Taxing the Carbon out of your farm

taxing-the-carbon-out-of-your-farm

Carbon emissions and targets are back in the news with the election promise by the opposition to ignore the cost to the Australian economy of its policy of a 45% reduction in emissions by 2030 vs the much more manageable 26% target set by the liberals.

Labor’s herculean attempt to reduce Australia’s carbon footprint by a total of 226 million tonnes over the next 11 years is 4 times more than what has been achieved in the past 12 years. Such a massive reduction will require cuts across all parts of the economy but in particularly agriculture.

The difference between the Labor and Liberal targets approximates the emissions from the entire red meat, dairy, trucking, domestic aviation, rail and bus sectors. Assuming a Shorten government is not able to turn our entire power generating system over to renewables in the next decade, or force half of all cars sold to be electric, it raises the question of where they are going to find the means to cut emissions.

The political reality is its highly unlikely they will want to see another doubling of wholesale power prices, nor will they want to load up the price of petrol with a carbon tax as both measures will hit the battlers hard. Plus those ALP members holding marginal outer metropolitan seats know that their electorates love their big four wheel drives, so it’s unlikely they will be supportive of any policy that attempts to force them to trade in their Prado’s for a new electric car that cant’t tow their boats and caravans.

The carbon equation is complex but one thing is simple if you exempt domestic energy and petrol you have to find another big emitter to hit and with 70% of all farm emissions coming from enteric fermentation – burping and farting livestock, plus most of the rest from burning diesel fuel, then they are highly likely to become part of the taxing equation. For agriculture to play its part in the ALPs reduction target, Australia’s sheep and cattle numbers would need to be halved or offset and our agricultural machinery would require upgrading to the latest Euro 6 low emissions engines plus again expensive offsets to even begin to make a dent on the 226m tonne target the ALP is chasing.

Suddenly our important off road fuel rebate becomes an easy target. While the government can’t defend a new tax that is used to cover the cost of building roads it could load primary producers up with a special carbon tax on off road fuel usage. The discussions on costings and equations has already started with the ALP offering government funding for a on farm carbon calculator. In a way this is a political sob to agriculture to warm us up for what’s coming as they are essentially offering Agriculture the opportunity to sell carbon storage projects to industry. But nothing in this world is free, what the government giveth they often then taketh way. The ALP policy comes with no real detail other than to provide $40 million over four years to develop new methodologies and establish a carbon assessment standard. This is a slight of hand or Short-hand for a Carbon Trade system on agriculture where farmers can sell carbon credits but in time they no doubt will be expected to account for their carbon footprint.

Once up and running in government Shorten will be under pressure to account for all of Australia’s emissions and start the push to target big emitters. The politics of marginal seats dictate that an ALP government will be looking to target a group of high emitters which offer a lower risk of an electoral backlash. Such a group exist in farmers in safe coalition county seats.

The fuel rebate has always been on the left green hit list so it will be the first to go. Next will be the call for a tax on older less efficient farm machinery so we could well end up with the introduction of minimum emissions standards on farm. And finally a carbon tax imposed on all livestock will be just another hit to an industry sector already under siege by the ALPs anti live export stance.

Such theorising is not scare mongering, it is just rational deduction on what is required to achieve Shortens mad 45% target. The reality is that if they are prepared to kill off coal fired power stations and coal mines agriculture can’t be too far behind. An Australian Farm Institute study in 2011 found that the cost of a simple $23 carbon price on the average WA grain farm would be $16,389, but carbon prices of $60 plus are being actively modelled by economists to achieve the ALP target which puts the cost closer to $50,000.

The brutal global market that we operate in does not pay for our governments carbon virtue signalling. So, unless you are in the fortunate position to be able to afford to buy all new green, yellow or red farm machinery, run no livestock or pay for offsets, and profitable enough to live with paying a carbon tax on your farm diesel usage your farm business could be collateral damage under Labor’s future climate change solution. That’s the reality of the cost of virtue signalling, it comes with a cost.

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