Many people are interested in the role of the Aggregator in the Australian farm offsets market. The role is strategic because Aggregators form the interface between supply and demand. There is no doubt that the role is important, despite the fact that the Legislation does not mention it, placing the responsibility for the supply side management on the shoulders of the “Project Proponent”, ie. the Grower. Most Growers can’t assemble enough tonnage to deal cost effectively with the market direct. But even a corporate landholder with sufficient land too deal direct will need specialist advice. The average landholder will have to deal through an aggregation service. Organisations with memberships have access to potential growers/suppliers and bureaucracies which can supply the necessary arms and legs. 

Banks may see synergies, especially since the legislation defines the offset unit as a financial product and therefore those giving advice or dealing in them must have a Financial Services Certification. To give advice tat maximises the Growers opportunity, the aggregator must understand how to draw up a Carbon Farm Plan that integrates practices and boosts emissions reductions and amounts stored in soils. 

There are five options facing Growers: 
1. Deal Direct with a big polluter.
2. Engage an aggregator as an agent.
3. Sell the rights to your units to an aggregator or agent.
4. Join an aggregation as a member.
5. Sell direct to the farm gate market. 

Aggregators will need to have sound knowledge of the five pieces of legislation that established the Carbon Farming Initiative. They will need a sophisticated data management system, an education function, an outreach program, and connections with local services such as measurement and auditing. At the same time, they will need to engineer costs out of their services to keep middleman costs down and prices competitive.

Aggregator Briefing: An Introduction to Carbon Farming – A One Day Workshop. Delivered by Carbon Farmers of Australia. FarmReady Approved. Call 02 6374 0329

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Some people dislike the notion of trading offsets as a way to reward farmers for environmental services. They give the following reasons: 

1. 1. Farmers should be doing the right thing anyway (ie. provide environmental services for free). 
2. 2. “Someone will make a lot of money out of it…” (ie. traders on-selling the units). 
3. 3. “It’s all bullsh--!” (ie. anything with the word ‘carbon’ in it is too hard to understand and is therefore a rort). 

One thing most people agree on is that our soils are degrading and farmland is badly in need of restoration. Our food production capacity is declining. If you think about it, there is no way we will get the maximum number of farmers to make the necessary changes to their management of soils without a system of incentive that is acceptable to the greatest number and is likely to last long enough to get the job done. 

The system that offers this is trade in offsets.

1. 1. Farmers have demonstrated little enthusiasm for ‘doing the right thing anyway’ on the grounds that no other sector of the community is asked to work for free and, besides, they already do a lot for free. 
2. 2. The majority of farmers have not engaged in taxpayer-funded land management incentive programs in more than two decades in which billions of dollars were invested by governments in restoration programs. 
3. 3. Tax and spend programs last only until the next election cycle as politicial priorities change. 
4. 4. Farmers are comfortable growing and selling commodities. That’s what they do. They happily deal with middle men and there are windfall profit opportunities from futures trading. 

So the answer to the question, “Is Trade the best option?” is Yes. If you seriously want to see our agricultural soils restored and enriched, out waterways cleaned, and landscape regenerated – as soon as possible across the largest percentage of the 60% of the nation’s  landmass used for agriculture.

The first methodology for soil carbon sequestration under the Carbon Farming Initiative was submitted at the Carbon Farming Conference on the 6th Anniversary of the start of the campaign by the Carbon Coalition for soil carbon credits.

The Methodology – developed by the Bridge Consortium (Carbon Farmers of Australia, Offset Generation Services and Object Consulting) – operates entirely within the CFI Legislation and is designed to circumvent the oft-quoted ‘uncertainties’ of soil carbon by using buffer pools and menus. For instance, Additionality is addressed by offering a program for renewal of vegetation in line with the Positive List and requiring participants to choose two or more additional practices or products from a long menu. 

The variety of combinations satisfies the ‘common practice test’ in most cases. The Measurement challenge is answered by reducing the uncertainty around direct sampling using a 90% certainty interval and by extending the Government’s own 5% ‘risk of reversal’ buffer into a Project Buffer which requires the participant to “bank” a tonne of CO2 for each tonne they trade during the first 5 year period. Thereafter both carbon buyer and grower are protected by the collective Program Buffer Pool that aggregates risk management and balances impacts across climate zones. This reduces the grower’s exposure while increasing buyer protection. 

