With Climate Change Minister Greg Combet's recent announcement that Australia will be scrapping its carbon tax agreement in favour of linking with the European Union's carbon trading schemes, a lot of farmers may be asking how this change will impact them.

Click here to download a fact sheet explaining how this ETS will work moving forward. We'd love to hear your thoughts on this, which you're welcome to leave in the comments section below. For more information, please contact us.

BREAKING NEWS! DINNER SPEAKER ANNOUNCED - THE HONOURABLE MP GREG HUNT We are very pleased to announce that The Honourable Greg Hunt MP, Federal Member for Flinders and Shadow Minister for Climate Change, Environment and Heritage, has graciously agreed to speak at the dinner. His presentation, "Carbon Farming Initiative - the bipartisan view" will surely be a highlight of the event.

BRAVE NEW WORLD HERE WE COME! TREE PLANTING "METH" IN PRACTICE As we have reported, in order to take part in the Carbon Farming Initiative and earn "carbon credits", you need to follow an approved methodology. The first broadly applicable one is about planting a native forest. So, its time to get out in the paddock and "walk the talk". We have been active ourselves on farm, dutifully gathering data points on some marginal land we have. We have chosen an area where we will be able to "join" some remnant native trees, of which the big ones stand tall and harbour our birds of prey. But, truth be told, they are few and far between. It will be nice to see many more of them, as well as other species. We are no genius at GPS, nor the Government's "tools" they have so endearingly worked up for us all, so its hilarious as we navigate through all of this. Soon we will be experts! Other steps required to put a project in:  We have our "registered offset entity" application in.  We are about to find out how much sequestration the Government estimates we"ll have, and we"ll get a "map" of the area.  Next steps - Application for a "project". More paperwork, but do-able.  We also have our interim Australian Financial Services Licence which enables us to continue to talk about the Carbon Credits in a trading sense. Watch this space for next installment!

GETTING DOWN TO BUSINESS Having spent the last 7 years working to see the eventuality of farmers being paid fairly for the carbon they grow, it is now time to work on our business model - ways we can work together with farmers and groups. The most widely available method at the moment is the tree planting method - as we wait for the soil carbon and others to come on board. We feel it"s a good way to 'put a toe in the water" and are backing that up by doing it ourselves!  We will have two levels of involvement: We will calculate an estimate of the carbon you could sequester in the tree method.  If you decide you want to put a "project" in, we will offer a fee for service approach where Carbon Farmers of Australia will be the "authorised representative" and manage the paperwork and compliance, but YOU will keep your carbon right - which means when you get a Carbon credit issued you will be able to make the decisions about WHO to sell it to.  We also happen to have about 35 years marketing experience, so we have plenty of ideas on how to market these. Trust me, if you had an ACCU at the moment, you"d be in big demand.  More on that next newsletter, but please feel free to contact me if either of these are of interest. We are ready when you are.

CONFERENCE UP DATE: CONFIRMED SPEAKERS INCLUDE... I"ve got to admit that I love conference time! Sure, the stress of making it the "best ever" is always present, but so many great things seem to come out of the wood work!  Lets talk "innovation" in soil carbon measurement, for instance. Did you see the piece on ABC News the other day? A couple of strong messages here. Things are happening in the measurement of soil carbon - as such, Terry McCosker will bring to the conference the latest data in this new "soil carbon mapping" exercise outlined in the ABC piece. How does it relate to "baselining" our soil carbon? Not just Terry McCosker is on this job however - Our esteemed colleague Dr Brian Murphy will also be on hand to talk about how he cut through the challenges of measuring soil carbon for the Lachlan Market Based Instrument project - and how this method is now going through the "peer review" system so it can be considered for a "baseline" method as well. I've also invited Dr Jeff Baldock to hear how his work relates to the baselining for soil carbon. Fingers crossed on that one. I have one or two "cards up my sleeve" on this as well.  If you know of anyone else with an innovation in soil carbon MEASUREMENT, please let me know!  Another big point in the article is the wonderful, the amazing, the incredible (drum roll)...  100 year rule.  Well, lets get this area out in the fresh air shall we? Lets talk about the 100 years! Is it as bad as it sounds?  Are there alternatives?  We've looked at this contentious part of the CFI very carefully, given that it is one of the real brakes on uptake by farmers. Our understanding is that if you take it to 25 to 35 years, there are at least three consequences: The credits will not be very saleable overseas.  You can"t sell them into the "compliance" market here or overseas (the $23/tonne market) due to the Governments commitment to Kyoto.  The value of a 25 year credit could be quite low.  But, there are precedents. The Voluntary Carbon Standard is an overseas Standard accepted in our market. They have a 25 year project running in Tasmania at the moment. It's a tree method, but not for planting trees. Rather for not knocking them down! So, I'm on the track of some speakers who will be able to shed some light on the pros and cons. Perhaps we could have CHOICE for farmers. More than one type of credit; long term and medium term?  Stay tuned, get your registrations in early and we'll get both sides of the story.

