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Carbon Credits (Carbon Farming Initiative) Bill 2011, Carbon Credits (Consequential Amendments) Bill 2011, Australian National Registry of Emissions Units Bill 2011
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Milne, Sen Christine
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Tuesday, 5 July 2011
Senator MILNE (Tasmania—Deputy Leader of the Australian Greens) (12:52): Mr Deputy President, may I take this opportunity to congratulate you on your election by the Senate to the role you now have; I am confident you will carry it out with aplomb. I now wish to address the matter in hand, and that is the Carbon Credits (Carbon Farming Initiative) Bill and associated bills. I note with interest the contribution of the coalition and recognise that it is actually the government coming to the rescue of the coalition here because, under the coalition's plan, 60 per cent of the effort in abatement to achieve five per cent below 2000 levels by 2020 is coming from soil carbon and yet the coalition has absolutely no methodology and no suggestion for the pathway to achieve that. We are now in 2011. There is no methodology; it will not happen unless somebody actually does the work. And that is where the Carbon Farming Initiative comes into play.
The Australian Greens are passionate about reducing greenhouse gas emissions as quickly as possible, and the land sector has a major role to play. Not only do we need to protect our natural environment, build resilience in natural ecosystems and restore them so that we can maximise the opportunity for species to survive the impacts of climate change and for the land to be productive in agriculture, but we also have to make sure that we protect our carbon stores. If you protect the stored carbon in the landscape, particularly in our forests, then you actually reduce the amount of emissions going to atmosphere. That is a critically important component of what we need to do.
When the government announced the Carbon Farming Initiative in August 2010, just prior to the federal election, it was really an attempt to address the vacuum created when the Greenhouse Friendly scheme ended in July and left businesses in the voluntary carbon market in limbo. So what the government did in the last week of the election campaign was go to Queensland and announce the Carbon Farming Initiative to effectively plug that gap. It was an announcement that included very little detail about the scheme. There was no proposition at that time for either Labor or the coalition to introduce a price on carbon emissions prior to 2013. The Carbon Farming Initiative was just envisaged as a policy measure to give modest support to projects and businesses in the voluntary carbon market, and I am confident that neither government nor the coalition thought it would play any role in a domestic compliance market for many years.
After the 2010 election that all changed after the Greens secured an agreement with Prime Minister Gillard to provide her government with confidence and supply. One of the concessions, if you like, that we achieved in relation to that was the agreement to establish a multiparty committee to deliver a carbon price mechanism in this term of government. Subsequently, the government decided to expand the role of the Carbon Farming Initiative by linking it to an emissions trading scheme much earlier than had been anticipated. Hence, the complexity in this issue took on a whole new meaning because we are dealing with carbon in the landscape in a very uncertain global environment.
First of all, we have got the United Nations Framework Convention on Climate Change, and the first Kyoto commitment period ends in 2012. Is there going to be a second Kyoto commitment period? And what happens to the land use, land use change and forestry rules if, indeed, there is not a second commitment period? What if the REDD scheme, reducing emissions from deforestation and forest degradation, gets up and what are the rules that are going to apply? What does that do for the compliance market? Let us assume for a moment that the Kyoto protocol does have a second commitment period or that the land use, land use change and forestry rules continue. There is then the option for Australia to opt in to article 3.4, making what are now non-Kyoto-compliant credits compliant. That would create a whole lot of new credits that would be available under this scheme to be sold into a compliance market, either domestically or globally when you go to a flexible trading environment.
We ended up with the situation where the questions were: what is going to happen internationally; what is Australia going to do in relation to article 3.4; what is going on with the national scheme and a fixed-price period; how many of those permits would be available, either Kyoto compliant or non-Kyoto compliant, to be brought into this scheme; and what would that do to an overall market mechanism? We also had, at exactly the same time, the forest principles process going on in Tasmania, determining what those arrangements might be in protecting forests and how that might relate to both the global and national scene in terms of the United Nations Framework Convention on Climate Change and also the emissions trading scheme.
So this became one of the most complicated areas to think through in terms of how you maximise carbon abatement in the landscape. How do you do it in such a way that you promote biodiversity outcomes? How do you do it in such a way that you get benefits into rural and regional Australia? And how do you do it to prevent perverse outcomes? The Greens have been very strongly on the record in this parliament saying that we want to prevent perverse outcomes. That is why we voted against the carbon sink forest 100 per cent tax deduction: it was following on from managed investment schemes in creating an uneven playing field in terms of land prices and in setting up the whole scenario that I described at the time as 'managed investment schemes on steroids'. I am glad to say that the 100 per cent tax deduction will end next year, and so we can get that out of the way. Nevertheless, we have a crisis in Australia in terms of climate change. We have an energy crisis, we have a food security crisis globally, and we have a water crisis, and we have to make sure in addressing any one of those, whether it is food security, water, climate or energy, that we do not treat them as silos and end up with perverse outcomes, so you incentivise one part of that equation and end up with adverse impacts in the others.
One of the good things about the fact that the Carbon Farming Initiative is now linked to an emissions trading scheme and to a global regime is that there has had to be a huge amount of rigour in thinking through how you prevent those perverse outcomes, how you maximise the benefits for rural and regional Australia, how you maximise the biodiversity outcomes, and how are you maximise the benefits for Indigenous Australia. One of the very good outcomes of this deliberation is that it will enable Indigenous people to be able to take advantage of carbon farming through some of the already established methodologies—for example, savannah burning, which has already been recognised as a methodology to qualify under this particular legislation.
