Environmental Law

24/05/2016

Reducing Emissions from Agriculture: Australia’s Unique Approach (Part I)

Not many countries have regulatory schemes in place aimed at reducing greenhouse gas emissions from agriculture. As indicated in the blog on the Paris Agreement and agriculture, the agricultural sector is responsible for almost 25% of anthropogenic GHG emissions, both through CO₂ emissions caused by deforestation and peatland drainage, and through methane (NH₄) emitted by livestock and rice cultivation, as well as through nitrous oxide (N₂O) emissions caused by the use of synthetic fertilizers and the application of manure on soils and pasture. There is a dark cloud hanging over this because emissions are expected to rise over the coming years and decades because of an expected sharp rise in food demand. The Australian Climate Change Authority, in a 2014 climate change policy review for that country, for example, reports that the agricultural sector is expecting a doubling of demand for agrifood commodities in emerging economies in Asia, particularly China and India. It is expected that Australia is in a good position to meet this increased demand, as a consequence of which Australia’s production of agrifood is expected to increase by 77% in 2050 (from 2007 level). The Climate Change Authority in its  report is pessimistic about what that means for climate change. Because of the strong economic incentives of the global food market, increasing emissions are inevitable: the expected production growth is likely to offset emission reductions achieved through the introduction of climate smart agriculture practices and technologies.

Photo by Flickr user Oli.

Doing nothing, however, is no option, as this will lead to an even bigger rise in emissions. And what is more: the agricultural sector has the potential to store large quantities of carbon in soils and vegetation. Domestic regulators, however, have been reluctant to address agricultural emissions, partly because of regulatory difficulties. It is, for example, difficult to measure emissions at the individual farm level since a variety of factors determine the amount of emissions (such as the diet of individual animals, soil composition, weather systems of individual regions, the way in which fertilizer is applied, etc.). In addition to emissions, removals are relevant as well since crops and other vegetation absorb CO₂ from the air, and lots of carbon is stored in soils (more carbon is stored in soils than what is present in vegetation and the atmosphere). Soil carbon may be released, or remains there, or is increased, depending on how you manage the land.

A growing number of countries is setting up regulatory schemes aimed at reducing emissions from agriculture, mostly in the form of an offsets scheme linked to emissions trading. Under these schemes, industries and energy producers can buy credits generated by agriculture, and use these partly to comply with their obligation to hand in allowances equal to their emissions. This is the case in California, Quebec, Alberta, and Ontario. Under the California ETS, two types of agricultural offset projects are accepted, both aimed at reducing methane emissions: biogas systems in dairy cattle and swine farms, and rice cultivation projects. In Alberta, agricultural offsets include a wide range of projects: nitrous oxide emission reductions, biofuel production and usage, waste biomass projects, conservation cropping, several types of projects concerning beef production, projects aimed at reducing emissions from dairy cattle and biogas production.

The country with the longest experience in this area, however, is Australia. Despite the country’s much criticized poor overall climate policy, Australia adopted a Carbon Farming Initiative (CFI) as early as 2011, which spurred farmers into action and, therefore, potentially provides the rest of the world with a model to reduce emissions from agriculture. In 2011, the CFI originally was set up as an offset scheme under its ETS. Since the repeal of the ETS in 2015 (just before trading was set to start), the initiative, now called Emissions Reduction Fund (ERF) functions on its own and is enjoying rapidly increasing attention from farmers.

Instead of having to rely on the (unreliable) international carbon market, under the ERF farmers can offer the credits that they generated to the government through reversed auctions. Farmers can obtain credits for both emission avoidance projects and sequestration projects and offer these credits to the government. The government buys up credits from projects that achieved the biggest emissions cuts against the lowest costs. Agricultural emission avoidance projects mostly focus on methane emissions reductions: methane capture and combustion from livestock manure and methane emissions reduction through manipulation of digestive processes of livestock. A third important emission avoidance project for the agricultural sector is the application of urease or nitrification inhibitors aimed at reducing fertilizer and manure emissions. Sequestration projects are for example projects aimed at sequestering carbon in soils in grazing systems, on farm revegetation, rangeland or wetland restoration, the application of biochar to the soil, and the establishment of permanent plantings on farmland.

Since 2011, an enormous amount of expertise has been built up in Australia, and a very elaborate and effective regulatory system has been developed that on the one hand seems to ensure a high level of environmental integrity, while on the other hand not overburdening farmers with costly administrative obligations. The Australian scheme, therefore, is an interesting example for the rest of the world, particularly for the EU, that has yet to tackle emissions from agriculture. A government funded, project based system of emissions reductions seems to fit well in the EU’s Common Agricultural Policy.

In May 2016, the results from the latest auction were released. After three auctions a total of 309 carbon abatement contracts have been awarded by the Australian government to deliver more than 143 million tonnes of CO₂ equivalent abatement, earning the project proponents a total of A$1.7 billion (about € 1 billion). The vast majority of abatement is by vegetation projects, which often are on farmland (but not always). Carbon farming has grown into an important new income stream for farmers in Australia. In a country prone to droughts, floods and bush fires, the scheme, therefore, not only helps to reduce emissions from agriculture, it also assists in diversification of agricultural practices and leads to a more resilient sector.

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This project has received funding from the European Union’s Horizon 2020 research and innovation programme under the Marie Sklodowska-Curie grant agreement No 655565.