I am now so "tech savvy", and there is always so much happening in this space now, you can keep in touch by following me on Twitter, Facebook or LinkedIn.

For all the latest Conference news and to book your places now, please go to www.carbonfarmingconference.com.au. I am, as usual, your humble carbon servant and can always be reached on 02 6374 0329 or at louisa@carbonfarmersofaustralia.com.au.

The Government understands that it is asking a lot of farmers wanting to take part in the Carbon Farming Initiative. The commitment asked of farmers is significant, to ensure that credits generated by the scheme meet the strictest global standards, according to parliamentary secretary for climate change, Mark Dreyfus. "Australia comes to this with a very high reputation for scientific integrity, for regulatory integrity. We're expecting that Australian carbon credits will be in world demand for those reasons.” he said. Australian farmers will benefit from having to meet high standards to earn carbon credits. 

They destocked Henbury Station and they’ve locked all 500,000ha of it up, and called it carbon farming.  It is the most high-profile example of ‘carbon farming’ but it sends all the wrong messages. Call it “Conservation” or a National Park, but it is not farming. 

Last week we were interviewed by 2 sets of journos as they try to gather info on what farmers are doing and 
thinking about with all the new 'carbon era' noise around. This piece aired on PM last Thursday or Friday. We also got a run in the Sustainability Report - click here to read the full article.

Farmers are wondering: Should they, shouldn't they - AND, while the soil carbon sequestration meth seems to take forever, we have only ONE method which broadacre farmers can take part in. The Tree Planting meth. 

So, we've decided to put about 20ha. of a tree planting methodology onto our place - basically to see if we can figure out how hard/easy it is for the ordinary bloke to take part. This is the STATED aim of the CFI - we are meant to be able to take the meth 'off the shelf' and do it on farm. So, lets see. 

I know I can call someone who knows about planting trees, but how do I keep the most of the money in the regions? What local skills will I be able to use? Who holds the know-how to navigate the approval process? Will I need a degree to understand it? Can you do it without $1/2 million from the biodiversity fund round one? 

Most of this carbon market knowledge resides in the cities - which is why we are mounting our NEW Carbon Market Summit. We are bringing all that knowledge about HOW this works - legally, in the accounting sense, for councils and NRM agencies to come and learn - If this is going to happen, lets make the regions strong, let our accountants, lawyers, councils and others be the BEST informed they can be! Lets own the bl.....dy thing! (please note, this is ADDITIONAL to our annual Carbon Farming Conference and Expo - now in its sixth year) 

Rest assured however, we are still the champions of the soil! After all, we owe our existence to the interaction between the sun,  the rain and the soil! And the soil is the one we can 'manage'. It is still exciting for me to realise that farmers have control over the largest carbon sink over which we have control in the world . Rise up, Sir Farmer! 

