With the draft Garnaut Review report to be released on Friday, there’s lots of fevered speculation about what it might contain, and what it might mean. The Australian managed a big beat-up on nuclear power a few days ago. Bob Carr’s views on nuclear power (however sympathetic I am to them) have been public pretty much since he left office. Much more important right now – given Labor policy on nuclear power won’t change for at least the next term – is the question of what the emissions trading will and won’t cover.
The general view – and the one put in Garnaut’s discussion papers – is that we should generally try and cover as much of our total emissions under the scheme, as quickly as we can. But two of the Australian plogosphere’s favourite econobloggers – Joshua Gans and John Quiggin – have made a slightly contrary case in a submission to Garnaut (which you can download from here).
A section of their report called “The Need For Learning” makes the fair sensible point that we need to learn as much as possible about how emissions trading will work, as soon as possible. So they argue that the scheme should be introduced quickly. However, they argue that the learning issue actually suggests that we initially limit the scope of the emissions trading scheme to the emissions that are easiest to measure and trade – and, as a bonus, cleaning them up will have other nice side effects. The two they identify are electricity generation and transport emissions.
These are by far the biggest emitters in any case, constituting well over half of our emissions, so the difference in practice to “as broad as possible as early as possible” isn’t as great as you might think. And by avoiding some of the more fuzzy areas, it reduces the risk of the carbon market going haywire. But, at least to my understanding, it also runs the risk of missing some of the cheapest and fastest emissions reduction possibilities, such as revegetation and increasing soil carbon.
This kind of thing may be arcane, but the devil of these things – and the difference between a scheme that works, and one that’s abandoned – is in the detail. Let’s see what Friday brings!
I don’t follow the logic – if ‘learning’ how to regulate the scheme is the objective, surely that’s the case for including as much as possible as quickly as possible and having a series of rolling ‘experimental’ phases a la the EU ETS.
I’m not completely clued up on emissions trading systems, but one option might be to get the procedures in place in a pain-free manner and then gradually apply the screws, as I understand you could in an annual or time-limited licence system or a cap and trade approach.
But the partial approach will have problems. Consider primary producers who have their cost inputs raised but can get no benefit from tree planting or using pastures which can secure very large amounts of carbon in the soil.
At the risk of being accused of pedantry, according to Australia’s 2006 Greenhouse Inventory, electricity generation and transport constitute 48% of Australia’s emissions. 198 Mt CO2-e are for electricity generation and 79.8 Mt CO2-e are for transport emissions. There is also 89 Mt Co2-e for other forms of ’stationary energy’.
I agree with your general point however, if we only covered half the economy for a few years and then covered all of the economy then over a ten year period we would still cover most of the economy. The issue that we should learn as much as possible about how emissions trading will work, as soon as possible is an important one. I see the issue where this becomes incredibly important is how we treat emissions from agriculture, and land use, land use change, and forestry.
While it is relatively easy to measure the carbon sequestered from something like a monoculture tree plantation, it is much harder to measure the carbon sequestered from restoring an ecosystem. Reforestation and avoided deforestation can have huge cobenefits in terms of reducing habitat destruction which is an important driver of extinction. We need to learn as fast as possible how much carbon is sequestered through activities such biodiversity plantings and reducing grazing from cattle.
There is also the issue of emissions from logging and burning old growth native forests. At present only land that is converted from a ‘kyoto forest’ to land which is not a ‘kyoto forest’ or vice versa is included, so if you log an old growth forest, which stores huge amounts of carbon in both its soil and biomass, and then burn it, then because a forest will grow back, the emissions from logging and burning are not included in our greenhouse gas accounts. We need to learn as quickly as possible how to measure the GHG emissions from all kinds of emissions.
We also need to learn as quickly as possible how much emissions are sequestered through sustainable land use practices that sequester carbon. We should also consider the possibility that there will always be significant uncertainties about how much will be sequestered. The best way to learn is by doing, so the question becomes how do we fund a whole lot of different environmentally appropriate activities that sequester carbon that we can learn from? One possibility is to fund them using money raised from auctioning permits(pdf); another approach is to introduce a carbon tax for uncertain sectors like LULUCF and agriculture – with this tax being negative for activities that sequester carbon. In either case we avoid the risk that uncertainties in measurement jeopardise the rest of the emissions trading scheme.
