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STANDING COMMITTEE ON RURAL AND REGIONAL AFFAIRS AND TRANSPORT
24/07/2008
Carbon sink forests

CHAIR —Welcome. Do you wish to make a brief opening statement before we go to questions?

Dr Polglase —It might be helpful if I say a few words just to introduce myself and the work that my team has done, in the context of this inquiry. I am a research program leader with the Division of Sustainable Ecosystems, and for the last five or six years I have been leading an active and quite large team in research concerning integrating plantations and forests of all shapes and forms into Australian agricultural landscapes. We have provided the technical underpinning to help people—in natural resource management agency bodies, or forest industries, or other investors—to make decisions to help integrate trees and, as far as possible, as far as we are concerned, to minimise the negatives and maximise the positives. But it is really about empowering people with the technical and scientific knowledge to know what they are doing, for whatever decisions they make. So, for example, if it is about salinity control, it is about identifying areas. It is very much about trying to better predict expected rates of growth in carbon sequestration, because that is a key input, of course, into economic models. I could go on, but it is really the scientific underpinning on the impact that trees have in particular regions and localities in Australia, and providing spatial tools for people to help inform their decision making. So we do not presume to prejudge outcomes or to tell people what to do. It is really saying, ‘Here are the scientific tools and the evidence,’ and hopefully it is helpful to them in meeting their objectives.

CHAIR —Thank you, Dr Polglase. I will go to questions.

Senator MILNE —Dr Polglase, do you agree that a plantation is not a forest?

Dr Polglase —Actually, I probably do not, on balance. I am unaware of—

Senator MILNE —Is a monoculture a forest?

Dr Polglase —Well, planted forests by definition are just that—trees that are literally planted by people; that would be the most common definition. It is an interesting distinction that you make. My opinion would be just one of many, I dare say, and it is not meant to be definitive. But planted forests are normally differentiated from natural forests by the way that they are established, and planted forests, by definition, are planted. But they can be, actually, not monocultures. Direct seeding would be an example of a mixed species plantation—it is planted but, in my mind, it is a forest.

Senator MILNE —Okay—

Dr Polglase —If I can just finish off my answer: to me, a forest is more a matter of scale. One tree is not a forest, but if it is planted over many hectares then, to me, it probably is a forest.

Senator MILNE —So do you agree that a forest, the stated intention of which is to be a carbon sink, should be in the ground for 100 years or thereabouts—if not longer?

Dr Polglase —In Australia, the green paper has suggested that we follow Kyoto rules, which do have a requirement for permanence. As far as I am aware, if the requirement for permanence is, for whatever reason, not met, then you simply incur a liability. So if you earn a credit for sequestering carbon and, for whatever reason, that forest is no longer in existence, then you therefore earn a liability. But the intent is, yes, under Kyoto rules, to require permanence.

Senator MILNE —That actually links the two questions I am trying to ask, which I am sure you understand; I am getting to the point of biodiversity, of resilience, of ecosystem maintenance and so on. The legislation, as it currently stands, does not require biodiversity and does not require a length of time for the trees to be in the ground. What I am asking you is: in an ecosystem sense and in a carbon storage sense, do you regard it as being desirable that you have a biodiverse forest and a specification about a length of time that it be in the ground?

Dr Polglase —I will answer the second question first. The answer is: I do not know, because that is really a policy question. I do not know that you can require permanence. What is permanence? Let us go back to your opening question, ‘What is a forest?’ It is a large area, which does not live forever at a tree scale. They are always disturbed, and fire is a natural part of that. So—in answer to your question—I think structural diversity is imposed by fire and disturbance.

Senator MILNE —Yes.

Dr Polglase —So that is not a bad thing. And I think that when we talk about permanence and we say, about a forest, that you must have it for 100 years, that is a nonsense at a tree level. Every tree cannot live for 100 years. So what you get is an average.