I like the MP for Parkes Mark Coulton. I stood against him when he was first elected in 2007. He showed he has a fine sense of the hystorical in Parliament on Thursday when he warned farmers to stay away from the Carbon Farming Initiative because it could lead to the failure of Australian agriculture. He announced that farmers had to sign up for the CFI and submit themselves to being told what to do by the government. He's right, of course. Famous failed experiments of state-controlled agriculture led to famine and disaster in the Soviet Union and China and more recently North Korea and Zimbabwe. But Mark need not worry. The CFI is still voluntary. In fact, the CFI wants farmers to tell governments what to do by making their innovations available to other farmers by submitting them to the Positive List. (The Carbon Farming Initiative (CFI) includes an additionality test to ensure that carbon credits generated by CFI projects can genuinely offset the emissions produced. To pass the additionality test, a project must be on the Positive List.)

NEWS FROM THE HUB OF CARBON FARMING!

Regional Carbon Market Summit - Leveraging the Carbon Market for regional prosperity

Why is it that all things to do with The Clean Energy Policy, the Land Sector package and the Carbon Farming Initiative are all ‘announced’ in the cities, and discussed at city conferences which cost a fortune to attend? After all, only Landholders can earn carbon credits in the CFI!

Many farmers interested in the CFI are now asking the following questions:

Q. What is happening on 1 July, 2012? What do I have to do?

A. Nothing. On 1 July, 2012 the Clean Energy Future program starts. The top 500 emitters of Greenhouse Gas will be required to pay a price on the carbon they emit. This will increase some input costs for farmers as those companies forced to pay the price on carbon pass on some of the increase to their customers. Eg. power costs.  But the huge increases in power bills in recent times have nothing to do with the price on carbon because that won’t start until 1 July, 2012. The dramatic price hikes predicted to be inflicted by the ‘carbon tax’ were based on worst case scenarios used in the political campaign against the price on carbon. As well, companies like Fontera have said they would avoid passing on increased power costs to its farmers. Farmers do not have to pay for their emissions on farm, despite the fact that Australian Agriculture emits more than the transport industry.  Instead the  plan is that farmers will be paid to increase the carbon in the landscape and reduce their emissions of methane from animals and nitrous oxide from fertiliser and other sources.

Q. How do we get paid to reduce our emissions?

A. The Carbon Farming Initiative (CFI) is  a government program that enables farmers to earn carbon credits which they can sell on the carbon market. The credits can be bought by companies that need to or want to offset their emissions. This is why they are called an “offset” – they allow emitters to bridge the gap while they invest in the changes they must make to be part of a low carbon economy. Offsets earned in Agriculture are known as “Australian Carbon Credit Units” (ACCUs).  

Q. What do we have to do to earn ACCUs?

A. A wide range of activities may be used to earn ACCUs. They include reforestation and revegetation and surrender of permits to clear, reduced methane emissions from livestock - eg., using tannins as a feed supplement for ruminants, incorporating Eremophila (emu grass) into feed for ruminant livestock, and manipulation of gut flora in ruminant livestock - reduced fertilizer emissions, manure management, reduced  emissions of nitrous oxide – including application of urea inhibitors to manure, application of urea inhibitors to fertiliser - and increased sequestration of carbon in agricultural soils. The types of projects that may be permitted include planting native vegetation, restoring drained wetlands, applying biochar to soil, and flaring methane from livestock manure.

Q. How much can we make from the CFI?

A. Nobody knows. The Government has set a fixed price for carbon of $23/tonne for the “Compliance” market (the market made up of those companies listed in the top 500 emitters). This will rise by 2.5% each year until 2015 when the price will float.  Not all CFI ACCUs will be eligible for purchase on the Compliance market. Non-Kyoto-compliant CFI ACCUs are restricted to the “Voluntary” market (the market made up of those companies and individuals who want to go carbon neutral to reduce emissions) which is expected to attract lower prices. The Government has put aside $250 million to buy Voluntary ACCUs to support the market. The prices are hard to predict. However, ACCUs are bankable, so farmers can wait for the right price before selling.

