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Australian Cattle Council : Yearbook 2008
page 41 C aTTL e COUNCIL OF a USTR a LI a Y ea RBOOK 2008 both people and goods incur more travel costs than is the case in urban areas. adding to the challenge for australian farmers is the realization that farmers in major competing agricultural-exporter nations such as Brazil, argentina and Russia are unlikely to face the same input cost increases for a considerable period. as a result of climate change policies, farm businesses will face extra and escalating pressure to find ways to reduce farm energy and fuel costs. alternative energy sources will become more attractive, and interest is already growing in technologies such as bio-digesters that can utilise agricultural wastes to generate gas that can be used for heating or electricity generation. Solar energy is also likely to become more viable economically. Management changes that reduce fuel use, such as the adoption of minimum tillage cropping systems and the use of more fuel efficient transport will also become more attractive. Fertiliser and chemical costs are also likely to be impacted, adding to existing pressure to maximise the efficiency of these inputs. In many respects these added fuel and energy costs will simply amount to an escalation of pressures that already exist due to rising fuel and chemical costs, although the fact that these higher costs are almost certain to persist in the longer-term may mean different decisions being made about the energy sources that will be adopted in conjunction with new longer-term farm investments such as packing sheds, cool rooms, and water pumps. FaRM gReeNHOUSe OFFSeTS The near-certainty of higher farm input costs as a result of climate change policies, and the fact that australian farmers are largely price-takers in global markets means it will be increasingly important for farmers to find ways to mitigate the increased costs arising from climate change policies. generating farm income by selling greenhouse offsets to emission trading scheme participants is one possibility, although again, the specific design of an emissions trading scheme will be critical in determining whether or not this is will occur. ‘emission offsets’ are actions that are recognised by the rules of an emissions trading scheme as having a beneficial impact on national greenhouse emission levels. Major emitters that are required to participate in an emissions trading scheme can purchase offsets, and use the emission credit on the positive side of their greenhouse emission accounts to lower their net emissions. Under the rules of existing emission trading schemes such as the one operated by the european Union and the NSW scheme for electricity generators, actions that are recognised as offsets need to pass ‘permanency’ and ‘additionality’ rules. permanency refers to a requirement that the offset action creates a permanent stock of stored carbon, which is capable of being kept out of the atmosphere for seventy to one hundred years. additionality refers to the requirement that the offset is specifically to reduce greenhouse emissions, and not something that would have happened anyway. Creating a plantation of trees is the most widely recognised offset under such schemes. To be eligible as an offset, however, the trees need to be established on an area that was not previously under timber, and there are also accreditation and legal requirements, such as a requirement for a legal caveat on the title to the area of land identifying the separate ownership of the stock of carbon that has been created. Taken together, these requirements are likely to mean that small areas of trees will not be economical to trade as offsets, unless some regional carbon pooling systems are developed that reduce overhead costs. For many farm businesses, however, planting significant areas of land to trees will not be environmentally or economically viable, and this is especially the case on farms that have already done so. The ability of these farm businesses to find ways to mitigate the cost impact of emissions trading policies will depend on whether or not the rules of the trading scheme include recognition of ‘non-permanent’ farm offsets, such as actions that sequester carbon in the soil, or reduce emissions from livestock or those associated with nitrogen fertiliser use. as noted earlier, current emissions trading schemes do not recognise non-permanent offsets, so the farm sector will need to argue strongly for their recognition, either within a national scheme or through an arrangement whereby governments pay farmers for their offsets, based on their greenhouse impact and the prevailing price greenhouse offsets within the trading scheme. ‘Emission offsets’ are actions that are recognised by the rules of an emissions trading scheme as having a beneficial impact on national greenhouse emission levels.