Senator MILNE —Yes, but it builds soil carbon—you know what I am saying—as opposed to taking it away for harvest. However, if you want biodiversity, structural diversity is a good thing. That also is imposed by trees dying naturally from old age, drought or fire et cetera. Those sorts of disturbances build biodiversity. Then, when you say start to count your carbon, you say, ‘Okay, what is the average amount of carbon for a disturbed ecosystem or a disturbed forest?’ That is what the permanence would be. It is not the theoretical maximum. To me, a sensible way to count the carbon in a biodiverse forest would be to assess the average amount of carbon for a disturbed regime over 100 years.

Senator MILNE —Can I ask about rainfall? Given your experience and given that the whole purpose of an emissions trading scheme is for people to build the value of their carbon product, you therefore would want to plant your plantations in an area where you get maximum carbon growth and, therefore, maximum carbon credits. In your experience, what rainfall zone would be most attractive to an investor in a carbon sink forest?

Dr Polglase —Again, without wishing to duck the question, I do not know what is more attractive financially, because we do not do those analyses. But, of course, the faster the tree or the forest grows, the more carbon is stored.

Senator MILNE —That is the proposition I am putting.

Dr Polglase —But I do not then extend that into a financial model. With regard to water, the National Water Initiative is now developing a framework for regulating and licensing intercepting activities, including plantations, bores and dams of overland flow. The intent there is to bring overallocated catchments back into allocation, no matter what the land use change is. That would include plantations, farm dams, bores et cetera. I expect that there would be an intersection of carbon policy with water policy, and no catchment that is overallocated or approaching allocation would be expected to remain that way. The purpose of the National Water Initiative is to bring all those catchments into allocation. That should regulate any substantial land use change.

Senator MILNE —What is the expected time frame for doing that? The issue here is that, in some catchments—and I could cite you some in Tasmania—some of the plantations will have to be cut down because of the level of interception that has led to reduced town water supplies and so on.

Dr Polglase —In Tasmania?

Senator MILNE —In Tasmania, yes.

Dr Polglase —That is not my understanding, but I would stand to be corrected.

Senator MILNE —The Prosser River, for a start.

Dr Polglase —My understanding is that Tasmanian catchments are not overallocated with respect to water, but there may be some issues with regard to summer flows.

Senator MILNE —Yes, with regard to town water supplies. Anyway, coming back to that, what is the projected time line for looking at the catchments? It would seem to me to be sensible that this does not apply until we know which catchments are already overallocated; otherwise, you are going to get into a situation where people plant in that catchment and then find that it is overallocated, and then all sorts of retrospective actions will occur. When can we expect the National Water Initiative to identify issues in catchments across the country?

Dr Polglase —They are developing the framework and not doing the work. My understanding is—again I probably need to go back and check it—water-sharing plans are required by the National Water Initiative no later than 2011. That is my understanding.

Senator MILNE —Since this effectively is law now, we are going to have several years of people effectively planting plantations. Going back to this issue, I know that you have said you will not comment on the amount of money, but certainly the principle stands that, if you have enough water, you are going to grow trees and optimum volumes will be grown. I have asked you about rainfall limits. What level of rainfall is most desirable for an area of plantation in order to maximise your carbon and, for that matter, to maximise your plantation?

Dr Polglase —I would repeat my answer that maximum growth leads to maximum carbon.

Senator MILNE —Yes, that is right. So what rainfall range is most desirable?

Dr Polglase —That is related to rainfall. Trees grow least in low rainfall and then faster in—

CHAIR —Do you have a rough annual rainfall figure, just to assist Senator Milne?

Dr Polglase —My answer is that growth is highly correlated to rainfall across—

Senator MILNE —Yes, I know. Is it between 400 millimetres and 600 millimetres, essentially? Above 600 is good, 400 to 600 is fine and less than 350 is bad.

Dr Polglase —If you want to put it that way, yes. That is what I am saying. There is a direct linear correlation between—

Senator MILNE —That is what I am asking. Since you have had a lot of experience advising people on where to grow trees, I am trying to get the rainfall issue here. That is the critical issue for this committee in looking at competing land uses. We have been told that these carbon sink forests will vegetate all the desert areas of Australia, which seems to defy logic. I am trying to establish that, below 350 millimetres, you are not likely to get much uptake of this. Is that correct?

Dr Polglase —I do not know, but speaking personally I suggest you are right.