Q. Do some activities pay more than others?

A. Yes. For every tonne of methane you can avoid emitting (eg., by changing the diet of your cattle or sheep) you may earn 24 tonne of CO2-e.  For every tonne of nitrous oxide you can avoid emitting (eg., by changing the method and the amount of fertliser you apply) you may earn close to 300 tonne of CO2-e. (We are waiting for a Methodology to be approved for both Greenhouse Gases.)

Q. Why do scientists say soil carbon can make only a modest contribution to the efforts to reduce Global Warming?

A. Not all scientists say that. The world’s leading soil scientist Dr Rattan Lal believes the world's farmers control the largest installation of a biological technology (photosynthesis in vegetation across 5 billion hectares worldwide) that can extract billions of tonnes of carbon from the atmosphere, interrupting the rapid rise of Global Warming. He says farmers can draw down the equivalent of 50ppm (parts per million of CO2-e) from the atmosphere for 50 years. It just so happens that it will take only another 50ppm to the atmosphere before we reach 450ppm (which will increase Global temperature by 2°C).  We need to buy time for low-emissions renewable energy to reach critical mass. Change land management to turn agricultural soils and vegetation into a vast global carbon sink .  Soil is fully deployed, has critical mass, and massive capacity. Let’s get on with it.

Q. How do we get started? Who do we talk to?

A. The CFI is in the start-up phase. One by one, the long list of offset activities is coming on stream as “methodologies” are written for them. A methodology is a set of rules that enables someone to take it off the shelf and follow it like a recipe to conduct the activity and earn offsets in a way that is genuine and reassures buyers that they are getting what they are paying for. There are only 4 ‘meths’ available at this time: environmental plantings of native trees would be most relevant to the majority of farmers; flaring methane from manure ponds in piggeries; managing methane emissions from landfill; and reducing emissions from savanna burning.

Q. Can we cut out the Middleman?

A. The Government believes that farmers should be able to manage the process themselves. However, they will need the services of some third party because offsets are typically sold in bundles of thousands of tonnes, orders that few landholders will be able to fill. An ‘ aggregator ’ s responsibilities can include parcelling orders, pool management, registry maintenance, measurement, trading, and educating. As much as farmers love to cut out the “Middleman”,  direct trading makes up a small fraction of produce sold. Experience in markets overseas tells us that landholders will have choice of aggregation services from their farmers’ association, natural resource management bodies such as CMAs, suppliers such banks, agents or agronomy services, and dedicated aggregation services. The role of aggregator is difficult and requires substantial database management capabilities. Based on overseas experience, the cost of aggregation, insurances, etc. varied between 10% and 30%. Landholders will most likely choose to aggregate with the best price/lowest risk provider. (E., A farmers’ group could choose to form a cooperative to engage an aggregator.)

Q. Do we have to take land out of production in order to raise carbon levels in our soils?

A. No. The best process for increasing soil carbon levels involves active farming. Carbon farming includes all forms of grazing management, biological and biodynamic farming, composting, pasture cropping, soil inoculants, etc. And agroforestry and integrated use of trees can have a significant impact on production. Seasoned carbon farmers have discovered that they can plant 20% of their land to trees and maintain production while gaining many benefits, including increased biodiversity, landscape resilience, and lower levels of evaporation.

Q. Will they ask for the money back if we earn credits for increasing carbon in our soils or trees and subsequently lose it?

A. No. If you lose soil or tree carbon due to bushfire or drought or any other reason beyond your control, you will not be asked to pay the money back. The Program automatically puts 5% of the value of every sale into a ‘buffer account’ – called a Risk of Reversal Buffer – which covers the losses. You will be expected, however, to restore the carbon levels in soils or trees for which you had earned ACCUs. If you refuse to restore the carbon, the Program Regulator can request that you ‘relinquish’ (or hand back) the ACCUs you were paid in the first place. Your ‘carbon maintenance obligation’ sounds like a burden, but it means that you simply commit to continuing the land management practices that had led to the soil carbon levels previously achieved.