In the text of his recent lecture at ANU, Garnaut hinted that because of rising fossil fuel prices, Australia may meets its Kyoto commitments anyway, and therefore we should start with a low carbon tax before introducing a full fledged ETS.
What distresses me about this whole emissions trading…. carbon tax is the substantial lack of vision on what the end game is. “We are aiming to reduce our carbon emissions!”, does not answer the obvious question of what is offered in place of carbon consumption. “renewable energy of course!!” Oh, well exactly what is the vision of what that entails? What is the programme of renewable energy implemetation? What types and by what time frame? “Trust us we know what we are doing!!!” does not hack it with me. So far all I can hear is the cockroach like frantic scratching coming from a closed cabinet.
Informed, thoughtful comments.
I get the impression that the Govt is depending heavily on the ETS to wind back our emissions. Is there anyone there who’s got a clue? I suspect that the ministerial arrangements are not working all that well. Marn has collared everything that has to do with industry and resources. Penny has overall policy overview. Peter has the residual bits and pieces.
BTW there was an article worth reading Renee Viellaris in the Courier Mail today.
Agriculture is a bigger emitter than transport. (And given that livestock is the biggest part of that and, as I understand it, methane has a more immediate climate forcing effect than is reflected in the calculating of CO2 equivalance, one could argue it has an even bigger impact again.)
Having said that, finding a way to measure and cost emissions from agriculture is much more difficult, so the main point of your post still holds – get a better idea of how carbon trading might work before including some of the trickier components.
Whoops. Sorry for my mistake. Must have been thinking of Victoria with its brown coal.
Andrew B,
I heard a figure the other day that transport contributes 14% of CO2 emissions in Aust. That’s a significant share. Agriculture is a real conundrum. You’re right about methane (does it amount to about 25 TIMES more greenhouse-effect, gram for gram, than CO2?). Why isn’t the Press discussing this? In Victoria, dairy researchers are trying to
i) quantify methane emissions
ii) see whether changing cow feed, or finding new varieties (genetically distinct) of cow might reduce methane emissions
Early days, but an urgent problem. We may have to drastically reduce our dairy industry?? Farmers are scared witless about it. But as Warren Truss pointed out recently, it’s foolish to propose to tax a farmer by a particular $ amount, if the UNCERTAINTIES in the (scientific, chemical, biochemical) estimates are still huge.
cheers
Ambigulous, the notion of CO2 equivalence takes account of the greater greenhouse potential of methane. It’s the CO2 equivalent greenhouse impact it has during it’s lifetime at point of release. Nevertheless, there is a question as to how this is defined. I think Andrew might be right, but I’m not sure the difference is of any great significance.
On agriculture, we produce GHGs to some extent so that people in other countries can be fed. In an entirely just international system in the future there should be some adjustment to our allowable quota to take account of that. But we are so far over that it’s clear we should cut back as much as possible and worry about that sort of detail later. Apart from vegetarianism though it’s a fairly intractable problem.
Peter Wood, you say:
While I agree with you in principle, there are a few points to make about forestry and carbon.
1. We really don’t know enough about carbon flows in temperate eucalypt forests, there is space for a lot more research. The studies that have been done are contradictory. The Mackey et al study that the Wilderness Society and others like to quote about loss of carbon from ‘old growth’ (by which they only mean senescent tall wet eucalypt forests) is only one data point, and is seriously flawed in a number of ways. For example, methane emissions aren’t counted, nor are natural fire cycles considered, and the carbon sequestered in removed products is not accounted for. Confident statements made by conservation groups that logging = emissions simply can’t be supported at this point in time.
