0:05

Welcome to the Fear and Greed Business interview, I'm

0:07

Sean Aylmer. Carbon capture and storage

0:09

is often referred to as a key part of

0:12

our transition to net zero. It's

0:14

one of those things that you hear a lot about, but

0:16

if asked to explain what it is, how it works and how

0:18

it will help us get to net zero, I

0:20

suspect many, including myself, might come up a

0:22

little short. There's also a

0:24

lot more to it than just being an

0:26

environmental tool. The Labor Minister and economist Craig

0:28

Emerson once described it as a gift horse

0:30

for Australia, going on to say that after

0:33

wool, coal and iron ore, the storing of

0:35

carbon in soil may be Australia's next

0:37

big opportunity in the global economy. Definitely

0:40

time to find out more. Hamish Webb is

0:42

the executive director and CEO of Precision Pastures.

0:44

Hamish, welcome to Fear and Greed. Thank

0:47

you very much, Sean. It's a pleasure to be with you. How

0:50

do you start with a 3200 acre sheep

0:52

and cattle farm and end up establishing

0:54

a major soil carbon project? Well,

0:57

to be honest, it was a little bit

0:59

by accident, Sean. We weren't necessarily looking to

1:02

do a soil carbon project. We were just

1:04

looking to optimize our soil

1:06

health to improve our

1:08

pasture production for our livestock business. I

1:12

guess the aha moment was from

1:14

our agronomist Precision Pastures. They

1:17

identified that the activities

1:19

to improve our soil health are

1:22

what's called eligible activities to

1:24

undertake a soil carbon sequestration

1:26

project with the Clean Energy Regulator

1:28

to generate ACUs. Okay.

1:31

And so an ACU is the Australian

1:33

Carbon Credit Union. How do you do it?

1:36

Yes. So the Australian Carbon Credit

1:38

Units, the Clean Energy

1:40

Regulator, which was established in 2012,

1:44

it's their job to come up with

1:47

methodologies for industry and

1:49

agriculture to either

1:51

reduce, avoid or

1:54

abate or sequester one ton

1:56

of carbon equivalent. And

1:58

there are many methods. I think they're somewhere between 40

2:00

and 50 of them and it

2:05

is actually one of the newest and perhaps

2:07

one of the most complex. It

2:09

involves undertaking a baseline soil

2:11

test at year zero and

2:14

then undertaking a new activity to

2:17

improve or optimize soil

2:19

health. Which if

2:21

it does in fact increase soil carbon,

2:24

it will be determined from a

2:26

further measurement another round of baseline

2:28

soil testing, all independently assessed by

2:30

a lab and then

2:32

from that those two comparisons

2:34

of soil test results, the

2:37

clean energy regulator will issue what

2:39

acute per tonne of CO2 sequestered.

2:42

Okay, now just break that down for

2:44

me a little bit and off air you

2:47

were saying carbon actually

2:49

flows in and out

2:51

of soil and so

2:53

by improving the soils ability to capture

2:56

carbon when it's there, the

2:58

outflow is less. Am I sort of saying

3:00

that right? Yes, that's right.

3:02

I mean we are really

3:05

at the start of understanding deeply

3:07

how this cycle works but in

3:09

simple terms carbon is

3:12

cycling through all soil at all

3:14

times. We've spent about the

3:16

last 200 years in Australia removing

3:18

carbon and nitrogen from our

3:21

agricultural soils thinking

3:23

we were doing the right thing by

3:25

maximising our agricultural production. It's

3:27

clear that our soil carbon levels are

3:30

low and there are many ways that

3:32

we can increase them. That includes

3:34

things like resolving soil

3:37

health issues like acidity or

3:39

nutrient deficiency or toxicity but

3:42

also husbandry activities such

3:44

as optimising time

3:46

controlled grazing so that pastures

3:49

are not overgrazed but

3:51

are given sufficient rest time to recover

3:53

and that can maximise root growth and

3:56

fundamentally that's what we're talking about for

3:58

soil carbon. maximizing root

4:00

growth which is one of

4:03

the key ways carbon is sequestered

4:05

into the soil. Okay,

4:07

so if you're maximizing root growth and I'm trying to

4:09

remember my kind of year 10

4:12

science here, carbon is basically stored in or

4:14

becomes part of the root growth system. Does

4:17

it diminish or does it get stored there?

4:19

I'm not sure. As I

4:21

say, there's several ways it's coming in. Probably

4:24

the two most common can be through a

4:26

small amount through decomposing leaf, lisser

4:29

or organic material on the surface.

