Senate Rural and Regional Affairs and Transport Legislation Committee, , 8:22:26 to 8:32:21
Examination of corporate land acquisition for carbon credits and the potential for regional limits to prevent excessive land-use change and community disruption.
Topics: Carbon farming, Land management
Speakers: Speaker 14, Speaker 8, Speaker 24, Speaker 5
spoke about earlier? >> So, we've got a few plans to to look at enhancing the model. um we don't have direct plans on the second round impacts and maybe it's worth you know putting a bit more detail on that that measure that we've used because it's a bit of a it's not not as clear as saying that it's uh in terms of the LGA impacts as the impact on on agricultural production
is >> yeah so so yeah just to clarify a couple things I've got >> the uh LGA it's it's streaky bay >> uh so it was one of the that's the one above 10% >> this particular measure yeah it's broader than us the impact on agricultural production. It's the impact on agricultural production multiplied by a proxy of effectively how important is agriculture for that region. So if agricultural impact is large but agriculture is only small part of that community, it gets weighted down because the data on that is not great at the regional level. We use uh the regional employment data and agriculture and value ad for for different um sectors to come up with that proxy. So it's a it's trying to get at how how big is that actual first order impact for that community taking account of both the agricultural impact and how important a
is for that region. Yeah. So, so in some ways it's trying to shed some light on your question about the second order impacts and so forth with acknowledging that there's a real pority in data, you know, to to do any of those kind of
>> assessments. Well, >> there have been um recently I've seen or I've um uh heard from people quite serious concerns that from uh large corporations buying up agricultural land uh to meet uh either government imposed uh safeguard mechanism credits and or the cor corporation's own net zero objectives. Does does this analysis capture those those activities? So we've
very much nested it in landholder behavior and participating in markets. And one of the things you would have noticed at the end we do make some comments around the way the market functions will be really important and so you know having this ability for land holders to combine you know carbon into their enterprise and so forth um is is really key. So and we've also looked at a fairly I guess you know just assumption driven you know demand path for carbon where it starts at very low and then just goes linenly to hit that 119 million million tons. So we don't have you know the dynamics that might be created through you know things like you talk about in behavior of of large corporations but if the market is designed and can function so we can clear and and have a sequestration market that allows this clear participation we think that there's there's more of an opportunity. So there is a a view around where we think the I guess that will happen to help deliver these kind of outcomes and obviously it's a bit of a projection as well based on the treasury modeling projection um and what might actually happen in reality as the car as the economy goes to net zero and different technologies come and the actual demand for sequestration that will also make a big difference to to what happens across and that pathway and and those type of
questions you've asked. But but those market behaviors by the big corporates >> potentially will be a big driver. We've seen it before. >> Excellent. >> Now, some people might have different perspectives on which way that goes, but if you go back to the days of MIS where >> um money was looking for a place to plant a tree and whether it was the right place to plant a tree or not was not necessarily >> properly assessed >> and you've um I mean different different circumstance now because you you're looking for a static sequestration rather than something that could be moved later, which was the problem. >> But you'll also have areas within this that are more productive in terms of re of sequestration as well. And so your example of streaky bay I would have thought is is a much drier environment. Therefore, would be a lower >> Yeah. uptake of sequestration compared to a plus 600 mm rainfall area which
>> that's right the model is is trying to find that sweet spot between so it takes account of what are the what's the foregone agricultural uh revenue but also what carbon uh revenue do I get so it's trying to balance that and trying to figure out what's the most economic thing for me to do in this particular
cell >> yeah so so you've used the critical word which is the economics of it >> and um I was going to ask you off the back of that the comment around regional limits which or farm limits. So you've asked the question whether a 20% regional limit or a 20% farm farm limit >> and this is one of the problems that >> actually does come as part of this because you get a significant land use change and a community base change and you change the structure of communities and society in those regions which is what drives a whole cycle of discontent. I mean >> we've seen it in those communities previously. So in in terms of those areas where you've got a higher productivity and this does go to Minister McCarthy's point to a certain extent about what we support being done with respect to a property and how much >> but but those cultural changes and those changes to communities that occur as a part of this can be very disruptive. Um, how how do you you've come down on the side of a regional limit in your calculations more so than a a farm limit, but in some circumstances it's probably
>> more appropriate there's a >> yes. So we I guess the way that we frame
the analysis >> these are judgment calls policy that has to be made
>> that that's exactly right. So we we've we've put those scenarios in there to illustrate, you know, the costs and benefits of doing different things really. Um, and that 20% regional limit has quite a limited impact on on the overall results. And so we're weighing off whether or not you've got a a lower pathway to to net zero, which has benefits for the agriculture sector as well versus the other. Um and and really the the purpose of that is just to highlight that there are costs and benefits and if you go too far and and there's significant amount of restrictions then there are going to be greater unintended impacts from from that. Um but as you say
>> unintended impacts when governments interfere in the markets anyway. So I mean it's just a a feature of life and they're never what's anticipated or completely what's anticipated. >> Um sorry. So, so just in in in those regional numbers there are there there would be some regions there are some regions where uh you could regenerate up to 20% of agricultural land with minimal or zero impact on >> on grazing area. In fact, I've been on farms seen farms where that happens. has has that >> been factored into and worked into these calculations and how does that work?
>> Yeah, it has. And so that's when we've got those figures about you know that 59% is occurring where you know there's kind of this coexistence on with agriculture occurring and so we've looked at you know methods that you know there's an exclusion period and then after which you as you exactly say you reintroduce grazing and so in that case those land holders and those areas will benefit from the carbon revenue but there will be very limited to to no impact on agricultural output from that. So we've factored those in based on the design I guess of the the scan the methods I can that well or kind of methods that you know we we've observed um to to capture that.
>> Yeah. And it's based on the relative returns uh from the the data we got from our surveys and elsewhere uh about what are the relative returns from cattle versus sheep versus carbon versus cropping versus whatever. So it takes account of that underlying economics and
profitability. So, so does any of this also incorporate the possibility for for timber
production? >> Not yet. Not yet. So, we haven't got the plantation method in the model yet, but that's something we're working on at the moment. Uh we we've just got some uh underlying sequestration data and some other data to do with the sawmill market and other things that we're trying to update >> to then put that into the model. So that's that's one of the things we're
working on at the moment >> because because we're talking about >> um facilitating farmers making >> a return and timber production as a part of this process to continue the carbon sequestering sequestration cycle >> is a definite part of what that could
be. >> Yeah, we we we agree and that's number one on our next priority. Um there's also we haven't looked at saw carbon which also has that greater kind of co coat. So we will look to kind of add
these
>> 50% of a tree is underground. >> Yeah. Um and so one of the things I think we we wanted to do initially was to respond to a the there were you know acknowledgement that there was going to be further work out of the net zero modeling and and to particularly be able to answer the questions that this committee were placing you know putting to us around you know what would that mean and so forth. Um I think there's great scope to then think more broadly about the question that's been asked um and the methods and so forth and we can get into that as we we go through time but we see this you know the next opportunity and the next kind of focus for us will be plantation method. So is