1 00:00:05,850 --> 00:00:08,099 Sean Aylmer: Welcome to the Fear and Greed Business Interview. I'm Sean 2 00:00:08,099 --> 00:00:11,309 Sean Aylmer: Aylmer. Carbon capture and storage is often referred to as 3 00:00:11,309 --> 00:00:14,190 Sean Aylmer: a key part of our transition to net- zero. It's 4 00:00:14,190 --> 00:00:16,049 Sean Aylmer: one of those things that you hear a lot about, 5 00:00:16,049 --> 00:00:17,940 Sean Aylmer: but if asked to explain what it is, how it 6 00:00:17,940 --> 00:00:20,070 Sean Aylmer: works, and how it'll help us get to net- zero, 7 00:00:20,430 --> 00:00:22,950 Sean Aylmer: I suspect many, including myself, might come up a little 8 00:00:22,950 --> 00:00:25,950 Sean Aylmer: short. There's also a lot more to it than just 9 00:00:25,950 --> 00:00:29,008 Sean Aylmer: being an environmental tool. Former Labor Minister and Economist, Craig 10 00:00:29,010 --> 00:00:31,919 Sean Aylmer: Emerson once described it as a gift horse for Australia. 11 00:00:32,190 --> 00:00:34,289 Sean Aylmer: Going on to say that after wool, coal and iron 12 00:00:34,289 --> 00:00:37,080 Sean Aylmer: ore, the storing of carbon in soil may be Australia's 13 00:00:37,080 --> 00:00:40,530 Sean Aylmer: next big opportunity in the global economy. Definitely time to 14 00:00:40,530 --> 00:00:43,138 Sean Aylmer: find out more. Hamish Webb is the Executive Director and 15 00:00:43,140 --> 00:00:46,829 Sean Aylmer: CEO of Precision Pastures. Hamish, welcome to Fear and Greed. 16 00:00:47,219 --> 00:00:48,899 Hamish Webb: Thank you very much, Sean. It's a pleasure to be 17 00:00:48,900 --> 00:00:49,350 Hamish Webb: with you. 18 00:00:49,950 --> 00:00:52,498 Sean Aylmer: How do you start with a 3, 200- acre sheep and cattle 19 00:00:52,500 --> 00:00:56,910 Sean Aylmer: farm and end up establishing a major soil carbon project? 20 00:00:57,510 --> 00:00:58,980 Hamish Webb: Well, to be honest, it was a little bit by 21 00:00:58,980 --> 00:01:02,760 Hamish Webb: accident, Sean. We weren't necessarily looking to do a soil 22 00:01:02,760 --> 00:01:06,660 Hamish Webb: carbon project. We were just looking to optimize our soil 23 00:01:06,660 --> 00:01:10,800 Hamish Webb: health to improve our pasture production for our livestock business. 24 00:01:11,940 --> 00:01:16,020 Hamish Webb: I guess the aha moment was from our agronomist, Precision 25 00:01:16,020 --> 00:01:21,389 Hamish Webb: Pastures. They identified that the activities to improve our soil 26 00:01:21,389 --> 00:01:25,529 Hamish Webb: health are what's called eligible activities to undertake a soil 27 00:01:25,530 --> 00:01:29,370 Hamish Webb: carbon sequestration project with the Clean Energy Regulator to generate ACCUs. 28 00:01:29,370 --> 00:01:35,160 Sean Aylmer: Okay, and ACCU is the Australian Carbon Credit Union. How 29 00:01:35,160 --> 00:01:35,760 Sean Aylmer: do you do it? 30 00:01:36,930 --> 00:01:40,980 Hamish Webb: Yes. So the Australian Carbon Credit Units, the Clean Energy 31 00:01:40,980 --> 00:01:45,989 Hamish Webb: Regulator, which was established in 2012, it's their job to 32 00:01:45,990 --> 00:01:51,720 Hamish Webb: come up with methodologies for industry and agriculture to either 33 00:01:51,720 --> 00:01:57,179 Hamish Webb: reduce, avoid, or abate or sequester one ton of carbon 34 00:01:57,179 --> 00:02:00,929 Hamish Webb: equivalent. And there are many methods. I think there's somewhere between 40 and 35 00:02:00,929 --> 00:02:05,189 Hamish Webb: 50 of them, and the soil carbon sequestration method is 36 00:02:05,190 --> 00:02:07,560 Hamish Webb: actually one of the newest and perhaps one of the 37 00:02:07,560 --> 00:02:13,260 Hamish Webb: most complex. It involves undertaking a baseline soil test at 38 00:02:13,260 --> 00:02:17,609 Hamish Webb: year