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SO WHAT HAPPENS TO THE CARBON TAX CREDITS WHERE FARMERS ARE PAID TO GROW TREES THAT CANNOT BE HARVESTED FOR 100 YEARS

IT IS difficult to imagine a more wretched waste of a colossal amount of money than paying farmers to plant trees that cannot be harvested for a century.

HOOP PINE FOREST (1)

The new Abbott government is sticking with its plan to spend $1.55 billion on the Carbon Farming Initiative (CFI), part of its policy of direct action to reduce carbon dioxide emissions. The CFI was introduced by the Gillard government with the support of the Coalition.

Most of the money will be spent on growing trees, with the farms on which they are grown accumulating carbon credits. The original plan was for these to be bought by businesses needing to offset their emissions under the carbon tax scheme, but with the imminent repeal of the tax that market will not exist. And hopes of selling them overseas have evaporated with the rest of the world backing away from similar schemes and the virtual collapse of the EU’s carbon credits market.

Thus, apart from a small demand by companies choosing to voluntarily offset their emissions, most of the carbon credits will be purchased by the government. In practical terms, farmers will be paid by taxpayers to grow trees.

More trees may be a worthwhile goal, but this is not farm forestry.

The trees planted to generate carbon credits must continue growing for 100 years and cannot even be properly managed for fire control, otherwise the carbon credits will be lost and the farm obliged to replace the trees or repay the credits. They cannot be harvested for timber to build houses, fences or furniture, or even turned into woodchips to make paper.

If the government wanted to encourage more farm forestry, all it would have to do is improve the incentives, including removing the risk that when it comes to harvesting the trees, native vegetation conservation rules will stand in the way.

Paying farmers to plant trees that specifically cannot be harvested for 100 years is about as close to policy idiocy as it comes.

Some will argue that more trees to soak up carbon dioxide will help contribute to Australia’s role in combating climate change. And so it might. Nobody disputes the fact that atmospheric carbon dioxide is increasing, although there is debate about what effect this is having and whether it justifies government action.

But there is a problem. Even if rising carbon dioxide levels are causing climate change, and even if the consequences of this are negative to human civilisation, planting 20 million trees by 2020, the probably unachievable target of the CFI program, is a drop in the ocean. Its impact on Australia’s carbon dioxide emissions will be negligible and in global terms effectively zero.

Australia will be spending a very large amount of money, notwithstanding a significant budget deficit, rising government debt and many other deserving uses, to achieve next to nothing.

And it gets worse. A recent OECD research paper has confirmed that Australia’s pioneering carbon pricing is damaging its competitiveness, with energy-intensive industries shifting offshore to countries that do not tax carbon. This can only be avoided if Australia’s policies are also implemented by the rest of the world.

Assuming the repeal of the carbon tax, that problem will come to an end. But we will still be stuck with renewable energy targets that lead to the subsidising of solar and wind power generation, a major contributor to high and rising electricity costs. Our energy intensive industries will continue to be at a disadvantage compared to countries where energy costs are not artificially inflated.

But what if the CFI money was used as compensation for those who have invested in wind and solar power as these subsidies are progressively withdrawn? Within a few years our energy sector would be competing on the basis of cost efficiency, industry would benefit from lower energy costs, and consumers would be spending less to keep the lights on.

And that, I suggest, would be a much better use of the money than paying farmers to plant trees

David Leyonhjelm has been an agribusiness consultant for 24 years. He was also elected to the Senate in the recent election as a member of the Liberal Democrats.

He may be contacted at reclaimfreedom@gmail.com

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September 23rd, 2013
Topic: CARBON CREDITS, TIMBER WOOD TREES Tags: , , ,

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