2. It’s clear that even (tall wet eucalyptus) old growth forest logging is eventually carbon positive – though probably over too long a time cycle, over 100 years. Logging in regrowth forests is carbon positive over much shorter time cycles. Most logging is conducted in regrowth forests, and this will inevitably be an increased focus, due to social license and a deep misunderstanding about the impact forestry.
3. This doesn’t include life cycle analysis and systems – if timber is not harvested then houses will be built from concrete and/or steel, or potentially tropical imports.
Kyoto accounting totally excludes permanent native forests, anything that was forested before 1990. For simplicity’s sake at this point in time that’s probably a good thing.
When far far more data is able to be captured and the full systems approach considered, I am extremely confident that the domestic timber industry (both plantation and native) will get a major boost from carbon trading, being essentially neutral or slightly positive, particularly compared to alternative industries. The industry lobby groups such as NAFI and A3P both reckon an ETS has serious upside, but I’m thinking they’re motivated by potential rent-seeking opportunities rather than the current good science (which is too lacking).
The real risk and issue is mega-fires, which CSIRO are telling us are not going to go away. But these fires burn areas that subsequently (eventually) fully regenerate, and are supposedly natural events, so to what extent should they be accounted for in each year?
Short version – I don’t think LULUCF should be in the first round of an ETS, because there are too many opportunities for rorts, but it probably will be.
Energy and Transport and possible waste will be included. This is a substantial percentage of our emissions and more broad than the EU system (and similar to the NZ).
Ag is simply too hard to measure at the moment and would place a massive burden on farmers and the industry. Whereas its much easier to place a carbon price on a power station and a petro company (essentially at same time as excise is applied.)
Don’t forget as well that they’ll get hit through transport and energy costs anyway (dairy equipment say).
Forestry will again be hard to measure and probably not included at start, but as it has offsets will be included indirectly. ie. Generators can buy offset permits created by forestry.
The Cwth will likely set caps/trajectories in a transition period out to 2012 in line with Kyoto. ie. 108% of 1990. in which case as we are likely to hit that anyway, the carbon price will stay lowish ($10 or so) and the impact will be relatively minimal. its once the carbon price ramps up post 2012 that we get serious. and that will depend on how committed Rudd and co are, and how the international negotiations proceed.
with regards investing in new technology and alternatives. the idea is that the ETS promotes the least cost response to the problem. so those with means to reduce their emissions at a cost lower than the permit price will be encouraged to do so.
so if you’re TRU Energy and you’re looking at building a coal or renewable power station. then you’d look at forward prices for energy with projected carbon prices and decide that renewable energy is looking rather good and i can make a profit. hence that’s where the money comes from.
Govt of course still has a role but the market is also expected to pick up a lot of it. fundamentally though, the ability for the ETS to be effective will be based on what the eventual caps and trajectories are and what it translates into in terms of a carbon price. if we go to soft we get a low price and no investment. if we go too hard we set the bar too high and the investment might not be able to react in time and the economy gets a little slowdown.
m
On the matter of measuring carbon sequestration from biodiversity plantings – its in fact easier than monoculture species – don’t forget that monocultures are generally harvested – there’s a double calculation of the emission and the sequestration and measuring the overall base of sequestration from an ever changing pool. The DCC has NCAS NCAT devised for the purpose of biodiversity plantings. Soils, fert application, previous land use, rainfall etc will vary as much for monocultures as for biodiversity. Remember we measure biomass over a hectare not the individual trees. Ag emissions can be simple also mostly dependant on how baselines are set up. See the emissions from agriculture publication undertaken by Landcare Australia and the then AGO for a reasonable guide. http://www.carbonsmart.com.au
I was fascinated by the effort CO2 Australia went to to verify their sequestration potential of WA Mallees in order to become ‘Greenhouse Friendly’ certified.
