GROWCOM has welcomed the Federal Opposition's announcement of their alternative climate change policy for Australia, saying that an incentive-based scheme had long been argued as more suitable for horticultural industries than the Government's Carbon Pollution Reduction Scheme.
Chief advocate Rachel Mackenzie said she believed the policy would be likely to receive broad support from rural industries and communities because it aimed to provide financial rewards for on-farm activities that reduced emissions or sequestered carbon dioxide from the atmosphere.
"However, we have concerns about some of the background details of how the scheme will work in practice and its long-term effect on emissions, small horticultural businesses and the national economy," Ms Mackenzie said.
"For example, the Coalition claims that the policy is fully funded and yet admits that they have yet to find money in the budget to fund the program. We are concerned that the $3.2 billion funding may be extracted from other essential services, including those to rural areas and agricultural research and development," she said.
The centrepiece of the Coalition's policy is the 'Emissions Reduction Fund' that will provide financial rewards to businesses that reduce their emissions intensity below business-as-usual or baseline levels.
As described in the policy document, this fund will essentially operate as a baseline-and-credit system, but instead of a regulated market to decide who pays how much for greenhouse pollution, (as in an emissions trading approach) the Government will simply decide who gets how much money.
"The rules governing the calculation of baseline levels are unclear," Ms Mackenzie said.
"This is a common area for criticism in baseline-and-credit systems. The policy states that there will be penalties for increasing greenhouse emissions intensity but contains no further information on these penalties nor which rules will apply to ascertain liability."
Ms Mackenzie said the recognition of the role of soil sequestration in the Coalition's policy was most welcome, but there were limitations that could reduce the effectiveness of the scheme.
"Because soil sequestration is not recognised in the international accounting rules, soil sequestration will not reduce our national emissions and taxpayers will be required to pay for the shortfall," she said.
She said there are limits to soil sequestration and the tree planting exercise will need to be repeated in regular cycles.
"While it is possible, even probable, that the international rules will be adjusted to include soil carbon at some point in the future, the Coalition is taking a considerable gamble on this rule change.
"And of course, unless other aspects of the rules also change (e.g. involving natural disasters, inter-annual variation and harvested wood products) including carbon in soils and forestry may include a risk of significant future liabilities following fire or drought."
Ms Mackenzie said the policy looked positive for rural industries on the surface, and certainly was an interesting alternative to the Government's Carbon Pollution Reduction Scheme.
"However, a thorough reading of the policy statement reveals that the Coalition may have underestimated the complexity of the international agreements and the implications for domestic policy options."
We await further information on the finer details and supporting regulations before we can make a meaningful comparison between the two alternatives for the horticulture industry," she said.
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