Carbon offsets worth billions to Queensland: report
A new report commissioned by the Queensland Department of Environment and Heritage Protection has estimated that Queensland’s emerging carbon farming industry could generate $4.7 billion under current settings, and with optimised policy setting could be worth up to $8 billion in 13 years.
The report, Unlocking value for the Queensland economy with land and agriculture offsets, produced by energy and carbon management consultancy, Energetics, describes the potential economic value to the Queensland economy of carbon offsets from the land sector, the barriers that need to be overcome and the support that needs to be achieved across government departments.
The report finds that Queensland has a substantial opportunity to participate in developing carbon markets as a supplier of offsets.
“Aside from the significant direct financial value to the State’s economy from the sale of offsets, the activities associated with offset creation deliver a range of co-benefits, particularly to the health of the environment through improvements to biodiversity and water quality, landscape protection, income for Indigenous communities and productivity enhancements to agriculture.”
As a conservative estimate for the period 2017-2030, and assuming low demand in the short term primarily due to policy uncertainty, the report valued the potential returns to Queensland from land and agriculture offsets at $1.4 - $4.7 billion.
It noted that analysis conducted for the report shows that domestic demand for land sector offsets could be much higher than forecast.
“If demand for land sector offsets increases, a further 270 - 502 million tonnes of abatement (MtCO2-e) are possible. This could be worth up to $8 billion to the Queensland economy. However, a combination of the following would need to occur:
under-delivery of abatement by other sectors in the economy
increased voluntary demand for offsets
a strengthening of Safeguard Mechanism baselines
an increase in Australia’s business as usual emissions.”
The majority of offsets created would come from a number of existing methods under the Emissions Reduction Fund (ERF), with a larger contribution expected from regrowth methods including:
human induced regeneration of a permanent even-aged native forest
native forest managed regrowth
avoided clearing of native regrowth.
The report called for a whole-of-industry and government approach to realising the economic potential of carbon offsets.
“A variety of threats to realising this economic potential includes inadequate information for stakeholders, high transaction costs and conflicting intra-government approaches. Significant longer-term risks that require near-term and sustained attention include technical limits on market growth, increasing complexity and uncertain climate policy.”
Recommendations for the Queensland government to consider included:
Measures to address near term issues: 2017-2020
Advocate for domestic policy certainty to stimulate demand for offsets
Provide relevant and targeted information to encourage market participation
Enhance business and financial models available in the market
Reduce and streamline participation and transaction costs
Measures to address longer-term issues: 2020-2030
Maintain an active engagement in domestic and international climate policy developments
Create new methodologies and offset activities to increase market size
Value co-benefits and develop best practice policy and regulatory frameworks to support a co-benefits market in Queensland
Encourage support social licence for the offset industry
Continue to implement strong policies to mitigate the physical impacts of climate change.
The report is available here