Relinquishment provisions follow the CFI Legislation with the additional benefit that a Program Buffer Manager may accept a relinquishment responsibility entirely on behalf of a grower.  This allows the added security of protection for all concerned coming from a balanced pool of projects rather than from a single farmer or piece of land only.  Buffering and averaging of measured values over time are also included to solve the Permanence issue. An elegant solution.

“Without your efforts Australia would have no Carbon Farming Initiative and no network of amazing farmers. In no small way you will leave a legacy of nationwide land regeneration at precisely the time we, and the rest of the world, needs it. “ - John W Crawford, Judith and David Coffey Chair in Sustainable Agriculture, Faculty of Agriculture, Food and Natural Resources, University of Sydney

The reason why we have racked up private debts of more than $500k campaigning for the last 6 years “to see the day soil carbon is traded safely and farmers paid fairly for what they sequester’’ is simply this: the prospect of a financial return from carbon farming will be enough to capture the attention of the great majority of farmers - who currently are not available to the sustainability message - for long enough for them to consider land management practice change. If they decide against it at least they have given it a fair hearing (and prepared themselves for the inevitable conversion somewhere down the line). We are promoters of trade for three reasons; 1. we believe only rapid and widespread soil sequestration has the capacity to stall global warming long enough for the global community to transition to a low carbon energy system; 2. we have a soils crisis that must be addressed for food security reasons; and 3. the profit motive is more influential and widespread in its application and rapid in its effect in changing behaviour than education and encouragement, ie. business as usual. 

We live by the principle that, if you always do what you have always done, you will always get what you always got. The single-minded focus on soil carbon as a key performance indicator simplifies the communications and behaviour change tasks because the co-benefits inevitably follow on attempts to raise soil carbon levels (co-benefits include improved soil structure, ground cover, water efficiency, nutrient availability, buffering against drought, and biodiversity above and below the ground). Once the average farmer gets over their negativity about soil carbon and trading (the result of the relentless misinformation campaign by those who fear being made redundant by the privatisation of soil health management when the opposite will be the effect) CMAs and Landcare groups will have their work cut out for them handling the rate of enquiries. As for middlemen, every commodity market has them, they are essential, and farmers can select which program they go with. Ie. it will be competitive. As for merchant bankers making money, that can only occur if the units are on-traded by the buyer. Farmers can choose to sell only to buyers who will 'retire' them, thereby removing them from circulation. If merchant bankers are making money, it is a sign that the market is flourishing and farm landscapes are being restored at a rapid rate. 

It will not be a gold rush, as some predict. It will take at least 5 years to develop and bed down the processes required to protect the farmers' interests. That is where Carbon Farmers of Australia fits in: Advocacy, Representation, and Ethical Aggregation.

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From Western Magazine:

When the first Carbon Farming conference was held five years ago, it was just a dream. Five years on and the carbon farming intiative (CFI) legislation dominated the topics at this year’s conference. Convenor Louisa Kiely, who is the director of Carbon Farmers Australia and a Goolma district farmer, said the change was amazing. “We have been able to start moving away from theory towards rewarding practice,” Mrs Kiely said. “When we started five years ago this was just a dream- can soil carbon ever be a mainstream mitigation strategy? This is a turning point- by this time next year trading will be a reality.” Mrs Kiely said the change in attitude to carbon farming was evident with some of this year’s delegates. She said there was quite a bit of interest from new exhibitors and sponsors, while farmer delegates included a mix of innovators as well as those who were finding out more. 

Speakers at the conference included federal senator Matt Thistlewaite who said the CFI would give a lot of opportunities. “By 2020 the credits created by this initiative could be worth hundreds of millions of dollars for rural and regional Australia,” he said. Senator Thistlewaite said the scheme would provide economic value for those who adopt best practice. “The aim of the scheme is not only to recognise and encourage practices existing and taking place but also to encourage further uptake in those who aren’t currently doing those practices,” he said. 

