Environmental Project risk – 2015, no option to do nothing

There is a rise of project risk if you ignore sustainable practices. Banks are introducing the need to consider that you be aware of that responsibility. 2015 is shaping itself as the review year of regulatory response and licenses to assign risk. It follows that we are on track to the need to focus on compliance action verses the risk of no action being greater. The evidence is you are endangered as a species or at best targeted by Australian jurisdictions if you ignore what your facility or business might do to reduce the risk. For instance environmental licensing regimes are being reworked so that compliance activity can be aligned with actual facility risks. These checked activities take into account the operator history and what is a nearby sensitive environment.

You may not be aware of AELERT – their website says:“We are a collective of environmental regulators from all levels of government across Australia and New Zealand.  We create a platform for environmental regulators to connect and collaborate in their work.

Member officers connect through AELERT to exchange resources, knowledge and experience about environmental regulatory practice and work together to drive continuous improvement and new approaches to the ‘regulatory craft’.”

What is growing from this collaboration is NSW will launch its risk-based licensing scheme on July 1, 2015, and Victoria’s three-year roll-out of its Licensed Operator Risk Assessment scheme will be completed in 2015, while Queensland is also well into a process of risk-profiling the sites it regulates.

The other issue is that compliance to regulatory needs has another element in 2015: It is called ‘social licence’ and is likely to be the dominant phase of 2015. Our opening paragraph referred to banks, and this form of license, and we quote:

“And it’s no good having the official go-ahead to build a coal port or mine if activists have made sure that no financial institution will back it (see related article).

Many environmental groups have become so dismayed at what they perceive to be a large-scale wind-back of environmental legislation that they no longer consider official processes capable of delivering a fair result. Their concerns have been magnified by the de-funding of public interest environmental lawyers (see related article), new restrictions in Queensland on rights to appeal decisions or even be notified about projects (see related article), and Tasmania’s new law cracking down on rights to protest (see related article).

For many groups, that means strategic community campaigning – ranging from blockades to shareholder activism – is now often seen as the best option.”

To Co2land org these license events are the equivalent to the actions of the political pendulum and as history displays no matter what the swing the middle is where it will travel.

The pendulum for carbon pricing was set in 2014 with the repeal of the Carbon Tax, and the reliance on the Emission Reduction Fund to take the battle over the policies of what Australia should use to reduce emissions. To again to use out quoted source:

“But 2015 will mostly be about how deeply the nation should cut them. In Australia, one legacy of the 2014 struggle over carbon policy is that we will have two major reviews of suitable targets – one led by Prime Minister and Cabinet (see related article) and another by the Climate Change Authority (see related article).

Both will be important. Although the PMC review will represent Australia’s official position, other governments are likely to judge the Government harshly if its proposals fall far short of what the Climate Change Authority suggests. Meanwhile, businesses themselves will come under increasing pressure to set corporate emissions reduction targets that are based on climate science.

There is now an international campaign – with high-profile backers including CDP, the World Resources Institute and WWF – urging companies to do so.”

Our current Government has introduced an emission reduction scheme – albeit with a $0 baseline and it is called Direct Action Plan. The Senate referred to the Environment and Communications References Committee for inquiry and report on the matter on 10 December 2013. All good to go now and you expect no problems!

Then SAI GLOBAL, 2 February 2015 reports in the Carbon + Environment Daily that in the climate change arena, “nervousness about the capacity of Direct Action to deliver emission cuts and about the Federal Government’s commitment to renewable energy will lead to growing pressure for states to pick up the perceived slack.

The actions of the NSW, ACT and South Australian governments show they already consider they have a major role to play in helping their citizens deal with climate change, and the newly-elected Andrews Labor Government in Victoria has indicated it shares this view.

As well, both NSW and Victoria are reviewing coastal legislation in 2015, a task that will inevitably have a strong focus on climate change adaptation.”

Co2land org is taken back to the Howard years of government and recalls the shift from Greenhouse Gas Abatement Actions to Climate Change Adaptation strategies. So if this all sounds back to the future it really only means the makeup of our current government is recycling its policies as business as usual. A rebadge of funding here and there of course. If you think this is cynical it is not meant to be it is a concern that we are seeing the continuing rise of risk and that even the most strident of climate change deniers are acknowledging risk is risk, and exposure to risk requires assessment to minimize the fallout. That is a fact it is not a political position and it is common to survival.

An excellent example of taking risk seriously is Cotton Australia where in their periodical Cotton Matters, 28 January 2015 they write:

“The Australian cotton industry supports programs to reduce emissions through improving efficiencies and a first assessment indicates the draft method is technically sound. However, Cotton Australia considers that at this stage it could be challenging to garner involvement due to a potentially inadequate benefit:cost. Implementing a project involves administrative obligations and costs (e.g. for independent audits) as well as the need to manage financial risk.

