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Emissions trading and reducing carbon pollution

CHAIR —I welcome witnesses participating in the roundtable on carbon accounting this morning. What we have done with our roundtables in the past is that we have gone along the table and had a quick introduction from each representative of four or five minutes, if it is deemed necessary, and then we have moved to questions. Dr Richards, would you like to kick off?

Dr Richards —I have been the Principal Scientist for the National Carbon Accounting System for several years and currently run the Land Management Branch of the Department of Climate Change.

Mr Carruthers —As Gary has already mentioned, his program forms part of my division. I am the First Assistant Secretary of the Adaptation and Land Management Division. If you wish, I will just make some brief opening remarks.

CHAIR —Sure.

Mr Carruthers —The Department of Climate Change very much welcomes this opportunity to join the committee to discuss carbon accounting. The Australian government has maintained a strong focus on carbon accounting for land systems which has been driven by the treatment of these emissions under the Kyoto protocol and the significance of land-based emissions to Australia’s overall greenhouse emissions profile. In that context Australia over the last decade has built up a world leading and scientifically robust capability in carbon measurement and accounting in land systems. This capability being the first of its kind, we have focused very much on publication of our methods and data, access and transparency. This helps both the credibility of the system and its utility for users outside of the Australian government.

This has very much been a team Australia effort involving strong collaborations across governments, with states and territories, the science community and the private sector. The methods and data of Australia’s national carbon accounting system are subject to independent international review processes of the United Nations Framework Convention on Climate Change. The development of national capabilities in carbon measurement and accounting is ongoing. The initial priorities have been on meeting the compulsory Kyoto protocol reporting requirements for deforestation and establishment of new forests, including commercial and environmental plantings. The accounting construct employed in the Kyoto protocol in relation to land systems is especially complicated and differs from the accounting approach used in the preceding United Nations Framework Convention on Climate Change inventory accounting. As a side product of this national system, a national carbon accounting tool box has been made publicly available to allow development of project level accounts on a basis consistent with the national accounts. This tool box was released in 2005. It was very much a prototype that has been useful under existing government programs and for voluntary users. The government has indicated that it will further develop the national carbon accounting tool box to meet the estimation and reporting requirements for reforestation under the Carbon Pollution Reduction Scheme.

CHAIR —Thank you. Dr Richards, do you have anything to add to that?

Dr Richards —No.

CHAIR —Ms Blakers.

Ms Blakers —Thank you for the opportunity to speak today on behalf of the Green Institute. It is evident, I think, that climate policy depends critically on having a comprehensive, reliable and transparent set of greenhouse gas accounts. I want to focus today on the three aspects of Australia’s land-use accounts. I will probably call them either land-use or LULUCF—land-use, land-use change and forestry accounts. This is the landscape side of the equation, the bio-carbon side of the equation. The critical aspect is that they are presented in a way that you can understand what is in them, what they are telling you, that the coverage is as complete as possible and that the data is reliable.

I should say that there are two sets of greenhouse gas accounts that Australia prepares. There are copies for people here. I will call them the UNFCCC accounts—this is what they are normally called—and the Kyoto accounts. The UNFCCC accounts are more comprehensive; still not completely comprehensive but leading in that direction. The Kyoto accounts are a subset of that. So the top set of accounts I have given you here is the UNFCCC accounts and I have given you in the first column the standard format, the set of numbers you would normally see if you look up on the department’s webpage or elsewhere to see what Australia’s emissions are. I want you particularly to focus on the land-use, land-use change and forestry sector, the LULUCF sector. The number that you see in the standard framework is 14. That is net emissions of 14 million tonnes of CO2, which sounds rather benign. If you look across into what I have called the rearranged format and what is enclosed in the black box, you can see that within that number 14 are some very large fluxes, some very large emissions and some very large uptakes and a lot of unknowns.

The main point that I want to make is that that net figure buries a whole lot of information, and it is that information which is crucial for deciding on policy. I will briefly give you the rationale for the way I have rearranged the accounts here. I have distinguished first of all between biocarbon and what I am calling fossil carbon—fossil carbon from fossil fuels primarily; that is, coal, oil and gas. I am not going to focus any more on that part of the accounts. I am not familiar with that sector and, as far as I understand, it is not highly controversial. I think the accounting system there is reasonably comprehensive and reliable.

On the biocarbon side—the carbon that is in the landscape—I think it is a different matter. Within biocarbon, I want to distinguish between green carbon and production carbon. Green carbon is the carbon associated with natural ecosystems in the vegetation and the soils—in the ecosystem as a whole. The reason that I want to pull that out separately is that that carbon is, for all intents and purposes, permanently stored, provide the ecosystem is appropriately managed. Storage is crucial. That is what we want to do: we want to keep carbon stored where it is, whether it is in fossil carbon under the ground or in the landscape in natural ecosystems. Production carbon is the carbon in systems which are used to produce food, fibre or wood. There are, I think, plenty of opportunities to improve carbon storage in those landscapes, but your primary management objective is going to be production of whatever it is you are producing.

The critical thing about biocarbon as distinct from fossil carbon is that you have flows in both directions—you have got emissions and you have got uptake. I think one of the really confusing things in the way the accounts are presented is that, for biocarbon, you get net figures—the figures you are given are netting out the uptake and emissions—so you cannot actually see what is going on. For policy purposes it is crucial that you can see what is going on.

If you look at the numbers down the bottom and compare them with 1990, you can see what has happened over that period. These are the UNFCCC accounts. Fossil carbon emissions have gone rocketing up from 310 to 430 or near enough over the last 16 years. Green carbon emissions have gone down from 172 to 94. That is primarily due to land clearing being slowed down. We can talk later about the uptake number. I think what is really interesting is that agriculture and waste emissions really have not changed that much over that period of time.

As a footnote, we have to be really careful when we use the terminology ‘agriculture’, because agriculture in the greenhouse accounts is only the non-CO2 emissions; it is none of the land use. So there is a real confusion between agriculture as an industry sector and agriculture as a greenhouse accounting sector. We have to be very mindful of that. On the right hand side, the uptake by carbon of plantations has gone up because of the increase in MIS plantations over the last 15 years or so. If you break out the accounts this way, it is clear that you have a large opportunity to stop native forest clearing and logging and save a very large amount of emissions. But, because of the way the figures are netted out, that opportunity really has not entered the current debate in a very big way.

