AFTER the Kyoto protocols were developed in 1990, a group of businesses, as represented by the ABARE group, wanted to find ways to deal with the threats presented by socio-economic responses to climate change, which their businesses were helping to create.

One conclusion, reached over time, was to find ways to convert a problem into an opportunity and see climate change as a means to increase, or at least continue, business as usual while consolidating their position. Huge multi-nationals like Poyry, who saw opportunities to expand their income from the sales of massive engineering projects and earn lifetime incomes from operations management, facilitated these ideas through their consulting arm, both globally and in Australia.

One key idea was to create a carbon trading scheme, in which carbon is claimed to be ‘locked up’ (sequestered) on a large scale to act as an ‘offset’ for the emissions from energy businesses (coal, oil etc). The carbon sink would then form the underpinning for a trading scheme, similar to the way that gold used to underpin money – we lock up your carbon – you pay us for doing it. The bigger the sink, the more money it would notionally be worth.

Carbon sinks under Australian control would allow polluting industries to claim carbon credits in proportion to their ‘investment’ in carbin sinks. The most important component was control of government processes that wrote the ‘rules’ for the carbon trading system – through bodies like ABARE whose objective is ‘to contribute to the competitiveness of Australia’s agricultural, fishing, forestry, energy and minerals industries ...’ It’s well worth noting that ABARE doesn’t subscribe to a social or taxpayer related goal such as ‘to assure that the activities of our various industries contribute usefully to Australia’, rather their stated brief is to help the named industries. The effect is to shift government policy towards industry goals rather than to assure that industry goals match wider socio-economic needs.

A role for taxpayers

With taxpayer support, any carbon cost increases could be met by increasing power prices to consumers. In addition the scheme needed to be financed so that the carbon sink could be brought into existence without the polluting industries themselves having to pay the costs.

The obvious contender for a carbon sink is trees. A plan was devised for a huge area of trees to be planted and called a carbon sink as well as providing feedstock for an increased number of pulp mills. In 1997 the federal government published the 2020 Vision program that called for 3.3 million hectares of plantation to be established by 2020. No risks or opportunity costs were studied for this program and the various other stakeholders in rural Australia who would be impacted (e.g. food producers) were not represented in the planning. Indeed, the impacts of the plan were largely hidden by both the forestry industry and governments.

Once of sufficient size, the carbon estate could then be used to underpin a market for carbon credits via trading arrangements similar to the futures market. The operators of the carbon estate would become instantly rich as the ‘carbon estate’ that they controlled would be used to underpin carbon credits worth billions, what the forestry industry describe as ‘windfall profits’. With the promise of a huge carbon sink available, energy competition from solar and wind power was ‘unnecessary’, because ‘conventional’ energy generation by coal etc could continue.

Targets and other goals set by government would largely be informed by ABARE forecasts and models which themselves would be driven by industry claims of increased ‘competitiveness’.

The tree estate method had the additional advantage of providing a means to mute criticism by environmental groups. In fact, it proved easy to get their support by threatening native forests then ‘negotiating’ a trade off by eliciting their support for a ‘replacement’ activity in plantations. This enables plantation interests to market to ‘environment friendly’ investors, regardless of the intention to permit the energy lobby to continue to pollute. Macquarie Bank is one market entrant offering carbon sequestration investments in tree plantations.

The logging industry could create a huge tree based carbon sink and the only practical long-term funding source for such a mammoth venture was the Australian taxpayer.

A tax incentive scheme was conceived where the establishment and growth of plantation trees was partially funded by the taxpayer (MIS) which had the advantage of being largely ‘under the radar’ as it was a tax office operated plan that didn’t need to go through parliament for debate. The amount paid per hectare needed to be above the actual cost so that the tree growers could make enough profit to buy more land – land ownership being thought essential for the long-term stability of the plantation estate and certainly for the long term interests of the forestry industry. The scheme was justified as an offset to carbon dioxide build up from Australian industries by sequestering carbon in both the forests and their products (paper and wood). Indeed the forestry industry was represented as ‘the industry of the future’ on that basis and because it could substitute timber for many higher energy products like aluminium frames etc. Another way that support was ‘locked in’ was to include plantation activities as a component of public service superannuation funds to tie public service retirement monies to the success of the scheme.

The forestry/Poyry model was for a series of plantations to be harvested 5 times over 100 years against their contention that a lot of the products locked up carbon within them, consequently producing a net reduction of carbon in the atmosphere. They argued that plantations presented a complete solution as they also allowed the production of paper to generate continuous profits for timber and forestry groups.  If trees needed to grow for 100 years (one mooted minimum period to lock up carbon) then they could be well separated so that the thinnings could used as pulp feedstock. If they could be cut down (the current theory) then the forestry industry could use them for pulp and paper products.

The forestry industry wanted government support to ‘value add’ to woodchips to increase their profitability. This need was justified on the basis of ‘balance of trade’ being achieved. The usual tedious approval impediments to establishing pulp/paper operations needed to be ‘softened’ or removed entirely so that the forest industry could profit more easily and, predictably, help pulp and paper mill manufacturers sell more mills. Agreements were reached for governments to facilitate pulp and paper mill approvals including taxpayer subsidies for infrastructure (roads, water etc) and other high cost elements.

The plan suited the forestry industry, offering them a means to grow quickly without requiring significant investments on their part. Various financial arrangements were agreed with the major political parties to assure their ongoing commitment to the program. In this way, politicians could be controlled and pressured to support the program, regardless of voter objections.

All of this was made a lot easier because the objectives of government organisations such as ABARE were rewritten to support industry growth and competitiveness, and to exclude mention of responsible resource use or wider community goals.