wilful,
I haven’t been able to find the Mackey et al study yet so some of these comments are based on their submission to the Garnaut review, and a Wilderness Society submission to the National Greenhouse and Energy Reporting System review that refers to the Mackey study. With respect to the carbon sequestered in harvested forest products, 80-90% of Australian forests logged end up as woodchips of pulplogs, and over 90% of Tasmania’s forests harvested end up as woodchips. Most of these woodchips end up as paper products where the carbon has a very short lifetime. Must of the carbon sequestered in an old growth forest is in the soil as well as the biomass, and most of this will be lost in the post harvesting management fire. So the amount of carbon sequestered in forest products could be up to an order of magnitude less than than the amount of carbon harvested, which will not include the carbon stored in the soil and forest floor. Conversely, Berry and Mackey estimate that the 11.3 million hectares of eucalypt forest that are not protected have an average C sequestration potential of 622 tonnes C per hectare. That amounts to 7 Gt C, or 26.5 Gt CO2.
I agree that the use of plantations for logging can be a carbon sink, especially if most of the wood is used for long lived forest products. Australia has huge resources of both softwood and hardwood plantations, so there is no point in logging native forests anymore. We can use the plantation timber as an alternative to steel, concrete, and imported tropical timbers. Unlike emissions from forest logging, the emissions from steel and concrete production are measured elsewhere. We do not want to include these emissions when estimating emissions from logging forests because that will lead to double counting!
Under an accurate carbon accounting system, plantation forestry will get a boost (except for new plantations on what was previously native forest), but logging native forests will make no sense at all. The value of a ton of woodchips is much less than the likely value of the carbon that they contain.
Quite incorrect. The value of a ton of woodchips is $75 and the equivalent value of the carbon (CO2e) is around $20 in the ton (green)of woodchips.
Please consider the elements required to create a trade and the standards for accreditation – this is what underpins the value ; not simply the fact that carbon is sequestered. Have a look at trading volumes and prices for plantation (harvest) and biodiversity (non-harvest) credits – high volume low value for the former and high value low volume for the latter.
Under current accreditation standards the moment a forest is cleared then it is counted as a depletion event.
Peter, carbon accounting for short duration products suggests 2-3 year lifespan. This probably is deeply conservative in many cases, Glenn Kile and others have demonstrated 50 years plus persistence in anaerobic landfills. And of course, pulp is an internationally traded, energy intensive commodity. Indonesia is a big source of fibre for Australian consumption. I wont quibble about the 80 to 90% figure, reality is typically less than that. But of course, that excludes the non-removed waste that is typically burnt on coupe.
The management fire for all intents and purposes replicates the natural fire, that WILL happen, as history shows. If all old growth was protected from harvesting, the additional carbon saved across the landscape in natural fire cycles would be pretty trivial, even if you don’t account for the long and short duration carbon removed in harvesting.
Also, to restate, ‘old growth’ means a lot more than the one forest type that Mackey et al were looking at. To generalise across forest types is beyond irresponsible.
I’m certainly not suggesting double-counting in an accountancy sense between steel, concrete and timber. A systems view does however require recollection of the alternatives, so perverse incentives aren’t generated.
It is simply and entirely untrue that plantation timbers can replace native timbers any time soon. They do not create the same products. And the other question is why would we? Forestry causes basically no harm compared to every other broadscale land use we contemplate in Australia. State forests are as healthy and providing as many biodiversity opportunities in the landscape as their equivalent National Parks (with the proviso that the most biodiverse areas and critical habitats have been put into Parks). The State of the Environment Report didn’t list forestry as any sort of an issue, unlike farming in all it’s guises.
Matthew,
Thankyou for pointing out the price of woodchips, I had misread a statement to the ASX from Gunns about the woodchip price when I made the statement that “the value of a ton of woodchips is much less than the likely value of the carbon that they contain.” Readreading this statement of mine I realise that it is unacceptably vague.
Unfortunately the carbon contained in a tonne of woodchips is different to the amount converted into CO2 to produce a tonne of woodchips because of the carbon stored in the soil and forest floor. I couldn’t find a figure for the percentage of carbon in green woodchips, do you have a figure?.
The value of the carbon (CO2-e) depends on either a carbon price (be that in a hypothetical Australian ETS, GGAS, the EU ETS or CDM CERs), or the social cost of carbon – which is likely to be much higher, especially if Hansen is right about carbon cycle feedbacks and the likelihood of melting ice sheets.
