National Party leader and deputy prime minister Michael McCormack created headlines in Australia last week with some comments about agriculture and climate change.
Prior to McCormack’s remarks, prime minister Scott Morrison gave a speech at the end of January in which he indicated his government (in which McCormack serves, of course) would look to achieve net-zero carbon emissions by 2050 – although, notably, he did not commit to it as a formal target.
In response, McCormack told Sky News the government might exclude agriculture from any target, citing New Zealand’s approach as an example to follow.
This seems to willfully miss the point about agriculture and its role in emissions reduction.
It is reasonable to ensure that agriculture does not bear an outsized burden from any target. But it is a fact that the sector is a large contributor to Australia’s carbon emissions (as in many other countries), so any meaningful attempt to lower them is going to have to address the sector at some point.
Agri Investor has consistently reported on the sector’s positive ESG credentials and both LPs and GPs are alive to the possibilities agriculture presents. We increasingly hear from investors that emissions reduction potential contributes to its attractiveness.
This is evident from a string of recent developments in the carbon abatement sector with KKR investing in GreenCollar; Impact Ag Partners selling A$500,000 ($388,956; €320,485) worth of carbon credits to Microsoft; and executives at Craigmore Sustainables saying they expect a third of the returns from their new timber fund to come from carbon credits trading.
The market for carbon credits is still emergent but offers huge potential, not only to help investors meet their ESG goals but also to increase the return they receive on their investments.
It thus seems counterintuitive to argue that ag should be excluded from any emissions reduction goals, when investors and farm operators are so obviously leaning into the sectors’ inherent potential in this space.
Agriculture minister David Littleproud, also from the Nationals, made this point publicly himself by disagreeing with McCormack’s comments a day after the deputy PM made them, showing that there is a split within the party over the issue.
The direction this debate takes will be important as investors will hope to receive further support from the Australian government, as they seek to monetize much needed emissions reduction opportunities.