The Government faces several ‘perverse outcomes’ as a result of Section 39: Additionality in the Carbon Credits (Carbon Farming Initiative) Bill 2011. The Carbon Farming Initiative could penalise progressive farmers if the Additionality Principle is applied in its Kyoto form. Farmers who have been storing carbon in their soils for years will be denied the right to be rewarded for their contribution. Farmers who changed their soil management practices as a result of being involved in programs staged by Catchment Management Authorities, Departments of Primary Industries, etc. will also be banned from access to the revenue streams flowing from the biggest commodity market in history. Included in those banned would be the GRDC’s “Carbon Champions”. (The Carbon Coalition has been warning about Additionality since September 2007.)
The Additionality Principle holds that a change in land management that has already been made or would have been made for business reasons (higher productivity or profitability) or becomes common practice in the district, cannot earn credits because the abatement does not reduce emissions or sequester greenhouse gases any more than if the scheme was not in operation.
The number of farmers affected by this “Additionality Dilemma” would be in the thousands, and they would be the best farmers in their districts. They would include farmers who invented many of the techniques used to store carbon in soil.
The version of Additionality chosen for the CFI was originally developed to apply to industrial emissions reductions projects and forestry carbon sequestration projects under the Kyoto Clean Development Mechanism (CDM): “a project must result in abatement that would not have occurred in the absence of the scheme. There would be no reduction in emissions as a result of the Carbon Farming Initiative if the project activity would have occurred in the normal course of business.”
Rival interpretations of “Additional”
Rules have been specified to ensure additionality of the project. But, according to the Stockholm Environmental Institute, there are currently two rival interpretations of the additionality criterion:
1. What is often labelled ‘environmental additionality’ holds that a project is additional if the emissions from the project are lower than the baseline. It generally looks at what would have happened without the project.
2. In the other interpretation, sometimes termed ‘project additionality’, the project must not have happened without the offset credits.
Environmental additionality is sensible, but it is not the default definition. The tests for “Project Additionality” are more restrictive. For instance, if the project will increase productivity or profitability, it cannot be additional. (This would disqualify all soil carbon increases associated with sequestration.) As well, if the practice has been adopted by several enterprises in the district, it cannot be additional. And if there were no difficult barriers to overcome (regulatory, etc.) it cannot be additional.
There are several reasons why this version of Additional does not fit the reality of a farming enterprise: 1. The likelihood of increasing soil carbon without improving productivity ranges from very difficult to impossible. 2. Increasing productivity is directly related to two of the co-benefits that make soil carbon offsets attractive in the marketplace, under the heading “Food Security” and “Farm Landscape Restoration”. 3. Farming is not a purely economic activity. “Business as usual” cannot be assumed to be whatever will bring the best return. A farmer’s “culture” or “ideology of agriculture” will dictate decisions and is often a barrier to shifting practices which the offset is used to overcome. The emotional context of the decision made on a farm is very different to that made in a factory or a forest.
There is another reason why “Project Additionality” is inappropriate for assessing additionality for soil carbon offsets: ease of reversability. The assumption that, once a manufacturing enterprise has re-engineered its processes or a landholder has planted a forest, that there is little chance they will reverse the decision, given the investment involved. But the same cannot be said for a farmer. The plough, herbicide and superphosphate are still at hand. Making the change is not the key decision. It is persisting when the going gets tough that makes the difference.
Finally, the global response to Climate Change is now dependent on maximising the sequestration capacity of farmlands to draw down enough CO2 to slow Global Warming while the world community 1. Decides on a course of action to reduce emissions and 2. Invests in building base load capacity.
“Specificity” of soil carbon
This list of unique characteristics has been summarised under the heading of the “Specificity of Agriculture” which means its unique multifunctionality. The provision of food and fibre, the notion of food security, the national security implications of domestic supply capability, the export earnings of agricultural commodities, the income generated for rural communities, the increasing value of environmental services, including carbon sequestration, the socio-cultural contribution of rural community values to national identity, etc. are all dimensions that make Agriculture subject to ‘specificity’. No other industry is described this way.[1]
As the carbon cycle is dynamic and matrixed, so also is agriculture. The simplicity of emissions-only industries or sequestering-only sinks allowed the authors of the UNFCCC “Tools” to set the tram tracks on a single gauge when a portfolio of solutions as always going to bring with it a diversity of needs for methodologies.
A faulty default?
The wording and terminology of the CFI Consultation Paper indicates that the Department of Climate Change & Energy Efficiency is using the existing definition of “Additional” (as interpreted in the Kyoto Protocols) as the default. It appears that DCCEE do not expect this definition to change as a result of consultation. The Department appears willing to innovate only around the fringes for convenience.
For instance, Section 7.1 of the Consultation Paper indicates DCCEE is looking to streamline assessment of ‘Additionality’ because it can be “time consuming, costly and subjective”. The core definition does not fall into the area highlighted for innovation. Eg. the DCCEE gives as an example of its focus the developing of methodologies for baselining to make it easier to prove additionality.
We have no choice?
The Reason given for sticking with a clearly out-moded and unworkable system is that Marketplace reality dictates our limited freedom for movement: “The environmental integrity of the scheme will directly affect consumer confidence and the amount that buyers are willing to pay for Carbon Farming Initiative credits. For these reasons it is important to ensure that all abatement credited under the Carbon Farming Initiative meets internationally recognised standards which are designed to ensure that abatement is real and verifiable.” (Section 7.)
