A Growing Carbon Industry

A Growing Carbon Industry: What Does it Mean for Landholders?

By John McLaughlin – Project Manager at Upscale Carbon

Welcome back for Article 2 of this series where we are exploring Australia’s Carbon Industry. In Article 1 – Carbon Markets: What are they and are they a for for me – I touched on the history of the industry in Australia dating back to 2011 and introduced the concept of Carbon Farming. In this article I want to touch on the three (3) major implications that thus rapidly growing industry has for primary producers across QLD, and the country more broadly.

1. Opportunity: The most obvious implication for landholders is that there is now another potential product that your parcel of land may be able to produce. Another resource. Another revenue stream. Another opportunity. Not only are you able to produce 100 tonnes of grain or turn off 500 bullocks, you might also be able to store X amount of tonnes of CO₂ or prevent it from being released into the atmosphere as emissions. All of the cold calls and random emails you receive from Carbon Project Developers are aimed at trying to get you to look into this new opportunity. If they are doing it for free, then I encourage you to take a look.

Now, this opportunity is unlikely to be a ‘free lunch’ as they say and will likely involve a shift in the way you currently do things. What are the implications of these changes to the way you do things? What trade-offs will this involve? How will this affect your primary enterprise? There are questions you must ask and analyse yourself, rather than trusting anybody else to do it for you.

Remember, it might also be the case that there is no opportunity for you. In most cases, this will have nothing to do with you and how you have managed things. It might be where you are located, the scale of your operation, what sort of production system you are running, or any other number of reasons. If you look into your options and find no carbon opportunity – then you are simply in the same position you are in now.

2. Competition for Land: As the Carbon Industry continues to grow, both at home and around the world, a greater number of players are setting their eyes squarely on the areas most capable of storing CO₂ – Agricultural lands. We all know the stats – 55% of Australia is Agricultural Land and more than 50% is used specifically for grazing livestock. While storing more CO₂ in the concrete cities of Sydney and Melbourne doesn’t offer much promise, storing it in the far-flung expanses of extensive livestock properties across the Australian Rangelands is very attractive. And corporations have realised this. Anyone that has been to an Auction in the Mulga Lands of Queensland and NSW has noticed that they are not just competing with other graziers anymore; instead they are competing with companies ad businesses with a firm focus on carbon and other emerging Environmental Markets. Yes, these businesses still appreciate the agricultural value of the property, but they have priced in the additional value of the carbon opportunity. And what does this do? It sends prices higher. Now depending on your situation, this might be a good or bad thing. But, it is inevitable that this is a trend we will see continuing into the future.
3. The Carbon Footprint of Primary Producers: Now this one is important and probably deserves and article all on its own. Let us remember what is driving this industry in the first place → this is the requirement to reduce the total amount of Greenhouse Gases (GHGs) in the atmosphere. The amount of GHGs in the atmosphere, such as Carbon Dioxide, Methane and Nitrous Oxide, has increased dramatically since the industrial revolution, leading to a warming of the atmosphere. Countries, businesses and individuals are under political, economic and social pressure to reduce their Carbon Footprint – the total emissions produced by their activities. Currently the major focus of this pressure is on your large corporations or at an industry level. However, to properly measure ones Carbon Footprint, you must assess the emissions associated with producing a product. For a large retailer, such as Woolworths, this includes analysing the net emissions associated with producing food, say a Kilogram of steak. We call this Scope 3 Emissions.

This is where Carbon Accounting comes into play. While some landholders may have the opportunity to participate in Carbon Farming, it is likely that in the future all producers across all industries will fac some pressure to report on the emissions associated with the production of their product. And this pressure is likely to come from their own supply chain, the people that buy and sell their product, as they look to measure the own scope 3 Emissions. Another thing to look forward to hey?

See you next time for Article 3  where we will look at the different Carbon Methodologies and help you to determine what might be best for your property.