Wednesday, April 11, 2007

Landholders Submission on Carbon Trading

Submission to the Office of Prime Minister and Cabinet in respect of a Carbon Emissions Trading Scheme for Australia.

Prepared by Ian Mott, Secretary, The Landholders Institute Inc.

1. Legal Framework

It must first be stated that the issues paper does not appear to have anticipated the implications of Constitutional, Statutory and Common Law obligations of government in respect of the design and implementation of a Carbon Trading Scheme. To date, all discussion on such schemes appears to have been based on the carbon accounting determinations of the Intergovernmental Panel on Climate Change (IPCC), a body of scientists who have made their deliberations on narrow questions of expedience or administrative convenience.

These deliberations have not been informed by the specific legal conventions and obligations that must be applied if any sort of greenhouse abatement mechanism is to be lawfully applied within the Commonwealth. It is one thing to adopt an international convention but any convention has no legal standing until relevant legislation has been enacted by the Parliament of Australia. And any such legislation must comply with ALL the relevant Australian legal principles and conventions.

There is not the slightest room for doubt that some of the current IPCC carbon accounting standards would, if applied carte blanch in Australia, be in significant breach of the obligations of Australian Governments.

Conclusion 1.a.

An Australian Carbon Trading Scheme must be consistent with Australian legal principles and conventions and these principles must prevail to the extent of any inconsistency with IPCC practice.

Conclusion 1.b.

The carbon accounting practices or conventions developed by the IPCC or any other unrepresentative international body may not be applied in any way that would deprive Australian citizens of their lawfully acquired rights, liberties or possessions.

2. A system for trading carbon credits cannot function without a matching system of carbon penalties, a carbon debit is a carbon tax.

For a carbon trading scheme to function there must be a carbon emissions target and a set of penalties associated with failure to meet those targets. Otherwise why would anyone bother purchasing credits? And the price of credits will be primarily driven by the cost of the penalty. And whether it is called a carbon tax or not, that penalty will be, for all intents and purposes, a carbon tax. And for that tax to be lawfully applied to Australian companies and citizens, it will need to comply with the principles and conventions that shape Australian taxation law.

It is worth remembering that the moment carbon policy enters the tax realm it will enter the most vigorously tested field of legal principle we have ever seen. There will be very substantial interests with significant moneys at stake that will hinge on the application of procedural fairness, equitable distribution of burdens, issues of fact and proper exercise of authority. And it would be very naive for any scheme to assume that every relevant issue would not be thoroughly tested in the courts.

Conclusion 2.a

An Australian carbon trading/tax system must apply the same legal principles and conventions, and the same standards of fact, as the existing tax system.

3. Dual Domestic and International Trading Schemes.

No-one would ever suggest that the Australian Taxation System should be fully compliant with that of the United States or the European Union. International trade is conducted in a context of compliance with each nation’s own taxation system, to the extent that the trade actually takes place in those nations. Trade in both goods and services are clearly capable of taking place efficiently in a dual context of domestic markets and international ones, subject to differing rules and accounting standards.

And as with all other forms of international trade, Carbon Trading can be conducted on a bilateral basis with nations that have essentially consistent standards. There is no single set of product specifications or standards and no single body that determines whether a nation may or may not participate in trade. Indeed, any attempt to establish such a body would, rightfully, be regarded with the very deepest distrust by most nations on earth.

Accordingly, one must ask, by what mandate, and after which process of consultation and in depth consideration of pros and cons, has the IPCC apparently taken for itself the role of sole arbiter of the eligibility of nations and commodity classes to participate in carbon trading? The short answer is, none whatsoever.

Conclusion 3.a.

Carbon trading must be free and unrestricted, based on the mutual standards and expectations of fully informed agreed participants, and free of any requirement for official sanction by the IPCC or any other central body.

Conclusion 3.b.

There must be a dual carbon trading system with a domestic market that is fully compliant with all Australian legal obligations and an international one (or ones) that comply with bilateral carbon trading agreements or with single IPCC sanctioned standards.

