Optimising Carbon in the Australian Landscape

Abstract

The focus in climate change policy has centred on reducing greenhouse gas emissions from energy generation, manufacturing and transport, because this is fundamental to any solution to climate change. The science now tells us that it will be next to impossible for nations to achieve the scale of reductions required in sufficient time to avoid dangerous climate change unless we also remove carbon from the atmosphere and store it in vegetation and soils. Terrestrial carbon includes carbon stored in forests, woodlands, swamps, grasslands, farmland, soils, and derivatives of these carbon stores, including biochar and biofuels. The power of terrestrial carbon to contribute to the climate change solution is profound. At a global scale, a 15% increase in the world’s terrestrial carbon stock would remove the equivalent of all the carbon pollution emitted from fossil fuels since the beginning of the industrial revolution. The multiple public policy benefits for Australia in adopting full terrestrial carbon offsets are enormous, but there are also significant risks of an unregulated terrestrial carbon market to other areas of public policy. In a report recently commissioned by the Queensland government, Analysis of Greenhouse Gas Mitigation and Carbon Biosequestration Opportunities from Rural Land Use, CSIRO estimate that the Australian landscape has the biophysical potential to store an additional 1,000 million tonnes of CO2e in soils and vegetation for each year of the next 40 years. If Australia were to capture just 15% of this biophysical capacity, it would offset the equivalent of 25% of Australia’s current annual greenhouse emissions for the next 40 years. This represents a gross investment potential of terrestrial carbon in Australia of between $3.0 billion and $6.5 billion per annum. It is good news for Australia. It lowers the economic cost of achieving Australia’s emissions reductions, and makes it possible for Australia and the world to adopt deeper emission cuts. If Australia commits to reducing our greenhouse gas emissions by 25% by 2020, and carbon forestry offsets are included, ABARE estimate that the majority of these forests will be permanent environmental plantings rather than harvested plantations. If we plan wisely, terrestrial carbon presents an economic opportunity of unparalleled scale to address a range of other great environmental challenges confronting Australia: repairing degraded landscapes, restoring river corridors, improving the condition of our agricultural soils, and conserving Australia’s biodiversity. It also poses significant risks. Without complementary land use controls and water use accounting arrangements in place, there is a risk that carbon forests will take over large areas of agricultural land, causing adverse impacts on food and fibre production, and impacting on regional jobs that are dependent on these industries. ABARE has estimated that if Australia commits to reducing greenhouse gas emissions by 25% by 2020, over 40 million hectares (an area equivalent to 40% of the entire Murray Darling Basin) would be economically suitable for carbon forestry. In some locations, newly established carbon forests could also cause a reduction in runoff into rivers and worsen existing over-allocation problems. The challenge for Australia is to optimise this new terrestrial carbon economy to drive investments towards improving the health of our agricultural soils, protecting areas of high conservation significance and repairing degraded landscapes, and away from damaging native vegetation and prime agricultural land. It is also counterproductive to create economic incentives to revegetate overcleared landscapes without introducing complementary measures to reduce broadscale land clearing. Clearing of native vegetation still contributes 13% of Australia’s greenhouse gas emissions. Australia needs to plan where we want trees, where we produce food and where we might do both. It is the role of Australia’s governments (Commonwealth, State, Territory and Local) to build the institutional structures to create these opportunities and manage these risks by: 1. Designing a Carbon Pollution Reduction Scheme that captures the full potential of terrestrial carbon in vegetation and soils, providing land managers across Australia the opportunity to optimise their contribution to the climate change solution; 2. Regulating the terrestrial carbon market so that multiple economic and environmental benefits can be realised, whilst avoiding unintended consequences for fresh water resources, biodiversity and agricultural land; 3. Assisting communities prepare regional Climate Change Adaptation Plans to manage the impacts of climate change on the Australian landscape and guide the development of policies to optimise future investments in terrestrial carbon; 4. Underwriting climate change adaptation policies and terrestrial carbon investments by building a system of regionally based, National Environmental Accounts, to monitor the health and change in the condition of our natural resource assets; 5. Establishing a Climate Change Adaptation Fund, by applying a 1% levy on the sale of emission permits to monitor, plan and invest in actions to minimise the impact of climate change on Australia’s biodiversity, coasts, and land and water resources; and 6. Strengthening international efforts to protect and restore terrestrial carbon in tropical forest landscapes that will promote new international rules to provide the opportunity for developing countries to capture this potential. These reforms will mean that a price on carbon stored in the landscape can make a substantial contribution to Australia’s efforts to combat climate change. They can also help Australia adapt as climate change imposes its footprint across the Australian landscape, and they can be a catalyst for driving a new generation of economic reforms to improve the health of our farmlands and the protection and restoration of Australia’s biodiversity.