HECS-style loan will encourage more carbon producers: Menzies Research Center report | The young witness
The government could encourage more farmers to take advantage of carbon cultivation, helping both their lowest dollar and the country’s emissions reduction targets, with a HECS-like loan, according to a report.
The Liberal-aligned Menzies Research Center’s guidance document argues that increasing soil carbon in the agricultural sector was obvious, with financial, environmental and climate dividends.
The report – From scratch: unleashing the potential of the soil – suggested several practical steps the federal government could take immediately, which could potentially generate gains in soil carbon in a single season
He recommends funding the soil carbon baseline measurements through an income-tested loan program, similar to HECS university student loans, which students are only required to repay once their salary reaches a certain level. threshold.
The loan would allow more farmers to benefit from carbon farming and would only be repayable when the return on their carbon credits reached a particular value.
Right now, the start-up costs of growing carbon are a big hurdle: it costs around $ 30 / ha to measure soil carbon, but the government is working to bring it down to $ 3 / ha through improving technology and data.
But in the meantime, no improvement in the carbon content of the soil will be taken into account, which will deprive farmers of incentives and potential income.
The HECS-type loan would allow farmers to advance baseline measurements and allow them to store sequestered carbon, the value of which can be repaid once the costs of the measurements are reduced.
“The loan would act as an advance on future income received from Australian carbon credit units with repayments made as a fixed percentage,” the report says.
“This in turn will make the transition to carbon farming projects for these companies more attractive as the methodologies become more applicable.
“As with HECS-HELP, there is no obligation to repay the loan if the repayment threshold is not reached.
Menzies Research Center executive director Nick Cater said the report was not a manifesto for revolution or an instant recipe for perfect agriculture.
“We are however calling for a change in mindset, recognizing that agriculture backed by sound agricultural science is the solution, not the cause, of many environmental challenges we face today,” said Cater.
He argued that progress in the soil carbon space would be largely achieved through trade incentives, not government spending or regulations.
“While the bulk of the work will be done by the private sector, the government can smooth the way with relatively small investments in training, targeted grants and conditional loans,” Cater said.
“The biggest obstacle to the progress of agriculture is the non-trade failure, limitations and false incentives imposed by poorly calibrated policy.”
“The current debate is sorely lacking in this regard,” said Cater.
“All that has been lacking in this policy discussion so far is the determination to move soil improvement from the nice-to-do plateau to the must-have plateau in the offices of policymakers, industry groups and farmers in Australia.”
Agriculture Minister David Littleproud said the government is not currently considering HECS-type loans for carbon benchmarks.
“But obviously I think we’re happy to look at all of the proposed solutions,” Littleproud said.