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346. Soil carbon is a highly flawed climate policy, Part 1

The idea of paying farmers to sequester carbon in agricultural soils has once again become politically prominent. It is still an idea with little potential benefit for farmers.

Soil carbon features in the Australian Government’s “Technology Investment Roadmap” and has been widely spruiked this year by the Minister for Agriculture, David Littleproud. The Government hopes that it can make a major contribution to achieving a target of net zero emissions by 2050, which the Prime Minister has flagged will become the national target. To that end, we are promised a new “National Soils Strategy”.

Prominent economist Ross Garnaut is also enthusiastic about the prospects for soil carbon. In his 2019 book Superpower: Australia’s Low Carbon Opportunity, he says “Australia can make an exceptional contribution to climate action by creating natural systems to store more carbon in soils”.

Thirteen years ago, in PD127, I wrote that “Unfortunately, in my judgment, payments for extra carbon sequestration in soils from changes in land management will result in little, if any, benefit to Australian farmers.” This matters because farmers won’t participate unless they see a benefit for themselves.

I gave four reasons for this pessimism:

1. It is difficult to increase the amount of carbon stored in most cropped soils in Australia. Here is a recent quote from Michael Crawford, CEO of the CRC for High Performance Soils. “Australian soils and our climate and our farming systems don’t lend themselves to storing great amounts of carbon.” … “Australian crop growers have been practising methods advocated for improving soil carbon for decades and soil carbon levels haven’t changed all that much”.

2. Soil sequestration is a once-off process. People seem to imagine that new carbon can continue to be sequestered indefinitely, but once farmers change their management to increase soil carbon, it increases up to a new equilibrium level after about 20-30 years and then stops. Farmers need to stick with the new management regime to avoid releasing the carbon they have sequestered, so costs continue to be incurred, but not new benefits that would justify further payments.

3.       It is costly to measure the amount of carbon stored in soils. Regular soil testing is needed to confirm that carbon has been sequestered (indicating that a payment is justified) but the current cost of testing probably outweighs any benefit of the program.

4.       The process of storing carbon in the soil also ties up other nutrients (nitrogen, phosphorus and sulphur) that would otherwise be available to plants. The cost of replacing these with fertilizers (or the loss of yield if they are not replaced) further reduces the benefits of the whole approach.

To these, I would now add two more problems.

5. One of the main methods being suggested for increasing soil carbon is converting land from crop production to perennial pastures. (It is the one practice that is highlighted on the Government’s Soil Carbon web page.)  Not only would switching to perennial pastures be substantially less profitable for many crop farmers – a far greater drop in profit than can be offset by any plausible carbon payment – but it will actually increase emissions overall, at least with current technologies. What farmers do with pastures is use them to run livestock, and methane emissions from livestock are a bigger concern than emissions from cropping. Sooner or later, governments will realise this and they will rule out making any payments unless livestock are excluded from the pastures, which will make the approach a non-starter for farmers. Scientists have been working on ways to reduce emissions from livestock for at least 20 years, but there doesn’t yet seem to be a practical solution.

6.       Australia has regular droughts. When there is a drought, carbon is released from the soil. In principle, farmers would need to pay back an amount to cover the losses. Politically, that will never happen, but we will still need to account for those losses when we report internationally. That will surely put a dampener on the Government’s enthusiasm for continuing the policy at that point.

The Technology Investment Roadmap that I mentioned has an objective of reducing the cost of testing soil carbon from $30/ha to $3/ha. This is described in the document as a “stretch goal”, which I suspect means it is just a number out of the air, without any particular basis for thinking that it can be achieved. But even if it can be achieved, it only addresses one of the six problems I’ve summarised above.

I worry that a lot of farmers are being misled into thinking that there are great financial opportunities here. I think there is only one way that farmers could benefit, and that is if the government designs its policy extremely badly such that farmers get paid more than is justified by the amount of new carbon that is being sequestered. That could happen, but then it would not be a climate policy but a farmer subsidy policy.