Harming Farming: The cost to agriculture from the government’s emissions reduction plan

by Matt Grudnoff

Australia’s commitment under the Paris climate agreement is to reduce carbon emissions by 26 to 28 per cent below 2005 levels by 2030. With the announcement of the National Energy Guarantee the government has required the electricity sector to reduce its emissions by 26 per cent. This implies other sectors such as agriculture will also need to reduce emissions by at least 26 per cent by 2030. This approach will impose significant costs on agriculture and other sectors that do not have the existing, commercially available technologies for emissions reduction that the electricity sector has.

We have calculated that the government’s plan will require agriculture to reduce emissions per year by 18.7 million tonnes (Mt) of CO2e by 2030. Between 2020 and 2030, this represents 126 Mt of CO2e not emitted compared to business as usual, since the reduction in yearly emissions is expected to occur incrementally.

Emissions reduction projects identified by energy analytics firm RepuTex could reduce agriculture’s emissions by a maximum of 9.6 Mt of CO2e per year and from 2024 onwards the agriculture sector would be unable to abate emissions in line with a 26 per cent reduction trajectory. By 2030 there would be 9.1 Mt per year gap in emissions reductions which will have to come from reducing agricultural production, including significant reductions in livestock numbers. In 2030, this would include 2.9 million fewer beef cattle, 8 million fewer sheep, 290,000 fewer dairy cows and 270,000 fewer pigs.

This represents an emissions reduction through lower production of 11 per cent by 2030, roughly equivalent to the 15 per cent reduction in emissions through lower production caused by the major Millennium Drought in South East Australia (from 1996 to 2010).

This unnecessarily high cost is a product of the government’s decision that every sector should reduce emissions by 26 per cent. If those sectors that are able to most cheaply reduce emissions are allowed to do so, then sectors like electricity generation would reduce emissions by far more than 26 per cent and sectors like agriculture would reduce emissions by less than 26 per cent.

This is particularly important as the government attempts to lock in a 26 per cent reduction target for electricity generation. If the government succeeds in doing this, it will increase the cost to sectors like agriculture.

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