Senate Rural and Regional Affairs and Transport Legislation Committee, , 8:32:21 to 8:46:06
Discussion on the modeled carbon price of $106 per ton and the lack of a formal cap on land conversion under the government's long-term net zero projections.
Topics: Emissions reduction, Energy prices
Speakers: Speaker 8, Speaker 14, Speaker 5, Speaker 20, Speaker 24, Speaker 12, Speaker 37
there any capacity to use the experience of um MIS to incorporate or provide some overlay on community impact as part of this because I mean we're seeing it we saw it through MIS. Um got no question that in some locations you'll see it here. There's already some farmers who are working this process without reaping the benefit of the sequestration capacity because of the way the systems are working um or not working probably more to the point um but you're also seeing it with renewable >> infrastructure um and managing that properly is >> critical to act to community acceptance.
>> Yeah. Yeah. >> Yeah. We agree and and it's a big kind of driver of this work is to provide an evidence base to help you know the the policy formation continue and one of the the the key things that the net zero plan and the egg and land sector plan was that it's it's an evolution like this was the first pointed out a number of things steps to take but it was going to be continuing process and so the more that we can do to to develop an evidence base for for these kind of decisions the
better. >> Yeah. and and consistent with that I mean that these uh regional impacts results we've got in the paper um you know there's a risk of over interpreting them I mean that the whole purpose of including that in this paper is we knew people were interested you can look at a map and see that it's you know it's spread out to a certain degree but we thought let's try and actually quantify that um but it's quantified more from an illustrative point of view because the actual outcomes could be could be different and the same with the farm limit and the regional limit it was more well let's see how this might actually influence the outcomes just to demonstrate there are trade-offs but not to overread that and say oh well you know the answer is two or six or
whatever but >> but it might be that but there might be it might be that there are different limit values in different locations based on >> um other other outcomes you're looking
to achieve >> and if you're worried about the regional impacts yes you might want to implement some sort of policy but there are trade-offs there and you need to be aware of those trade-offs rather than just uh you know implementing something so that that was a point to to try and illustrate that whole area.
>> So you talked about the exclusion of horicultural areas. So this is rain, this is um >> broad.
>> Yeah, that's fine.
>> No, no dairy either.
>> Yeah. >> Y
Senator, maybe just I could add to your point around I guess landholder decision- making. One of the the key focuses that we had in developing the Agon sector plan was ensuring that as much as possible in this kind of changing market conditions that we're putting in place programs and thinking about how we empower the the landholder and particularly the farmer to make decisions that best optimize their farming system and enterprise. Um so so that is um that is also a focus of ours in ensuring that farmers are equipped to make make the best decisions they can
>> in an ideal world but but when a big corporate has a desperate need to do something sometimes it's not about the market it's about the doing >> um and as as I indicated before in MIS there was stuff that was planted in the wrong place because it wasn't assessed properly the results weren't achieved from a forestry perspective, an economic perspective, or any of the things that we desire down the track. So, um, as looking at some of those market behaviors, >> um, has to be part of the thinking. I mean, >> agreed.
>> Bitcoin. >> Yeah, agreed. Um um I think we can all appreciate um where the MIS scheme went wrong and we're certainly mindful of that and the construction of programs like the support plantation
scheme. >> It's also about land use and land use change >> but also the impact of that on local communities. I mean and that's what drives the field. It's it's it's why you've got people um in the streets with respect to renewables for example and transmission lights uh and in particular and other stuff like that. I just want to go back to the horicultural land and you said dairy um and so so this is for the purposes of modeling >> um rather than what might actually happen because there might be some dairy areas where some regeneration Right. >> Um could be useful because um there are well understood benefits from partial regen around farms for windbreaks and things of that nature reducing um evaporation and all those sorts of things. Um,
>> I could just jump in there. He Heather McGilly, assistant secretary of climate policy, just to say that I'm sure this is sort of clear to everyone, but the Abe's analysis has modeled certain types of um carbon projects on certain areas of land because that's what's sort of available from a modeling perspective. And so you can start to look at some of the trade-offs and land use change. that isn't necessarily the options that are available to people at the moment in the
acu market. >> So which I was coming to but but in a market sense some of those horicultural areas >> are very high value land and therefore >> are unlikely to >> to flip because of >> Yeah. >> the value and the productivity. >> Exactly. >> Despite how grumpy some of the farmers
are. >> Yeah. I mean it' be high sequestration land but it's unlikely to offset the the high value agriculture. That's right.
>> Yeah. So, so there are other things that drive >> the the likelihood of land use change. >> That's right.
>> Just got a couple more on. >> Sure. >> Yep. And I'm cheering. So, I'll take the call. Um, no interruptions now either. We can deal with. Um, so just a couple quick questions. So this I believe this report is based on uh uh a cap if you like of only 119 million tons of carbon sequestration. >> Yeah, that's >> that's in the net zero plan. >> But my understand uh understanding of uh the uh the uh the government's net zero plan is there is no such cap as such. Is that correct?
>> The agricultural >> I think essentially they had a projection. Yes, >> which is one story. And so we've just picked that up as the way to illustrate.
>> Yeah, I understand that. But there is actually nothing stopping the 18 million hectares being 20 or 30 or 40 million hectares. Is that correct? >> I mean that's cap. >> Well, maybe the department it's more a policy question the department could answer. Um there's no cap on how much land can go towards carbon sequestration for us to meet net zero.
>> No, there isn't, Senator. No, it's it's a modeled scenario. So that the net zero plan itself is also modeled projections out to 2050. So um
>> I mean the concern we have in rural areas is that our performance so far, I'm sure you're aware over 90% of our emissions reductions, well over 90% have come from this process. >> So if we go to go to net zero at that sort of ratio, it won't be 119 million tons. It'll be more like 400 million tons needed. So it'll be it'll be 12 times Tasmania or so. Well, >> so is that why is that why hasn't there been more for the minister I suppose but why isn't why is this an uncapped process particularly given what we've seen in the 20 year odd history of reducing emissions in this country it's been ridiculously ludicrously skewed uh towards taking out agricultural production and not changing any conduct or behaviors in the major cities uh to
reduce carbon use >> uh well certainly you know we had this um sort of evidence earlier uh today Senator in terms of where the vast majority of regulatory uh work and also investment if you like from government in different sectors of the economy reflects where the decarbonization effort is going particularly around energy electricity transport and heavy industry uh so that is that is a sort of a core feature of the net zero plan so a lot of that is in other sectors not in agriculture and I guess I would also uh note that there are inbuilt reviews use in terms of some of the regulatory schemes such as the safeguard mechanism, the ACU scheme that allows for uh checks along the way to see how progress is tracking against desired policy outcomes. So this is not an unfettered uh sort of 2050 approach. There are inbuilt >> uh gateways along the way to to provide some confidence around unintended consequences and those policy trade-offs
as well. >> Okay. Well, yeah, that's a very good
question. I'll let you ask it. So this is based on a sequester sequestration
price of 106 >> that that's a result of a sequestering 119 million tons and so yeah
>> so that so that so so that's an output
from the modeling >> that's an output yeah so we we fix we said how much land and at what price would it take if you assume it's a linear increase from now until 2015
>> okay so so I was looking at the the modeling that we discussed last time from to Q and that was talking 200 or
300. >> Well, yes. So, the Treasury modeling, I believe, had a shadow carbon price that approached $300 a ton or so. >> So, so what happens to this at that sort of number? >> Well, well, this is a very good
question. >> So, we haven't looked. Yeah. So, you're right. Then the Treasury model talks about the marginal abatement incentive. Yes. Of that around that. I can't
but isn't isn't that where the model drive isn't that where the process drives things because that's >> that's that's the overall cost of doing this. I mean
>> that's certainly a question for them. Um I think from the way that the as Mr. Blong had had kind of outlined there's a range of different policies and and programs in place to deliver net zero and not all of them are are market based. There there's certain targets for you know say for our energy renewable energy in in the grid and all those type of things. So those things will happen and then there's a residual amount of emissions which they looked at. the way that that model worked and that marginal bait and incentive we'll have to ask them about that. Um but we didn't look we didn't say say for example if the price was as you say you know somewhere around 300 what would be the >> the amount of land taken but
>> we're going to abate this amount of stuff we think it's going to take this amount of >> area >> and and and to do that the number that comes out of that is 106.
>> That's right. >> Yeah. It also tells you where >> where >> where and then that sums up to give you your 18 million
>> hectares. So it doesn't started started with quantity not with price.
>> Yeah. Okay. But the reality is that the market won't work that way. It'll determine a price which will then drive behavior which goes back to the what if what if a big corporate's got a desperate need to kill off a whole heap of carbon. So we'll go in and we'll >> cuz that will be the driver. It'll that it's it's always about the dollar.
>> Yeah. So I think that comes to the the broader I guess pathways and and the the policies that are used across the economy which won't always be based on offsetting. Some of them are you know standards that that have to be met and all the rest. And so there there's a range of different behavior that would occur. But I think you know not to ignore the point because we haven't actually looked at you know I guess a more dynamic you know um examination of
this >> but that's what it's going to be isn't it really in real real I mean >> company X will have a requirement to abate this it's going to they'll do their calculation it'll come out the other end that's what it's going to cost so we'll apply that into the >> into the market I mean that's
>> we haven't looked I don't feel that I'm qualified to to give you a a useful answer on that because we haven't haven't looked at that. But I think the the thing that I would say is the observations that we've made about the ability for this market to work in the coexistence space and that being a kind of key focus for where we would
like the >> but working in a market sense like that with a dollar base attached to it to start with which being the driver makes the rules around it even more important. >> That's right. That's right. >> So the 20 or 20% regional or the 20% farm those rules become even more important. Yeah, >> because it's the dollar number that will drive the land use change which is um >> what's happened in the past. It's what's happening in some circumstances now that's going to be the thing that drives it. Not um an assessment of how much we need to abate and then divide it backwards to get this is what we think it'll cost which is effectively where we've gone to here.