Nevertheless, businesses in the carbon market are working to develop smarter services and products to help manage complexity, risk and reduce project costs. A sufficient price for carbon would help overcome these.

For these reasons, the researchers, economists and technical specialists at CottonInfo eagerly await the results of the first Emissions Reduction Fund reverse auction the coming months of this year to firm up the likely carbon price and revenue potential for future projects.”

From this Co2Land org finds the price of carbon will prevail, and the mid point of the pendulum will not be $0. There will be ‘degrees’ of difference that will set the price and price has the capacity to reduce greenhouse gas emissions adequately and effectively.

One risk for the Emissions Reduction Fund (ERF) is as the federal government’s centrepiece for emissions reduction, and it relying on being used to purchase lowest cost abatement, and participation in the ERF is voluntary and open to everyone is that it may be window dressing.  The key is the reference of being ‘open to everyone’. The issue is that interested parties must establish a project, which must follow the rules outlined in a ‘method’. What is not well know is that a minimum block of emissions reduction from the method exists and set by an arbitrary decision process. In short individuals may not particulate without complexity. Complexity by virtue of the need to be fully aware, upfront behaviour of how the detail and requirements in undertaking a project: the risks, costs as well as the benefits are presented. That said the other aspect is the market is immature and finding who to trust as having your interests as a ’license’ is a risk.

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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!

ERF funding – is it a play on words.

The Government is confident it will stem the march of climate change with its $2.55 billion Emissions Reduction Fund and its Green Army of tree-planting enthusiasts. So confident, in fact, that it has commissioned $10 million for a new icebreaker in Antarctica.

At least one problem is solved – broken ice will be served with drinks. It sort of makes sense does it not?

But, where is the money, it was not mentioned at all in the budget speech. Even more interesting is submissions on the draft legislation for the ERF are due to close 23rd May 2014. So how will it be funded if it is to start 1 July 2014? As kids often say, Daddy it will just wish-t-appear – how mature of them to understand the minds of our pollies!

In her coverage of the Federal budget Annabel Crabb makes another point on health – why strip away the ability to service our health in order to fund health research. A similar parody could be said a tipping point is fast approaching that mankind is under threat for its existence – anthropogenic influences of climate change will outpace the ability to research a medical solution. Doesn’t make sense except give the opportunity for a fiddle! On reflection Annabel said something about twiddle – could that be what she meant?

Perhaps the last word should go to the Prime Minister, speaking on August 22, 2011:

“Nothing could be more calculated to bring our democracy into disrepute and alienate the citizenry of Australia from their government than if governments were to establish by precedent that they could say one thing before an election, and do the other afterwards.”

Source – Annabel Crabb is the ABC’s chief online political writer – www.abc.net.au .

Co2land org now asks about the $20 billion to be spent on health research, is that a play on words – a weasel? Another worry is as an Australian entity I am at a disadvantage at influencing the wealth of this country, and it is suggested we should register as an offshore entity and get preferential treatment in Australia? It is not a flippant comment: For example, register in Singapore as a $1 company ($500 setup cost), pass their Directorship rule test and there you go! You can sell back your Australian ideas as a new desirable off-shore package and thumb your nose on paying the correct tax. Albeit the UK now says money shifting will be discouraged via London markets. But I guess that only affects the likes of tech suppliers, mining etc. As they tend to use those markets.

What has this got to do with sustainable futures? Nothing. Even the economics make no sense in terms of society – but maybe a small community might do well from it!

Co2Land org has a theory it reflects in the term ‘hubris’. Hubris: The Inside Story of Spin, Scandal, and the Selling of the Iraq War (9780307346827): Michael Isikoff, David Corn: Books

www.amazon.com/Hubris-Inside-Story-Scandal-Selling/dp/030734682X.

The theory is we are being spun the same text book sell on something of an ideal as opposed to a solution. It is even something tried and failed in other political arenas of the world. As in Lewis Carroll’s Alice in Wonderland – Alice in wonderland grew a mile high after eating one mushroom. She was then subject to rule 42 which says that anyone taller than a mile must leave the court immediately. That thought line then mandates that if you think it is a joke you will be subject to rule 13. And, do not dare to ask what is rule 13. If you paraphrase this you just might understand Joe the Treasurer is a Lewis Carroll fan.

Maybe – yes, we are a fan of the real Malcolm Turnbull. He might just turn bull into hope. For those that did not know, he was a former Environment Minister in the Howard Government and is credited with strongly supporting sustainable solutions.