As to coverage, as I said, we prepared—like the other annex I countries—two sets of accounts: the UNFCCC account and the Kyoto account. The Kyoto account is on the second page. You can see that it is much more restricted. In particular, it does not include native forest logging, nor does it include the opportunities for carbon storage in the production landscape—in grazing lands and cropping lands, for example. And there are some other issues there.

Senator FEENEY —So only the highlighted categories appear? Is that correct?

Ms Blakers —It is land use change that is in Kyoto account. It is forests going to non-forest and it is non-forest going to forest. Forest remaining forest, grazing land remaining grazing land, and crop land remaining crop land are not in Australia’s version of the Kyoto accounts.

I was not going to dwell on the reliability of the data because I was hoping that Professor Mackey would be able to speak to that, but I will just make a quick comment. On the green carbon accounting side, as far as I can see, a reasonable piece of work has been done on the clearing figures—as Mr Carruthers said, because it is a Kyoto sector. The native forest logging is, I think, way underestimated. It does not include soil carbon. Professor Mackey’s work through the ANU has pointed to consistent underestimations in the way the carbon quantities are estimated for green carbon. I have a number of recommendations, but perhaps I will wait to talk about those later in discussion.

I do want to point out one issue, which is the boundary issue in relation to emissions trading and the way that interacts with the accounting framework in relation to the treatment of biomass and biofuels as carbon neutral. Some of them may be. If it is crop waste which is annually recovered, possibly it is carbon neutral—but you would certainly want to have a good look at it to make sure it truly was. If it is coming from native forest clearing or logging, it is more than likely that it is not carbon neutral. The comment is made in the white paper, for example, that biomass and biofuels are to be treated as carbon neutral because the assumption is that the carbon which is lost through logging or clearing will be recovered. That may be true, but the question is: over what timeframe?

We are talking about an issue of climate change where we have to get our emissions coming down within five years. Anything that takes longer than that to recover is in no way carbon neutral. The reason that the IPCC recommends that biomass and biofuels be treated as carbon neutral in the energy accounts is that the emissions have supposedly already been accounted for in the land use accounts. When you are coming with an emissions trading scheme where native forest logging and clearing is not included and there is no liability attached to emissions from those sources within the emissions trading scheme, but biomass and biofuels are assumed to be carbon neutral, you are setting up a perverse incentive to get those biomass and biofuels from sources where you do not have to account for the emissions. I will leave it there but, as I said, I have a number of recommendations that flow from that kind of analysis.

CHAIR —That is probably a fairly reasonable place to start. We heard evidence in Hobart last week about the accounting processes. For example, in Tasmania, as soon as a forest is harvested, the assumption that is made is that all of the carbon, including that in the root system—and this is the accounting process that Forestry Tasmania use—is actually emitted. So I am interested in your concept that there is no accounting under the processes for the CPRS? Mr Carruthers might like to comment on that also.

Mr Carruthers —I am happy to comment on that. Regrettably, I think this business of carbon accounting and land systems driven by the present international rules is very complicated. This is something that Australia has been seeking to address in the international processes. In my mind, we can make an analogy here between financial accounts and carbon accounts. We have a capacity to measure the physical emissions. We have a sophisticated, scientifically advanced capability in Australia to measure the emissions. In the case of the financial system, we can measure a dollar. There are very good ways of measuring a dollar.

Then there are accounting policies, which are set by whatever institutions. In the case of a financial account, you can have a cash account, you can have an accrual account, you can have a profit and loss statement. There are various accepted forms of financial accounting and they serve different purposes. They have different coverages and constructs, and that is the case here. As both Ms Blakers and I said in our introductory remarks, in the UN climate change system there is a separate accounting approach for the land systems in relation to the climate change convention and for the Kyoto protocol, and we will see what comes to play out the current international negotiations leading to the Copenhagen conference.

The central point about Australia’s national greenhouse gas inventory reporting for the convention and the protocol and the way that is linked to the Carbon Pollution Reduction Scheme is that Australia follows the international rules. Whatever they may be, we follow the international rules for carbon accounting of the land system and that involves various assumptions and propositions in the accounting construct. It does not mean to say that we necessarily think they are the best accounting construct, and indeed in appearances before the Senate committees previously I have stated clearly that we think that there are a number of simplifications and constructions in those inventory accounting approaches set in the international rules that are not the preferred approach and Australia is seeking to change those. Those assumptions are things like a presumption that biomass fuels are treated as zero emissions. Harvesting of trees are treated under the Kyoto protocol as an immediate emission when clearly this table here is not an emission; it is a carbon stock and there is a decision to be made at the end of the useful life of this table as to what happens with that carbon stock. We do follow international practice and the Carbon Pollution Reduction Scheme is designed to align with the international practice of the day.

CHAIR —Just on that, that has been one of the discussions that we have had through this inquiry in a number of areas. The CPRS is effectively designed and based around the Kyoto carbon accounting rules. What is your perception of what is likely to occur? We still have some time to go before Copenhagen, what are the things that are likely to change in that forum and how would that get dealt with as part of the process that we have in front of us right now? Will there be changes to the accounting processes? We have had a lot of discussion about soil and my understanding is that any potential changes there are further off than Copenhagen. Obviously there are discussions about other elements. What are the things that we are likely to see change and how do we deal with those in the construct of the CPRS, which is based on something that was designed in the 1990s?

Mr Carruthers —I think my crystal ball is not as clear as it might be in terms of what might come out of the current international negotiations. The reason for that is that the international negotiations around climate change policy for the land systems have been fraught and difficult, and that was very much the case with the Kyoto protocol. A lot of this complexity we speak about in carbon accounting around Kyoto is as a result of a lot of compromises that were made in the construction of the Kyoto protocol. All I can say is that in its negotiations in the current process, Australia has pointed to what we see as being the limitations and weaknesses in the current Kyoto approach.

In the negotiations, we have been strongly advocating for and giving considerable priority to the argument that we should have comprehensive accounting of the land systems that reflects the proposition that we measure, report and account the actual emissions that are occurring at the time and place at which they occur. In other words, we do not have spatial and temporal dislocation with things like assumptions about wood products—for instance, harvesting being an immediate emission when clearly in both space and time it is not an immediate emission. In the energy and industrial sectors, we follow a principle of emissions being reported at the time and place at which they occur, and that is the proposition which we think should underpin the accounting for the land systems. We think there are good prospects of securing that outcome, but at this point we would say that that is a long way short of being certain and we will have to see what happens in the process.

CHAIR —How do we deal with that in the context of the CPRS? If the rules change, how does that apply to the CPRS?

