I’ve spoken about the difference between going carbon neutral (a cost) and selling carbon credits (an income) before…
Now, Terry McCosker makes some great points about insetting – reducing emissions internally. (The below is from an article first published in Beef Central, reproduced here with permission.)
This is an important topic for farmers to get their heads around, and that is why we’ll be featuring it at the Nature-Based Solutions Conference & Expo. We’ll give landholders the information and let them decide for themselves.
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Now let’s hear from Terry.
Insetting has emerged as a new term in the carbon market in recent years as food service, meat processing and the livestock industry set ambitious targets to eliminate emissions from their supply chains.
As the name suggests, carbon insetting is the direct opposite of carbon offsetting – it refers to a company implementing methods to reduce emissions internally. Carbon offsetting is when a company looks to reduce its emissions footprint by purchasing credits externally to offset its own emissions.
It is not possible to do both with one credit, as they are publicly registered and can only be used once.
But there appears to be demand for both practices as many food service companies and processors have stated their intentions to decarbonise supply chains, which may rely on producers insetting instead of selling them as offsets.
While many are yet to make a clear pricing structure, well-known carbon service provider Terry McCosker (pictured below) said low-carbon beef was likely to come at a cost to producers.
“I have done some calculations on one of our properties and I believe it would cost supply chains $2.77/kg liveweight more to overcome the opportunity cost of selling the ACCUs,” Mr McCosker said.
“It varies from property to property, but they would at least demand more than $1/kg to keep credits within their business.
“In the example above, insetting 700 ACCUs to become carbon neutral would have a cash cost of $31,500 to a producer, at $45/ACCU, which may be an advantage to the supply chain at the consumer end. However, it does not help the supply chain pay for its efforts to decarbonise.”
Potential for producers to do both
Mr McCosker is the chair of Carbon Link, which has a series of projects currently going through the auditing process of the Clean Energy Regulator awaiting the issuance of ACCUs. He said the projects they were undertaking were showing production to be significantly carbon negative.
“Every thousand kg of animals these guys have run over the past five years has drawn down an average of nine tonnes of CO2 after accounting for emissions,” he said.
“This makes well managed livestock a significant contributor to removing CO2 from the atmosphere, contrary to the popular narrative which focuses on their emissions.”
Mr McCosker said if producers were forced to inset, there was still potential to sell credits.
“Livestock producers have the potential to create credits beyond their own requirements,” he said.
“For example, a livestock producer may sequester the equivalent of 10,000t of Carbon dioxide with emissions of 700t per annum. Therefore, they could retire 700 ACCUs (1 ACCU = 1 t CO2) and become carbon neutral. The 700 ACCUs would be insetting. They could then sell 9,300 ACCUs to another organisation.”
Significant growth expected in ACCU market
In terms of selling offsets, the market for Australian Carbon Credit Units has been hovering between $30 and $40 for the past six months – it started this week at $37.50, according to market information service Jarden.
Looking forward to discussing it with you all,
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