For farmer Jeremy Bradley, who has a property on the north coast of NSW, this scheme has the benefit of providing financial incentives to farmers to change to carbon friendly practices. “Carbon is the driver of soil fertility,” he said. “Everything works better with carbon and hopefully we can get paid to put it there. “If people are paid to sequester carbon it is a huge step for food security.” Mrs Kiely said that farmers do hold a lot of power in shaping the future. “It is slowly starting to sink in that soil is the largest carbon sink under the control of man and farmers control over 50 to 60 per cent of that land mass,” she said. “That makes farmers very important in the future.”

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The Carbon Trade Exchange today announced the commitment to offset the footprint of Australia’s fifth annual Carbon Farming Conference in Dubbo, 27-29 Sept.

The entire event will be offset for the full three days, this will include all travel for the conference speakers to and from the event, the electricity, as well as the on-site event set up and bump out. All delegates and sponsors will be responsible for their own carbon footprint.

The land-based offset credits will be purchased from India where the credit is derived from sugar cane waste in the form of biomass used to generate energy.

Louisa Kiely, Director for the Carbon Farming Conference said “This is a demonstration of how farmers will be able to benefit from generating and then selling carbon credits. At the moment these credits are only available for sourcing overseas, however the recently passed Carbon Farming Initiative (CFI) provides the framework for carbon credits to be derived in Australia and the benefits will go straight back to Australian farmers”.

Ben Stuart, Director of Carbon Trading said “We fully support the CFI in Australia and wanted to show farmers what it could mean for them by participating in this market. Through the process of offsetting of an event we can show how land-based projects, that generate carbon credits, can make money. Businesses will be able to buy CFI credits in Australia to offset their own carbon footprint and count towards their overall emissions reductions with the money generated going back in to the Australian farming community”.

EcoView will be responsible for the footprint measurement using CarbonView. Fadi Geha, Managing Director of EcoView said “we are delighted to work with the Carbon Trade Exchange and the Carbon Farming Conference to assist with the measurement of this event. Offsetting events is a great way to highlight the value of how offsets can play an integral role in assisting Australian farmers to participate in the low carbon economy”.

Carbon offset credits are produced by projects that reduce greenhouse gas emissions and are made available by companies like the Carbon Trade Exchange to purchase under compliance requirements or voluntary purposes. A carbon offset credit is equivalent to one ton of carbon dioxide removed from the planet’s atmosphere. The money paid for each credit goes to funding either abatement or sequestration projects.

About Carbon Trade Exchange

Carbon Trade Exchange is a global carbon credit trading exchange. The exchange enables carbon buyers and sellers from around the world to trade most major voluntary carbon standards in an extremely efficient, end-to-end electronic process. The Carbon Trade Exchange is the world’s first web based electronic platform for Voluntary Carbon Credits (VERs) and international offset credits (Certified Emission Reductions or CERs).

Carbon Trade Exchange operates from offices in Australia, London and New York. They have a dynamic and highly experienced management team supported by a global board of Directors, led by founder and CEO Wayne Sharpe.

BREAKING NEWS

KEYNOTE SPEAKER ANNOUNCEMENT

Land management’s quiet American revolution

Keynote speaker at this year’s Carbon Farming Conference, Courtney White of the Quivira Coalition, is leading a revolution in land management in America. The former environmental activist abandoned confrontation with ranchers to forge a new community model for creating healthy ‘working landscapes’ by building bridges between ranchers, conservationists, public land managers, scientists and others. In 1997, with two farmers, he co-founded the Quivira Coalition in New Mexico which uses education and collaboration to promote progressive public and private land stewardship. More recently he has been focussed on ‘carbon ranching’ and the new agrarian movement (healthy soil, healthy food, healthy people) in the USA. Mr White is visiting Australia to meet ‘carbon farmers’ and healthy soils activists. Australia is the first country in the world to legislate a carbon offset scheme for farming projects, at a national level.

