A Quandary – Nit-pick or constructive critique of CFI ERF

The quandary for most of us when we express our thoughts is we can be regarded as excessive or obsessive for seeking out an agenda – the agenda to change that might be procedurally correct, but fails to address the main issue. For instance the Emissions Reduction Fund – Irrigated Cotton draft determination and associated documents (the consultation process closed 12 December 2014). The main issue, as with other Carbon Farming Initiative methods, is that it is harder for leading growers to be rewarded, as there is no recognition of past improvements.

In the main we found the draft cotton determination, draft cotton explanatory statement and the draft cotton equations, as is, to be sound. It has its process thought through well enough and while we could say some of the flow could be improved any further submission could appear to be nit-picking as opposed to constructive criticism.

Was there room for constructive critique? Yes, but these are areas we might like to adjust the eligibility criteria. Also a little tweaking of what appears too broad in the descriptions. They are areas that could be argued as wrong, but they really are areas for the regulations or legislation to be adjusted. When you access the process of a determination your role amounts to comment on the process that is laid out in the draft determination. It is not the appropriate place to express frustration with the rules. Expressing your frustration is really the domain of the politics.

Being we mentioned the ERF – Irrigated Cotton draft determination, we should let you know what is it about. The first thing is it is the opportunity for growers to obtain certificates called the Australian Carbon Credit Unit (ACCU) under the Act 2011 called the Carbon Farming Initiative (CFI). The reference to the Emissions Reduction Fund (ERF) is part of the CFI Amendment Bill 2014. The fund is designed to help reduce Australia’s emissions by providing and incentive for business, landowners, state and local governments, community organization and individuals to adopt new practices and technologies which reduce emissions. The ERF does include incentives for business activities and farming practices. To find more go to: http://www.cleanenergyregulator.gov.au .

A bit more about our thoughts on the determination and consultation on the Draft Energy Reduction Fund: Irrigated cotton.

  • The ‘system’ is for irrigated cotton growing mainly in Queensland, NSW and Western Australia.
  • The incentive is to encourage Nitrogen fertiliser use efficiency and efficiency is a measure of the ratio of lint yield to nitrogen applied via synthetic fertiliser (kg lint yield per kg N).
  • An increase in nitrogen fertiliser use efficiency is equivalent to a decrease in emissions intensity from synthetic fertiliser use in irrigated cotton (t CO2-e per kg lint yield).
  • Because nitrogen fertiliser use efficiency is calculated using both nitrogen fertiliser use and yield, credits for emissions reductions can be generated by reducing fertiliser use while maintaining or increasing yield, or by increasing yield without a corresponding increase in fertiliser use. This approach also ensures that credits for emissions reductions cannot be generated through a contraction of yield without a reduction in fertiliser use.
  • The draft Determination therefore enables irrigated cotton growers to adjust nitrogen fertiliser rate according to paddock yield potential in the project area, provided that nitrogen fertiliser use efficiency increases.
  • There is support for a broad range of activities to improve the efficiency (reduce the emissions intensity) of fertiliser use in irrigated cotton, including activities to improve lint yield without a corresponding increase in nitrogen fertiliser application rate, and activities to modify the rate, timing, method and efficiency of nitrogen fertiliser application.
  • Proponents have the flexibility to select management actions that suit their individual circumstances.
  • In this draft, cotton is the only crop in the production system eligible for generating credits for a reduction in emissions from synthetic fertiliser use.
  • Emissions from other crops grown in rotation with cotton, with the exception of green manure, are excluded from this draft Determination.

What is Synthetic fertiliser?

Inorganic are sometimes called synthetic fertilizers since various chemical treatments are required for their manufacture.

Synthetic fertilisers do not include solid or liquid organic products created using waste products of other industries that do not meet these labelling and minimum nitrogen content standards. For example, synthetic fertilisers do not include manures, such as poultry litter or beef feedlot manure, or mulches and composts, such as composted ginning trash.

What is a Green Manure?