zero, and then undertaking a new activity to improve 39 00:02:18,150 --> 00:02:22,379 Hamish Webb: or optimize soil health, which if it does in fact 40 00:02:22,379 --> 00:02:26,100 Hamish Webb: increase soil carbon, it will be determined from a further 41 00:02:26,100 --> 00:02:30,780 Hamish Webb: measurement, another round of baseline soil testing, all independently assessed 42 00:02:30,780 --> 00:02:35,490 Hamish Webb: by a lab. And then from those two comparisons of 43 00:02:35,490 --> 00:02:39,899 Hamish Webb: soil test results, the Clean Energy Regulator will issue one 44 00:02:39,900 --> 00:02:41,640 Hamish Webb: ACCU per ton of CO₂ sequestered. 45 00:02:41,640 --> 00:02:45,540 Sean Aylmer: Okay. Now, just break that down for me a little 46 00:02:45,540 --> 00:02:50,220 Sean Aylmer: bit. And off- air, you were saying carbon actually flows 47 00:02:50,340 --> 00:02:54,120 Sean Aylmer: in and out of soil, and so by improving the 48 00:02:54,120 --> 00:02:59,008 Sean Aylmer: soil's ability to capture carbon when it's there, the outflow 49 00:02:59,010 --> 00:03:01,230 Sean Aylmer: is less. Am I saying that right? 50 00:03:01,889 --> 00:03:06,330 Hamish Webb: Yes, that's right. We are really at the start of 51 00:03:06,480 --> 00:03:10,980 Hamish Webb: understanding deeply how this cycle works. But in simple terms, 52 00:03:11,520 --> 00:03:15,419 Hamish Webb: carbon is cycling through all soil at all times. We've 53 00:03:15,419 --> 00:03:19,798 Hamish Webb: spent about the last 200 years in Australia removing carbon 54 00:03:19,800 --> 00:03:23,700 Hamish Webb: and nitrogen from our agricultural soils, thinking we were doing 55 00:03:23,700 --> 00:03:28,079 Hamish Webb: the right thing by maximizing our agricultural production. It's clear 56 00:03:28,080 --> 00:03:31,679 Hamish Webb: that our soil carbon levels are low, and there are 57 00:03:31,679 --> 00:03:35,369 Hamish Webb: many ways that we can increase them. That includes things 58 00:03:35,369 --> 00:03:40,590 Hamish Webb: like resolving soil health issues like acidity or nutrient deficiency 59 00:03:40,590 --> 00:03:47,040 Hamish Webb: or toxicity, but also husbandry activities such as optimizing time- 60 00:03:47,040 --> 00:03:51,690 Hamish Webb: controlled grazing so that pastures are not overgrazed, but are 61 00:03:51,690 --> 00:03:55,410 Hamish Webb: given sufficient rest times to recover. And that can maximize 62 00:03:55,410 --> 00:03:58,890 Hamish Webb: root growth. And fundamentally, that's what we're talking about for 63 00:03:58,890 --> 00:04:03,389 Hamish Webb: soil carbon, maximizing root growth, which is what is one 64 00:04:03,389 --> 00:04:06,750 Hamish Webb: of the key ways carbon is sequestered into the soil. 65 00:04:07,380 --> 00:04:09,630 Sean Aylmer: Okay. So if you're maximizing root growth, and I'm trying 66 00:04:09,630 --> 00:04:14,130 Sean Aylmer: to remember my Year 10 science here, carbon is basically 67 00:04:14,130 --> 00:04:16,620 Sean Aylmer: stored in or becomes part of the root growth system. 68 00:04:17,279 --> 00:04:20,159 Sean Aylmer: Does it diminish or does it get stored there? I'm 69 00:04:20,160 --> 00:04:20,669 Sean Aylmer: not sure. 70 00:04:21,240 --> 00:04:23,940 Hamish Webb: As I say, there's several ways it's coming in. Probably 71 00:04:23,940 --> 00:04:27,690 Hamish Webb: the two most common can be through a small amount 72 00:04:27,690 --> 00:04:31,440 Hamish Webb: through decomposing leaf, litter or organic material on the surface. 