Senator MILNE —So we are talking about areas at least above 350 millimetres and probably above 400 millimetres. Do you agree that in Australia that will set up land use competition with food production?

Dr Polglase —I cannot agree because I do not know. That is not something we have investigated.

Senator McGAURAN —I have a technical question because I am more interested in the mechanics of the legislation. Following on from Senator Milne’s fine point about where to grow I would add: ‘What to grow?’ As you advise people on tree growing and are an expert in that area, what is the best tree to grow—the Australian tree or the European tree?

Dr Polglase —I understand the question and where you are trying to go. With apologies, I cannot give those sorts of answers because we do not advise people where to grow or what to grow. We give people the tools to make those sorts of decisions. We say, ‘If you’re in this part of the world or in this part of Australia’—

Senator McGAURAN —Can you tell us what the best carbon eaters are?

Dr Polglase —Sorry?

Senator McGAURAN —Which trees are the carbon eaters—European trees or Australian or trees?

Dr Polglase —I was going to say, it depends on rainfall. Research we have done recently estimates rates of growth for trees suitable to particular regions. So in the very high rainfall areas we would use a high-rainfall suitable species. If you are in the 400- to 600-millimetre rainfall zone there is a whole range of species that have been looked at but typically you might use a range of eucalyptus, as well as pines and even mixed species—environmental plantings, which are more conservation type plantings. It has become clear to me when I talk to people in my travels that there is no single model, no single answer, no single investment model. It is very much a matter of horses for courses, and people have their own objectives and ways of doing things. When they come to us, we say: ‘Okay, what are your objectives? Here’s the information we can give to help you to achieve your outcomes.’

Senator McGAURAN —Which is the biggest carbon eater—the pine tree or the blue gum?

Dr Polglase —I cannot answer that.

Senator McGAURAN —But you are from CSIRO!

Dr Polglase —It all depends on where it is planted, rates of growth, rainfall—

Senator HEFFERNAN —Can I assist you, Senator McGauran: the mallee tree has a big root system—it makes a bloody good fire—and they will thrive in that 400-millimetre country. The CO2 company is suggesting that it is going to grow a lot of mallee. Have you blokes plotted the carbon-sinking history of a mallee tree to tell us what happens after the first 15 years and then the next 15? When does it start to go backwards? Have you done that sort of work, or are we all just going to have a good guess at it?

Dr Polglase —We have done a little bit. My understanding is that CO2 Australia has most of the relevant data for that.

CHAIR —They will be here later today, Senator Heffernan, so you can ask the question of them.

Dr Polglase —The problem is in the last point you raise, the longer term time frame. A lot of the new forestry we are seeing in these lower rainfall zones is new plantings, generally less than 15 or 10 years old. So we are a bit constrained scientifically.

Senator HEFFERNAN —Let me assist you further. I have 10,000 acres of gum trees in the lower Lachlan that would be 60 or 80 years old and they are all dying. Would you agree that we are about to take a voyage into the unknown?

Dr Polglase —I absolutely agree, and I think that you are alluding to risk. I think risk management includes matching species to sites and climate variability—drought impacts as opposed to long-term climate change impacts. I expect risk management would be a very important part of an investment.

Senator HEFFERNAN —The idea that, as someone recently said to me, we are going to go out, plant in the western division and get a salinity credit—where we do not need a salinity credit, by the way—is a fantasy. I would also have 20,000 or 30,000 acres of one of the toughest plants they say exists, saltbush, which is all dead, and that is related to 10 years of drought. So you can fantasise as much as you like about how much carbon, how you are going to be contracted to do all this and how you are going to save the planet. In my view we would be better off focusing on the 2½ million hectares in the lower Gulf that gets plenty of rain. It ought to be planted out rather than mucking around out here in 10-, 12- and 14-inch rainfall country, where there is a better than fair chance that you will lose the stock.

CHAIR —Do you have any other questions on that?

Senator HEFFERNAN —I still would like to pursue the principle of protecting the carbon sink and understanding the science of the life of the carbon sink. Is there a complete science document or, as Senator McGauran has said, are we just guessing about how much carbon certain species will put in when they start to slow down? As Father Time takes care of us we slow down too! But is that science done?