A green manure is a legume that is planted in a paddock to improve the soil for a subsequent cotton crop. A green manure crop is not harvested and the above ground growth is returned to the soil. Examples of green manure are vetch, faba beans, chickpeas and annual clovers. Non-legume crops which require nitrogen fertiliser are not included in the definition of green manure

What is Organic fertiliser?

Organic fertilizers are usually (recycled) plant- or animal-derived matter. The main “organic fertilizers” are, in ranked order, peat, animal wastes, plant wastes from agriculture, and sewage sludge.

If you picked up on peat as a organic fertilizer and the reference that it has no nutritional value to the plants, but improves the soil by aeration and absorbing water. You might ask why is biochar not a fertilizer?

Bio char

It gets down to two issues:

  1. Bio char is described as a sequester of carbon and as such binds carbon to its properties.
  2. So broad is the definition that it is seen to be the product of ‘burning’.

The later point is where it gets interesting and frustrating. This is because the technology for fine chars is thermochemical decomposition of organic material at elevated temperatures in the absence of oxygen. In another speak, Bio char is created by pyrolysis of biomass.

We do not argue that is a fertilizer. What we argue is it is an agent to improve the efficiency of fertilizer use.

Another potential for confusion is linking soil carbon to bio char. Soil carbon is a condition and bio char is a conditioner. If you think one is the constant and the other the agent for change it makes sense does it not?

That leaves the issue of if it is helpful why is it excluded from the incentives?

Maybe the question is better put this way: Plants don’t need carbon, soils do. Biochar is but a hazardous waste from pyrolysis, looking for a below-the-radar application. Do we have that application? But that is for another discussion and a case study!

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CFI – a XANADU

If you follow that Shangdu as the summer capital of Kublai Khan’s empire, then you would be forgiven for thinking the CFI is our XANADU and an enigmatic bright feature on the surface. Thereby, we have a problem because it is being profiled as exactly that and actively marketed by government as a series of experiments to showcase. Practitioners are asking: What about us in the ‘real’ world, can we believe something that looks good on the surface is enough? Some say yes, many no.

This conversation started because projects are to be funded that address recognised program gaps of the Carbon Farming Futures activities. This round: The Extension and Outreach Phase two submissions were due Wednesday June 12 5pm. Information is be found on Extension and Outreach daff.gov.au.

Some disquiet continues and numerous amounts of feedback do focus on the issue of the bankable when needing to finance, and other is the number of reference groups that were set up to work through the matters and the concern some of the critical consultation groups are difficult to contact or not able to be mobilized. A prime example being: The Biochar Reference Group. After some searching key people advocating the approach found part of the problem was people moving on to further their personal interests. The difficulty is that the group has funding to develop the soil carbon methodology necessary to be approved by the DOIC to produce ACCU’s (carbon credit units), and although soil carbon methodologies now has an active ‘reference group’ to attempt to push it along, the two subgroups (Mixed farming, and Rangelands) do not, or have not formally communicated what each are up to in their work levels. Compounding this the CFI is looking less of a ‘farming’ initiative in terms of reward systems, and as of the time of writing the government has not produced an example of a good news story on a true ‘farming’ credit. It is difficult to sell virtues without success stories and Gant chart the project support from the farming community without it.

A closer look at the cost of participating is also most interesting, and it is easy to see another genuine hurdle is related to the methodologies development. There is considerable variation in calculating the cost of participating, and some use this as an excuse that farmers are simply not ready to seek approval of their methods, some say it is simply too expensive to get approval. Some even say there is a genuine disinterest for government to get on with ‘innovation’ attempts.

In terms of cost we need to consider that published 8 April 2013 by Co2Land.org: ” It costs up to $1M to develop a methodology acceptable under CFI. Once accepted the transaction cost to create the ACCU’s is said to be about $70,000. Although it is not a definite cost, it can be less but a reasonable guide and it requires you to look carefully at the potential yield of each project and whether you can smear the transaction cost across the entire project to determine the minimum size for it to be a worthwhile program”.  Then Country Carbon ( www.CountryCarbon.com.au ) said the numbers posted by CO2land of transaction cost of $70k for ACCUs are ridiculous. They made no attempt to say what is a typical transaction cost other than a comment, and the spokesperson (identified as NC) said “I have no idea where they sourced those”. Curiously NC goes on to say: “The Clean Energy Regulator register shows only a few projects from farmers and only 1 I believe has done a transaction. 
I doubt very much that every methodology needs $1 million for development as well. Too many variables to generalize”.