4. Consideration of all relevant matters of a Carbon nature.

The design and implementation of any lawful Australian Carbon Trading Scheme must consider all relevant matters relating to an emission or class of emission and all relevant matters relating to a carbon sequestration or class of sequestration. The failure to do so would be an improper exercise of power under the Administrative Decisions (Judicial Review) Act 1977.

Conclusion 4.a

A Carbon trading scheme must include all forms of carbon flux and consider all relevant matters relating to those fluxes.
5. Forest and Land Use carbon fluxes.

It is an unavoidable fact that human activities can have an impact on both anthropogenic carbon fluxes and on the natural stocks of carbon and their natural fluxes. Indeed, this fact is inherent in the very need to control emissions from natural stocks of carbon that takes the form of Coal or Oil. But IPCC carbon accounting in relation to natural stocks of carbon in wood form is restricted to post 1990 induced changes, and then only to human initiated forest stocks.

IPCC conventions wrongly assume that native forests are all “natural forests” with no anthropogenic inputs. They also wrongly assume that the carbon emission and sequestration in these forests are in a balance of equal growth and decay with any removal of wood from such forests being a simple reduction in natural stocks. Yet, the clear evidence from decades of native forest management reveals some very significant fluxes are being ignored. These are;

5.1 The harvesting of trees from a native forest will generally target mature trees that will begin a process of decay if left any longer in situ. They may grow larger over many more decades but generally they will lose as much carbon from internal decay as they gain through growth on the outside of the trunk. So the harvesting is an anthropogenic action that will prevent or substantially delay a natural reduction in a natural carbon stock. So while this may not produce a reduction in anthropogenic emissions, it will certainly have the same effect by creating an atmospheric gap, as it were, for other anthropogenic emissions to occupy with zero change in overall impact. This action can be identified, recorded, measured and verified and is therefore both capable, and deserving of a carbon credit.

5.2 The harvested tree does not decay and emit all its carbon on the day it is cut. The IPCC default methodology assumes this to be the case. Australia’s submission to the UN Framework Convention on Climate Change on Harvested Wood Products assigns varying lengths of decay time for different products but these are on a straight line basis based on the expected life of the product, not on how long it takes them to decay at the end of their useful life. See At P8, House frames are assumed to last 50 years, pulp and paper are assumed to last only 3 years while mill waste and biofuel carbon is assumed to be emitted in the year of harvest. Yet, NSWDPI scientists have recently found newspapers with fully legible print after more than 50 years in a landfill. And as this is the normal destination for most newsprint paper, and as newspaper is the main destination of mill waste, then the assumption that carbon in a harvested tree is emitted in the year of harvest has no basis in fact.

5.3 Of the total volume of a harvested tree, it is generally assumed that it will be apportioned as 35% sawn timber, 35% mill waste and 30% limbs etc left on the forest floor. Much of the mill waste is used for woodchip for paper production in larger mills while smaller mills sell part of it for firewood and dump the sawdust. I recently discovered an intact sawdust pile under a layer of grass on a high rainfall site that was last occupied by a mill in 1943. So the assumption that mill residue carbon is emitted in the year of harvest has minimal validity. Furthermore, larger limbs can remain in the forest for decades. This is especially so if cold, hazard reduction burns take place that give this wood a coating of charcoal and thereby extending the stable life of this carbon well beyond 50 years.

5.4 Unless specifically removed by mechanical means or hot fires, tree stumps and larger roots will remain in the forest for decades. My own property has numerous stumps with their carbon intact that we know were cut in 1927-30. Many others in a managed forest will not even be dead. There is a direct correlation between the youth of a stem and its propensity to produce coppice shoots after harvesting. And we have a number of photographs of two, three, and even four logs being cut from the one stump over a space of 60 years. Clearly, this carbon is in a stable condition long after it is deemed to have already been emitted. It should only be counted as an emission when the emission actually takes place.

5.5 The IPCC methodology has been developed under the assumption that it takes many decades for a new tree to grow to the size of a harvested sawlog but this is only part true. The removal of a large tree will allow four or more smaller trees to rapidly exploit the water, sunlight and nutrients that become available. And it is not unusual for a harvested forest to completely replace the removed wood volume in only two decades. At that point some of the young trees will need to be removed to allow the remaining ones to stay healthy and productive. This sequestration of carbon by the growth of young trees will be at a much faster rate than the growth of the post mature sawlog if it had been left unharvested. And this increase in carbon sequestration is contingent on a human action from which the consequences can be identified, recorded, measured and verified and is therefore both capable, and deserving of a carbon credit.

5.6 The IPCC methodology also assumes that all native forests, especially those in existence prior to 1990, are climax, or “old growth” forests when the vast majority on private land are regrowth forests that have regrown on previously cleared land or have been subjected to significant disturbance. These forests are not in equilibrium. They will generally be in various stages of immaturity and will exhibit very vigorous growth up to the point, called “lock-up” when the trees grow to a size where there are too many of them competing for the available water and nutrients. By this point growth of the entire stand will have declined to a point close to zero net sequestration where the growth potential of any tree will be contingent on the death of one beside it. Much of the private native forest resource is already in this state and the rest will follow if harvesting and thinning activity is discouraged. And just as for a climax forest as outlined above, the removal of a tree merely prevents or postpones a natural emission that was going to take place anyway. And if the struggling trees are removed and processed into poles or news print then the emission will have been delayed for much longer than it takes for the forest to re-absorb the same amount of CO2. In the case of regrowth forests, the supposedly natural outcome, that of not harvesting trees, will produce a substantial reduction in carbon sequestration and a substantial increase in carbon emissions. Consequently, the act of harvesting is a human action from which the consequences can be identified, recorded, measured and verified and is therefore both capable, and deserving of a carbon credit.

5.7 The same considerations outlined in respect of regrowth forests, in 5.6 above, also apply to pre-1990 plantations. The supposedly natural outcome of not harvesting trees will produce a substantial reduction in carbon sequestration and a substantial increase in carbon emissions. The IPCC assumption that the past sequestration of a plantation will continue without anthropogenic input is wrong. Consequently, the act of harvesting is a human action from which the consequences can be identified, recorded, measured and verified and is therefore both capable, and deserving of a carbon credit.

5.8 IPCC methodology assumes that wood for biofuel and firewood is burned in the year of harvest. Yet, the largest part of the commercial firewood market is taken up by “aged Ironbark” etc that has been drying in the paddocks for more than 40 years. Indeed, There is a federal policy on so-called “sustainable firewood collection” that seeks to conserve the stocks of clearly anthropogenic dead wood as if it were a natural resource. So the inconsistency between the IPCC assumptions and general practice faces no additional burden of proof. But what is not well understood is the fact that feedstock for biofuels can quite economically be stored to dry in the field for as many decades as it takes for the landscape to re-absorb the same volume of carbon. This will effectively double the greenhouse contribution of biofuels because the CO2 has already been re-absorbed before the emission actually takes place. It then becomes a true zero or even negative emission technology that does not rely on any “warehousing” of CO2 in the atmosphere until it is re-absorbed. But this is not possible if the carbon is deemed to have been emitted in the year of harvest. The act of delaying the burning of a biofuel is a human action from which the consequences can be identified, recorded, measured and verified and is therefore both capable, and deserving of a carbon credit.

5.9 Forests that are cleared for Land Use Change also fall within the two main categories, regrowth and climax, as outlined above. So they are also subject to the same sorts of fluxes both prior to and after human intervention. They may already be in a balance of equal growth and decay, if they are climax forests or they are likely to enter such a state shortly if they are regrowth forest and no thinning takes place. And as the majority of cleared forest is for grazing purposes, the carbon in dead trees often remains in situ for many decades, either as poisoned standing trees or as windrows. And according to the satellite surveys of Queensland, as much as 35% of cleared land will have such a large volume of post clearing regrowth that it must be cleared again within 15 years. And in such cases, the deemed emissions in the year of clearing, under IPCC methodology, will actually take place after the land has re-absorbed a similar volume as regrowth. See “Land Cover Change in Queensland 1999-2001 Table 6 P26. This clearly shows that 26.2% of clearing in 2000-2001 was on land that was not mapped as woody vegetation ten years earlier in 1991. That table was excluded in the 2003 but the increasing trend over time is very clear. What this tells us is that the longer cleared wood carbon is left in situ the higher the probability will be that regrowth will re-absorb the same volume of carbon before the original carbon is emitted. Ringbarked or poisoned trees have been commonly reported to remain intact for over 6 decades with a sequence of re-clearing events taking place each decade during that time. Yet, the current IPCC methodology does not encourage the long term storage of cleared wood carbon as the emission is deemed to have already taken place in the year of original clearing.
Conclusion 5.a