Dr Polglase —I would have to say science is never done, but I know what you are getting at. There are two things you need to do. The first is to be able to predict expected rates of carbon sequestration. If you have a greenfields situation and you are an investor, have a business model, want to buy land or whatever, you say, ‘I need to know the expected rates of growth within certain areas.’ It is impossible to forecast accurately because it depends on droughts and rainfall during the forthcoming decades, so you say, ‘Here’s an average rate of growth.’ That is one thing. You can then say, ‘It depends on pines or eucalyptus, but generally this is the expected rate of carbon sequestration.’

Senator HEFFERNAN —You will not be doing it with pines because they will just cark it in 15 years anyhow.

Dr Polglase —The second thing is monitoring. You make your forecast, your modelling predictions, and then the climate eventuates, but the important thing when you are trading carbon is to measure it cheaply. That is when you start to wrap tapes around trees and measure their heights to try and calculate their manifested carbon balance. So the two things are the forecasting and the measurements. In terms of the science, we have a reasonably good idea of expected rates given certain assumptions about the future. The science is less clear about how we cheaply and accurately measure the carbon that has been sequestered in a year or is sequestered every five years.

Senator HEFFERNAN —What you are saying really is that this is a very incomplete exercise, where people are about to take contracts—and there are a whole lot of carpetbaggers out there waiting to get in on this, and good luck to them. When I take the contract with you, the contractor, who is investing on behalf of Senator McGauran, because he is paying too much tax, you really cannot give me a definite figure of what you are going to pay me, because we do not know what the carbon history of the tree is going to be until it does it.

Dr Polglase —I am very keen personally to avoid unrealistic expectations but, based on the best available evidence and from a lot of trials that we have measured across a lot of species and sites to calibrate models, I can say, ‘Here’s what the evidence to date shows us.’ I cannot guarantee you what the future rates of carbon sequestration will be, because I do not know the future climate with certainty. It is up to you to—

Senator HEFFERNAN —As you say, it is related to the weather. We know the CSIRO has done some good work on the 50-year snapshot, certainly for southern Australia, which is pretty gloomy. Put that in against this as well and this could turn into a 20-year farce in places.

Dr Polglase —In some places, probably. But Australia is a big place and what we have done—

Senator HEFFERNAN —I appreciate that. I know where I would be sending them if I was in charge.

Senator MILNE —When you talk about monitoring carbon on the block, does that include soil carbon?

Dr Polglase —In the early nineties I did a lot of work with the then Australian Greenhouse Office on impacts of plantations on soil carbon change. We concluded it was a very, very small change compared to what is stored in vegetation. Because it is so hard to measure, it should be basically accepted as an almost zero change.

Senator MILNE —That is something we need to clarify, because you could get a 100 per cent tax deduction up front and sell the carbon rights, then agriculture comes into the scheme in 2015 or 2016 and then the owner of the block will be applying for additional carbon rights on soil carbon.

Dr Polglase —But our research did suggest that the change in soil carbon as a result of plantation establishment was very small and almost impossible to measure.

Senator MILNE —So, on the basis of evidence, it sounds like agriculture ought not to be in for a windfall gain in terms of soil carbon with agriculture coming in in 2015.

Dr Polglase —Well, that is a related argument.

Senator MILNE —I am just interested to see where that is—

Dr Polglase —I understand. There are others in CSIRO who are better qualified about the agricultural impact on soil carbon than I am to talk about that. My research addressed the question of a change in soil carbon when you plant trees on previously cleared agricultural land, and the change in soil carbon was very difficult to measure. So we were suggesting, ‘Forget about it.’

Senator JOYCE —Would it be fair to say that bigger trees and heavier trees equal more carbon than smaller trees and lighter trees?

Dr Polglase —Heavier trees, yes; bigger trees, no—because there are differences in tree density. So heavier trees, more carbon, yes; but bigger trees, not necessarily.

Senator JOYCE —So going back to Superfetch timber or whatever they call it now, it is the weight of the carbon that is sequestered on the land that gives you a better carbon sink. That is what you were trying to create?

Dr Polglase —Yes.

