Keeping trees in the ground means dollars for farmers Oakvale, NSW. Killawarra & Buckaroo, NSW. Young Carbon Farmers Case Study.

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1 Young Carbon Farmers Case Study Keeping trees in the ground means dollars for farmers Oakvale, NSW and Killawarra & Buckaroo, NSW This case study is one in a series showcasing how Australian producers are successfully using best management practices to reduce the impact of climate variability, reduce their greenhouse gas emissions and improve productivity. Producers: Kerrie and Bruce Jordan (managers) Producers: Peter Groegor Property: Oakvale Property: Killawarra and Buckaroo Location: Between Coolabah and Bourke, NSW Location: Coolabah, NSW Property area: 15,000 hectares Property area: 20,000 hectares Enterprises: Sheep Enterprises: Sheep and cattle Soil type: Red sandy loam Soil type: Red clay Rainfall: 400mm average rainfall Rainfall: 400mm average rainfall KEY POINTS Avoided deforestation allows landholders to claim Australian carbon credit units (ACCUs) through Carbon Farming Initiative (CFI) offset projects for not clearing existing native vegetation (where clearing approval has already been given), and protecting it for the next century. Projects must meet certain criteria and the lands can still be grazed after approval. Landholders are already receiving significant payments for ACCUs granted for avoided deforestation through the ERF and the CFI. The Young Carbon Farmers project is supported by funding from the Australian Government

2 Keeping trees in the ground means dollars for farmers Kerrie and Bruce Jordan, Oakvale and Peter Groegor, Killawarra and Buckaroo DEFINITIONS Climate variability means natural alterations in the earth s climate 1, or the shorter term (daily, seasonal, year-to-year) variations in weather. Australia has a highly variable climate, which includes cycles of wet and dry periods, and droughts. El Niño (dry) or La Niña (wet) events are part of climate variability. Climate change means the long-term changes in average weather patterns, such as the rise in global average air temperatures. It involves a persistent series of unusual or anomalous weather events, rather than simply one or two unusual weather events. The World Meteorological Organisation describes it as when events that used to be rare occur more frequently (e.g. summertime maximum air temperatures increasingly break records each year), or vice-versa (e.g. duration and thickness of seasonal lake ice decreasing with time) 2. CO2-equivalent is a way of measuring the global warming potential of greenhouse gases such as methane and nitrous oxide compared to carbon dioxide (CO2). For example, nitrous oxide has a global warming potential of 298, which means that one tonne of nitrous oxide in the air has the same effect as 298 tonnes of carbon dioxide over a 100-year time frame Climate-Change-Book/Chapter-2- Climate-and-greenhouse-gases.aspx 2. Parliament/Parliamentary_Departments/ Parliamentary_Library/Browse_by_Topic/ ClimateChange/theBasic/climate ccl/faqs.html 3. Parliament/Parliamentary_Departments/ Parliamentary_Library/Browse_by_Topic/ ClimateChange/theBasic/greenhouse Background Planting native vegetation as a method of removing carbon dioxide from the atmosphere by sequestering carbon is a generally understood idea but not all farmers are aware that the avoided deforestation methodology could allow them to reap financial benefits from carbon held by the trees already on their properties. For Western NSW farmers Kerrie and Bruce Jordan (managers of Oakvale ) and Peter Groegor (owner of Killawarra ), avoided deforestation has allowed them to claim payments for Australian carbon credit units for not clearing the existing native vegetation on their lands, with the commitment that they will protect it for the next 100 years. The methodology for avoided deforestation applies to a native forest that has received government consent to be cleared and converted to cropland or grassland. Abatement is achieved by not clearing the native forest thereby avoiding the emissions that clearing would have produced. Additional abatement may be achieved by managing the native forest in a way that enhances carbon stocks. 4 The key to eligibility is that the project land must have been a forest on 31 December 1989 and landholders must have a government clearing permit dated before 1 July 2010 to clear the land. Not proceeding with land clearing and therefore avoiding the emissions that clearing would have produced allows the landholder to apply for carbon credits. Josh Harris, Carbon Farming Development Manager with Climate Friendly, one of the firms which originates and implements CFI projects, says avoided deforestation is providing good returns from a new income stream for some landholders. We have a substantial carbon hub in Western NSW, where large properties can now earn an income stream based on their protection of existing native forests that were earmarked for clearing. These projects worked under the then carbon tax legislation and will be eligible to generate an income stream throughout their seven year contract term under the new Carbon Farming Initiative Amendment Bill 2014 which was passed by the Parliament on 24 November 2014 said Josh. One great strength of this program is that it is not locking up land. Sustainable grazing can still be carried out on the properties. While farmers need to protect the forest areas for 100 years, they can still run livestock across the forest. Under the CFI the Australian Government has issued Australian Carbon Credit Units (ACCUs) to a number of avoided deforestation projects including the Oakvale Native Forest Protection project, arranged by the Jordans in association with Climate Friendly, and the Killawarra Native Forest Protection project, arranged by Peter Groeger and Climate Friendly. Those landholders are now receiving their first CFI payments and they are significant. Oakvale Native Forest Protection project Oakvale is a significant historical property in Coolabah, Western NSW. Covering 15,422 hectares of forest, grazing and cropping land, it was explored in the gold rush in the 1800s and has been grazed for many decades. The current farm managers, Bruce and Kerrie Jordan, have been working with the property owner on a farm management plan that focuses on conservation. In the past five years the couple have constructed 46km of fencing, reduced sheep numbers by approximately 3,000 and removed 1,000 feral goats from the property. They have also run hunting and baiting programs to reduce feral animals on the property, including foxes, cats, rabbits and pigs. Since the sheep were removed in 2010, the property has been stocked very conservatively, with the Jordan s running no more than 600 sheep at any one time. The area used for cultivation around 800 hectares is sown to various fodder crops (depending on seasonal conditions) to reduce the need to run livestock in native vegetation areas. 2

