June 2021 - WA Carbon Connections
This month
Federal budget’s soil announcements
Property planning for carbon farming
Summing up soil carbon calculations
Deadline for southwest carbon + biodiversity grant applications approaches
Carbon news relevant to Aussie farmers.
First, as always, a carbon price update
National Budget – Soil Value
Yes, the Federal budget released last month mentioned soil, which is much-needed recognition of its immense value to society. Of the $196.9million in the budget (to be allocated over 4 years), $120 million is to be spent on developing a national database of soil test results, but there’s not yet much detail on how this cash will be splashed. When there is, we’ll let you know.
Adding carbon to your long-term farm planning
Do you know all the options for how carbon income could be generated on your property?
Carbon West can help ensure you do. Our property-specific ERF Carbon Opportunities Report is now available to landholders.
The report will outline the types of Emissions Reduction Fund carbon project methodologies available to landholders and explain how and where they could be applied on a specific property. Our team would assess the property to discuss carbon options which could support the landholders’ goals then present detailed analysis of the options available, applicable rules, the likely investment required to develop the various carbon projects, and a guide to potential carbon yields.
The cost of a Carbon West ERF Carbon Opportunities Report ranges from $850 to $3000 (dependent mainly on property size). The independent advice carries no obligation to proceed with any form of carbon activity.
Summing up soil carbon calculations - Let’s crunch the numbers
Getting your head around soil carbon and how it equates to carbon credits is not easy, but neither is it rocket science. Farmers tend to discuss soil carbon as a percentage of the total soil mass in a particular depth of soil. When most soil tests are done only in the top 10 centimetres, the results tell only part of the story.
In advising clients on soil carbon projects, Carbon West usually recommends baseline tests be done to a depth of one metre, where the core sample is divided into 3 portions (0-30cm, 30-60cm and 60-100cm).
It’s worth remembering that scientists predict that the top metre of Earth’s soils hold about four times as much carbon as above-ground vegetation does. That’s a bit mind-blowing, right? But it does really help to explain that the top 10cm of soil is only part of the total soil carbon pool. source
In the WA ag media recently, a figure of 0.25t/Ha/yr was used in discussion of the potential for soil carbon sequestration in this state. This figure was unqualified in terms of the depth of soil in which organic carbon is being measured.
So... let’s create a scenario to help explain soil carbon calculations.
Let’s say Ted and Tara had baseline measurements on their farm done to one metre depth, and the results given by the lab showed they had 1% carbon in the top 30cms of soil, 0.57% in the 30-60cm level, and 0.24% in the 60-100cm level. Because bulk density is relevant in terms of soil mass in a certain depth of soil, we’ll assume the three levels of soil have a bulk density of 1.4, 1.5 and 1.75 respectively (fairly standard for WA). This means that in the three levels, from top to bottom, there is 42 tonnes of organic carbon in the top 30cm, 25.65t of OC in the next 30cms and 16.8t of OC in the lower 40cms of every hectare of land. That’s a total of 84.45t of organic carbon in the top metre of every hectare of Ted’s soil (but of course you are not paid for carbon that already exists in the soil).
Now, let’s assume Ted and Tara made some changes to their land management practices and, after 4 years, remeasured the farm’s soil, to a depth of one metre. and had the soil cores analysed in the same way as before. This year, they have SOC levels of 1.08% in the top 30, 0.63% in the 30-60 layer, and 0.26% in the 60-100cm layer.
With these modest gains, achieved over 4 years, Ted and Tara recorded a total gain of 7.46t of SOC per hectare. To calculate the total annual gain, we divide that by 4, for the 4 years, and end up with 1.87t of soil organic carbon per hectare per year. (We must also keep in mind that very small gains are hard to measure due to the variability of soil carbon stocks across an area of land. As such, it may take a few sampling rounds before gains in the lower levels of soil generate carbon credits).