73 00:04:31,680 --> 00:04:35,190 Hamish Webb: Most of that is oxidized back into the atmosphere, but 74 00:04:35,190 --> 00:04:37,859 Hamish Webb: the key way that carbon is finding its way into 75 00:04:37,860 --> 00:04:42,509 Hamish Webb: the soils is through photosynthesis, carbon dioxide coming into the 76 00:04:42,509 --> 00:04:47,010 Hamish Webb: plants, converted to carbohydrates, which go down to the root 77 00:04:47,010 --> 00:04:50,730 Hamish Webb: tips of root hairs to feed microbes, which are bringing 78 00:04:50,730 --> 00:04:53,490 Hamish Webb: the nutrients to the plant. And there's an awful lot 79 00:04:53,490 --> 00:04:56,580 Hamish Webb: of activity going on down there, but that's the key 80 00:04:56,580 --> 00:05:00,240 Hamish Webb: way that you are putting carbon into the soil. So 81 00:05:00,240 --> 00:05:03,120 Hamish Webb: we want to encourage that and there are many, many 82 00:05:03,120 --> 00:05:06,330 Hamish Webb: ways, agronomically and agriculturally that we can encourage root growth. 83 00:05:06,331 --> 00:05:11,880 Sean Aylmer: Okay. So presumably if we do that, your actual output 84 00:05:12,300 --> 00:05:15,300 Sean Aylmer: on top of the soil, because you have healthier soil, 85 00:05:15,480 --> 00:05:17,430 Sean Aylmer: should be better as well. Is that right? 86 00:05:18,360 --> 00:05:20,940 Hamish Webb: Yes, that's right. And as I said, that's how we 87 00:05:20,940 --> 00:05:24,570 Hamish Webb: found ourselves in the first place, looking at soil carbon. 88 00:05:25,230 --> 00:05:30,390 Hamish Webb: Soil carbon, unlike most of the other ACCU methods, has 89 00:05:30,390 --> 00:05:34,889 Hamish Webb: significant co- benefits for production. And indeed, that's why I 90 00:05:34,889 --> 00:05:38,970 Hamish Webb: think the opportunity is so strong for Australian agriculture, because 91 00:05:39,299 --> 00:05:42,720 Hamish Webb: what's good for soil carbon sequestration is also good for 92 00:05:42,720 --> 00:05:46,440 Hamish Webb: production. It can lead to greater drought resilience as well. 93 00:05:47,100 --> 00:05:49,050 Sean Aylmer: Stay with me, Hamish. We'll be back in a minute. 94 00:05:56,460 --> 00:05:59,910 Sean Aylmer: I'm speaking to Hamish Webb, Executive Director and CEO of 95 00:05:59,910 --> 00:06:04,800 Sean Aylmer: Precision Pastures. What is the size of the prize here? 96 00:06:05,310 --> 00:06:08,789 Sean Aylmer: What you are talking about and you are doing on your 3, 200- 97 00:06:08,970 --> 00:06:11,910 Sean Aylmer: acre sheep and cattle farm. I want to talk about 98 00:06:11,910 --> 00:06:14,130 Sean Aylmer: how you've pushed other farmers to do it in a 99 00:06:14,130 --> 00:06:20,430 Sean Aylmer: moment, but how much difference can Australia with its landmass 100 00:06:20,730 --> 00:06:22,680 Sean Aylmer: make doing what you're talking about? 101 00:06:23,760 --> 00:06:27,960 Hamish Webb: Yeah, that's a wonderful question. And there's many ways you 102 00:06:27,960 --> 00:06:31,920 Hamish Webb: can look at this, I think, Sean. Australian agriculture accounts 103 00:06:31,920 --> 00:06:35,040 Hamish Webb: for over 50% of our landmass. So looking at it 104 00:06:35,219 --> 00:06:39,510 Hamish Webb: at an area is one way. You mentioned Craig Emerson 105 00:06:39,510 --> 00:06:43,170 Hamish Webb: in your introduction. Another notable person that spoke on this 106 00:06:43,170 --> 00:06:48,059 Hamish Webb: issue was John Anderson in 2021, and he framed the 107 00:06:48,059 --> 00:06:52,949 Hamish Webb: market this way. He said that there's approximately 65,000,000 hectares 108 00:06:52,949 --> 00:06:59,849 Hamish Webb: of ideal Australian cropping and pastoral country, which he believed 109 00:06:59,850 --> 00:07:03,990 Hamish Webb: could sequest up to 103,000,000 tons of CO₂ per year. 110 00:07:04,469 --> 00:07:08,759 Hamish Webb: So at today's market price per carbon credit of $ 33, 111 00:07:08,759 --> 00:07:13,679 Hamish Webb: that's about $ 3. 