Senator JOYCE —So you have to find the climate, the soil and the geography that has the propensity to grow that type of tree. Therefore—and just pull me up when I say something wrong—it would make more sense that, if you are going to be compensated or getting an income stream for the creation of a carbon weight, then you are going to try to pick the country that has the greatest propensity to grow heavy timber, and that would most likely be on better country.

Dr Polglase —You grow more carbon, but I cannot make any comment about the merits of any financial model, because obviously it is a matter of costs and revenues. What is the cost of growing that carbon? I don’t know.

Senator JOYCE —It might be that they say, ‘Waddi trees are heavier,’ but waddi trees take about 1,000 years to grow if you want to go out to the desert. If I am looking for a quick income stream I am going to look for the area that grows heavy timber quickly, so I am going to go to prime agricultural land.

Dr Polglase —That is up to the investor to balance the cost of growing carbon with the expected returns, and that is something I cannot comment about.

Senator HEFFERNAN —It would be fair to say, would it not, that the higher the carbon costs the better the quality of the land use?

Dr Polglase —The higher the carbon sequestration? Yes.

Senator JOYCE —Just so that people get an understanding, how many metres of organic matter make a metre of coal? I think about 100 metres of organic matter used to make a metre of coal, and it compresses over time.

Dr Polglase —I am sorry, I don’t know.

Senator JOYCE —Are you aware—I am just trying to compare the relevance of it—how many cubic metres of carbon was extracted by the Chaiten volcano when it erupted?

Dr Polglase —No.

Senator JOYCE —I am trying to get something comparable here. Let’s go then to another form of modelling. We just heard evidence from the previous witness that said that there was minimal tax advantage gained by the timber industry through MISs, and they quoted a figure somewhere in the vicinity of $5.3 million. The question I am posing is: do you believe that, seeing their tax advantage is so minimal, if we removed MISs as a mechanism, the timber industry would still be putting in timber like they are at the moment?

Dr Polglase —I am sorry, Senator, I cannot comment. I have not done any research in that area at all.

Senator JOYCE —Okay. With regard to carbon sequestration, was it part of your sphere of study to talk about the comparatives of carbon from the establishment of forests to carbon being sequestered in soil or how it compares with the innate effects of ocean to gassing and issues such as that?

Dr Polglase —No. Our research focused simply on the forests component, assuming an equilibrium condition, if you like, under farmland—so a steady-state zero baseline—and then the increase in carbon when trees were planted upon that.

Senator JOYCE —Would it be fair to say that what we should be doing—if people were really super serious about this, if this were the way to go, if this is what they want to do—is planting the trees and then, to completely reverse the process, we should be just digging a huge hole, burying the trees in it, and planting them again.

Dr Polglase —Well, yes—there is a form of that: biochar. They are talking about growing trees and converting them to charcoal and burying that under agricultural crops—biochar—and there are a few companies doing that. That is an emerging technology. I do not know much about it. But that is essentially what you are saying. The other forms have been: growing carbon and putting it in rocket ships and blowing the carbon into outer space, or putting it down abandoned mines—

Senator HEFFERNAN —That sounds like a good scheme; I might get on to that.

Dr Polglase —The best way to use forests to reduce emissions is actually through energy substitution—so bioenergy, whether it be for power generation or something else. The CSIRO is looking at ethanol production. But there is no question: you get more bang for your buck when you use the carbon produced to substitute for fossil fuels—that is how you get the biggest carbon emission reduction.

Senator JOYCE —I would like to ask one further question because I am trying to encapsulate a line of questioning in one single question, because I think it revolves around this. If I said to you: ‘Dr Polglase, I want you to go out there and grow a big, fat tree as quickly as possible, and I am going to give you a few places to go and grow it. You can try to grow it in the Simpson desert. You can grow it somewhere out in the Western Division, west of Bourke. Or you can go up to Tully and, on some prime agricultural alluvial land, grow it there. You have 10 seconds to answer the question of where you are going to grow it,’ what would your answer be?

Dr Polglase —I am going to cheat a little bit and say that what has come from my research is that Australia is a really big place.

Senator NASH —That research was spot on the money, wasn’t it!