4:32

Most of that is oxidized back into the

4:34

atmosphere but the key way that carbon is

4:36

finding its way into the soil is

4:39

through photosynthesis. Carbon dioxide

4:41

coming into the plant converted

4:43

to carbohydrates which go down to

4:45

the root tips of root hairs

4:48

to feed microbes which are bringing the

4:50

nutrients to the plant and there's an

4:52

awful lot of activity going on down

4:54

there but that's the key

4:56

way that you're putting carbon into the

4:58

soil. So we want

5:00

to encourage that and there are many,

5:03

many ways agronomically and agriculturally that we

5:05

can encourage root growth. Okay,

5:07

so presumably if we do that, your

5:10

actual output on

5:12

top of the soil because you have healthier

5:14

soil should be better as well. Is that

5:16

right? Yes, that's right

5:19

and as I said, that's how we

5:21

found ourselves in the first

5:23

place looking at soil carbon. So

5:25

soil carbon unlike most of the other ACUE

5:28

methods has significant

5:31

co-benefits for production and

5:33

indeed that's sort of why I think the opportunity

5:35

is so strong for Australian

5:37

agriculture because what's good for soil

5:40

carbon sequestration is also good for

5:42

production. It can lead to greater

5:44

drought resilience as well. So

5:47

with me Hamish, we'll be back in a minute. What

6:03

is the size of the prize here? What

6:05

you're talking about and you're doing on your 3200

6:08

acre sheep and cattle farm. I

6:11

want to talk about how you've sort of pushed other

6:13

farmers to do it in a moment. But what is

6:15

the size of, how much difference

6:18

can Australia with its land mass make

6:21

doing what you're talking about? Yeah,

6:23

that's a wonderful question and

6:26

there's many ways you can look at

6:29

this I think, Sean. Australian agriculture accounts

6:31

for over 50% of

6:33

our land mass. So looking at an

6:35

area is one way. You

6:38

mentioned Craig Emerson in your introduction. Another

6:41

notable person that spoke on this issue was

6:43

John Anderson in 2021 and he framed the

6:48

market this way. He said that there's

6:50

approximately 65 million hectares

6:52

of ideal Australian

6:54

cropping and pastoral country

6:58

which he believed could sequester up to

7:00

103 million tonnes of CO2 per

7:03

year. So at today's market

7:05

price per carbon credit of $33, that's about

7:07

$3.5 billion per year. He

7:12

went on to say there was

7:15

another 200 million hectares

7:18

of rangeland agriculture, perhaps semi-arid

7:20

agriculture, which he

7:22

thought could also sequester 100 million

7:24

tonnes. So add

7:27

that all up. It's about $7

7:29

billion a year worth of carbon

7:32

credits in the potential soil

7:34

carbon market. Now how do

7:36

we measure this? Hamish, how

7:38

do we measure it going in and we're able to

7:40

measure it going out? How's it worth? Yeah,

7:43

this is where the complexity of the

7:45

method really comes in, Sean. So soil

7:48

carbon projects must be baseline soil

7:50

tested at the beginning and that's

7:52

quite a rigorous process and it

7:55

involves a lot of mapping which

7:58

must be approved by the Clean Energy

8:00

Register. There's random GPS coordinates

8:02

applied to those

8:06

coordinates and sample down to at

8:08

least 30 centimeters. Those

8:11

random soil samples are sent off

8:13

to an independent lab for

8:15

assessment and then there's about 40

8:17

to 50 calculations looking at the gravimetric

8:20

weight of that soil sample, the

8:22

bulk density, obviously the soil

8:25

carbon content to ultimately

8:27

come up with a stock

8:29

of soil carbon in tonnes

8:31

per hectare. And that's

8:33

the measurement that we're looking at

8:35

from the baseline to the subsequent

8:37

rounds of sampling and where

8:39

we can demonstrate an increase in soil

8:41

carbon stocks, the regulator would look to

8:44

issue the ACUs for that. So

8:46

potentially for people like you and others

8:49

with land holdings and I know that

8:51

you've helped other farmers establish themselves in

8:53

this play, there's a financial reward for

8:55

this as well. Yes,

8:57

absolutely. ACUs are obviously

9:00

a financial instrument just

9:02

like a bond

9:04

or something else. They are currently

9:06

trading at around $33 but

9:09

personally and Precision Passengers

9:11

doesn't give advice on this, from

9:13

a personal perspective, I'm actually

9:15

a bit more interested in retaining my carbon

9:17

credits. They are a tax deferred income so

9:19

they can just sit on my balance sheet

9:22

and there's a lot of

9:24

talk about what the future may bring in

9:27

terms of needing my own

9:29

carbon credits as a livestock producer.

9:32

Whatever the future brings, I'll have my own

9:34

carbon credits there. In the meantime,

9:36

as a financial instrument, it can sit

9:38

on my balance sheet. That's my own

9:40

personal view but certainly we're talking about

9:42

a significant value for producers that undertake

9:44

a soil carbon project. So

9:46

the impact on the land itself then is

9:49

positive. When I think of carbon

9:51

capture and storage, which is different, I get

9:53

that, but I often wonder about the

9:55

impact on the land itself but what you're saying

9:58

this carbon Sequestration. Now

10:00

decide, Would it's actually a positive for

10:02

the land? Then. That's. Right

10:04

Saw Think it's important to differentiate back

10:07

carbon capture i'm storing. it will make.

10:09

A gas or hydrocarbons.

10:11

prospective. The Soil Carbon

10:14

Sequestration method is specifically about

10:16

agricultural production. It must be

10:18

conducted on an operating agricultural.

10:21

Enterprise. And. As

10:23

a said, it's Spain develops. Primarily.

10:26

From produces researchers and groups like

10:29

making lots of in Australia and.

10:32

They. Have done a fantastic job

10:34

of identifying something that has

10:36

five benefits to production. And.

10:39

It. Is a bit complex. It does

10:41

require some costs. The measurement. But.

10:43

It really does so to be a win win

10:45

for produces them so that raise our think that

10:48

the. The. Prospects for the saw a

10:50

fab and industry very strong. A very exciting

10:52

with Craig Anderson right? Is this going to

10:54

be a boon industry for China. Now

10:56

well, Certainly. By the look

10:58

of the numbers that saw that John

11:00

Addison sighing I mean they are almost

11:02

ridiculous. Are watering know there. But.

11:05

Yeah, even if we just look at

11:07

the production benefits saw this. There's a

11:09

lot of race and produces are thinking

11:11

about this or any why such. It's

11:13

a bit of an incentive to to

11:15

do the right Seeing him. So. That

11:18

race and way think it's it's pretty

11:20

prospective for produces. And testing

11:22

Jaime Thank you for talking to fearing Great. It's.

11:25

A pleasure shown Thank you very much

11:27

Does Home is where the Executive Director

11:29

and Ceo of Precision Past is. This

11:31

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