Agriculture is the latest frontier on which skirmishes are taking place between protagonists on the need for an emissions trading scheme tax. The federal government has indicated it will agree to exclude direct emissions from agriculture from the ETS ambit.
Agriculture accounts for about 18 per cent of Australia's annual 550 million tonnes of greenhouse gas emissions -- or about 90 million tonnes.
Among the representatives of the farming community, National Farmers Federation president David Crombie and the Nationals' Barnaby Joyce have taken contrary views on the best approach for farmers to the government's carbon tax proposals.
Crombie says a carbon tax is inevitable and that farmers should therefore move to damage limitation and try to gain some benefits from it. He has in mind gaining credits from shifting to different forms of farming (for example, forestry) or ceasing to farm.
Joyce says the carbon tax will be a disaster for all productive sectors of the economy and that farmers will also inevitably be victims.
While Joyce is undoubtedly right, little in the debate on greenhouse gases is wholly as it appears.
Land is a natural greenhouse sink as well as a source of emissions. The greenhouse-gas diplomats planned for only a limited ability for land use to claim credits. Originally such credits were to be confined to changing land from productive to the wasteful uses much applauded by the green zealots who have captured the debate.
The notion of carbon credits from land was widened somewhat by the "Australia clause" -- article 3.7 in the Kyoto protocol. That clause permits countries to count changes to land use and forestry as part of their aggregate net emissions estimates.
By largely banning new land clearing for agricultural production, Australia has claimed offsetting emission credits, bringing us nominally close to meeting our Kyoto target. Without such claimed offsets our emissions will be some 30 per cent greater than 1990's levels and considerably above the 8 per cent target.
But the usage of land does not need to be changed for it to be a greenhouse gas sink.
Globally, land absorbs more than 9 billion tonnes of carbon dioxide annually, says the CSIRO's Michael Raupach. Given Australia's share of the world's land area, that means we are likely to be a sink for some 137 million tonnes a year, which is considerably more than the 90 million tonnes of emissions attributed to agriculture. The open spaces of Australian farms, forests, national parks and Aboriginal land actually sequestrate considerably more carbon dioxide than they emit.
The Garnaut report recognises this point. Ross Garnaut quotes one authority as saying that, "rangelands (accounting for 70 per cent of Australia) could absorb at least half of Australia's current annual emissions, or some 250 Mt, for several decades".
Hence, paying landholders for their land's sink attributes while taxing them for the emissions is likely to leave farmers net gainer.
With Australia emitting more than 550 million tonnes of CO2 and its equivalent a year, the annual value of emission rights at a price of $50 a tonne is more than $25 billion. That's equivalent to half of what the goods and services tax collects.
If the government is to recognise land's absorption of CO2 and allow landowners to benefit and trade in carbon credits like others who hold carbon emission rights, these rights will be worth close to $7 billion a year. And if, as is likely, land were also to be a sink for other greenhouse gases the sums will be even greater.
As the ETS now stands, even if agriculture per se is excluded, farmers will end up paying tax through their purchases of fertiliser, electricity and other inputs as well as in the processing of farm products that must compete with untaxed farm output from overseas.
Introducing a true accounting system would change this radically. But it would also emasculate the revenue bonanza the Rudd government is hoping to reap for itself from the carbon tax.
The government wants the revenue from the ETS for its war chest to buy future elections. So it's not going to happen.
Indeed, as things stand, excluding the 18 per cent of emissions that stem from agriculture means even more draconian tax measures on the remaining users. Will we see a compensatory tightening of other emissions or is this all simply about dressing the turkey for a December political feast?
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