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Carbon-Storing Forests May Compete With Farming in Australia

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Oct. 11 (Bloomberg) -- Carbon-storing forests may compete with agriculture for land in Australia, the world’s fourth-largest exporter of wheat, if the nation introduces emissions trading, according to a research report.

“Large areas of land could become more profitable” as sites for plantations to absorb greenhouse gas emissions, depending on the price at which carbon trades, the Australian Farm Institute said today. A cap-and-trade system “would potentially generate new competition for agricultural land.”

Australia in April shelved climate change laws until after 2012 amid lawmaker opposition and a lack of action by other countries. Prime Minister Julia Gillard has established a multi party committee to study options for introducing a price on carbon in a country where coal accounts for more than 80 percent of power production. The group met for the first time last week.

Carbon Conscious Ltd., an Australian company that plants gum-trees to absorb greenhouse gas emissions, has been hired by BP Plc, Origin Energy Ltd. and Wesfarmers Insurance to establish plantations on less-arable farmland. Melbourne-based competitor CO2 Group Ltd. has similar accords with Inpex Corp. and Woodside Petroleum Ltd.

The mallee eucalypt trees that Carbon Conscious plants, absorb and store emissions in their leaves, twigs and roots, and generate permits tradable under the pollution reduction laws Australia has now delayed. About five trees are needed to absorb 1 metric ton of carbon, according to the company.

The Australian Farm Institute commissioned GHD Hassall to compile the report, titled ‘The Implications of Greenhouse Mitigation Policies on the Demand for Agricultural Land.’

To contact the reporter on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net

To contact the editor responsible for this story: Clyde Russell in Singapore at crussell7@bloomberg.net

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