5 billion per year. He went on 112 00:07:13,679 --> 00:07:20,550 Hamish Webb: to say that there was another 200,000,000 hectares of rangeland agriculture, perhaps semi- 113 00:07:20,550 --> 00:07:25,740 Hamish Webb: arid agriculture, which he thought could also sequester a hundred 114 00:07:25,740 --> 00:07:29,039 Hamish Webb: million tons. So add that all up, it's about $ 7 115 00:07:29,039 --> 00:07:33,900 Hamish Webb: billion a year worth of carbon credits in the potential 116 00:07:33,900 --> 00:07:35,070 Hamish Webb: soil carbon market. 117 00:07:35,670 --> 00:07:39,509 Sean Aylmer: Now, how do we measure this, Hamish? Do we measure 118 00:07:39,510 --> 00:07:41,309 Sean Aylmer: it going in and we're able to measure it going 119 00:07:41,309 --> 00:07:42,239 Sean Aylmer: out? How does it work? 120 00:07:42,780 --> 00:07:46,049 Hamish Webb: Yeah, this is where the complexity of the method really 121 00:07:46,049 --> 00:07:51,060 Hamish Webb: comes in, Sean. So soil carbon projects must be baseline 122 00:07:51,150 --> 00:07:54,690 Hamish Webb: soil tested at the beginning, and that's quite a rigorous 123 00:07:54,690 --> 00:07:58,500 Hamish Webb: process, and it involves a lot of mapping, which must 124 00:07:58,500 --> 00:08:02,490 Hamish Webb: be approved by the Clean Energy Regulator. There's random GPS 125 00:08:02,490 --> 00:08:06,209 Hamish Webb: coordinates supplied to the project, and we must go out 126 00:08:06,209 --> 00:08:09,270 Hamish Webb: to those coordinates and sample down to at least 30 127 00:08:09,270 --> 00:08:13,680 Hamish Webb: centimeters. Those random soil samples are sent off to an 128 00:08:13,680 --> 00:08:18,210 Hamish Webb: independent lab for assessment. And then there's about 40 to 129 00:08:18,210 --> 00:08:21,660 Hamish Webb: 50 calculations looking at the gravimetric weight of that soil 130 00:08:21,660 --> 00:08:26,640 Hamish Webb: sample, the bulk density, obviously the soil carbon content, to 131 00:08:26,640 --> 00:08:30,930 Hamish Webb: ultimately come up with a stock of soil carbon in 132 00:08:30,930 --> 00:08:34,650 Hamish Webb: tons per hectare. And that's the measurement that we're looking 133 00:08:34,650 --> 00:08:38,760 Hamish Webb: at from the baseline to the subsequent rounds of sampling. 134 00:08:39,089 --> 00:08:42,450 Hamish Webb: And where we can demonstrate an increase in soil carbon 135 00:08:42,480 --> 00:08:45,838 Hamish Webb: stocks, the regulator would look to issue the ACCUs for that. 136 00:08:46,740 --> 00:08:49,920 Sean Aylmer: So potentially for people like you and others with land 137 00:08:49,920 --> 00:08:53,069 Sean Aylmer: holdings, and I know that you've helped other farmers establish 138 00:08:53,070 --> 00:08:56,399 Sean Aylmer: themselves in this play, there's a financial reward for this 139 00:08:56,400 --> 00:08:56,850 Sean Aylmer: as well. 140 00:08:57,450 --> 00:09:02,939 Hamish Webb: Yes, absolutely. ACCUs are obviously a financial instrument, just like 141 00:09:03,540 --> 00:09:06,660 Hamish Webb: a bond or something else. They are currently trading at 142 00:09:06,660 --> 00:09:12,750 Hamish Webb: around $ 33. But personally, and Precision Pastures doesn't give advice 143 00:09:12,750 --> 00:09:15,809 Hamish Webb: on this, from a personal perspective, I'm actually a bit 144 00:09:15,809 --> 00:09:18,718 Hamish Webb: more interested in retaining my carbon credits. They are a 145 00:09:18,720 --> 00:09:21,569 Hamish Webb: tax deferred income, so they can just sit on my 146 00:09:21,570 --> 00:09:25,890 Hamish Webb: balance sheet. And there's a lot of talk about what 147 00:09:25,890 --> 00:09:29,700 Hamish Webb: the future may bring in terms of needing my own carbon 148 00:09:29,700 --> 00:09:33,599 Hamish Webb: credits as a livestock producer. Whatever the future brings, I'll 149 00:09:33,599 --> 00:09:36,870 Hamish Webb: have my own carbon credits there. In the meantime, as 150 00:09:36,900 --> 00:09:39,450 Hamish Webb: a financial instrument, it can sit on my balance sheet. 