Mr Carruthers —The government has not made public any formal policy on that. The government has said that the CPRS is being progressed through the legislation and that its implementation is on the basis of the current Kyoto protocol accounting construct, because that is our current national commitment under the international treaty arrangements. But, as a matter of logic, if Australia were to take on new and different commitments in a post-Kyoto or post-2012 framework, we could expect to see the Carbon Pollution Reduction Scheme brought into line with those new international accounting requirements:

Senator FEENEY —Why isn’t it possible for us to adopt an accounting standard that is obviously compliant with our international obligations but is perhaps more expansive in several important respects, if only for the benefit of Australian policy makers and the Australian community more broadly? Why can’t we do both?

Mr Carruthers —The Australian government is promoting activities and programs that deal with the whole of the Australian landscape. For example, the Australia’s Farming Future program in the Agriculture and Forestry portfolio under Minister Burke is addressing the issue of building our knowledge and technological and management capacities across the farming systems. But, to the extent that Australia and its farmers take action in those regards, we do not get credit for them towards our Kyoto target. So, yes, we can undertake the activities, we can measure the emissions and we can report the emissions; but, to the extent that they sit outside the accounting framework of the Kyoto protocol, we do not get credit for them.

Senator FEENEY —No, but there still might be good public policy reasons for doing it.

Mr Carruthers —Absolutely. One of the points here—

Senator FEENEY —Indeed, they might be structural changes that we argue for at future conventions.

Mr Carruthers —The policy principle that I spoke about in terms of measuring and accounting for the emissions at the time and place at which they occur links to the point that that is what the atmosphere is seeing. That is the actual effect on the atmosphere. You are right in the sense that, to the extent that these positive activities or, indeed, if they are negative management practices from a climate view point sit outside the Kyoto framework, they are having an effect on the atmosphere and the climate of the future, but that is not being recognised in terms of the accounting for the Kyoto target. That is an anomalous situation in terms of climate objectives, and it is why we need to get the international rules on to a stronger and more coherent footing.

Ms Blakers —Australia is not using the Kyoto framework in its CPRS. It does not include land clearing. It is an even more limited set of sources and sectors than the Kyoto framework. I think Senator Feeney is quite right: we can choose what we do within Australia in terms of both accounting and action. The only requirement to intersect with the international rules is that we are able to report in conformity with the international rules and that we meet whatever those targets are. We can clearly do a far better job at home and look at all those non-reported sectors—for example, upgrade the native forest accounts—and come to the international arena with that experience under our belt and be able to then inform the international negotiations about what is doable and not doable. I think the continued insistence that we are following Kyoto in the CPRS is wrong; we are not.

I will just go through some of those other points that have been made. Let us have emissions at the time and place they occur. There has been a very large amount of work put into the wood products modelling which, if you look on the UNFCCC account—that is under ‘other’ at the bottom of the set headed ‘Land Use, Land-Use Change and Forestry’ sectors—it is minus four. It is four million tonnes per annum, and that is on a modelling outcome. It is not large in the total scheme of things. If you look at ‘native forests available for logging’, that figure is—

CHAIR —What is the basis of that minus four? Where does that research come from?

Ms Blakers —It is from these gentlemen from the department. The former AGO did quite a lot of work on modelling what happens to wood once it is logged and goes into the product stream. They can give you chapter and verse on that modelling. But my point is that that is a rather small number in the scheme of things and that there are some much larger numbers about which we know very little, and that is in relation to native forests which are available for logging and what in fact are their real emissions, including the soil. The minus 57, the uptake—which is the regrowth of all the forests that have been logged any time since Europeans arrived—is a constant. It is not a measured number. We do not actually know what that number is.

Senator FEENEY —How accurately do we understand or account for the amount of carbon stored in a hectare of native forest?

Ms Blakers —That is what Professor Mackey’s work is starting to elucidate, and it is coming up with very large numbers indeed. The older the forest gets, the more carbon it stores. The storage is both in the soil and in the biomass—the roots, the trunks, the leaves, the branches and the litter.

CHAIR —Do you mean the fuel load on the forest floor?

Ms Blakers —It depends—

CHAIR —That is a flaw in that particular piece of work; it does not account for fire.

Ms Blakers —I am not an expert in this area, so what I am giving you is my understanding. Fires are part of the ecology. They are part of life. Fires take out mostly the finer fuel—so the leaves and twigs and so on. I think there was some evidence from Dr Keith earlier on that about 20 per cent of the carbon in a given area might be taken out by fire.

CHAIR —But it depends on the fuel load. The higher the fuel load, the more intense the fire and the higher the emissions. There is some very reasonable work on that as well.

Ms Blakers —I do not know that. My understanding is that the way in which it operates in a dynamic sense is temporary—that might be a decade of reduction in fuel storage. But you are not taking out the big elements of the forest: you are not taking out the big trunks; you are not taking out the soil. That storage remains.

In the very large picture of how the Earth’s climate is going to respond to climate change, this is actually one of the limits. If we start to get up to two degrees or beyond, then fire frequencies and so on are going to increase and then we do have the potential to pass some of those tipping points, which are losses of forests and the carbon that is stored in them, which then sends you, potentially, into runaway climate change. To my mind, what we are operating within is a rather narrow limit of potential safety, and maintaining the storage of carbon in natural ecosystems is absolutely critical.

Senator MILNE —Mr Carruthers, I would like to follow up on you saying that the atmosphere does not really bother about what the rules are, how we measure things, that the atmosphere just understands how much carbon is going into it and what we end up with in terms of greenhouse gas intensity. So by choosing to use the Kyoto rules—UNFCCC rules, but mainly Kyoto rules in Australia—what we are doing is kidding ourselves about the real impact we are having on the atmosphere. We are also putting in place policy positions which generate even worse outcomes from the atmosphere, and we know full well that that is what we are doing, and we are doing it because we want to adhere to accounts. Wouldn’t it be much better to develop a policy framework that gave us our best shot of protecting the climate by maximising the carbon outcome benefits at the same time as maximising the biodiversity benefits and land-use benefits and so on? What you seem to be saying is: ‘Yes, we know that what we are telling people is wrong. We know that the logging from native forests is not accounted for, but we’re sticking to the rules and the rules of these and, therefore, we don’t have to count them regardless of the fact that we know that they’re wrong in terms of the atmosphere.’ How do you justify that position?

Mr Carruthers —I used the analogy of different forms of financial accounting. They are all correct forms of accounting—

Senator MILNE —Yes, but for some of them go to jail eventually.