The lovely bit about doing calculations of tonnes of organic carbon is that to find out how many carbon credits that equates to, we multiply it by 3.67, because one tonne of organic carbon equals 3.67t of carbon dioxide equivalent (CO2e). So... Ted sequestered 6.85t of CO2e (ie 6.85 carbon credit units) in every hectare each year between 2016 and 2020. Have a look at the top of this newsletter at the prices being paid for carbon credits and you can easily do the maths.
BUT... this is the gross gain, not the net gain. Just as a tax accountant takes the costs away from the income to work out the profit, a carbon accountant must deduct the carbon costs away from the carbon income to find the carbon profit/gain. So, things like diesel used in land management, methane produced by animals being farmed on the land and the carbon released during the production of any farm inputs (i.e. fertilisers and chemicals) and a range of other factors, are calculated and deductions are made from the gross carbon gains.
AND... if your project is registered with a verified carbon scheme like the Australian Federal Government’s Emissions Reduction Fund, there’s also some discounts applied, just to make sure no-one gets paid too much, ever! All ERF projects have 5% of the net gains shaved off the net gain (in what’s called a ‘risk of reversal’ discount), and if the project proponent elects for a permanence period of 25 years rather than 100 years (which most people do because a 100-year soil project is way too hard to wrap your head around) then a further 20% discount is applied to the net gain. Ouch.
But... in the soil carbon project modelling Carbon West has developed, which has all of these discounts and input emissions deductions and carbon calculations embedded, there is still money to be made from soil carbon if the losses of historical levels of soil carbon can be turned around, even partially, and the scale of the project is appropriate for the area. There are heaps of variables, and certainly there is risk – a reality farmers know very well. We estimate that costs on Ted and Tara’s project, the implementation costs would work out at about 20-25% of the net income over the life of the project.
The decision on whether to engage in carbon farming should not be based on some arbitrary figure pulled out of one non-site-specific source which has little hard evidence on which to base its claims. Every property owner should assess the carbon farming opportunity on its merit for their particularly property, land management plan and future aspirations.
Our advice is to plan your ‘perfect’ future farm, assess how carbon farming may assist in the pursuit of that ‘perfect’ picture, then seek good advice on the options, the risks, the rules and the realities of being involved. And yes, Carbon West can help you with that, from general advice to specific guidance and project management.
SWCC Carbon + Biodiversity Applications closing soon
(for landholders in the southwest catchment area only)
SWCC Catchment Area
We’re reiterating this announcement from last month in case anyone missed it!
For landholders in the South West catchment area. Under the Carbon + Biodiversity (C+B) pilot program, the Federal Government will pay farmers for improving biodiversity as a result of planting trees for carbon sequestration.
The $23.5 million C+B pilot program would meet up to about 75 - 80% of the cost of developing an ERF project of between 5 and 200Ha in area.
To make an application, the landholder must commit to registering and managing an ERF carbon project using the ‘Environmental plantings’ methodology. This could include planting and managing vegetation to regenerate gullies, waterways and hillsides, link areas of remnant bush and create habitat for threatened species. Any proceeds and credits from the project are then owned by the landholder.
Carbon West consultants can assist eligible landholders to submit a project proposal for consideration by the South West Catchments Council. The application period is now open but will close on June 11.
General updates
Another sign that the carbon industry is ramping up in WA is the recent investments in Western Australian carbon players. Tiverton Agriculture Impact Fund has acquired a majority shareholding in Carbon Neutral, and Mitsui is rumoured to have invested in Outback Carbon. This follows Shell’s purchase of Select Carbon late last year.
As is becoming a pattern, carbon is increasingly taking its place as a consideration in minds and boardrooms across Australia and the world. This month’s updates include ANU announcing its pledge to take its roughly 55,000 CO2e annual emissions below net zero by 2030, the first university in Australia to do so, and only the second in the world.
More globally, but also closer to home, carbon emissions from agriculture is a point of contention in current free-trade discussions between Australia and the UK. Farmers in the post-Brexit UK are unhappy with the idea of competing with Australian farmers who do not have to comply with the same standards across multiple areas, including carbon emissions.
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