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Offsets focus could leave farmers worse off, finds new report

A new report reveals how Australian farmers are on a collision course with big miners and industrial polluters thanks to the Albanese Government’s Safeguard Mechanism reforms.

The Queensland University of Technology report (available here) analyzes how, by allowing large mining companies and other big polluters access to essentially unlimited Australian Carbon Credit Units (ACCUS) in order to offset their emissions, farmers could lose out in the long term.

The release of the report, commissioned by Lock the Gate Alliance, comes shortly after the Albanese Government published a discussion paper on the net zero pathway for Agriculture and Land. However, that paper is silent on key risks to the sector from industrial carbon offset demand. It raises a question about how the use of offsets by other sectors may impact agriculture, but suggests nothing as to how to assess the scale of the impact.

The QUT report at a glance:

  • In order to fully decarbonise and maintain access to international markets with increasingly strict regulation for carbon neutrality, farmers will need access to least cost abatement options, like land-based carbon sequestration projects.

  • But big polluters like mining companies are likely to buy up large volumes of carbon offsets, limiting access for agriculture, and will even potentially buy properties directly to convert from agriculture to offsets.

  • This could lead to rapid land use change, which can potentially cause short and long term economic and social impacts on regional communities.

  • Land-based carbon offset projects are themselves threatened by extreme weather events made worse by climate change, as well as policy uncertainty and price volatility. 

Maules Creek Landholder Phil Laird said, “Mining companies are already swallowing up huge volumes of farmland and water for coal and gas projects. Now they want access to more farmland so they can theoretically offset these projects.

“The Safeguard Mechanism transfers climate risk from the big polluters to the land sector. For a small capped fee, the mining and gas industry offloads its climate risk onto farmers or crowds out agriculture by buying up large swathes of land if the marginal cost of carbon credits makes it economic to do so.

“Carbon offsetting that shifts the burden of fossil fuel abatement onto agriculture while enabling companies like Santos to develop gas mining on the Liverpool Plains is an entirely possible outcome.

“Farmers are already on the front line facing climate change. The Albanese Government ought to be doing more to secure Australia’s sustainable farmland, helping farmers and their supply chains move toward net zero, not encouraging carbon credits that once transferred to mining, will add new layers of risk onto farmers.”

Lock the Gate Alliance National Coordinator Carmel Flint said, “This report shows the urgent need for the Albanese Government to conduct modelling of the likely scale of demand for land-based carbon credits under the reformed Safeguard Mechanism.

“The Albanese Government has given the industrial sector free rein to use 100 percent carbon offsets under the Safeguard Mechanism scheme rather than requiring them to stop emissions at the source, which may limit the options for agriculture in climate mitigation.

“The reliance by the mining companies and big polluters on carbon offsets is likely to lead to large scale impacts on rural and regional areas, and on access to finance and markets for the agriculture sector, but there has been no assessment done to quantify those impacts.

“We’ve seen perverse outcomes before when schemes are rolled out without any proper modelling, as with the Forestry Managed Investment Schemes, and we need to make sure action is taken now to prevent a repeat of that.

“The recent Net Zero Discussion Paper for Agriculture and Land rightly highlights the need to increase ambition to safeguard agriculture from the worsening impacts of climate change.

“However, it doesn’t properly address how the offsetting structure of the Safeguard Mechanism creates a zero sum situation for agriculture, cancelling out mitigation efforts with industrial emissions and putting climate change goals out of reach,” she said.



The report finds that various attempts at modelling overall demand for ACCU’s in Australia have identified a very large range in estimates, which raises concerns about the scale and the speed of the impact on agriculture.  

For example, Reputex modelling of potential demand for ACCU’s to offset all Beetaloo Basin gas domestic emissions led to estimates of 3 million hectares of land needed for environmental and plantation forestry projects to offset a medium emissions scenario and 4.2 million hectares to offset a high emissions scenario.  That’s a very big footprint.

The report’s QUT authors argue that the Federal Government needs to conduct modelling of the likely scale of demand for land-based ACCUs under the reformed Safeguard Mechanism. That job is now urgent.

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