Co2Land org agrees that too many variables are involved, and then notes two other people advocating for the CFI saying: “None of the methodologies applicable to general farming, that we have examined so far, appear to have net positive financial benefits. Some can lead to substantial unknown liabilities in the future or limit land use in overly prescriptive ways. 

If I am wrong in this please correct me, and show me where it does work and I will be happy to spread the good news”. 

And, “I am a farmer (even if less active than I would like) and all the ones I know are not only not ready to adopt but are only following the program with peripheral interest until such times that they are satisfied something of genuine benefit to their own operation has become apparent. Many I have talked to see it as another under handed greenie grab for the land, some of the prescriptions on approved methodologies certainly seem lifted from this camp. 

Methodology development using all our substantial ‘in house’ skills and resources we estimate to still cost in excess of $100,000 with no guarantee of success “(source identified as PK). Then source LK – not related, said “Many unresolved issues remain, however moving ahead is better than waiting for the ‘perfect’ answer in my view. Just wish for political consistency at this end – the fact that State Coalitions have stripped climate change policies bare is of most concern to me.”

In all this there does seem to be agreement that for farmers, environmental planting does not pay a sufficient return to justify the investment on carbon alone. NC also said “It is also considered that the RMT tool (modeling tool) is deliberately using carbon sequestration estimates well below average because no direct sampling is required for audit”. Possibly this is an oversight, maybe not? In this approach they have taken an ultra conservative approach and the indications are these carbon estimates are so low it is not economical to do it – participate in the initiative that is!  So it remains only one of those methodologies remain with few takers. Even the CSIRO was showing how low these estimates are for the RMT. Reported is the government has taken a decision to use the lowest rates possible for landholders carbon sequestration from tree planting. A good source of this view is https://twitter.com/CountryCarbon/status/332655918254792706/photo/1 

They go on to say: ”In simple language the govt will only recognize extremely low carbon sequestration rates regardless of what happens on the land. It is not even the mid-point average. So that farmers would earn very few carbon offsets. Therefore they say, why bother? 

Most of the extension and outreach to date talks about tree planting or piggeries. (Piggeries are a different question). Most projects approved are all about landfill projects and they are town councils.” They also say: “It actually has less to do with government cut backs or Coalition vs Labor politics and more to do with implementation”. More than one providing input say it may be just a simple matter as readjusting the RMT tool.

CO2Land org intends to continue this thread of knowledge and asks: Unless you be fortunate enough to have a government program that is more generous behind you. 
Should we lobby government harder to be more encouraging for innovation in CFI?

Notwithstanding, CO2Land org wish everyone the best with their endeavours in the initiative. Applauded is the intention is well founded, the legislations well intended, and the potential well received – but something is missing! Maybe it is a case of it is too difficult to include farming in CFI and the outreach context for farmers is that the potential liabilities that could be incurred by landholders using some already approved methodologies are not properly explained and/or are dismissed as of a trivial nature. The great harm in this possibility is that the program reputation will be tainted – irrespective of its intention of fairness. Even recent Government decisions on department restructuring (especially the Department of the long name – too long to repeat) and budget constraints required by departments and the continued efficiency dividends to Treasury are not helpful to the pledge. What is hoped for by farming advocates and practitioners is a more direct show of continuous steps to perfection for the farming community and eliminating any direction that might be seen as a series of steps to dismantle or derail such a worthwhile cause from its name sake – the Carbon Farming Initiative.

Movements – a Viable CFI methodology

Under debate for some time has been whether reforestation, and afforestation should be part of the CFI. It was thought only conservation planting was viable as a measure under Natural Resource Management (NRM) rules. In more recent times part of discussion was a concern that political movements would be disruptive.

Two announcements made by the Australian Government on these matters by newsletter on 12 April 2013 may be helpful for the debate. Namely:

  1. First reforestation and afforestation project approved, and
  2. No changes to methodology development following changes to the Cabinet.

