With the release of the Garnaut Report on climate change policy in Australia this week, there has been a lot of talk about the impact of any emissions trading scheme on agriculture. Here I argue that farmers are unlikely to benefit from one of the management options being discussed: carbon sequestration in soils.

Agriculture looks like it may be included in Australia’s emissions trading scheme, although probably not immediately, due in part to difficulties in reliably measuring emissions and levels of sequestration.

Its eventual inclusion is likely to affect agriculture adversely, particularly due to the need to pay for emissions from livestock. To moderate this impact, people have been looking at the potential benefits to agriculture from sequestration of carbon. This PD discusses one of the sequestration options that has had some attention: sequestration in agricultural soils.

Firstly, what is it?

Soil carbon sequestration is the process of transferring carbon dioxide from the atmosphere into the soil through crop residues and other organic solids, and in a form that is not immediately reemitted. This transfer or “sequestering” of carbon helps off-set emissions from fossil fuel combustion and other carbon-emitting activities while enhancing soil quality and long-term agronomic productivity. Soil carbon sequestration can be accomplished by management systems that add high amounts of biomass to the soil, cause minimal soil disturbance, conserve soil and water, improve soil structure, and enhance soil fauna activity. Continuous no-till crop production is a prime example.” (Sundermeier et al., undated),

Under an emissions trading scheme, farmers who increase their soil carbon above the existing level would, in principle, be able to sell emission permits to other emitters, or use them to offset their own emissions elsewhere on the farm. There has been some optimism about this prospect. For example, in relation to agriculture, Garnaut says, “The most significant opportunities may be in the area of improved carbon sequestration through better management of soil carbon.” (p. 355).

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. There are several reasons for this.

1. It is difficult to increase the amount of carbon stored in most cropped soils in Australia, even with zero till and when large amounts of stubble are retained (Chan et al., 2003).

2. Soil sequestration is a once-off process. Once farmers change their management to increase soil carbon, it increases up to a new equilibrium level and then stops. After that, there are no net additions of carbon to the soil each year. This means that a properly designed emissions trading scheme would pay the farmers for their extra sequestration once, but only once. The carbon would not be a source of annual income. The annual financial benefit would be the value of the carbon sequestered times the interest rate, which means it is small relative to other economic drivers of farm management. The farmers would need to maintain their soil carbon at the new higher level in order to avoid having to pay for emissions permits.

3. It is difficult to measure the amount of carbon stored in soils. To do so in a convincing way would involve regular and ongoing costs, which would eat away at the modest once-off benefits.

4. John Passioura (2008) has pointed out a crucial and under-recognised problem: increasing humus in the soil (e.g. from reduced tillage) does tie up carbon, but it also ties up other valuable nutrients: nitrogen, phosphorus and sulphur (Williams and Donald, 1957; Passioura, 2008) which would otherwise be available to increase crop yields. He estimates that in Australian cropping conditions, the cost of replacing these nutrients using additional fertilizer would be sufficient to wipe out any benefits from carbon sequestration even if the CO2 price was as high as $80 per tonne. He acknowledges that the error margin around this estimate is large, but even so there is clearly likely to be little or no net benefit at the sort of CO2 price currently being discussed: $20 to $40 per tonne.

This combination of issues means that farmers who are looking for opportunities to benefit from climate change policy should probably look at other options.

Also note that I am not referring in this piece to the idea of storing carbon as biochar, only to attempts to increase soil carbon through changes in land-management. At this stage I am not for or against biochar.

David Pannell, The University of Western Australia

Further Reading

Chan, K.Y.; Heenan, D.P., and So, H.B. (2003). Sequestration of carbon and changes in soil quality under conservation tillage on light-textured soils in Australia: a review, Australian Journal of Experimental Agriculture 43(4): 325-344.

Passioura, J. (2008). The hidden costs of sequestering carbon in the soil, GRDC Groundcover.

Sundermeier, A., Reeder, R., Rattan Lal, R. (undated) Soil Carbon Sequestration—Fundamentals, http://en.wikipedia.org/wiki/Biochar.

Williams, C.H. and Donald, C.M. (1957). Changes in organic matter and Ph in a podzolic soil as influenced by subterranean clover and superphosphate. Australian Journal of Agricultural Research 8(2): 179-189 .