Mr Carruthers —but they give you different pictures and different coverage of the story, and no one particular form of accounting is complete in terms of the full picture, and that is what is happening in the international accounts. Climate change is a global problem; it needs a global solution. That is why Australia is part of an international climate change treaty framework, and we work in conformity with the international provisions. As I have said, the international provisions are not ideal, and we are looking to better those in the negotiations.

Senator MILNE —Can I pick you up on that?

Mr Carruthers —But the Carbon Pollution Reduction Scheme, as I said, is designed around the international rules of today. One of the reasons why that is important is that in the announcement of the proposal for the Carbon Pollution Reduction Scheme, we are looking to link the Australian national carbon trading system with international carbon trading systems, the carbon trading systems that are in place in a number of other countries now, or are coming into place, such as has been announced by the new US government. So we want to have those linkages. If you want to link into international carbon trading markets, you need to be conforming to international rules, otherwise the carbon units will not be equivalent and not tradable, and it is quite an important reason for that scope and focus of the Carbon Pollution Reduction Scheme.

Senator MILNE —Let me get back to this: you do not have to allow plantations into the Carbon Pollution Reduction Scheme on a voluntary basis to comply with anything. You do not have to, but by choosing to you are driving a perverse outcome, are you not? You are providing incentive by putting the very resource which should be serving the sawn timber from the timber production system, taking it out of timber production and putting it into a carbon store and rewarding people for that through the CPRS. Therefore, you are driving the logging into the greatest carbon store, which is our native forests, because you do not have to account for the emissions. And now with the collapse of Timbercorp, you are going to see the receivers desperately wanting the plantations in the CPRS so that they can recover something from plantations that were designed to be for wood production. If you are going to take plantations out of wood production and put them into carbon, you are going to drive out into the forests, which have far more carbon density—or perhaps if you can answer this first: do the native forests have far more carbon density than the plantations per hectare? Do they have more biodiversity benefits per hectare and, therefore, why would you voluntarily choose to distort the system in this way?

Mr Carruthers —I cannot speak for the intentions of individual forestry companies like Timbercorp.

Senator MILNE —No, the system is driving this.

Mr Carruthers —No doubt you have had discussions with some of them during the course of your inquiry. We are looking to provide incentive, through the Carbon Pollution Reduction Scheme, to pursue land activities that will benefit the atmosphere. It is correct to say that there is not comprehensive coverage of the land systems. What is announced in the white paper is a two-step process: the inclusion, on a voluntary basis, from 1 July 2010 of the forestry plantations, a process of engagements and planning to have coverage of the agriculture sector that will go on, and, at the same time, engaging in international negotiations to get a coherent approach. That is really the best we can do today in relation to the Carbon Pollution Reduction Scheme. It has some features which may not be ideal, but that is a product of the international rules.

Senator MILNE —Could you answer the question: is there greater carbon density and biodiversity benefit in a hectare of native forest than there is in a hectare of pine plantations or eucalypt plantations?

Mr Carruthers —That depends which particular clusters of trees you chose. If you were to look at some sparse cypress pine native forest in western New South Wales and compare that to a softwood plantation in a fertile high rainfall area—I do not know what the answer is, but you may well find that there was more carbon in the plantation than there was in the native forest.

Senator MILNE —And what about the biodiversity benefits of both?

Mr Carruthers —That will depend on the situation. The Carbon Pollution Reduction Scheme cannot be principally a biodiversity policy. It can have benefits for biodiversity, but biodiversity outcomes that need to be dealt with through biodiversity policies.

Senator MILNE —Yes, but surely that is the whole point: if you just focus on carbon and Kyoto, you drive perverse, bad outcomes for ecosystems. That was what the whole green roundtable on the first day was about. Every single one of them, from every perspective, said the best thing we could do for the atmosphere is to protect native forest and native vegetation first as a store.

CHAIR —I am not sure they actually said that.

Senator MILNE —They did. If you go back and listen to what they all said, they all said that is the first thing you should do. What they also said is if you took out the plantations from the CPRS, and then you developed a parallel—

Senator PRATT —Some of them said that.

Senator MILNE —no, they did not all say that—mechanism then you would provide an incentive for the things with the maximum carbon benefit but also have maximum biodiversity, water retention, all of those kinds of benefits. Do you agree that by taking out production forests from production forestry plantations, you are increasing the driver into logging native forests? And is that a good thing for carbon?

Mr Carruthers —I do not think that that follows, Senator. A carbon pollution reduction scheme has the objective of maximising the protection of the climate through reducing carbon emissions and increasing carbon removals in the land system. That is the objective. That is the design of the system. There will not be perverse biodiversity outcomes if we have sound biodiversity policies in place and there will not be perverse outcomes in relation to water resources if we have sound water policies in place. If there is a concern that conducting activities for the purpose of carbon outcomes could produce perverse biodiversity or water outcomes then we should look at our water and biodiversity policies and remedy those.

Senator MILNE —But don’t you think protecting native forests and native vegetation would be a major contribution to protecting the carbon stores in Australia?

Mr Carruthers —Carbon policy will have a number of benefits for biodiversity outcomes. Similarly biodiversity policies will very likely have positive carbon benefits. But biodiversity policy is principally about biodiversity and can produce other ancillary benefits. Carbon policy is principally about carbon outcomes and can have other ancillary benefits.

Senator MILNE —Ms Blakers, would you like to comment on that?

Ms Blakers —Yes, I would like to comment on that. From a purely carbon perspective stopping native forest logging and clearing will have a positive benefit for the environment, for the atmosphere, by stopping the emissions, which are quite large—something in the order of 100 million tonnes a year. That is about 20 per cent of Australia’s emissions. And it will have an ongoing benefit because as the previously damaged or degraded forests regrow they will be pulling CO2 out of the atmosphere. So you get a double whammy. Because it is biodiverse, the storage is permanent or effectively permanent. It is self regenerating, it is resilient and it will, if it is properly managed, stay put. I just do not think there can be any argument about that.

CHAIR —You talked before about over five years, and that is a very short-term thing. There is a lot of research, both here in Australia from CSIRO and from other institutes all over the world, that shows that a managed native forest over time—if you account for the carbon that is locked up in stores such as we talked about before—can sequester up to 30 per cent more carbon over, say, 180 years if you manage it or harvest it on a 60-year cycle. So you are talking about a long-term process here. You are talking about sequestering more carbon over time. There certainly has to be some work done with respect to the life of the store. I accept that. But that research comes from North America and there has been work done here in Australia. Effectively we come back down to this: if you shorten the term to a five-year cycle and say we have to do something about it now then you get back down to the argument as to whether people have access to that resource or not without looking at the longer term issues that surround it.

