As the pot of money for carbon farming projects runs out, ABC Rural explains what the Emissions Reduction Fund (ERF) is and how agricultural projects have benefited.
What is the ERF auction?
The Emissions Reduction Fund is an allocation of $2.55 billion of Federal Government money to pay for carbon abatement projects.
The energy sector is not able to participate in the scheme.
The government is the only buyer, so it’s taxpayer money, not private sector finance, paying for the carbon credits.
The scheme works via a reverse auction system, so proponents put in their lowest bid of what they can afford to do for the price.
The first auction was held in April 2015 and there is $440 million remaining in the fund for the fifth auction.
So far, the ERF has bought contracts to abate 180 million tonnes of carbon for up to 10 or 20 years.
The results from the fifth ERF auction held on April 3 will be announced on April 13.
What projects have been winners?
Australia’s system of awarding carbon offsets for carbon farming is considered one of the highest quality, best regulated, and with the strongest legal backing of any carbon offsets in the world, according to the Climate Institute.
The first auction spent $660 million, with the majority going to a small area of drought-affected NSW.
Sixty per cent of the contracts were awarded to projects at Bourke and Cobar, in western New South Wales, where farmers committed to avoiding clearing native vegetation.
Since then, up to 115 million tonnes of carbon dioxide equivalent (CO2e) has been contracted from landholders around Australia, fencing off native vegetation or creating new plantings.
Methane from piggeries:
Methane is a greenhouse gas that is 23 times heavier than carbon dioxide.
By collecting methane off effluent dams and generating biogas, piggeries can power their sheds and sell electricity back to the grid.
So far, 11 piggeries have registered with the ERF, for $10.4 million, to abate 200,000 tonnes of CO2e.
This equates to 13.5 per cent of Australia’s pork being sourced from farms with biogas systems.
Piggeries with more than 500 sows can potentially save up to $5 on the cost of producing each pig.
Raging savanna fires contribute 4 per cent of Australia’s greenhouse gases.
Savanna burning projects have won contracts for northern Australian Indigenous landowners and graziers, where mosaic burns are conducted in cooler months of January to June to reduce hot tropical fires.
Cattle, sheep producers:
Meat and Livestock Australia calculated that of the first three auctions, $1.7 billion spent by the ERF, landholders and red meat producers had won 65 per cent or $1.1 billion worth of contracts.
Since then there have been more.
The money largely went to projects for revegetation, avoided deforestation, pig methane offsets, soil carbon, and savannah burning.
Overall, the ERF has delivered timely income for farmers, generating $239 million annual revenue for landholders, according to the Australian Farm Institute.
Is the scheme flawed?
Economists argue many projects would have been done anyway as good business sense.
The price started higher, at $14 per tonne of carbon dioxide, when landholders in western NSW were big winners.
A handful of landowners fenced off native vegetation, protected it from feral animals and weeds, and secured 60 per cent of the first auction contracts, at least $300 million over 10 years.
Paul Burke, an environmental economist at the Australian National University, said it was an expensive way to buy carbon offsets that could have been done anyway, to make economic sense.
“Large sums of money, often many times the value of the land, have been awarded to projects for little effort,” Dr Burke said in September 2016.
Since then, the price for carbon has been pushed so low that other critics claim many seeking contracts find it is not worth their while.
Reputex, analysts of energy and emissions markets, said many contracts already secured were “stranded” seeking better carbon prices on the voluntary market overseas.
Why are greenhouse gas emissions still growing?
On current government figures, based on 2016 carbon dioxide levels, Australia’s emissions will grow by 10 per cent by 2030, to 592 million tonnes a year.
That is falling well short of the Paris commitment to reduce emissions by 26 to 28 per cent on 2005 levels over that time.
Analysts point to a lack of focus on energy, despite the closure of the Hazelwood power station in Victoria.
“While 80 per cent of Australia’s emissions come from burning fossil fuels, 80 per cent of the Government’s Emission Reduction Fund has been spent on land carbon sequestration,” Reputex stated.
In its 2016 report, the Climate Council said burning of Australian fossil fuels both here and overseas, produced 6.5 times as much carbon as the land can sequester.
“While storing carbon on land is useful for combating climate change, it is no replacement for reducing fossil fuel emissions,” Martin Rice and Will Steffen from the Climate Council said.
Eighty per cent of the money from ERF is dedicated to land emissions, which has managed to secure only three per cent abatement a year, while emissions from fossil fuels continue to contribute 75 to 80 per cent of our greenhouse gases.
Is there any more money?
Industries are closely watching the forthcoming Federal budget to deliver more money for landholders to sequester carbon.
A Federal review of climate change policy was released on March 27 this year. A six-week public consultation period is open until May 5.
The review states that Australia’s commitment to the Paris climate change agreement of reducing greenhouse gas emissions by 26 to 28 per cent on 2005 levels by 2030.
It expects Australians will halve their emissions, per capita, and energy intensity will be reduced by two thirds.
A statement from Environment Minister Josh Frydenberg gave no indication there was any consideration for more money in the budget. The statement said the government’s climate policy was under review.
“The government is committed to adopting a non-ideological approach to emissions reduction to ensure we secure the lowest cost of abatement,” the statement said.
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