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Wednesday, 15 June 2011
Page: 6177

Ms GAMBARO (Brisbane) (18:23): I also rise tonight to speak to the Carbon Credits (Carbon Farming Initiative) Bill 2011. This bill seeks to achieve a reduction in greenhouse gas emissions by contributing to the bipartisan five per cent reduction on 2002 emissions by 2020. It seeks to create incentives for farmers and landholders to undertake voluntary land sector abatement projects around the country through the Carbon Farming Initiative, which is a voluntary scheme. The bill seeks also to achieve carbon abatement and improved soil resilience in particular farming that would have additional environmental benefits such as reducing salinity and erosion. Regenerating landscapes and improving water quality may also be achieved.

The Carbon Farming Initiative would offer farmers the chance to sell carbon offsets—largely by growing trees. However, no guarantee has been given that the offset could be sold into the initial fixed price trading scheme. The CFI aims to give farmers, forest growers and landholders access to domestic and international carbon markets, providing an investment incentive for environmental conservation and greenhouse gas emissions reduction. By undertaking emission abatement activities that reduce or store carbon pollution, landowners can generate carbon credits, known as Australian carbon credit units, that can be sold domestically or internationally, either voluntarily or to meet regulatory requirements. Dr Brian Keating, the Director of the CSIRO's Sustainable Agriculture Flagship, says that while it is good to encourage landowners to take action carbon farming will not play a major role in cutting emissions. Dr Keating told an inquiry held by the Senate Standing Committee on Environment and Communications into the CFI:

While forest carbon and soil carbon sinks are opportunities worth pursuing, current research would suggest the abatement likely to be achieved in the short term, at least, is likely to be modest.

Agriculture accounts for 23 per cent of Australia's greenhouse gas emissions, but the sector will be exempted from Labor's carbon tax and emissions trading scheme. While we on this side strongly support the principle of carbon sequestration, our experience with this government is that everything must be very carefully considered. Quite often it introduces a program without proper oversight, and we know the disastrous results that can come of that. On this bill we are asking for oversight and we are looking very carefully at what this government is proposing.

The member for Shortland spoke earlier about our opposing everything and saying no, no, no. We support the principle of the bill, and I commend any action at all that improves the quality of air, soil and our waterways. That is not an issue. What we do not support are the outcomes this government does not achieve when it has been given a blank cheque. Time and time again, it just has not achieved positive outcomes. For this reason, we seek to see a greater discussion on the substantive bill and on the regulations, which we are yet to see. There is nothing wrong with wanting to see the regulations regarding this bill.

The CFI will cover carbon sequestration projects including reforestation, revegetation and projects that increase the secure storage of carbon in soils. On-farm projects that reduce emissions through better on-farm management can also qualify, as will some projects designed to avoid emissions from land clearing or deforestation. The Carbon Farming Initiative is open to wide participation; however, the registration of a project will not be simple. Some of these abatement activities, such as reforestation, are recognised under the Kyoto protocol, with the result that the Carbon Farming Initiative credits generated from them will be able to be exchanged for Kyoto protocol units, such as the emissions reduction units and assigned amount units held by the federal government, and traded on the international compliance market.

Others of these abatement activities are not recognised under the Kyoto protocol, although some of them, such as the avoided deforestation and soil carbon sequestration, may subsequently be recognised under any international successor to the Kyoto protocol. The Carbon Farming Initiative credits generated from these activities will be tradeable only on voluntary markets, most likely at a discount to the compliance units. Because the abatement represented by these voluntary units does not count towards Australia's international greenhouse gas reduction commitments, the federal government is assuming the risk of any difference in the achievement of the domestic and international targets that may result from such abatement. The Australian Plantation Products and Paper Industry Council told the inquiry into carbon farming that timber growers would be unlikely to join the Carbon Farming Initiative as currently proposed. The lobby group's chief executive, Richard Stanton, said:

It is our considered view that the Carbon Farming Initiative, as detailed in the legislation, is unlikely to attract the interest of commercial plantation growers …

Growers would not take the economic risk associated with establishing a project in the absence of a 'meaningful' carbon price market, he said.

We support the principles of carbon farming but there are many, many flaws in this legislation. The government has not explicitly said the use of CFI offsets will be included in any future carbon price. 'But the expectation is that it will,' says Martijn Wilder, head of Baker & McKenzie's global environmental markets practice, who helped advise the government on the draft laws. Big polluters will buy the offsets to meet mandatory emissions cuts, thus giving them another way to manage their carbon risks and drive investment in projects that cut greenhouse gas emissions. But, until that happens, the initiative will only serve a small voluntary market for offsets and limited international demand for offsets from forestry projects. While there is likely to be some demand from the voluntary market, I do not think we are going to see the huge volumes of CFI offsets until we see carbon-pricing legislation that confirms that they can be acquitted against mandatory carbon liabilities. There are many, many people out there who share that view, including Deutsche Bank's carbon analyst Tim Jordan.

This legislation needs a lot more detail. That is why we in the opposition will be supporting that amendments be made to this legislation. Biosequestration through better land management can be a significant way to reduce greenhouse gas emissions. However, in encouraging these activities we must also remember that land use changes to forestry and pasture cannot be reversed without significant carbon costs should we decide that more land is needed for food production. I have been very pleased to speak to this legislation tonight, but we need to see more detail. I will be supporting whatever amendments are moved by our shadow minister.