Ms Blakers —Okay, the short-term issue is that we have to get our emissions down fast—the world has to.

CHAIR —No-one is arguing that.

Ms Blakers —And that means in the Australian context, where we have alternative sources of wood and fibre, that we do not have to log native forests and we certainly do not have to keep clearing them.

CHAIR —That is an important point though—where you have alternative resources.

Senator MILNE —We do.

Ms Blakers —No, sorry, with respect it is not a different point; it is the same point.

CHAIR —Not for everything we don’t. Senator Milne just said that we do have alternative resources but we do not have alternative resources for all of the products that we get out of native forests. We just don’t. So I am having an argument with Senator Milne not with you, Ms Blakers.

Ms Blakers —My understanding is that the vast majority—we are talking 90 to 95 per cent—of the wood requirements for Australia can be met outside of native forests. So we have native forest logging and we have native forest clearing. These are two different activities although they come together in Tasmania where forests are logged and cleared still. The absolute priority from the atmosphere’s point of view—and this is what is coming through in the international negotiations; this is what the red negotiations are all about—is getting emissions from logging and clearing down internationally. The same applies in Australia. We can make a major reduction in our emissions if we can end or dramatically reduce logging of native forests and clearing of native forests.

Clearing of native forests is a Kyoto activity. It is not in the CPRS. We are not making any serious effort—there is no coherent policy—to look at how we protect those permanent stores of green carbon. Planting plantations or replanting environmental plantings is very slow. Forests are slow to grow and slow to accumulate carbon. You can see that because that 23 million tonnes that is in the accounts on the uptake side—mostly the MIS plantations, as I said—is a relatively small amount of storage; and that is after 16 years. So if the world’s emissions are going to peak and start going down by 2015 then we cannot wait for another 10, 20, 30 or 40 years for new plantations or new forests to soak up carbon; we have to stop the emissions from the existing stores.

CHAIR —But for a lot of these plantations the cycle is less than 15 or 16 years. They cycle them through at 13 or 14 years.

Ms Blakers —Correct, and that is even worse because you are not allowing the store to accumulate—you are taking it out.

CHAIR —So on a plantation basis—the source of timber that Senator Milne is saying we ought to be going to—the cycle is a lot shorter, particularly for certain products. They are quickly growing trees. You can have an estate that you can account for with a cycle that has been worked through to have a base store and if that store or that base continues to grow then you obviously have a growing storage of carbon in that resource.

Ms Blakers —I think we have to be clear about what we are growing these trees for. Are we growing them to produce wood or are we growing them to store carbon?

CHAIR —The CPRS looks at both of those options.

Ms Blakers —The CPRS looks at carbon, but it only looks at carbon in trees that have been planted since 1990. As I keep on saying, it is the MIS schemes and the young, fast-growing eucalypts, by and large, which are destined to be turned into paper products—

CHAIR —Or regrowth native forests.

Ms Blakers —Well, one of my questions is whether they are in fact included in the current accounts. It is certainly not regrowth in existing native forests. Whether new ecologically diverse plantings are included in the current accounts I am not certain. It is not clear from the methodology.

CHAIR —That is worth exploring.

Senator MILNE —Perhaps we could stop there and just ask if they are.

Dr Richards —Yes, approximately 30 per cent of the area of plantations that are called generally plantations, which are new forests on previously cleared land, is environmental plantings not intended for harvest.

Ms Blakers —And that is in the 23 million tonnes here.

Dr Richards —Yes, and we should be clear here: that is the annual uptake over the Kyoto period not a store so that is the net result of sequestration and emissions from harvest.

Ms Blakers —Just to follow up on that, I would really appreciate having a look at the methodology for that because I do not see it in your methodology document.

Dr Richards —We could provide the webpage where those documents are located on for you.

Ms Blakers —Thank you. Would it be an appropriate time to run through what I think—

Senator PRATT —Could you just outline if you have any recommendations?

Ms Blakers —Yes. First of all, I think a lot of this discussion is predicated on accounts which are not clearly set out and where it is not totally transparent what we are dealing with. We also know that the data that is going into the accounts for the non-Kyoto sectors is not as good as it should be. I think the commitment in the government’s work plan it to have full accounts for these sectors for 2008. We are currently working on the 2006 account so that is 18 months away at the minimum. I think we need something much more urgently than that and some kind of open process to upgrade—to have a look at where the accounts are now and put more money in if that is required to increase the resources so that we can get a decent set of accounts for biocarbon much more quickly than in two years time.

Secondly, I do not think that biocarbon should be incorporated in the emissions trading scheme. The only sector that is at the moment is the new Kyoto plantations. As I said, land clearing is not included and native forest logging is not included. Soil is not included. So it is a minor change and it removes one of the distortions in the scheme.

Thirdly, as I have said several times, green carbon has not received the attention that it ought to be receiving. Stopping emissions from logging and clearing native vegetation has to be a No. 1 priority in Australia, as it is globally. It is about 20 per cent of Australia’s emissions and it is an arena where we can make a very big impact very quickly.

Senator PRATT —Could you go back to the point that you made before about stopping logging in native forests? I did not catch what you meant.

Ms Blakers —Take biocarbon out of the emissions trading scheme. I can go through the reasons. The measurement is just one of them. I think it distorts the emissions trading scheme. If it were restricted to fossil carbon, it would be a much more uniform measurement with more reliability, and it would be a more workable scheme.

Senator MILNE —I will just stop you there. Let us assume we did take it up because it distorts it—and I accept that. We do need something to incentivise the protection of the stores and to actually prioritise what has the maximum benefits and pay people for that. Otherwise, it is not going to happen. That was the point that the grain people have made and a number of other farming groups have made. At the moment they are being expected to do this stuff and not getting any reward for it. There is no incentive, they are doing it tough and so on. So in saying, ‘Take it out,’ you are actually taking away a potential income source from people who might voluntarily put it in. What are you suggesting we should do, then, given what the Grains Council and others have said?

Ms Blakers —I think that is absolutely right. If we are protecting the existing green carbon stores, we are promoting increased soil carbon storage and so on, so we need to pay for that. As a community we need to pay for it, and we need to pay for it in perpetuity. It is storage that we are talking about here. It is keeping carbon stored in ecosystems, in soils, forever. It is not simply about reducing emissions in the short term. It is about managing those systems in perpetuity.

Senator MILNE —Do you have a view about how that would happen? Forestry Tasmania objected to that notion, because they said they would only get paid once.

