Agriculture, Climate change, Economics, Policy, Politics

348. Soil carbon is a highly flawed climate policy, Part 3

I conclude my critical look at whether soil-carbon sequestration should be a priority of climate policy. Apart from challenges with additionality, which I covered last week in PD347, there are a number of other issues that hinder the success of a soil-carbon sequestration policy.

In PD346, I quoted Michael Crawford, who is CEO of the CRC for High Performance Soils. He observed that some of the main methods being advocated to increase soil carbon (e.g. no-till and stubble retention) are already practiced by the majority of farmers, so the opportunities for further gains in those areas are low. At least in Australia, much of the low-hanging fruit has already been picked (more so in some states than others).

The option of converting crop to perennial pasture would increase soil carbon, but it is not a practical option (even if it was economically viable) because it would also increase emissions from livestock. (There is a comment that reinforces this point by Peter Thorburn in response to PD346.) Even if the land is originally in a less productive pasture, a switch to more productive perennial pasture would probably see increased stock numbers and therefore an increase in methane emissions (which might or might not fully offset the increase in soil carbon).

The permanence of carbon sequestration is another concern. In a previous policy phase, the Australian Government found that requiring soil carbon to be maintained for 100 years was so unattractive to farmers that they would not participate. In response, the Government reduced the requirement to 25 years, which is a short time frame in the context of climate change. After that time, farmers who have been paid to sequester carbon will be free to switch to a more profitable land use without penalty even if that results in the release of all the newly stored carbon. If we want the carbon to stay in the soil, we’ll have to pay the farmers again. To account for that, the Australian Government discounts the number of tonnes of carbon sequestered by 20%. That discount was calculated at a time when the discount rate used by the Government was 7%. I don’t know what discount rate is currently being used, but with interest rates close to zero, it must be much less than 7%. For example, if it was 2%, the appropriate discount for 25-year permanence would be over 50%. Unfortunately, this is extremely difficult to fix because the 20% discount is specified in the legislation. Changing it would require the issue to go back to the parliament, and that’s highly unlikely.

A problem that might or might not be fixable is the high cost of monitoring and measuring soil carbon. These costs eat up much of the potential benefits of the program. Time will tell if efforts to substantially reduce these costs are successful. A potential concern is that less costly measurements might be less accurate. Reduced accuracy would also eat into the benefits of the program. Weighing up the trade-off between the accuracy and cost of this information would require a complex and sophisticated analysis. It should not be assumed that cheaper is better.

Finally, I come back to the fact that increasing soil-carbon sequestration on a piece of farm land is a one-time event. Once a new farming system is adopted, soil carbon increases for about 20-30 years and then stops increasing. The same piece of land does not continue to offset new emissions indefinitely. This means that, at best, sequestration should be looked on as buying a bit of time while we get a system for reducing emissions in place. It is not a long-term solution.

Overall, it is extraordinarily difficult (probably impossible) to succeed with a policy of paying farmers to increase the sequestration of carbon in agricultural soils. By “succeed” I mean that the policy actually results in the sequestration of substantial amounts of carbon that would not otherwise have been sequestered, at a reasonable cost. And even if it could be made to work, it could never be a long-term solution that addresses our ongoing emissions. For those reasons, soil carbon policy is a distraction that risks diverting the Government’s attention, energy and resources away from other approaches to climate policy that could actually work.