The rapid growth of the carbon market isn’t just a fact being celebrated by carbon industry players alone, but by governments, investors and environmental organisations worldwide. However, if the industry is going to keep pace with demand and grow to a point where Australia can feasibly meet globally acceptable emissions reduction targets, then the market needs to grow.
Titled ‘Boosting Supply’, a plenary discussion at the Carbon Market Institute’s Carbon Farming Forum on Friday September 10 sought to discuss the nature of—and need for—this continued market growth. Comprising speakers from a diversity of sectors including the carbon farming industry, conservation, finance and land management, the discussion featured GreenCollar’s own Chief Science Officer, and co-chair of CMI’s Landscape Taskforce, Jenny Sinclair.
Scaling the Market
Perhaps the most straightforward notion of scale is that of financial growth. Alex Toone, CBA’s Global Head of Commodities, identified the need for sufficient liquidity and transparency to drive further investment in the carbon market, and the need for larger players like CBA to leverage their brands to help drive investment. But driving scale on the demand side is just one aspect of how the carbon market needs to grow. According to GreenCollar’s Jenny Sinclair, demand is already beginning to outstrip supply, and more opportunities must be created if the market can continue to grow.
Currently, carbon farming has adopted a ‘one activity, one method’ status quo, leveraging off what Jenny refers to as the “low-hanging fruit” of the land sector –avoiding emissions through regenerating previously cleared land and other revegetation-centric activities.
But the reality is, there’s the equivalent of two Amazon rainforests worth of carbon currently in the atmosphere, and even if trees were planted on every square metre of available land on earth, it still wouldn’t be enough to sequester all that carbon. There needs to be a shift, away from single methodologies and towards what Sinclair calls “more holistic land management”, which accounts for emissions and carbon reduction in all activities, from land clearing and soil management to fertiliser application, enteric emissions and fire management.
A land management method addressing these considerations has been drafted for the Clean Energy Regulator’s 2022 land method priority list. Developed by the CMI’s Land Taskforce, of which Jenny is a co-chair, this proposed land management method is called Land Management and Agricultural Productivity (AL-MAP).
By leveraging off existing vegetation and agricultural methods, the proposed method creates an accounting framework for the abatement generated by activity change in all relevant carbon pools. Rather than just focusing on one prescribed area of carbon reduction or sequestration, AL-MAP includes above ground biomass, below ground biomass, soil carbon, the debris pool, enteric emissions, project emissions and wildfire emissions.
The outcome of this more holistic carbon calculation is that when all activities and abatement sources are accounted for, the supply of sequestered carbon on a single property increases. This is significant, as it increases project viability for properties that are too small for standalone carbon projects. As Jenny Sinclair puts it: “climate, environmental and productivity benefits that you get across the whole landscape can really open the door for smaller producers”. Formally quantifying co-benefits also stands to deliver similar supply increases, driving up the amount of benefits derived from a single property.
The other focus for the scaling up of the carbon market in Australia, is the need for increased collaboration. Addressed by every member of the panel, the requirement for increased partnership is something that needs to occur at a farm level, a market level and between different sectors.
As pointed out by fellow panellist Mara Bun, President of the Australian Conservation Foundation, the market is reaching exponential growth curves, spurred on by corporate net zero commitments. However, continued carbon market growth will become difficult as a growing lack of land availability slows the supply of credit generation. By deepening partnerships between farms and making it possible for a single carbon project to take place over a number of properties, involvement in carbon farming can be expanded, as can the amount of land available for carbon projects.
Yet this is just a part of the collaboration that will be needed to scale the industry. Cooperation with other sectors is going to be vital in growing the industry, not just increased collaboration with carbon and environmentally-focused organisations, but what Greening Australia’s Brendan Foran calls ‘strategic intersectionalities’ with venture capital entities, the agricultural sector and tech. To grow the industry effectively, it needs to become far less of a ‘closed shop’ approach.
Scaling the carbon market means scaling in all areas – in land management techniques, the accounting of project benefits, input from investors and the collaborations inside and external to the carbon farming industry. The market has experienced unprecedented growth recently, but will not be able to rely on the same techniques – always looking for new ways to ensure the carbon farming industry remains a growing asset, both environmentally and financially, for years to come.