A Carbon Trading Scheme must include anthropogenic actions that impact on natural stocks of carbon and their natural fluxes as well as the existing narrow treatment of anthropogenic impacts on anthropogenic fluxes.

Conclusion 5.b

A Carbon Trading Scheme must recognise that natural or native forests, and plantations established prior to 1990 incorporate significant carbon emissions that can be managed in a way that reduces, postpones or prevents those emissions and thereby create ‘gaps’ in the sum of total atmospheric CO2 that can be filled by other emissions or assist in meeting emission targets.

Conclusion 5.c

A Carbon Trading Scheme must recognise that natural or native forests, and plantations established prior to 1990 incorporate significant carbon sequestration potential that can be managed in a way that increases that sequestration, or prevents a natural reduction in sequestration, to create ‘gaps’ in the sum of total atmospheric CO2 that can be filled by other emissions or assist in meeting emission targets.

Conclusion 5.d

A Carbon Trading Scheme must be consistent with the current legal recognition that an anthropogenic omission or failure to act can also constitute an anthropogenic act. That is, a decision, post 1990, to cease activities that maintain the growth and carbon sequestration capacity of a forest is tantamount to a decision to emit an equivalent amount of carbon.

Conclusion 5.e

A Carbon Trading Scheme must be consistent with the current statutory legal requirement for Corporations to report on their affairs in a way that presents a “True and Fair View”. There is no room in Australian law for a “deemed emission” that is at variance with the facts of an actual emission. So the responsible officers of any Corporation involved in emission or sequestration activities cannot discharge their fiduciary duties without the factual reporting of actual carbon fluxes as and when they actually take place.

Conclusion 5.f

A Carbon Trading Scheme must not incorporate presumptions of fact for the sake of administrative convenience. In particular, there can be no presumption of continuity of pre-1990 forest fluxes in the face of evidence to the contrary and no presumption of natural state in the face of evidence of prior disturbance.
6. Carbon storage by territorial oceans – Exclusive Economic Zones.

There is no room for the arbitrary denial of national sovereignty and all the benefits that may accrue from the use of sovereign natural resources. But this, and more, is exactly what the IPCC has done through the misapplication of carbon accounting standards.

Australia has legitimate and uncontested claims to sovereignty over 12 million square kilometres of territorial oceans known as our Exclusive Economic Zone. No other nation exercises, or seeks to exercise, sovereign rights over these waters and no other nation has undertaken to fund any measures to protect these waters and no other nation has been willing to forego the benefits of any associated natural resources for the purpose of protecting and maintaining ecological values in these oceans.

And it is a fact that each square kilometre of ocean absorbs 5.54 tonnes of Carbon each year. And as atmospheric CO2 concentrations increase these oceans will increase the amount of Carbon they absorb to the benefit of all humanity. This carbon absorption, and especially the increased future absorption, is the rightful property of the Australian people.

One such option for future enhanced carbon sequestration by oceans is Iron Fertilisation. See Other options include the dumping of wood waste in deep oceans would ensure the almost permanent removal of that carbon from the biosphere with its eventual addition to hydrocarbon stocks.

The right to the exclusive enjoyment of this attribute of this natural resource is recognised under the International Covenant on Economic, Social and Cultural Rights, (No5 1976).

Article 5 states;

“1. Nothing in the present Covenant may be interpreted as implying for any State, group or person any right to engage in any activity or to perform any act aimed at the destruction of any of the rights or freedoms recognized herein, or at their limitation to a greater extent than is provided for in the present Covenant.