Posted on April 8, 2013 by co2land, Makers – a Viable CFI methodology the point was made it is not a simple process to develop CFI Methodology and program rules are a major factor in participating, and the recent Government announcements will address most of those points (but not the coalitions position).

On point 1: The Clean Energy Regulator under the Carbon Farming Initiative has announced the first project using the Carbon Credits (Carbon Farming Initiative) (Reforestation and Afforestation) Determination 2013. There are now 53 projects approved under the Carbon Farming Initiative. All projects declared eligible under the CFI Act are published on the Register of Offsets Projects.

On point 2: Work on the development and assessment of Carbon Farming Initiative methodologies undertaken by the Department of Climate Change and Energy Efficiency (DCCEE) will continue apace under new Ministerial Responsibilities announced recently by the Prime Minister.

DCCEE’s energy efficiency functions will be have been transferred into the Department of Resources, Energy and Tourism (DRET) while the remaining policy functions currently performed by DCCEE, including the CFI, will be have been transferred to the newly-named Department of Industry, Innovation, Climate Change, Science, Research and Tertiary Education (DIICCSRTE).

Former DCCEE staff working on the CFI and other land sector measures will move to DIICCSRTE and continue their work accordingly.

Whether participating in CFI or not is still very much a matter of it depends on the location and the carbon sequestration rates that would be possible for it to be viable.

If we start by avoiding the cost of participation discussion, one non-scientific way to help you decide is to ask: Did the area to be used have really large trees present in the past? If yes it could be very viable. It follows that nature will want to regenerate those areas into large carbon rich forests. In gathering your evidence you could include old local history photos of the areas showing the large density of trees on them. In choosing a more scientific way: Gather the Lot & DP numbers and/or GPS points, and the CFI environmental tools should be useful to tell the landholder the likely sequestration rates. However, as we said in the former Co2Land org post the uncontrollable factor in proving if it is viable is the price of carbon. Notice it was not said the ‘carbon price’ as that is an artificial price set for the transition period.

If we focus on the cost of developing a methodology for inclusion into the CFI program register the major factor is cost in terms of the capability to enter into initiative. You may find innovation is required for a “creative” way to recover the cost of developing a methodology. Or is it? It follows that once published on the climate change website it becomes public information. However, it will still take some effort and there will be a need to lobby Government to allow the methodology to be used by another entity. In equity you should anticipate any agreement might require a royalty payment to the original developer.

If you can overcome the matter of cost, it becomes a question of what CFI environmental tools you refer to for the CFI Mapping and Reforestation Modeling tools. Also the methodology costs will depend on the level of verification and any additional research required, in many cases there are sufficient prior studies (such as survival & growth rates in the targeted region) and accepted calculation methods to do this could be found from a literature search, or you could talk to others trying to develop the same thing. It is understood the web page: http://www.greeningaustralia.org.au/our-projects/land/bio4 will promote further research on this matter.

One suggested project to study as a background search is the NSW Blacktown Council and their Regenesis Project. That project has lessons that can be of benefit to be aware of in your deliberations. One example lesson is they had a significant grant to develop their concepts and actually generated the first carbon credits only to have a later policy decision rule projects within urban boundaries to be ineligible. Notwithstanding, the core of their work is valid. You can view the Regenesis projects on the website – www.australiancarbontraders.com and then click on the Regenesis link on the front page.

So frustration will continue and innovation continues to be encouraged – for those eligible – and that suggests you need friends to be recognized as able to be innovative. At cross purposes you might argue!  An anonymous friend, name provided but withheld, said “in an entirely different forum some years ago we flagged this as a problem for the then announced Innovation Strategy. The senior public servant delivering the local launch responded: We can’t have people solving problems in unique ways that we can’t predict, you wouldn’t know where would it all end up!

It would seem the core problem with the current grant model is that it is primarily a funding model for the usual suspects, as practiced the truly (open) competitive component is only a small % of the funding available.

We need a better approach that covers needs of Universities and commonwealth and state research agencies separately.”

Then we hear funding has no longer been provided for strategic innovation!