While accreditation standard for offsets count a forest being cleared as a depletion event, this is not counted in Australia’s emissions when accounting for its Kyoto target (unless the forest is converted to grazeland or grassland). It seems that current accreditation standards are much more advanced than Kyoto accounting. Australia had the option of including forest management under Article 3.4 of the Kyoto protocol, but decided not to.
I hope you are right about the carbon in biodiversity plantings being easier to measure than a monoculture tree plantation. Hopefully this will mean that these activities can be included in an ETS. Ultimately I think we need to find ways of including biodiversity values in policies and activities related to land use change.
I can give you some approximate figures, will that help?
Woodchips are typically about ~800 kg to the m3. About 25% water. About 95% of the rest is long chain carbohydratey things (C, O, H). All up it’s a little bit less than half a tonne of carbon per m3 of timber.
So $75 a tonne is a reasonable approximation of market prices. That contains, maybe $10 – $20 of carbon, depending on price?
As previously noted, if we tax it here, it just gets imported straight-away from Indonesia.
Thanks Peter, spot on – including biodiversity values in carbon.
For the wood calc and carbon I use the following:
half of the weight of green wood is water
half of the dry weight is carbon – ie 25% of the total
multiply by 3.67 for the conversion to CO2e and you are above 90% of the original weight so, give or take a 10% error, the weight of the wood in tons is about the same as the C02e tonnage. Weigh a ‘fresh’ tree and whatever it is in tons then thats about the CO2e tonnage. Pretty rough but about right as a rule of thumb. Naturally we have more sophisticated methods for Landcare’s approved calculation methods. Appreciate this blog bringing the carbon and biodiversity vs monocultures into light. Rowan Reid has written a good piece today in the HWT Weekly Times. Although I will be writing a response for the next issue.
Hi
The point I try to make in the Weekly Times piece is that selling carbon credits from forestry necessarily involves the sale of property rights – in this case what is being sold is the future use of the land. I appreciate that projects like CarbonSMART are targeting areas that require revegetation for conservation values. However, it seems clear to me that there is now an industry that has been built on converting whole farms to forests using investor funds. They will obviously be involved in developing carbon sink forests and selling the credits to the large polluters (mostly international companies). If we allow this as part of the ETS we will be essentially selling off the future options for using Australian farmland for both conservation and profit. As soon as the trees are planted and the credits sold the capital value of the land will fall (because the next buyer is tied to the contract). Hence my comment that carbon forests are akin to land degradation.
I suggest the best option is for governments to not allow carbon credits from planting ‘Kyoto forests’, tax fossil fuel at its source and to use some of the funds to support strategic revegetation for multiple values. Starting with supporting the regional CMAs to deliver on their regional plans, supporting R&D on integrated tree growing on farms and reducing AG emissions. Then, use market based mechanisms to ‘buy’ local conservation values like Biodiversity and Water Quality.
The result would mean more money for conservation works (not less) and fewer ’suits’ taking their share. The trees still lock up carbon and can be included in the national audit without impacting on individual farm values. Of course I have no problem with voluntary tree planting programs where money is raised to plant trees without the buyer receiving tradable credits.
Rowan, unfortunately there is rather a large amount of Australia that could do with some trees on it. Whether or not they will grow is another matter. However, there is plenty of degraded cropland that would have much higher biodiversity values if converted to mallee woodland.
Incorrect. Houses are entirely made out of pine and composites these days. Hardwood is used for appearance flooring (e.g. Vic Ash, Jarrah etc). This accounts for about 2% of the logs taken from native forests.
The only reason that they are still flogging hardwood is that the industry is subsided by free access to native forests. Royalties are nominal. Its a gift to them, but a theft from the rest of us who lose our forests.
Here is a Google book with information from a Mackey study: [link]
More research is coming out on green carbon that will further prove that logging is a serious negative for GHG – around 10% of Australia’s emissions. Stopping it is one of the easiest things we can do to cut carbon emissions.