Ms Blakers —Correct.

Senator MILNE —And I said to them, ‘Wouldn’t we be better off to protect the forests and be paid for that as a carbon store as opposed to cutting them down? Wouldn’t Tasmania get more?’ They said no because, in the way they would see it operating, they would only get paid once. What would you propose as a mechanism so that farmers as well and anybody who does an environmental plan or whatever does not just get their one-off payment up-front? How would you see that happening?

Ms Blakers —That is also the reason why it does not fit well into an ETS framework, because with an ETS you are paying money on fluxes, so you only get the payment, as you say, when you stop for the one-off avoided de-forestation or avoided logging event, whereas what you actually want is a long-term income stream to enable you to maintain those stores in perpetuity. So I see it as two steps. One is the transition to stop logging and clearing, and there needs to be appropriate funding for that transition to happen for affected industries’ workers. Step 2 is to set up what I have called a REDD-plus fund—‘REDD’ meaning ‘reduce emissions from de-forestation and degradation’, ‘plus’ meaning the soil carbon enhancement and the additional storage you can get by managing those natural ecosystems in perpetuity. Where the funding from that should come from is obviously an open question, but I think there are a number of possibilities. The fact is that carbon now has a value. That value does not have to simply be mediated through an emissions trading scheme. The government can also step in as the intermediary to collect funds and to distribute them, as it is doing for other sectors through its compensation packages for the emissions trading scheme.

Senator MILNE —Are you suggesting, for example, that if I were a farmer and I put in my environmental planting then I get paid something each year for maintaining and increasing the store if I go to further rehabilitation work or something like that, so that I get an ongoing income?

Ms Blakers —Yes. I think the primary objective has to be permanent storage, so I would link it to permanence in a legal sense as well as permanence in an ecological sense. Permanence in a legal sense means appropriate land tenure or covenanting or something that can assure the community that this carbon store is actually going to be there forever. The issue here is that you need an expert intermediary body to allocate funding because you want that funding to be allocated on a needs basis. So it is in need of the ecosystem for management rather than the quantity of carbon that is stored or accumulated. It may be that it is some combination of a low per hectare payment and then project funding for specific management requirements, or some combination like that. But I think the key point is that this is 20 per cent of the problem and it needs 20 per cent of the resources and 20 per cent of the policy attention put into solving it. It is a huge opportunity for Australia. Because in many ways Australia is a developed country with a developing country profile, I think what we do in Australia can actually inform what happens globally.

CHAIR —So a farmer who has some native forest on his property who wants to manage that is locked out of the system altogether at the moment, as Private Forests Tasmania told us when they came to us in Hobart. Effectively under your proposal they would be locked out of one of the income streams, which is managing the forest and getting a return from the timber, which in a lot of those cases with these guys who do manage it is high quality are more likely to go into some sort of store. You give them one income stream and lock them out of another.

Senator FEENEY —It is more than just forestry, too, isn’t it?

CHAIR —These guys see it as whole-of-farm management, and the witness that we had in Hobart last week I have to say I have a lot of faith in as a land manager. I have seen his property in the way he operates his property. His evidence to us was that if he had this opened up to him on those two fronts—the capacity to manage his forest and earn an income stream from the forest itself but also regrow it as a native forest, which is what he wants to do to manage his farm and maintain the biodiversity processes and all of those things we have been talking about this morning, but also get a return from it as a carbon store over time—that fits in with his whole of fund management planning process. It also takes his farm away from being a carbon emitter on a net basis to a carbon store on a net basis. That is what he would like to see as part of this process. But what you are suggesting to us is that he have one of those streams taken away from him, which is the capacity to earn income but still manage on a sustainable basis of forest on his property. If you look at Tasmania, where 50 per cent of the native forests that are managed are on private land, you are potentially taking a huge slice of income out of those people who are sustainably operating their farms.

Ms Blakers —Someone has got to do some numbers on all of this stuff. At the moment we do not even have an accounting system that properly accounts—

CHAIR —They have. They have used two models, and they put that evidence before us in Hobart.

Ms Blakers —The models are the problem. I am sorry Professor Mackey is not here to address that question, because that is what their work said: the models are the problem. We need to get a lot more data on the ground, and the number of data points that give you full carbon accounting for a slice of native forest is very low. But the work that they did showed that—

CHAIR —Mind you, that work is pretty widely disputed as well.

Ms Blakers —Well, there is certainly an attempt to do that. The obvious response to that is, let the government put some funding into getting this data upgraded very fast.

CHAIR —A very fair response.

Ms Blakers —It is a failing that that work has not been done in the last 10 or 15 years. I understand why the effort has gone into the Kyoto accounting but now we really need to compress and move very fast to get these accounts upgraded.

Senator PRATT —If a rich country like Australia cannot get this right quickly what hope do we have of trying to assist developing nations in protecting their native forests so that we do not accelerate climate change? Can you update us on that question internationally in terms of getting the world to maintain its native forests?

Mr Carruthers —The government has a major initiative in this area. The International Forest Carbon Initiative with funding of $200 million and a substantial component of that is directed at the measurement, reporting and verification of the carbon stocks in developing countries. We are especially talking here about the tropical forested countries, which are a large source of greenhouse gas emissions.

Because Australia was required for the purposes of the Kyoto protocol to invest in its national carbon accounting capability, we are very much ahead of the game in terms of capability in world terms. That is an experience that we are sharing with developing countries. For example, we are working very closely with Indonesia in developing the Indonesian national carbon accounting system. They are designing their system for their purposes directed at reducing deforestation emissions, but we are working very closely with them and transferring that experience, as we are with a number of other bodies such as the US Clinton Foundation. We are working in a number of countries. This is a very important extension of our national capability to deal with this international issue.

Senator PRATT —In that context, Ms Blakers, you mentioned a national REDD-plus fund. Can I ask what emerging prospects there are internationally for the kinds of things that can be incorporated into agreements—an exchange—with countries, particularly developing ones, being able to be paid for retaining their native vegetation.

Ms Blakers —I am not close to the international negotiations, except to observe how reducing emissions from deforestation and degradation is going to be brought into the game, because it is such an important source of emissions.

Senator PRATT —And no-one has yet been able to find a link between an ETS type trading system and one that effectively links, I suppose, the money that you have in the bank versus the money that you are trading. That is one way of looking at the issue. We have not been able to create a link that rewards that investment and saving yet, have we?

Ms Blakers —There are various proposals floating around. Greenpeace has one out that I looked at a few months back, but, as I said, I am not close enough to the international scene to know where things are at there.

