Soil Carbon Sequestration Policy in Australia: The Additionality Dilemma

Abstract

The Australian Carbon Credit Unit (ACCU) Scheme provides opportunities for farmers to benefit financially from sequestering additional carbon in their soils. The Scheme assesses additionality using a ‘newness’ test; if one of a list of eligible farming practices was not used by a farmer in a 5-year baseline period, its use within the project is considered to be additional. However, this approach is unable to detect non-additionality in cases where farmer adoption of the eligible farming practice is increasing in the absence of carbon credits. This analysis uses parameters from the actual scheme, combined with soil carbon sequestration rates informed by scientific research, and calculates net financial benefits to farmers from participation in the soil carbon method of the ACCU Scheme. In most scenarios modelled in this study, the net benefits to farmers from participating in the soil carbon scheme are small relative to other costs and revenues from farming (assuming that a recognised existing design problem with the scheme that is causing over-crediting is corrected). As a result, the area of additional projects is relatively small and can easily be outweighed by non-additional projects. Therefore, the expenditure on ACCUs required to achieve a tonne of genuine CO₂-e mitigation can be extremely high: up to 80 times higher than the cost of an ACCU in one of the scenarios explored. The prospects of developing a system that accurately assesses the additionality of soil carbon projects seem remote.