Q. If we plant trees today under the Environmental Plantings methodology, how soon can we be paid for it?

A. Theoretically, you can be ‘paid’ at the end of the first year. Practically, you would be likely to wait until there has been enough carbon captured to make it worthwhile to submit an audit report. You can claim ACCUs only after a reporting period closes. You can choose the ‘reporting period’ from 12 months at the minimum or any time up to 5 Years after commencement of the project. Each subsequent reporting period begins immediately after the last reporting period.

Q. How long can we expect the income from Environmental Plantings to continue?

A. The CFI law sets out the length of time that different activities can generate credits using an approved CFI methodology. This is known as a ‘crediting period’. Most projects have a 7 year crediting period. Reforestation will have a 15 year crediting period and native forest protection projects have a 20 year crediting period. The end of the crediting period does not mean the end of the project’s earning capacity. Projects can be approved for a further crediting period so long as the project activity remains eligible. (This sounds like enough time for someone to shift the goal posts. If you are signing contracts for a project like this, insist that the factors that will make activities eligible or ineligible are spelled out in the contract.)

Q. The prices that carbon credits are fetching now are too low to make it worth my while, according to many experts. Why should I bother?

A. No one has any knowledge of how the market for ACCUs will operate. Any opinion about the future is mere speculation, especially if it is based of misunderstandings. Eg. the price on international markets has plummeted in Europe for no other reason than the Global Financial Crisis forced companies with carbon offsets on their books liquidate these assets for cash flow. The rush to offload units depressed prices.  In the USA the year before, the Chicago Climate Exchange’s agricultural offsets price collapsed after President Obama failed to convince his Congress to pass an Emissions Trading Scheme (ETS) into law. The companies buying CCX units were doing so to prepare for the ETS which did not arrive. Unlike the USA, Australia is getting an ETS.  The CCX scheme also had problems with Additionality which the CFI solves. Another ‘fact’ experts quote is that Voluntary market units inevitably sell for less than Compliance market units. But, in Europe, voluntary units have sold for close to 10 times the price of Kyoto compliance units. So you see, speculation is useful only if it is based on facts, such as: 1. You can ‘bank’ your ACCUs and sit on them until the market price suits you. 2. No Australian farmer is likely to have enough sequestered carbon to sell until at least 5 years in to the project’s life. A lot has happened in the last 5 years and a lot can happen in the next 5 years. 3. Within that period, our major trading partner China has announced that it will have a nation-wide Carbon Trading system by 2015. It has started a  three-year trial in 5 provinces using a $10/tonne Carbon price.

Q. No farmer I know would sign a contract for 100 years, especially as many of them are close to retirement. The experts always mention the 100 years rule as a problem. What do you say to that?

A. While it is natural to imagine the worst thing that could happen, the facts are these: 1. Between 2001 and 2005, only 2.5% of Australia’s forests were impacted by wildfire each year. The odds are 37 to 1 of a fire event. The vast majority of wildfires do not kill the trees. The CFI requires that dead trees be replanted. 2. The Soil Carbon Methodology submitted to the Government’s expert panel by the Bridge Consortium (Carbon Farmers of Australia is a member)  offers an ‘self-insurance’/’mutual insurance’-type system that spreads the risk over pooled and stored units and over a number of farmers across climate zones. 3. “100 years liability” sounds worse than “100 years of healthy soils”.  But how hard could it be to continue treating the soil with respect and enjoying the benefits of soil structure, water efficiency, increased microbiological activity, more available nutrients, buffering against drought, greater resilience against disease, etc.? 4. If those "experts" are right and prices of soil carbon offsets never amount to much, your Permanence liability will never amount to much either. 5. 100 Years might seem to be set in stone, but there is no scientific reason for that period. It is not the amount of time in which a molecule of CO2 is held in the atmosphere. The CFI Legislation allows the Minister to set any other period. Carbon Farmers of Australia is seeking to have the 100 Year Principle reconsidered.