Mr Carruthers —The Australian government has put on the table in the international negotiations a substantive proposal on how this can work. That submission is a public document and we would be happy to share it with the committee. We absolutely do think that, firstly, we can measure strongly what is going on in the tropical forests. By setting up these systems in countries, we can provide the incentive structures through funds and the like and look to being able to link these to international carbon markets as providing the strong incentives at a scale that is going to produce big results in the tropical forests.

Senator MILNE —If we can measure the full carbon-carrying capacity of an Indonesian forest and we can account separately for the emissions from logging it and the uptake from it, why can’t we do that for Australia’s native forest estate? And, if we are putting a substantive proposal on the table for how you could incentivise protection of those forests in developing countries, why can’t we do it for Australia? Can’t you see that the global community is going to say: ‘Why is it that Australia is prepared to do this kind of accounting in Indonesia for its forests but it’s not prepared to apply the same at home’?

Mr Carruthers —We do have a comprehensive carbon accounting capability in Australia. That is really the basis on which we are able to sustain our accounts on deforestation or land clearing and to show for purposes of national and international reporting the results of vegetation management policies in Australia, which have made a big difference to the rates of land clearing and the deforestation emissions on our agricultural lands.

But, in relation to Dr Blakers’s first recommendation, could I correct a point of fact. Australia began reporting in 2008 comprehensively for land use, land-use change and forestry—the LULUCF sector—in a UN inventory, and we will again do that in the 2009 inventory, which will be lodged with the UN very shortly. That covers the whole of the landscape, including the whole of the forest estate. It is true that not as much technical development effort has gone into the gathering of the data and so on in relation to the general native forest estate, because that has not been our first priority, but we are reporting on a comprehensive basis. We are continuing to improve the data and the methods for forest systems.

Senator IAN MACDONALD —Mr Carruthers, strange though it is, I agreed with Senator Milne in one of her earlier questions, although of course I never agree with her particular view and the Wilderness Society’s views on the native forests. But, as I understand what you are saying, the Kyoto principles are followed because they are the principles but they do not really accurately determine what carbon is emitted to the atmosphere. Is that right?

Mr Carruthers —That is right. I think you may not have arrived in the room when we spoke about this early on, but I made the point early on that the Kyoto protocol, in its treatment of the land systems, is very much a compromise outcome and it gives partial coverage—

Senator IAN MACDONALD —I was here for that. Notwithstanding that, Australia is a very small emitter. There are some that think that, whatever Australia does in international forums, others will follow. So why don’t we, regardless of Kyoto, just adopt a system which accurately, as far as we are concerned, records emissions from Australia and simply ignore Kyoto and use that at international forums? You did talk around this.

Mr Carruthers —We produce two forms of annual inventory of emissions. One is under the Kyoto protocol rules; the other is under the Framework Convention on Climate Change rules. The second of those is a complete coverage of the emissions associated with the land systems. The Kyoto inventory is not a complete inventory, for the reasons we have discussed. So we do report it already.

Senator IAN MACDONALD —And we do use that in international forums—the accurate carbon inventory?

Mr Carruthers —Yes, and that is a published document.

Senator IAN MACDONALD —We seem to mention landowners or land managers in a negative way, but we do not seem to take into account any impact of sequestration of range lands and other parts of land that farmers and landowners manage.

Mr Carruthers —There are various programs of the Commonwealth and the states which provide incentives for undertaking various activities on farms. There would be scope to introduce additional complementary measures to the Carbon Pollution Reduction Scheme that could expand—

Senator IAN MACDONALD —I am not talking about measures so much as much measuring. Do we measure what sequestration there is from all of our range lands?

Mr Carruthers —Yes. The UN inventory is a comprehensive account of the whole of the land system and all of the carbon pools above ground and in the ground.

Senator IAN MACDONALD —Does that take into account the CPRS?

Mr Carruthers —No, because the CPRS is done on the basis of the Kyoto scope.

Senator IAN MACDONALD —So we are designing a scheme in Australia that pays lip service to some international covenant which we all agree is not accurate and we will then penalise, fail to benefit or perhaps benefit wrongly Australians because of this scheme for Australia that is not based upon accuracy but on an international protocol; is that correct?

Mr Carruthers —In terms of the measurement and the reporting, we are able to present the full results. In terms of the incentive structures that are there to take actions out there on the land, there are various measures in place already. Governments could choose to expand those measures.

Senator IAN MACDONALD —The bottom line of all this is carbon emissions to the world. It is not really about what a technical, artificial international treaty might have said. It is all about what is accurate. Australia has an opportunity—

Mr Carruthers —I mentioned before Australia’s Farming Future as an example of a program that is addressing encouragement of activities on farms where some of those activities do not come within the scope of the Kyoto protocol—building soil carbon stocks being an example.

Senator IAN MACDONALD —I might be asking the wrong person here, but why aren’t we devising a scheme in Australia that actually deals with the issue, which is carbon emissions, rather than an international protocol. It is an Australian scheme. I am told that everyone is going to follow Australia anyhow if we do the right thing. So why wouldn’t we do that in our own interests and as the world leader that we supposedly are?

Mr Carruthers —The problem with moving to that immediately would be that it would impede our ability to link the Australian carbon market with carbon markets of other countries because we would essentially have different units in the scheme and compromise their tradability.

Senator MILNE —I will just interrupt Senator Macdonald for a moment. Mr Carruthers, you just said a minute ago that Australia is helping Indonesia and is leading the pack in terms of the accounting system and that it will actually be leading this. Senator Macdonald’s point is: if we are already leading it, we are going to have a huge influence, so why wouldn’t we do the right thing and push them in the right direction rather than wait for them to put in bad systems? They have not got a system on land use globally for the next phase.

Mr Carruthers —No, and that is what we are pursuing in the international negotiations. We want comprehensive coverage of the land system in Australia and we want comprehensive coverage of the land systems internationally.

Senator IAN MACDONALD —That is one aspect. The other aspect is that, within Australia, we should be doing what is right. As I say, I am told that everyone is going to follow us anyhow, so why aren’t we doing what is right? But, as I say, perhaps I am not asking the right person. I am not accusing you of deciding this.

Mr Carruthers —We have a multipronged effort at the present time. We are pursuing comprehensive outcomes in the international negotiations to get a better set of international rules in relation to the land systems and we are investing in the technical capacity to measure the emissions comprehensively in Australia. We do report them, as I have said. We also have a range of measures in place to support activities, even those activities which are not recognised under Kyoto.