Senator Birmingham talked about the regulations. The regulations are not the critical issue here for the community; it is the methodologies. There will be no permits issued until there are methodologies proven in terms of the carbon abatement, and those methodologies may take years to develop. I do want to issue a word of caution in terms of soil carbon, because I know that the coalition has been out there promising people in rural and regional Australia that they will be able to make a great deal of money out of soil carbon. There is no methodology established for it as yet. That will come. Work will be done on this. It will take a while to do and it is not going to be something that necessarily happens in the very short term. Apart from the financial benefit that might come in relation to soil carbon if that methodology is proven, the good thing about it is that by improving soil carbon you also improve water retention and agricultural productivity and you reduce dependence on petrochemical fertilisers and inputs. So your marginal cost of production ought to go down and at that level it is a very worthwhile thing to do quite apart from its biodiversity impacts.
So in thinking all this through, the Greens are taking on this issue of how you prevent the perverse outcomes and how you prevent a whole lot of good agricultural land being taken over by tree farming. One of the problems we had with the Carbon Pollution Reduction Scheme was that it only recognised reforestation and afforestation for which there were established methodologies. It did nothing about biodiversity and it could have led to quite significant perverse outcomes. This time around we have thought that through very carefully. That is why I am pleased to see that under the Carbon Farming Initiative biodiversity starts to come into its own. It is key that we have investment in rural and regional Australia in biodiversity that is not just about tree planting.
One of the problems that we did foresee in terms of the Carbon Farming Initiative was that it relied to a large extent on local and state government land use planning laws to avoid negative impacts and, as was evidenced by the Managed Investment Scheme fiasco, you could not assume that local or state governments have got anything half decent in terms of land planning laws. So the Greens were very keen to see that natural resource management groups and NRM plans were brought up to scratch in terms of getting a uniform level of criteria for what constitutes the basics for an NRM plan and getting some capacity building. In our discussions with the government, I am confident now that there is going to be a real effort to bring NRM groups and NRM plans into the land use planning scenarios when we talk about what can be on the positive and negative lists.
The Managed Investment Scheme is an absolute anathema to me and I am glad that when talking to the government we are now able to clearly rule out the possibility of crediting MIS projects under the scheme. We are also confident that plantations for harvest will not be in this scheme either. That would have been an absolute disaster, but we now think that the common practice test will significantly reduce the risk that large areas of prime agricultural land will be lost.
As to the other issues, I am concerned about the risk of reversal buffer—the five per cent—and whether that is enough. Whilst at the moment you might think that a five per cent risk of reversal buffer is sufficient, if you look at the climate science, by midcentury it may well be totally inadequate. But I do take heart from the fact that the government has agreed that the CSIRO will be specifically tasked with examining this question in the first review of the scheme in a few years. The same applies to the fact that because unforested land reflects more radiation into space than dark forested land, the climate benefits arising from sequestering carbon in new forests may be at least offset by the fact that they absorb more heat. The government advice is that that will not be a problem but, as with the risk of reversal buffer, the CSIRO, we think, should be formally asked to report on this question of albedo.
On Indigenous participation, I was very impressed by the evidence that Indigenous communities gave to the Senate inquiry. I recognise that there are two main issues for Indigenous people. First are the legal issues relating to who will be able to access the benefits of the Carbon Farming Initiative in terms of whether they have exclusive or non-exclusive native title, and I can foreshadow that the Greens have an amendment in relation to that to extend coverage to non-exclusive native title land. But we also want to make sure—and I have been very strongly advocating this—that we get some capacity-building happening in Indigenous communities so that they may not only have the legal ability to access this scheme, but also the capacity to do it. The Greens want to demonstrate that rural and regional Australia can effectively not only improve their agricultural productivity and reduce the risks of perverse outcomes but also enhance biodiversity and take on the weed challenge and take on the feral animal challenge. Whilst some in the coalition have been extremely critical and sarcastic about the camel cull, the issues of weeds and feral animals are critical to maintaining biodiversity and building resilience in landscapes.
Under the CPRS we simply had 'Tree planting—tick' and there was no concern raised about perverse outcomes. Our challenge has been to maintain agricultural land, to use natural resource management plans and groups to have real input into positive and negative lists down to a localised level and to offset the lack of concern that has often been shown in local communities with local government and/or state government.
There are issues as to exactly how much abatement is out there. It is fair to say that the Greens have a very different view. We think there is a huge amount of abatement to be had through protecting forests, restoring degraded forests and recognising avoided land clearing. The real question is: how quickly can farmers take up these opportunities? What are the competing interests for farmers and how can they best manage their land to maximum advantage in profitability terms and how can they restore their land in order to continue to be profitable? It is uncertain how quickly the rollout will be taken up. How rigorously and enthusiastically Australians engage the methodologies will determine that.
I see this as a big opportunity to save forests, to avoid land clearance, to deal with weeds and feral animals and to get a real focus on biodiversity in Australia that has been lost in recent years. Creating credits out there in rural and regional Australia to engage in market based mechanisms is one aspect, but this is an opportunity for rural and regional Australia to think about how they can positively engage with reducing greenhouse gas emissions and meeting the global challenge.
I do not agree with Professor Garnaut when he says that this is the new wool industry—that wildly overstates the likely uptake in the time frame—but I do think this is a landmark piece of legislation in connection with an emissions trading scheme. The fact that the two are being considered together in the context of global agreements means that this legislation has had examination with a level of rigour that is rarely seen in this parliament.
I thank the departmental officers with whom I have spent many hours talking about these issues: how you avoid these perverse outcomes, how you protect agricultural land for agricultural production and how you make sure that you are looking at the energy challenge, the climate challenge and the water challenge at the same time as guaranteeing food security. It is complex, it is difficult, but it is a worthy challenge. This is an opportunity for the land sector to really make it onto the climate agenda in Australia.