The permanent Domestic Offsets Integrity Committee (DOIC) has been appointed to replace the interim DOIC which was appointed in 2011 when the Carbon Farming Initiative (CFI) legislation passed into law. The DOIC is an independent expert committee charged with "supporting the environmental integrity of carbon offsets generated under the Carbon Farming Initiative." The new DOIC includes the following:

• Professor Timothy Reeves (Chair): Professor Reeves is an international consultant with expertise in the development and extension of sustainable agricultural productions systems and crop-livestock integration. He is a Professorial Fellow at the Melbourne School of Land and Environment, a director of The Future Farm Industries Cooperative Research Centre, was a Senior Expert for the Food and Agriculture Organisation of the United Nations (FAO) and was formerly the Director-General of the International Maize and Wheat Improvement Centre.
• Dr Tony Press: Dr Press has led one of Australia’s leading climate science bodies, the Australian Antarctic Climate and Ecosystems Cooperative Research Centre as CEO since 2009 and has been Chair of the Royal Tasmanian Botanical Gardens Board for many years. He was previously a senior executive on the Environmental Forest Taskforce in the Department of the Environment and Heritage and was the Director of the Cooperative Research Centre for the Sustainable Development of Australia’s Tropical Savannas.
• Professor Lynette Abbott: Professor Abbott is the Vice Dean of the Faculty of Natural and Agricultural Science and Professor in the School of Earth and Environment at the University of Western Australia. Professor Abbott is an internationally well known and respected scientist who has published widely in soil, agricultural and botanical research journals. Professor Abbott’s principle area of scientific expertise is within the agricultural sector with broad expertise in soil biology, including retention/protection of soil carbon.
• Ms Rebecca Burdon: Ms Burdon is the principal economist at the Australian Communications and Media Authority (ACMA). Ms Burdon has extensive international experience assessing the economic impact of existing and proposed regulatory interventions using statistical and econometric analysis and modelling. Prior to working with ACMA Ms Burdon assisted the NSW government with the development of the Greenhouse Gas Abatement Scheme, specifically with the rules governing the creation of NSW Greenhouse Gas Abatement Certificates from demand side abatement activities.
• Dr Brian Keating (CSIRO representative): Dr Keating is Director of the National Research Flagship on Sustainable Agriculture focusing on productivity, greenhouse gas abatement and sustainability challenges in Australian agriculture, forestry and land-use systems. Brian has 35 years experience in agricultural and natural resource management R&D with leadership roles including the Chief of the CSIRO Division of Sustainable Ecosystems (2004-2008) and a past Board member of Sugar, Rainforest Ecology and Management and Tropical Savannas CRCs. Brian has authored over 200 scientific papers covering diverse topics including soil and water management, plant nutrition, soil carbon and nitrogen cycling, crop physiology, farming systems analysis and design, bioenergy, simulation modelling, climatic risk management and food security. He is a continuing member of the Editorial Board of the international journal, Agricultural Systems.
• Ms Shayleen Thompson (Department of Climate Change and Energy Efficiency representative): Ms Thompson is the Head of the Land Division in the Department of Climate Change and Energy Efficiency. She has worked on international and domestic climate change policy and programs since 1995. The Land Division was established in July 2010 to provide a coherent and coordinated approach to climate change mitigation.

The DOIC's role is to assess methodology proposals for use under the scheme and advise the Minister for Climate Change and Energy Efficiency, who makes a decision whether to approve methodology proposals. The Committee also provides advice to the Minister on regulations specifying eligible activities under the Carbon Farming Initiative that are not common practice, known as the 'positive list'. The Minister for Climate Change and Energy Efficiency may also seek the Committee's technical and scientific advice on other offset matters.

Under the impression that David Pollock had destocked his station Wooleen permanently, we put a series of questions to him after his story appeared on Australian Story. WHile he and partner Frances have not turned the property into a 'national park with no income', their radical destocking strategy has forced a lot of graziers to consider their own stiuation. As David says, most could not afford to do it. Here are their answers to our questions: