Australia farmers see carbon credits boosting output

Australia's grain production stands to get a boost following changes to the country's proposed carbon-emissions trading scheme announced at the weekend.

Industry officials said on Monday the decision to exclude agricultural emissions from the scheme and to possibly allow farmers to earn carbon credits through better land-management practices would enhance production of crops such as wheat.

"Farmers are good carbon managers and it is in their interests to put carbon back in the soil where it belongs, as it means better water storage, improved crop and pasture growth," said David Crombie, president of the National Farmers Federation.

Australia's emissions-trading scheme has been delayed in the Senate where the government lacks a majority. In order to secure the support of opposition lawmakers, it has been under pressure to give more concessions to both farmers and heavy industry.

On Sunday, Climate Change Minister Penny Wong, in an attempt to win over the opposition, said the farm sector would be exempt from paying for its emissions, which account for about 16 percent of the nation's total, according to government figures.

Wong also indicated that farmers might be allowed to generate and sell carbon credits in what has been dubbed an "all carrot and no stick" approach to the powerful farmers' lobby.

The federation's Crombie said this approach to farming would bring Australia more into line with the existing European scheme and those proposed for the United States and Japan.

"This isn't a pipe dream ...," he said, adding that better land management could boost production of crops such as wheat.

"Over the last 15 years we have already lowered our farm emissions by 40 percent through a change in vegetation management such as not clearing trees, improving perennial pastures and zero-tilling agriculture."

Australia is expected to harvest about 23 million tonnes of wheat in coming weeks, of which about 15 million tonnes could be exported, making it the world's fourth-largest wheat exporter.

Rob Fowler, an emissions trading specialist at consultants Booz and Co, said land management would be greatly improved if the government awarded carbon credits for eco-friendly farming.

"It is a big step in the design of the scheme and will make a big difference in how people manage the land," said Fowler.

Australia's sugar industry, one of world's top exporters of the sweetener, said the exclusion of agricultural emissions from the government's scheme removed some uncertainty but farmers still faced higher costs for items such as fuel and electricity.

The power and petroleum industries are not exempt under the scheme and are expected to pass on their carbon costs.

Ian Ballantyne, head of Queensland Canegrowers, which represents most Australian sugar-cane growers, said that allowing farmers to generate carbon credits would present challenges.

"It may still be difficult for farmers to demonstrate that their normal activities permanently remove carbon from the atmosphere," said Ballantyne.

source: forexyard