Senator IAN MACDONALD —Thanks for that. We are running out of time so very quickly, Dr Richards, I am sorry if you said this earlier but what is the National Carbon Accounting Toolbox—your private assessment agency?

Dr Richards —I think that was the listing of one of the programs that we operate. I am with the Department of Climate Change and one of our products is a derivative from the National Carbon Accounting System and is a publicly available national carbon accounting toolbox which makes available the system to the individual users.

Senator IAN MACDONALD —Finally, you were talking about Indonesia. Do we measure Indonesian outputs from their coal, cement and aluminium plants?

Mr Carruthers —Each country is responsible for preparing its own national inventory, so Indonesia produces its own national inventory. We are assisting them, in this case, with their capability in the inventorying of their forests.

Senator IAN MACDONALD —So we are helping them with their forests, which means we know what the figures are—

Mr Carruthers —We are not doing the inventory; we are helping them do their inventory.

Senator IAN MACDONALD —Yes but you would be aware of—

Mr Carruthers —You would understand there is some sensitivity.

Senator IAN MACDONALD —Yes. But we are not doing the same thing with their accounting of the emissions from their cement factories or coal factories.

Mr Carruthers —Under the climate change convention, there is general assistance to developing countries through the Global Environment Facility which is funding them for capacity building on their inventories, and we provide our expertise into that kind of process.

Senator IAN MACDONALD —It came up yesterday that there are accountings and there are accountings, and there are certificates and there are certificates and, depending on where you get them around the world, they may not be uniform in what they tell you. Is that your understanding of things like what we are talking about? I do not necessarily mean Indonesia but also Colombia, Somalia or Russia.

Mr Carruthers —That is right. That is one of the problems, for example, with voluntary carbon markets. Whereas, with a market designed like the Carbon Pollution Reduction Scheme, there is an intense focus on the integrity of the carbon commodity or carbon units to conform to an accepted set of international rules.

Senator PRATT —In appreciating that we need to count all of this carbon, if it is not included in international agreements and we decide that we do want to abate that carbon without it being included, those costs get transferred to elsewhere in the community because someone else has to ultimately pay for it, don’t they? Can you explain to me how that works?

Mr Carruthers —We have taken on a Kyoto target and there is basically a set of actions that are needed to reach that target. If we start taking action in areas that do not get recognition for Kyoto then that is increasing the costs to the national economy and to companies, because we still have to achieve the target but those particular activities are not being counted or accepted.

Senator PRATT —Is that why the focus is on trying to find an international agreement solution to this problem, so that everybody tackles it and the playing field is level in relation to that issue?

Mr Carruthers —Yes.

Senator MILNE —In view of the time, I will put a question on notice, if I might. Mr Carruthers, you said that we now have a comprehensive set of accounts on land use in Australia. Could you provide the committee with the annual full emissions from native forest logging? Disaggregate the net figure and give me an uptake and an emissions for native forest available for logging and for native forest for clearing, and the uptake from those not available for logging. If you could disaggregate that into emissions and uptake, I would really appreciate it.

Mr Carruthers —We will be able to give you the inventory accounts for the native forests as they are set out in the United Nations Framework Convention on Climate Change.

Senator MILNE —Can you give me the emissions or are you going to give me a net figure? I really want to know how much we are putting to atmosphere. You said you can do comprehensive accounting. In order to get a net figure, you must be able to disaggregate what goes up and what is taken down.

Mr Carruthers —We produce them as a net figure for each unit of land. Basically, both are going on at the same time. If you have a piece of land with forest, the tree will be growing and taking up carbon, but simultaneously there will be microbial activity et cetera in the soil and emissions will be coming off. What is going on is a net emission at any point in time and that net emission and the fluxes are changing in time with things like droughts, wet periods and bushfires. The correct picture of what the atmosphere is seeing is the net emission from a particular land area.

Senator MILNE —Ms Blakers, can you assist me here? What I really want to know is what is going to atmosphere from logging activities.

Ms Blakers —Yes. The net which Mr Carruthers is talking about is an annual net. What is actually happening in clearing or logging is that on one piece of land you are getting an emission—the coupe that you are logging is an emission—but on all the other pieces of land which you are not logging, you are getting uptake. That is what you want to disaggregate.

Senator MILNE —That is what I am asking for.

Ms Blakers —And ditto for clearing. The clearing figure you are getting in here is a net figure; it is not disaggregated into how much land, what the emissions are from the land that was cleared in 2006 and what the regrowth is on the land cleared since 1990 which has regrown since 2006: two separate pieces of land and we want it disaggregated. If the 2008 accounts have been prepared—the ones which are filling in all of these gaps—when will they be public?

Mr Carruthers —They were published a year ago.

Ms Blakers —The 2008 accounts?

Mr Carruthers —In 2008. No, the 2008 inventory was for the period to 2006.

Senator MILNE —Please take it on notice because that is the question I am asking.

CHAIR —I think we have a full understanding of what is required.

Senator HEFFERNAN —Can you tell me the difference in the sequestration between a lucerne paddock that is harvested for hay and one that is left to seed?

Mr Carruthers —Yes.

Senator HEFFERNAN —Can you provide the committee with your understanding of what the US is proposing for its farmers, because our farmers at the present time are being walked up a very steep mountain—

CHAIR —That is probably a question for the roundtable later in the afternoon.

Senator HEFFERNAN —No, it is a question for the department.

CHAIR —We are having a roundtable with the department this afternoon. We are talking about carbon accounting at this point in time. Your question is for the roundtable.

Senator HEFFERNAN —I want to prepare the department so they can get the answer. As I understand it, the US proposes that the farming community will participate in the credit side and not on the debit side. Is that your understanding?

Mr Carruthers —I do not know whether the detail of the US approach has been determined yet. There are discussions—

Senator HEFFERNAN —That is what is proposed. Can you give us the details of what is proposed? If that is proposed and we go another way, we are dead—Australia’s farmers are dead. I will get it off you later. That is a question on notice. We need to know the answer.

CHAIR —It is certainly something we can ask the Department of Climate Change.

Senator HEFFERNAN —Aren’t you the department?

Mr Carruthers —Yes. We are having a specific discussion on carbon accounting at the moment.

Senator HEFFERNAN —That is part of the accounting, for God’s sake. It is one of the fundamental rules.

CHAIR —Mr Carruthers has taken that on notice. If we can get some advice back from the department this afternoon, that would certainly assist us and we would appreciate that.

Evidence was then taken in camera but later resumed in public—

 [10.30 am]