3 Oakvale is a special place, a real mixture of habitats including rangelands, wetlands and native forest areas, said Kerrie. While we run some stock and cropping at the front, the back country is still like a nature reserve in many places. In early 2010 we worked with the Western Catchment Management Authority to protect two High Conservation Value areas, of about 360 hectares each, which are significant for wildlife and flora and are a breeding ground for many bird species and other fauna. Oakvale has a large diversity of fauna and flora including over thirty species of trees and nineteen shrub species. Fauna including the striking crucifix toad, planigale, the endangered Kultar (a mouse sized marsupial) and the wedge-tailed eagle make their home on the property as do native bees that produce honey in red box trees. The property also contains a small wetland, which is used as a migration stop over and feeding ground for many native bird species including brolgas and black swans. We have a commitment to de-stock those areas and keep them weed free part of the owner s commitment to environmental protection, said Kerrie. Oakvale had a 2009 approval to clear some 14,500 hectares (around 80% of the property) to establish native pastures and increase sheep numbers and it is this land that has been included in the CFI project. The great thing is that we can now continue with our existing management strategies for the CFI project areas maintaining fence lines, keeping firebreaks clear, managing feral animals and even running some stock in those places if need be. We did have to commit to keeping those forests for 100 years. Personally I m very happy that we re protecting those natural areas and the native creatures that live in them. It generates income without destroying the country and we have other options now like going into ecotourism. IMAGE TO COME Sunset Ranch Native Forest Protection project Oakvale Images supplied by Kerrie and Bruce Jordan Peter Groegor of Coolabah owns two properties totalling some 20,000 hectares, in Western NSW. The larger property, Killawarra Station, contained a lot of timber when he purchased it in 1995, including cypress pine, bimble box, wilga, false-sandalwood and mulga trees. There was a lot of timber on the land and I bought it with the intention of logging it over time, said Peter, who lived in Sydney when he first purchased the land but now lives in Coolabah full time. I ran sheep on the property too, but as it became very dry in the last few years, I sold off all my sheep and I m now agisting small numbers of sheep and cattle until I am ready to restock. Five years ago Peter heard about the CFI on the news and thought it was worth investigating to see if it would apply to his property. He stopped logging and started researching. I m a business-minded person so I did my homework and investigated it thoroughly, which took a long time, he said. I could 3

4 see there was huge potential for my situation. I made the application myself and when we got the application in I decided to use Climate Friendly as my agent. Peter s application was successful and as a result he protected some 8,500 hectares for the next hundred years, though he is still able to graze the land if he chooses. There is more value for me in preserving the carbon than in clearing it and running stock. Plus I have less work to do on that part of the property I just need to maintain the fences and firebreaks and make sure the native forest is protected. Peter s initial payment came in June He will receive annual payments over the next seven contracted years under the Government s Emissions Reduction Fund. I plan to put money back into the property, he said. Especially the second property where I want to build up the stock. In fact the money has given me more freedom to do what I want with the land. Peter said farmers interested in claiming carbon credits for avoided deforestation should investigate the options fully. I don t think it s financially viable if it s only for small areas of land in those cases it might be more profitable to clear them and run stock, he said. But on larger blocks like mine, there can be a big income stream from the carbon. There is less risk from drought also. I ve found some farmers to be sceptical that the returns will eventuate, but I have the first payment in the bank it is actually happening and it s a great opportunity to generate income while still farming the land. Tree measurement Image supplied by Climate Friendly The bottom line To be declared as eligible offsets projects under the CFI, Oakvale and Killawarra were rigorously assessed by the Clean Energy Regulator. The total Australian carbon credit units granted to each property in their first issuance was 98,453 for Oakvale and 164,472 for Killawarra are recorded on the Clean Energy Regulator s public register. Eligible projects receive payments for the seven years of the contract period under the new Emissions Reduction Fund, said Josh. Some of the payments being granted to landholders are significant, so they may be receiving a substantial income stream for that time. They still keep the land and they can still graze animals across it. It s a win all round. 4