Courtney will address the topic: “The Carbon Puzzle: Reassembling Land and Livelihoods” at the Carbon Farming Conference (28-29 September, 2011, in Dubbo NSW). He will share his experiences at the forefront of change with the Quivira Coalition. During the Spanish Colonial era in the South Western states, mapmakers used the word 'Quivira' to designate unknown territory beyond the frontier; it was also a term for an elusive golden dream.

Mr White’s writing has appeared in numerous publications, including Farming, Acres Magazine, Rangelands, and the Natural Resources Journal. His essay “The Working Wilderness: a Call for a Land Health Movement” was published by Wendell Berry in 2005 in his collection of essays titled "The Way of Ignorance."  In 2008, Island Press published Courtney’s book Revolution on the Range: the Rise of a New Ranch in the American West. He co-edited, with Dr. Rick Knight, Conservation for a New Generation, also published by Island Press in 2008. 

Free Barista Bar Coffee!

There will be a special networking lounge area with complimentary ‘real’ coffee from a Barista Bar. This coffee service is sponsored by the Environmental Registry and the lounge area is furnished by Harvey Norman Dubbo.

Who Will Be The Carbon Converters?

Not every farmer will want to get involved in trading farm carbon offsets. In fact, at least 25% have already decided not to, according to a recent survey by the Rural Industries Research and Development Corporation (RIRDC). The study, called Decisions Made By Farmers That Relate To Climate Change, found there are three types of response to the need to change practices: ignore it (26%), want to do something but can’t afford it (19%), want to do something but need support (55%). This last group - called ‘Cash-poor long-term adaptors’ - tend to believe Climate Change is real and man-made and that we have a responsibility to do something about it. 

They are information seekers and intend to farm more sustainably if they can get support. They tend to have larger farms (average 5000 ha) than the other groups (1600 ha and 2700 ha), and they rely less on off-farm income. They average 55 years of age, their health is good and they feel up to handling change. So, the majority of farmers (74%) want to change to meet the challenge of Climate Change, but need financial support to do so. That is what farm carbon offsets from the Carbon Farming Initiative and the $1.8bn in adjustment funding from the Carbon Tax are designed to deliver to farmers. Now that’s something you won’t hear from rural politicians or regional press outlets.

How the market works (for Indians)

It is hoped that next year it will be Australian farmers, but Carbon offsets paid to farmers in India are being used to offset the emissions generated by this year’s Carbon Farming Conference. The land-based offset credits will be derived from sugar cane used to generate energy. Ben Stuart, Director of Carbon Trading Exchange said “We wanted to demonstrate to farmers what it could mean for them by stepping in to this market. Through the simple offsetting of an event we can show how land-based projects can make money. 

Businesses will be able to buy CFI credits in Australia to offset their own carbon footprint and count towards their overall emissions reductions and the money will be generated back in to the Australian farming community.” Ben will explain at the Conference how these offsets were created and traded-  from go to whoa. The entire event will be offset for the full three days, this will include the electricity for the event, as well as the on-site event set up and bump out (All delegates and sponsors will be responsible for their own carbon footprint.)

The Carbon Farming Conference

The Carbon Farming Bill passed by the Australian Senate is the world's first national scheme that regulates the creation and trade of carbon credits from farming and forestry. It is the first major legislation passed by the government with Greens support in the Senate since the Greens took the balance of power on July 1. "Green carbon is one of the four pillars of the climate package, alongside putting a price on pollution and investing in renewable energy and energy efficiency," Greens deputy leader Christine Milne said.

Australian industries which buy carbon offsets will need to ensure at least 50 percent of the offsets are domestic credits. The government estimates the carbon farming initiative will help cut Australia's carbon emissions by 460 million tonnes by 2050. "There is increased interest in the CFI from across market and the first wave of investment activity will start to unfold now the Act has been passed," said Martijn Wilder, global team leader for environmental markets at law firm Baker & McKenzie in Sydney. "But the really significant activity under the CFI will come with the approval of carbon pricing laws."

