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Australian Cattle Council : Yearbook 2008
page 40 C aTTL e COUNCIL OF a USTR a LI a Y ea RBOOK 2008 australian governments have broadly accepted that additional greenhouse gas being added to the earth’s atmosphere as a consequence of human activities, such as the burning of fossil fuels, is increasing the risk of adverse future climatic changes. governments are now considering or have implemented policies to try and limit man-made greenhouse gas emissions. The main policy being proposed is a greenhouse emissions trading scheme, which would effectively put a cost on actions that create greenhouse gas emissions, and would also create a market for activities that are recognised as removing greenhouse gases from the atmosphere, or reducing the rate of emission of greenhouse gases. There are currently two main proposals for an australian national greenhouse emissions trading scheme, one which has been developed by the australian government, and one which has been developed by australian State and Territory governments (the NeTS scheme). While there are some important differences between the two proposals, there are also many similarities. Both proposals involve the establishment of a ‘cap and trade’ emissions trading scheme. essentially, this involves major greenhouse gas emitters such as electricity generators being required to measure and then progressively reduce the net volume of greenhouse emissions they produce each year. If reducing emissions proves too expensive, these major emitters can pay other businesses to carry out activities that are recognised as emission offsets, the most common offset being the planting of trees to remove carbon dioxide from the atmosphere. The two proposals differ somewhat, in that the NeTS scheme developed by state governments would initially only require the stationary energy sector (electricity generators) to directly participate in emissions trading, while the australian government scheme would also require fuel distributors and other major emitters such as refineries and cement manufacturers to participate. From a farm business perspective, there are two main implications of this policy approach. The first is the extent to which it will result in farm input costs increasing, and the second is whether farm businesses will be able mitigate these costs through revenue received from on- farm activities that are recognised as emissions offsets. FaRM INpUT COSTS One certainty is that whichever greenhouse emissions scheme is introduced, the result will be a progressive increase in farm input costs, especially electricity, chemicals, fuel and freight. How much these costs might increase by will depend very much on the specific scheme design, and how quickly new low-emission technologies emerge. Some estimates have been made under a range of different scenarios indicating electricity prices may rise by between 100 and 300% within a decade. Other estimates indicate petrol and diesel prices might increase by between 6 and 15 cents per litre, relative to what they would otherwise have been. While these results are highly speculative, they give some indication of likely future scenarios for farm businesses. also important to remember is the indirect impacts of higher fuel costs on rural areas, which arise because This article examines the implications of likely government climate change policy responses for australian farm businesses, and highlights that climate change policy decisions are likely to have a greater impact on farm businesses in the short to medium term that climate change itself is. Mick Keogh, Executive Director, Australian Farm Institute government climate change policy responses and their implications for farmers Governments are now considering or have implemented policies to try and limit man-made greenhouse gas emissions.