5 For more information About the Carbon Farming Initiative: Five steps for participating in the Carbon Farming Initiative: Sequestration methodology: Native forest protection (avoided deforestation) The transition from the CFI to the ERF: Transitioning-from-the-CFI-to-the-ERF The CFI negative list: Department of Agriculture s ERF and CFI page: Climate Friendly: Sefton & Associates admin@seftonpr.com.au Young Carbon Farmers Future Farmers Network admin@futurefarmers.com.au Young Carbon Farmers is a national project created by rural communication specialists Sefton & Associates, with the Future Farmers Network, and is supported by funding from the Australian Government. Sefton and Associates - December

6 The Carbon Farming Initiative (CFI) allows farmers and other land managers to earn carbon credits by storing carbon or reducing greenhouse gas emissions on the land. Participants can generate carbon credits by setting up a project under an approved CFI methodology, which sets out the rules for the activity. Participation in the CFI involves five steps: 1. Planning a project 2. Applying to participate in the CFI 3. Applying to have your project declared as an eligible offsets project 4. Reporting and crediting 5. Participating in the market. Breakout article How to claim carbon credits as part of an avoided deforestation This methodology could be used by landholders who still have native forest on their property and who have received government consent to clear the land. A CFI project established under this methodology can generate credits for not clearing this land and maintaining it as a forest. While this methodology only covers a proportion of land within Australia where deforestation could occur, it has the potential to achieve high levels of abatement. The methodology for avoided deforestation applies to a native forest, which has received government consent to be cleared and converted to cropland or grassland. Abatement is achieved by not clearing the native forest and thereby avoiding the emissions that clearing would have produced. Additional abatement may be achieved by managing the native forest in a way that enhances carbon stocks. Projects are issued 5 per cent of estimated abatement each year over the contract period. This methodology differs from other vegetation methodologies in that it applies to native forest protection, rather than planting new forests. The CFI permanence rules recognise the realities of Australia s natural environment and climatic conditions. Owners of avoided deforestation projects will not be penalised for losing carbon through no fault of their own. In the event of naturally occurring events such as bushfire or disease that reduce carbon stocks below previously credited levels, the landholder must take reasonable action to re-establish carbon stores and crediting cannot continue until carbon stocks have recovered. Projects need to meet the following requirements: Project land must have been a forest on 31 December 1989 and when the project started. The landholder must have received consent before 1 July 2010 to clear the forest for the purposes of converting the land to cropland or grassland. The proponent must provide evidence of the clearing consent issued by the relevant Commonwealth, State, Territory government, or local regulatory authority responsible for approval. The CFI negative list outlines circumstances where this activity cannot be implemented. Projects must be monitored for disturbance in the course of each reporting period. It s important to keep project records because they will be used to calculate the abatement that has been achieved by the project. Projects are required to submit a report to the Clean Energy Regulator every one to five years and they must be audited by a registered CFI auditor. The Government has introduced the Emissions Reduction Fund (ERF). Through the Emissions Reduction Fund auction arrangements, the Government will purchase Australian carbon credit units from existing CFI projects that are competitive at an auction. This will allow existing participants in the CFI to secure a return from eligible projects. Existing Carbon Farming Initiative projects will automatically be registered under the Emissions Reduction Fund. One significant change to sequestration projects under the ERF is the permanence period. The Clean Energy Regulator website states that 5 : Under the Emissions Reduction Fund, sequestration projects can choose a permanence period of 25 or 100 years, but making that choice requires careful consideration. Key Points: Under the Emissions Reduction fund, there will be an option for a 25 or 100 year permanence period Projects with a 25 year permanence period will incur a 20 per cent reduction in the number of ACCUs issued for their projects New projects nominate the permanence period they will use when applying to run a project Existing Carbon Farming Initiative projects are able to swap from a 100 year to a 25 year permanence period within two years of the Emissions Reduction Fund commencing Existing Carbon Farming Initiative projects swapping to a 25 year permanence period will be required to relinquish ACCUs Once a permanence period has been nominated, it cannot be varied 6