151 00:09:39,450 --> 00:09:42,030 Hamish Webb: That's my own personal view. But certainly, we're talking about 152 00:09:42,030 --> 00:09:46,319 Hamish Webb: a significant value for producers that undertake a soil carbon project. 153 00:09:46,950 --> 00:09:49,680 Sean Aylmer: So the impact on the land itself then is positive. 154 00:09:49,889 --> 00:09:52,679 Sean Aylmer: When I think of carbon capture and storage, which is 155 00:09:52,679 --> 00:09:55,830 Sean Aylmer: different, I get that, but I often wonder about the 156 00:09:55,830 --> 00:09:58,199 Sean Aylmer: impact on the land itself. But what you are saying, this 157 00:09:58,200 --> 00:10:01,978 Sean Aylmer: carbon sequestration, I can hardly say the word, it's actually 158 00:10:01,980 --> 00:10:03,629 Sean Aylmer: a positive for the land then. 159 00:10:04,290 --> 00:10:07,770 Hamish Webb: That's right. So I think it's important to differentiate carbon 160 00:10:07,770 --> 00:10:12,660 Hamish Webb: capture and storage from a gas or a hydrocarbon perspective. 161 00:10:13,110 --> 00:10:17,939 Hamish Webb: The soil carbon sequestration method is specifically about agricultural production. 162 00:10:17,940 --> 00:10:23,699 Hamish Webb: It must be conducted on an operating agricultural enterprise. And 163 00:10:23,790 --> 00:10:29,129 Hamish Webb: as I said, it's been developed primarily from producers, researchers 164 00:10:29,129 --> 00:10:32,640 Hamish Webb: and groups like Meat & Livestock in Australia. And they have 165 00:10:32,640 --> 00:10:36,988 Hamish Webb: done a fantastic job of identifying something that has co- 166 00:10:36,990 --> 00:10:41,099 Hamish Webb: benefits to production. And it is a bit complex. It 167 00:10:41,099 --> 00:10:44,670 Hamish Webb: does require some costs for measurement, but it really does 168 00:10:44,759 --> 00:10:47,249 Hamish Webb: serve to be a win- win for producers. And for 169 00:10:47,250 --> 00:10:50,340 Hamish Webb: that reason, I think that the prospects for the soil 170 00:10:50,340 --> 00:10:52,050 Hamish Webb: carbon industry are very strong. 171 00:10:52,230 --> 00:10:54,570 Sean Aylmer: That's very exciting. Was Craig Emerson right? Is this going 172 00:10:54,570 --> 00:10:56,100 Sean Aylmer: to be a boom industry for Australia? 173 00:10:56,610 --> 00:10:59,459 Hamish Webb: No. Well, certainly by the look of the numbers that 174 00:11:00,059 --> 00:11:04,439 Hamish Webb: John Anderson was saying, they're almost ridiculous, eye- watering numbers. 175 00:11:05,010 --> 00:11:08,700 Hamish Webb: But even if we just look at the production benefits, 176 00:11:09,360 --> 00:11:12,480 Hamish Webb: there's a lot of reason producers are thinking about this 177 00:11:12,960 --> 00:11:16,469 Hamish Webb: anyway. So it's a bit of an incentive to do 178 00:11:16,469 --> 00:11:19,470 Hamish Webb: the right thing, and for that reason, we think it's 179 00:11:19,980 --> 00:11:21,659 Hamish Webb: pretty prospective for producers. 180 00:11:22,379 --> 00:11:24,630 Sean Aylmer: Fantastic. Hamish, thank you for talking to Fear and Greed. 181 00:11:25,230 --> 00:11:27,000 Hamish Webb: It's a pleasure, Sean. Thank you very much. 182 00:11:27,480 --> 00:11:31,200 Sean Aylmer: That was Hamish Webb, Executive Director and CEO of Precision 183 00:11:31,200 --> 00:11:34,588 Sean Aylmer: Pastures. This is the Fear and Greed Business Interview. Join 184 00:11:34,590 --> 00:11:36,599 Sean Aylmer: us every morning for the full episode of Fear and 185 00:11:36,599 --> 00:11:39,208 Sean Aylmer: Greed, daily business news for people who make their own 186 00:11:39,210 --> 00:11:41,309 Sean Aylmer: decisions. I'm Sean Aylmer. Enjoy your day.