriculture, and that improved returns will attract greater investment in the sector.
Allowing agriculture to trade in offsets will also allow it to compete successfully with carbon forestry.
Earlier ABARE modelling suggested that the effect of the original CPRS would be to encourage carbon forestry across millions of hectares of what is now considered agricultural land.
The positive effect of offset is particularly strong for the livestock industries, which ABARE forecasts will in the long run have the greatest capacity for cutting and sequestering emissions, which in turn would attract the highest level of investment.
Under the CPRS with an offsets scheme, ABARE suggests that the beef and sheepmeat sectors will be able to cut emissions by 4-5 per cent by 2030, while pulling back production costs by 5.7 per cent and increasing production 1.6 per cent.
(All the paper’s forecast are made relative to a reference case that accounts for global progress along “expected pathways, in the absence of any major regional or global climate change initiatives and without any significant technological breakthroughs”.)
Dairy would reduce its emissions by one per cent under the same scenario, dropping production costs by 3.3 per cent and increasing production by 1.9 per cent.
ABARE suggests that revised policy would not benefit the grains sector to the same degree. It forecasts that grains would only reduce emissions by around 0.5 per cent by 2030, and lower production costs by a similar amount, while production would kick up 1.1 per cent.
While wool may make gains in emissions reduction and production costs, ABARE still forecasts that wool production would slip by 1.7 per cent.
But the report’s authors also warn of a hole in the accounting: money needed to pay for the offsets needs to come from somewhere, in this case the sectors covered by the CPRS.
“The effects of offsets on the broader economy has not been considered in this paper.”
ABARE has also maintained its policy of modelling in the assumption that all countries will introduce their own emissions trading schemes, and in this case, that they will also offer offsets schemes to agriculture.
Corey Watts of The Climate Institute said the modelling shows a good result for agriculture, but it also underlines the issues that need to be addressed for the policy to be sustainable.
“Including agricultural offsets by exempting agriculture from any liability for their own emissions and asking other sectors to pay is a situation that can’t last,” Mr Watts said.
“On the other hand, the Bill currently before Parliament gives farmers an indefinite ‘period of grace’ to secure the investment, adopt the best practices and develop the new techniques to prosper in a low-carbon economy.”
“Of course, what ABARE doesn’t model is the case where we, together with the rest of the world, fail to act to rein in carbon pollution. That’s a world where an increasingly hostile climate is bearing down on food and fibre production.
“CSIRO predicts that, the way we’re heading, Australia could be a net importer of grain by 2050. According to the Garnaut Report, irrigated production in the Murray-Darling Basin will be down 90 percent by century’s end without strong action on climate change.”
Under the amended CPRS, there are three avenues through which landholders can produce offsets: “official” Kyoto-compliant CPRS offsets, voluntary market offsets, and “CPRS opt-in” offsets.
Kyoto-compliant offsets, which can be sold for full CPRS market price, can come from a limited range of sources, including changed management of fertiliser, livestock and feed quality, and methane capture systems in intensive agricultural ventures.
Opt-in offsets will provide credits for carbon sequestration through activities like “avoided deforestation”, vegetation regrowth, soil carbon and biochar.
Voluntary offsets, which will not be tradeable under the CPRS, are likely to sell for a lower price. ABARE did not include voluntary offsets in its calculations because of price uncertainty.
Email a friend
Favourites
Del.icio.us
Facebook
Digg
StumbleUpon
MySpace
Reddit
Newsvine
LinkedIn
Kwoff
Twitter