You know, its easy to understand WHY there is so much confusion around the difference between ‘going carbon neutral’ and ‘earning a carbon credit’ for Landholders. After all, there is no Formal education available, no Government or policy group clearing up the differences or the pros and cons.
However, education will be available soon - I'll cover that next newsletter - so stay tuned!
Little wonder then that I’m often asked the questions: “I’m thinking of going carbon neutral to get a premium, is this a good idea?” and “Can I do that as well as earn a carbon credit?”
So, here is the explanation in a few words. For more information on going Carbon Neutral under the Governments’ NCOS system visit our website; and the official site is http://www.environment.gov.au/climate-change/government/carbon-neutral/ncos.
Right up front I will say that I believe earning a Carbon Credit is better for Farmers/Farming and the climate in general. This is because it provides an INCOME which in my mind is far better, and longer lasting than a PREMIUM for your product/process - which is what Farmers and others look for after the process of going Carbon Neutral.
To go CARBON NEUTRAL you need to:
- Have your ‘carbon footprint’ calculated. The size of this will depend in part on your enterprises, how much diesel/ nitrogenous fertilizer you use and how many cattle you carry. There are calculators or companies who will assist with this.
- Find ways to improve your efficiencies to lower your footprint – fuel switching, fertilizer switching, cattle management etc.
- This will lower your footprint, but not ‘wipe it out’ which is what ‘Carbon Neutral’ means.
- Therefore, you either have to BUY carbon credits from others to get to zero emissions, or generate your own e.g. by Planting Trees.
- You will need to gain certification that you ARE carbon neutral, including an audit and ongoing monitoring etc.
- Once you have the ‘tick of approval’ i.e. your certification, you can make claims about your product being carbon neutral – and seek a premium.
To earn a CARBON CREDIT you need to:
- Investigate available ‘methods’ – “What can I do on my farm to potentially earn a credit?” – plant trees, reduce methane, improve soil carbon or regrow a forest are a few available under the ERF (now also known as the Climate Solutions Fund – CSF). You may talk to experts or the Government to make these decisions.
- Seek expert advice about HOW to go about this – often from a Project Developer, but increasingly more Landcare groups and others are gaining expertise in this.
- Make your decisions. How long for a ROI, what price of carbon to use? What partnerships can be made? What is the opportunity cost of not engaging?
- Follow the rules. Undertake your New activity, measure, monitor, keep records.
- All going well, CLAIM your emissions reduction or Carbon Sequestration. This can take from 1 year, to 3 or 4.
- Sell to the Government or other buyer. Income from 7 years to 25 years depending on the method.
So, one pathway can give a potential premium and one an income. In both cases you will be reducing emissions going into the air or storing it in trees or soils. The claims you can make however, are different.
OH and BTW, since the last newsletter, the spot price of ACCUs is now $16.25 up from $16.10 last month… Up it continues to go!
As always, questions and feedback welcome.
Not sure what a project might look like for you?
Read about the 5 most popular carbon farming methods: