Carbon trading market looks to beef up trust with release of Chubb review

Released to the public this morning, the review focussed on the Australian Carbon Credit Unit, already regarded as the world's most trusted tradeable share in one tonne of atmospheric carbon.

A panel, chaired by former chief Australian scientist professor Ian Chubb, was commissioned in June and handed their report to government before the new year.

"In recent times, the integrity of the scheme has been called into question," stated the review. "It has been argued that the level of abatement has been overstated, that Australian Carbon Credits are therefore not what they are meant to be, so that the policy is not effective.

"The panel does not share this view. While the panel was provided with some evidence supporting that position, it was also provided with evidence to the contrary."

This is good news for the emerging carbon market and certainly for agriculture, which is becoming more involved in building better soils ... and possibly making a few quid on the side.

With the new year underway, agriculture moves into a new reality surrounding carbon footprints and supply chain transparency.

From now farmers will be required to justify their impact on the environment, if they wish to appease banks and buyers.

For some time manufacturing companies have had to declare their direct carbon emissions - both scope 1 and scope 2. Now, businesses in the United States have to declare supply chain emissions - called scope 3 - in order to secure the best interest rates for finance.

"It doesn't matter if its red meat, wheat or wool," says Andrew Ward from the co-operative Regen Farmers Mutual. "The scope 3 emissions now count for net zero commitments and so this is going to have an impact across the supply chains of every commodity."

Just last month the Australian Federal Government signed up to major environmental reforms - a commitment to protect 30pc of the nation's land and sea by 2030, with new legislation drafted by June and enacted by the end of the year.

Meanwhile, the free market, through consumer choice, is driving this environmental agenda even harder than government.

As an example, McDonald's is now funding trials into managed grazing and carbon sequestration through MLA and Queensland University of Technology.

The restaurant giant says its hamburger beef is verified as not coming from de-forested land and there is anecdotal evidence to say the global corporate has for the past two years refused to buy beef trim from Australian postcodes where illegal land clearing for grazing continues.

To fund this united environmental effort - all intended to minimise rising global temperatures - a market solution was born: The Australian Carbon Credit Unit, based on a tonne of atmospheric carbon being captured and stored.

Recent doubt cast on the efficacy of methods used to prove environmental gains have cast a shadow on the evolving trade and so the fledgling carbon industry now welcomes today's federal review.

One of the triggers for the review had been research out of the Australia Institute and the Australian Conservation Foundation which found a portion of carbon sequestering projects did not meet the first requirement of "additionality" to carbon removal from the atmosphere.

How the review will steer methodology used to create an ACCU will become clearer in the short term, but already the move to offset big polluters with ACCUS has drawn criticism from the Climate Council who say carbon credits should be used as a last resort, not as a band-aid.

Market baulk at the carbon trade has given way to renewed interest in biodiversity offsets, where a landscape - not just the soil - is assessed for its value far beyond mere carbon. The price for such a paradise can be quantified, with monetary benefits paid directly into the farm account.

Of course the way needs to be better paved, but those in the industry say things are headed in the right direction.

"Since Prof Macintosh called out dodgy methodology, there has been a stench around the carbon market so whatever outcome there is from the Chubb review should give the market more direction," says Mr Ward. "Considering carbon and biodiversity projects run for 25 to 100 years there is a real need for market integrity over the long term."

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Mr Ward's co-operative enterprise was set-up as an environmental project service provider that could help deliver financial benefits to farmers who prove their land management skills sequester more carbon and maintain higher levels of biodiversity.

The major benefit, of course, is that an improved landscape not only holds more life but also offers more production.

"The market is now doing what governments have been saying all along," says Mr Ward, who works with a pilot group of wool graziers restoring box gum grasslands east of Stanthorpe, Qld.

Six similar projects are due to start this year in Victoria and another in Tasmania.

"Our advice is for farmers to prove they are net-zero then inset carbon credits to keep access to their supply chains and if they still have surplus to sell on the offset market."

Armidale-based soil, pasture and carbon service provider Hamish Webb, from Precision Pastures, says there has been a recent shift in clientele from eager early adopters, left-leaning by nature, to the conservative end of the political spectrum as more and more farmers brace for change.

"Our soil carbon testing service is expanding considerably," he said. "We are getting more interest from producers."

Trials conducted by Precision Pastures and Meat and Livestock Australia on 15 regional farms including Mr Webb's own property at Yarrowyck, west of Armidale, have shown how growing more carbon can increase production in the first instance and can deliver tradeable Australian Carbon Credit Units down the track.

"Previously it was always the more progressive, first adopter type of producer who would seek out our services," said Mr Webb. "Now we are getting a lot of traditional producers who are quite terrified of their future as farmers. Changes already made in other countries like New Zealand, Ireland and The Netherlands are requiring farmers offset their emissions or restrict their on-farm production to meet their countries' emissions targets.

"While our government has said that will not happen in Australia, our farmers worry that might be written in pencil, so they are trying to get ahead of that."

The first step after registering a farm's baseline measurements is to solve soil health issues which may be constricting production, such as pH, nutrient deficiencies or soil toxicities.

"What is good for the soil is good for soil carbon," Mr Webb explains. "You want to do that anyway. The credits are not the primary driver."

While the financial potential firms as the carbon sequestration industry matures, today's carbon farmers are not "starry eyed", says Mr Webb.

"They're more about being ahead of policy makers, or a green movement," he said. "They're nervous and a bit upset. The complexity of what is happening creates uncertainty. We say to them stop being scared. Get out in front of it.

"We don't advise farmers what to do with their ACCUs," said Mr Webb.

"However, 99 per cent of our clients have no intention of forward selling the ACCUs. Instead, they want to maximise production, increase soil carbon, be issued with credits and hold them in their Australian National Registry of Emission Units account (ANREU).

"They want to stack them up and see what the future brings."