2. No restriction upon or derogation from any of the fundamental human rights recognized or existing in any country in virtue of law, conventions, regulations or custom shall be admitted on the pretext that the present Covenant does not recognize such rights or that it recognizes them to a lesser extent”.

Article 15 further points out that;

“1. The States Parties to the present Covenant recognize the right of everyone:
(a) To take part in cultural life; and
(b) To enjoy the benefits of scientific progress and its applications”;

And Article 25 states;

“Nothing in the present Covenant shall be interpreted as impairing the inherent right of all peoples to enjoy and utilize fully and freely their natural wealth and resources”.

Yet, any carbon trading system based on current IPCC accounting standards will be in significant and serial breach of these principles. Due to a preponderance of European nations on the IPCC, and the relatively high number of land locked nations, or nations with minimal territorial waters there, the IPCC does not recognize carbon sequestration by territorial oceans as a legitimate part of national carbon accounting.

And as a consequence of this lack of recognition, nations like Australia, and the numerous pacific nations that are heavily dependent on Australian aid, are denied the opportunity to reap the considerable future benefits of any new technologies that will enhance the already considerable carbon sequestration potential of their territorial oceans. So we have one UN sponsored body promoting an outcome that actually abrogates a key UN convention on the use and enjoyment of natural resources.

The IPCC is expecting the Australian people to cover the burdens of oceanic sovereignty without gaining the carbon absorption credits that accrue from that sovereignty. This is very convenient for Swiss taxpayers, for example, who face no burden of funding a Navy and consequently derive no carbon sequestration benefit from their nonexistent territorial waters. Under IPCC methodology, our oceans are treated as “commons”. And one must ask, under what mandate, what head of power and after what process of consultation with the lawful owners of territorial oceans, has the IPCC assumed the authority to override the International Court of Justice, the body responsible for adjudicating on matters of territorial sovereignty?

6.1 A proper regard for all relevant issues of a carbon nature must include both natural and anthropogenic sources and sinks. Natural resources can be managed for environmental, social and economic goods. Indeed, a balance of these objectives is the essence of sustainable development. And it is clear that the management of oceans and subterranean rock strata, etc for carbon management purposes is an environmental, social and economic issue.

6.2 The advance of new carbon management technology will provide numerous opportunities for the management of oceans and other natural resources and these future opportunities, and the fruits of these opportunities, to the extent that they take place in Australia’s territorial oceans, rightfully belong to the Australian people.

6.3 The generally impoverished nations of the Pacific who have scarce land resources but abundant territorial oceans, and who are heavily reliant on Australian aid, exhibit low emissions but sequester huge volumes of CO2 in those oceans. But under current IPCC conventions they get zero credit or benefit for the environmental service they provide to much richer nations. These nations face substantial problems that are not of their making yet the one mechanism that could give effect to a proper redistribution of carbon management costs and benefits, a carbon trading scheme, is denied to them by restricted IPCC rules.

Conclusion 6.a

A Carbon Trading Scheme must recognise and account for all aspects of natural and anthropogenic carbon fluxes, sources and sinks within all sovereign boundaries so that the emission activities of the Australian people can be properly considered in the full context of their environment. Only then can all natural resources be properly valued under sustainable development principles. And those sovereign boundaries must include all territorial oceans.

Conclusion 6.b

A Carbon Trading Scheme must recognise the exclusive right to the use, enjoyment and future potential of all sovereign natural resources, including the territorial oceans and sea beds of all nations.

7. Duty of Care

It is entirely foreseeable that the failure to properly consider all of the above matters in relation to the implementation of an Australian Carbon Trading Scheme would be capable of causing substantial, preventable detriment to both forest owners and those with any beneficial interest in sustainable carbon management on land or sea.

Conclusion 7.a

The people responsible for designing and implementing a Carbon Trading Scheme for Australia must take all reasonable and practicable steps to minimize the detriment to all Australians might suffer from the misapplication of such a scheme.

And I advise accordingly.

Ian Mott
15th March 2007

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