The Opposition strongly opposes putting a price on carbon and will scrap the scheme if it wins the next election, due in the second half of 2013. It would have to wait until mid-2016 before they could win enough seats in the Senate to repeal the carbon laws, and its direct action plan for tackling emissions could be delayed until 2018, according to Reuters. These and many other issues will be canvassed at the Carbon Farming Conference, 27 - 29 September, 2011 in Dubbo NSW.

A practical methodology for allowing farmers to be rewarded for storing more carbon in their soils will soon be submitted to the Government’s expert panel for assessment under the Carbon Farming Initiative. The key feature of the methodology is the way it overcomes the oft-quoted barriers to trade in soil carbon credits: additionality, permanence, and measurement.The methodology adopts the principle of a buffer pool to manage risk to 90% certainty to address the twin issues of measurement and permanence. A buffer pool is formed by banking a percentage of the tonnes submitted for sale and using them as ‘insurance’ so buyers can be confident they are getting what they are paying for. Individual farmers will be protected against losses by the pool which will be aggregated across climate zones, spreading the risk. The Government’s use of a 5% buffer to address ‘risk of reversal’ in its regulations is an endorsement of this principle.

Under this methodology, the Landholder must choose two or more practices and/or products from a menu to be applied to the project area throughout the period specified. This multiple methods approach not only reflects the normal behaviour of carbon farmers, but also addresses the Additionality Requirement because the likelihood that more than 5% of the farmers in a district, climate zone or other segment would choose the same combination of options is low
 
Permanent behaviour change in the land care sector is rooted in economic self-interest. The CFI provides for carbon credits, but a more powerful incentive for permanent change lies in the economic value delivered to the landholder by the accumulation of a soil carbon reserve.

Each project is defined with an initial 5 year reporting period, at the conclusion of which an initial parcel of Australian carbon credit units will be issued, based on the Net Abatement Number for the reporting period, and an initial Project Buffer Reserve allocated. A project participant may elect to continue the project with further reporting periods. The maximum total duration of a project is capped at 25 years. While economic self-interest in carbon credits would work continuously through an entry-level 5 year reporting period up to a 25 year cap, at the same time the increasing availability of Phosphorus and water would provide a continuing incentive to maintain the relevant behaviour. Simultaneously the process of culture change is expected to cement in place the land management practices as the new convention.

The search for Australia’s best ‘carbon farmer’ is on as part of the Carbon Cocky of the Year Awards. What started as a competition for farmers in the Central West of NSW five years ago has now gone national to celebrate the passing of the Carbon Farming Initiative legislation which provides incentives for farmers to adopt sustainable practices. More than 35 carbon farmers have been recognised in the Awards since they started in 2007. “At that time the link between farming and climate change was all negative, focussing on emissions. But the positive contribution agriculture can make by extracting CO2 from the atmosphere was best communicated by celebrating the people who invented carbon farming: carbon farmers,” says Louisa Kiely, organiser of the Awards.

Notable farmer/innovators in the Central West include Col Seis from Gulgong (pasture cropping), Bruce Maynard from Narromine (no-till/no-kill cultivation), and Michael Inwood of Bathurst (electric utility truck). The Awards are being conducted as part of Carbon Farming Week on 27-29 September, 2011 in Dubbo NSW. They are to be presented at the Gala Awards Dinner which is to be staged during the Carbon Farming Conference & Expo.

The theme of the conference is “Preparing farmers to trade”, reflecting the new opportunities to earn carbon credits by on-farm activities including storing carbon in soils and trees, reducing emissions from animals and reducing emissions from fertiliser. The Award is still open for 2011 for conservation graziers and conservation farmers who have innovated their farm management for greater sustainability. Click here for more information about the awards.

High profile sponsors of this year’s awards include Best Environmental Technologies, Ylad Living Soils, and Principle Focus. Organising the Awards and the Conference and Expo is Carbon Farmers of Australia, a not-for-profit company which provides education, information and representation services for carbon farmers. Carbon Farmers of Australia is part of a consortium which has submitted a methodology for soil carbon credits to the Department of Climate Change & Energy Efficiency’s expert panel, the Domestic Offsets Integrity Committee, for approval. Once approved, it will be the only national soil carbon offsets system operating in the world. 

Contact us for more information.