Here at home, the Department’s own Voluntary Market Standard limits the degree of flexibility: “Under the NCOS, only offset credits that meet these standards are recognised as suitable for the purpose of carbon neutrality.” (In Section 5. of the consultation document the following link was made between the CFI and NCOS credits: “All CFI credits would be recognised as eligible under the NCOS for use by Australian businesses seeking to voluntarily offset their emissions or become carbon neutral.”)
The following may seem astonishing, but it reflects the core proposition of Additionality: “Activities which achieve abatement and clearly do not result in material increases in agricultural productivity or business profitability would be identified in the regulations through a ‘positive’ list that would be deemed additional without further assessment.” That list includes forest sinks and methane flaring from manure.
The paper makes the bald statement: “The majority of agricultural activities increase productivity.” They are therefore not eligible for the ‘positive’ list. But are they automatically ruled out? The DCCEE seems to know it has a problem: “Approaches to assessing Additionality, which are consistent with integrity principles outlined in Section 7, will be explored as part of the program of work to develop offset methodologies for use under the Carbon Farming Initiative.” (“Program of work” indicates that science will be tasked to supply the answers.)
The DCCEE wants help: “Stakeholders are invited to comment on this approach to assessing additionality and whether alternative approaches should be considered.” It should be noted the Department is not asking for comments on the definition of the concept, but on ways of assessing additionality.
A solution?
To find a solution we must move to a different logical framework. Einstein said we cannot solve a problem using the mindset that caused it in the first place.
To move to a problem solving space, first we must dispense with false premises:
1. Consumers and buyers will not have confidence in soil carbon offsets if they are not strictly manufactured and measured by the methodology devised for factories and forests. This assumes that buyers understand the principle of Additionality, which few people in the business world do. It also assumes that buyers cannot be educated to buy multiple benefits from farm based offsets, given the “win-win-win” of soil carbon offsets.
2. There is a need to comply with international standards or there will be no international sales. The international market does not exist and if it did, the concern indicates that DCCEE believe it will be a buyers’ market. It will be a buyers’ market if the producers act in the way they do with other commodities – competing against each other in a race to the bottom on price. A global problem needs a global solution. Farmers, through the International Federation of Agricultural Producers (6m members), could adopt the strategies of the fossil fuel industries and control supply to support prices. The world is coming to understand the James Hansen/Rattan Lal/Michael Battaglia belief that only Agriculture can buy us the time we need to avoid 2°C increase. (See Appendix 1) A Seller’s market should then emerge. In the meantime we bank our credits and wait.
Redefining Additionality
It is recommended that the notion of Additional be redefined to refer to the co-benefits of soil carbon sequestration as “additional” – ie. as a bonus or incremental increase in the value proposition. Packaging the benefits will raise their value in the mind of the buyer.
The inability of soil sequestration to fit the mould is a risk factor in the mind of the buyer.
Risk can be offset in one of two ways:
1. Reduction in price.
2. Increase in benefits.
The combination of Government Guarantee/Impremateur and the positive brand image of Aussie Farmers Fighting Greenhouse would be a potent proposition
APPENDIX 1:
Integrity Standards Vs The Urgency
The Integrity Standards focus on making the transaction possible by making sure the consumer is confident that they are getting what they paid for. No confidence, no market, no abatement, no sequestration of CO2. The logic is undeniable. But it is only as simple as that when you focus only on the transaction.
Turn the telescope around and you see a world that needs as many farmers as possible sequestering as much carbon as possible in their soils and vegetation as quickly as possible. The reason? Because there is little chance that global warming can be held to a increase of less than 2°C without it. Some of the world’s leading scientists are saying that the rate at which clean energy infrastructure can be built compared to the rate at which global demand for energy will grow make it now impossible to meet the 2°C target without a big soil carbon component.
Scientists, including the world’s most famous Climate Change scientist, NASA’s James Hansen, agree that renewables will not be ready to supply the world’s energy demands for up to 50 years, if then. In Smart Solutions to Climate Change, Chris Green of McGill University and Isabel Galiana look at current rates of progress and conclude that by 2050 alternative energy sources will produce less than half the power needed to stabilise carbon emissions. By 2100, the gap would be even wider.
Some prominent Australian scientists point to soil carbon as the solution: “It will be next to impossible for Australia to achieve the scale of [emissions] 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,” the Wentworth Group of Concerned Scientists told the recent Victorian Inquiry into Soil Carbon. Even the CSIRO agrees Dr Michael Battaglia, Theme Leader, Sustainable Agriculture Flagship, CSIRO told the inquiry: “What [soil carbon sequestration] actually gives us is time to make those adjustments [transition from burning coal].”
Emissions reductions won’t slow down the process of climate change because it is not tomorrow’s emissions that are causing the problem, they are your Grandfather’s emissions - the carbon released into the atmosphere 70 years ago - that are causing Global Warming. Luckily, we have the only process for extracting billions of tonnes of CO2 every year for 50 years, fully deployed and scaled up, ready to start: Photosynthesis, in the form of 5.5bn hectares of farmland around the globe. Scientists such as soil carbon authority Professor Rattan Lal estimate the process can remove 3billion tonnes of CO2 annually for 50 years. He testified before the US Senate that soil carbon can be a “bridge to the future” that “buys us time”
James Hansen and Rattan Lal agree that the world’s farmers can draw down the CO2 equivalent of 50ppm and hold it for 50 years. With the globe racing towards 400ppm, hoping to stop it at 450ppm (to hold the increase to 2°C), soil sequestration is attractive and available and relatively cheap. It would forestall the need for deeper, faster cuts in the future and it would protect the economy from damage. So why is it not activated immediately? Because we are looking down the wrong end of the telescope.
[1] Maier, Leo, Shobayashi, Mikitaro, “Multifunctionality: Towards an analytical framework”, OECD , 2000
