Report says farmers should not be exempt from net-zero carbon targets

The Grattan Institute report urges governments to "act now" to curb agricultural emissions, and indicates the sector was responsible for 15pc of Australia's greenhouse gas emissions in 2019.

It equates to emitting 76.5 million tonnes of greenhouse gases, and the institute warns with a recovering sector on the back of widespread rain, emissions could rise to 82 million tonnes by 2030.

Towards net zero: Practical policies to reduce agricultural emissions reveals sheep and cattle farmers account for 75pc of the sector's emissions.

The institute, which says it is independent and takes the side of the public interest rather than interest groups, makes four recommendations including to not exempt agriculture from any national net-zero target and to encourage the use and deployment of lower-emissions technology and practices.

"The Federal Government should consider alternative financing mechanisms to support deployment of lower-emissions practices, such as income-contingent loans, to share the risk with farmers," the report reads.

It also proposes to allow for more effective technology and policy in the future, including ways to reduce animal emissions, and also urges governments to not weaken land clearing laws.

"State and territory governments should not weaken existing land clearing laws, and should aim to keep existing stocks of nature-based carbon at or above current levels," the report read.

Grattan Institute energy and climate change program director Tony Wood said factoring in agriculture in any net-zero target was necessary, and would reduce the likelihood of exporters being subject to carbon tariffs from other countries in the future.

"I think any industry that is dependent on exports needs to be aware of what's happening with their customers globally," Dr Wood said.

"About 75pc of our beef is exported so even though it might be a small risk, it could increase in the future and the countries that buy our agricultural exports would themselves impose some form of carbon border tax unless we have taken action on emissions reduction."

The report found non-animal sources, such as fuel combustion and fertillsers, contributed to about 16.5 million tonnes of the sector's emissions - a fifth of agriculture's greenhouse gases.

It also recommended that better data about on-farm, emissions-reducing practices were improved so the sector could make better decisions and to prevent emissions from being overstated.

"There's going to be quite a variety of views but broadly speaking, the farming community and their industry associations are more strongly convinced that agriculture needs to be part of the solution, rather than part of the problem," Dr Wood said.

"In addition to that, agriculture is part of the economy that is most directly impacted by a changing climate and we've seen agricultural output adversely affected by the changing climate and corresponding reduction in net farm income."

He said the role of the government was also crucial to help the sector reduce emissions.

"The Commonwealth government does currently support some agricultural activity to reduce emissions through the Emissions Reduction Fund," Dr Wood said.

"However, like most small businesses, these are complicated policies for farmers to engage with and so we've recommended that the government should implement things to make it easier for farmers to participate and to receive support from the fund."

He said agriculture was particularly vulnerable to climate change, and stated governments should spend more money on programs which provide practical advice to farms on how to reduce emissions.

"Even with this support, agriculture is still likely to be a major source of emissions in 2050," Mr Wood said.