It was up to governments to control or limit any ‘collateral’ damage. The main group to be disadvantaged would be farmers and their support industries, as the plantations would need to be established on land with deep soils and sufficient rain, most of which is taken up by food production. Lesser land could be used but likely growth rates would produce little in the way of income to satisfy the needs of the forestry groups in the near term.

Concerns about losses of farm land were addressed in various ways:
 Overseas trade agreements are being established that allow Australia to buy food from countries with suitable crops in season
 Tax and other arrangements could apply to farmers who grew trees
In addition, a range of ‘spin’ phrases and justifications were agreed:
 The scheme could be represented as ‘good for mom & pop’ investors
 The purchase of farmlands reframed as ‘investing in the bush’ and ‘helping farmers get the best price for their land’.
 Only ‘marginal’ farmers would sell…after all, why would a profitable farmer sell?

Additional arguments were created to support the policy e.g. that other ‘impediments’ to the establishment of the carbon estate were removed. Laws were changed to encourage farmers to leave the land (like Tasmania’s PAL Act, restrictions on Murray Darling irrigators and federal schemes that make it harder for pensioners to hold onto their land). At every turn, one goal was to ease the way for the forestry industry while helping rural land owners to reach the decision to sell, thereby increasing the availability of suitable land to grow trees. Using these techniques, the resulting population shifts could be characterised as due to ‘market forces’, an explanation that is believed by many despite the huge public subsidies paid to the pulpwood industry.

The ability to conceal the whole plan during its implementation was seen as critical due to the large number of people in rural Australia likely to be adversely impacted. Loggers only needed to know that their business was secure and that they were safer from environmental protest. Public servants only needed to know that it was bipartisan policy and in the interests of their retirement savings.

Eonomic impacts are positive when viewed through the corporate-o-centric filters of ABARE and Access Economics. Tourism losses could be offset by establishing large tourism centres in coastal areas while considerable food farming might be moved over time to where the rainfall is high – e.g. NT. Agricultural losses could be offset with free trade agreements etc. and agribusinesses could benefit from taking over small farms disadvantaged by the policy.


Losses offset

Of course, there would be losers, but the losses would be offset by the value of the carbon credits and the ability of Australian energy interests to continue to use the ‘natural advantages’ of Australia (coal and gas) without needing to reduce emissions.

The entire scheme needed to remain independent so that the carbon credit scheme could be kept under Australia’s control. If other nations could be drawn into a similar scheme, then Australia would add that asset (the carbon estate) to its international trading ability, thereby attracting greater potential revenue flows.

Whatever the merits or otherwise of the carbon sink estate idea, a severe problem is being created by governments listening carefully to cashed up forestry and industry lobbyists and acting on their proposals without adequate consideration being given to community responses and to the ‘opportunity costs’ of the establishment of the plantation estate.
The recent formation of a Timber Council Taskforce to help overcome objections to the expansion of the plantation estate is an example of governments collaborating to sell the forestry story without any commensurate dialogue with food production, tourism, rural communities and other impacted groups.

Whether the production of pulp from plantations sequesters enough carbon to justify the costs of the establishment of the plantation estate still remains to be seen. What is certain is that our growing populations will continue to need food, and it is our food production areas that are under most immediate threat from plantations. These threats include buyouts of farmland by tree plantations subsidised by tax monies, groundwater levels lowered by too many plantations in catchments, plantations acting as a sheltered area for wild animals that eat farmers’ crops and fencing and access problems that add to farmers costs. In addition, when plantation interests do buy out active farms, rural communities suffer significant drops in cash flow that can cause the collapse of key rural services in an area.

Global strategy

This is all part of a global strategy by the world’s largest industries (coal, pulp/paper, oil etc) to not only survive, but also to take advantage of, the problems created by climate change.

In this context, the Gunns pulp mill is just a small link pushed by suppliers Poyry onto compliant local forestry groups, supported by offers of wealth and power.
The wider implications of our governments’ unquestioning acceptance of this program are massive shortages of water, devastation of rural areas and communities, disruption of our agricultural capabilities, and ever increasing reliance on big urban living conditions. In other words, we’ll make ourselves even more susceptible to catastrophe and by becoming even more reliant upon overseas suppliers.

But those are minor considerations compared to the growth of the ABARE group in an era of severe threat due, in large part, to their operations.

The Rudd government supported by the Liberals, has now passed legislation to establish around 35 million hectares of tree plantation as a carbon offset estate. That’s 350,000 square kilometres of trees – about 6,000 acres a day, every day for the next 40 years!

Each hectare of tree plantation will need at least 2 Ml of water each year, totalling over 70,000 Gl – equal to all of Australia’s available water in 2005. The plan effectively overallocates Australia’s water at a time when the federal government is buying back water licences.

Tree MIS are collapsing due to insufficient finance when ‘investors’ have been fleeced at $7,000 per hectare for the privilege of growing trees. In other words, the new estate will cost a lot more than that to establish. At a conservative $10,000 ha, the plan will need $350 billion over the period. Where will that money come from?

Watch this space

Mike Bolan
http://www.abetteraustralia.com

Mike is a complex systems consultant, change facilitator and executive and management coach.


Note. The author welcomes constructive comments and new information that adds to our understanding of these matters.

Mike Bolan
One conclusion, reached over time, was to find ways to convert a problem into an opportunity and see climate change as a means to increase, or at least continue, business as usual while consolidating their position. Huge multi-nationals like Poyry, who saw opportunities to expand their income from the sales of massive engineering projects and earn lifetime incomes from operations management, facilitated these ideas through their consulting arm, both globally and in Australia.