Dr Polglase —I know that is a bit of a surprise! But one example of the results—just to provide context—is this: nine million hectares in rainfall zones less than 800 millimetres, at equilibrium, when the trees have grown up, would offset about 25 per cent of Australia’s 2005 emissions. That is just a number, okay?

Senator HEFFERNAN —Yes, but there are 2½ million hectares in the lower gulf you could put them in.

CHAIR —Keep going, Dr Polglase, because we are running out of time.

Dr Polglase —What I am saying is: nine million hectares, if you spread it across Australia and manage your risk—if you are asking me as an investor then I would spread my risk and try and get maximum biodiversity outcomes and minimise the downsides, and I would spread it across north, south, east and west.

Senator JOYCE —Because you changed it around, I will change my question a little bit. When you were growing that big fat tree, and trying to get the biggest bang for your buck through an income stream from the carbon credit you were getting, do you have to factor in, anywhere in that argument, what it is doing to the regional community—or is that completely irrelevant to how fast the tree grows?

Dr Polglase —That is a question for policy and regional bodies and legislators, et cetera.

Senator HEFFERNAN —Has CSIRO done work on the carbon sequestration of perennial grasses or lucerne et cetera? One of the salinity arguments was: you have got to plant trees to fix your salinity. But we have discovered on the slopes that if you plant lucerne it does the same job. Have you done the work on perennial grasses, deep rooted species et cetera in the carbon offset arrangements?

Dr Polglase —I have not, but others in the CSIRO may have.

Senator HEFFERNAN —Could you provide that for us?

Dr Polglase —Yes.

CHAIR —Thank you, Dr Polglase.

Senator MILNE —Brendan Mackey at the ANU has done some work showing that one hectare of undisturbed forest in the southern forests of Tasmania sequesters 5,500 tonnes of carbon. When you compare that with planting out a plantation in a similar climate zone, in terms of fast reduction of emissions, would you agree it is far better to protect your standing forest stores than to plant out plantations?

Dr Polglase —I certainly agree wholeheartedly that the importance of natural forests in both carbon and water balances has been lost a lot in the water and carbon debate on plantations, because native forests simply dominate. The work you refer to was partly based on research that I did—my PhD on mountain ash forests. The numbers were actually exaggerated, but we can go in for another argument. But, certainly, globally and in Australia, protecting existing forest sinks from wildfires and—

Senator MILNE —Logging.

Dr Polglase —Logging is a slightly different argument. But I would certainly agree and encourage policy people to think more about native forests and their role in carbon and water cycles in general in Australia. It is exceedingly important.

Senator MILNE —Yes, but I asked the question about comparing protecting a hectare of standing carbon store with giving a tax incentive for a hectare of plantation. How many hectares are we talking about planting out over what period of time—just give me a ballpark figure—compared with saving a hectare of standing forest or native vegetation types at various locations?

Dr Polglase —A hectare of native forests in productive areas is a current store of carbon that has been sequestered over the previous 80 or 100 years; therefore it is not sequestering much annually, but it is a store.

Senator MILNE —That is the point I am making. It is a store; it sequesters—

Dr Polglase —So a new plantation would take that many years of growth or whatever to catch up. Personally I do not make the comparison because you have a store; you have a native forest that provides certain functions. Is there an opportunity for new forests in agricultural landscapes to contribute to a range of NRM outcomes and economics if that is possible? How do we know? How do we decide where those trees go? How do we manage the system? Can you get a win-win, if you like, in answer to your question?

Senator MILNE —I am just making the point that if you allow the destruction of standing stores and clearance of native vegetation at the same time as you give a tax deduction for planting out plantations, you are likely to end up with a carbon loss to atmosphere in the next critical 10 years—is that not the case?

Dr Polglase —I know what you are saying, and Australia has suggested in the green paper that they follow the current Kyoto commitments.

Senator MILNE —We know what the problem is with that account.

Dr Polglase —Article 3.4 is not included, so it is an accounting issue.

Senator MILNE —I know. The atmosphere does not understand account issues.

Dr Polglase —I think I know where you are going and I do not disagree.

CHAIR —On that, Dr Polglase, thank you very much.

[10.17 am]