‘Climate Change in Your Face' at the Great Barrier Reef

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By Murray Griffin

Aug. 15 — The bleaching of large parts of Australia's Great Barrier Reef has put the beef and sugar industries under scrutiny over polluted runoff, raised fresh questions about coal mining and prompted politicians to seek new ways to finance reef protection activities.

But threats to the world's largest coral reef system also are reverberating far beyond Australia, adding to pressure on the international community to quickly implement the Paris Agreement to fight global warming.

“I was up on the reef just a few weeks ago, on reefs that I had visited many times during my career, and they are almost unrecognizable,” Richard Leck, marine conservation spokesman for environment group WWF-Australia, told Bloomberg BNA in an interview in July.

“There are a lot of scientists who are generally in shock about this event,” he said, calling the extent of coral bleaching of the UNESCO World Heritage Site “climate change in your face.”

Largest Living Structure

Located in the Coral Sea off the coast of Queensland state, the Great Barrier Reef stretches more than 2,300 kilometers (1,400 miles), roughly the length of the U.S. West Coast from the Canadian border near Vancouver to the Mexican border south of San Diego. And its marine park zone is about half the size of Texas.

The U.S. National Oceanic and Atmospheric Administration calls the Great Barrier Reef the “largest living structure on Earth.” And it is not just the reef itself that is vast.

More than 30 major river catchments extending more than 424,000 square kilometers (164,000 square miles) drain into the reef, mingling into its waters the runoff brought down from cattle ranches, sugar cane fields, tracts of forest and wooded grasslands, coastal cities and towns, industrial areas, and mine sites.

Large vessels ply its waters daily, shipping coal and ores from inland mines, liquefied natural gas produced from onshore coal seam gas fields and sugar from cane fields, via four bulk commodity ports spread along the reef coast.

Climate Change Distress Call

Early this year, the reef—one of Australia's most popular tourist attractions—began sending out a climate change distress call in the form of the worst bleaching event on record.

Stressed by warm waters linked to climate change and a strong El Nino event that reduced cloud cover, vast expanses of once-colorful coral in its northern half have turned skeletal white and many now wear ghastly coats of slimy algae.

There is no doubt that climate change is the reef's biggest threat, Queensland Environment Minister Steven Miles and his federal counterpart Greg Hunt have acknowledged.

“This year, Great Barrier Reef sea surface temperatures for February, March and April were the hottest on record—averaging 1.1 C [2 degrees Fahrenheit], 1.3 C [2.3 degrees Fahrenheit] and 1 C [1.8 degrees Fahrenheit] warmer than the long-term averages for each of these months,” Miles told a recent conservation conference in Brisbane.

Said WWF's Leck: “The level of mortality, I know, is far higher than anyone expected. And that as at around about a 1 C temperature rise. If this is happening at 1 C, we really don't want to be getting anywhere near 2 C [3.6 degrees Fahrenheit].”

The United Nations-backed Paris Agreement to fight climate change, reached late last year by nearly 200 nations, will—once it is fully ratified—commit the international community to keep global warming below a 2 degree Celsius rise compared to pre-industrial levels.

Resilience, Abatement, Finance

Attempts to strengthen the reef's resilience are focused on improving water quality, which means slashing the massive sediment and nutrient loads entering its waters in runoff from grazing lands and sugar cane fields.

Improving water quality “will increase reef resilience in the medium term, while global efforts to tackle climate change will improve the long-term outlook for coral reefs around the world,” former federal Environment Minister Hunt told Bloomberg BNA by e-mail, ahead of his recent transfer to the job of industry, innovation and science minister.

But long-standing voluntary programs targeting ranchers and sugar cane farmers aren't delivering.

And the federal and Queensland governments have made only limited progress in approaching water-quality targets that lie at the heart of their joint efforts to protect the reef—reducing nitrogen in-flows to 80 percent below 2009 levels by 2025 and sediment in-flows by 50 percent.

‘Should Be Win-Win Decisions.'

The failure is particularly frustrating because preventing soil loss and excessive use of expensive nitrogen fertilizers also are in the interest of farmers, Brisbane-based conservation scientist professor Hugh Possingham told Bloomberg BNA.

“It's odd how often in the world of natural resources management win-wins don't happen,” said Possingham, who later this year will take up the post of chief scientist with global environment group the Nature Conservancy.

Reducing sediment and nutrient “should be win-win decisions,” he said. “If topsoil is on the reef and it is not on the land, that is not good for the farmers and it is not good for the reef.”

And if phosphates and nitrogen simply end up in the sea, “it is just promoting algal growth,” he said.

Tackling those two pollutants and fencing rivers and streams to keep stock out and allow vegetation to recover and bind soils would deliver “enormous returns in every possible sense,” he said.

Excess Fertilizer Application

The importance of remedying decades of poor farming practices was underlined in an independent reef water science report that the Queensland government commissioned and released in May.

The report found average nitrogen fertilizer application levels to sugar cane fields between 20 percent and 50 percent higher than best-practice levels, even though an industry best-practice program has operated for six years.

These excessive application rates reduce sugar cane farmers' profitability by between 10 percent and 15 percent, it said.

Only 34 percent of sugar cane farmers and 16 percent of ranchers in reef catchments have participated in best-practice programs so far, and less than 5 percent of sugar cane farmers and ranchers have been accredited under these programs, the report said.

The water science report recommended a suite of measures to improve performance on existing farms and the introduction of regulations that would oblige expanded or new developments to have no net impact on reef water quality.

‘Moving Swiftly.'

Queensland environment minister Miles told Bloomberg BNA in July that his government is “moving swiftly” on the recommendations of the water quality report, although it has yet to formally respond to them.

The government has adopted the report's recommendation to pilot a suite of integrated measures to reduce pollution in two key catchments that then could be deployed more broadly, Miles said.

It also is considering setting catchment pollution load limits to guide regulatory, policy and investment decisions, he said.

And in line with the report's recommendation, it is prepared to consider farm-specific nutrient caps with provision for the trading of entitlements to discharge nutrients if other strategies are not successful within five years, he said.

“Significantly better information would be needed to establish, measure and monitor individual property caps and trading allocations,” Miles cautioned.

Catchment Clearing Rates

The dire situation on the reef also has added urgency to Queensland government efforts to strengthen controls on land clearing by farmers and other land users through a bill currently before state Parliament.

Weak land-clearing controls result in spiraling greenhouse gas emissions and more sediment in runoff, and the Great Barrier Reef Marine Park Authority recently offered several statistics that demonstrate the impact of legislative changes.

The authority's acting director of reef recovery, Leigh Gray, said broad scale clearing throughout the state peaked at about 750,000 hectares (1.9 million acres) a year just before the introduction of new legislative controls in 2000.

A decade later they had plummeted to about 78,000 hectares annually because of the restrictions, he noted while presenting evidence to a state parliamentary inquiry in late May.

But the state laws were subsequently weakened and overall clearing in reef catchments has skyrocketed again from 31,000 hectares a year in 2009–2010 to more than 100,000 hectares a year in 2012–2013 and 2013–2014, he said.

The fate of the Queensland bill to reinstate stronger controls remains uncertain, as the ruling Labor Party does not have a parliamentary majority and the state's main farming association is implacably opposed to it.

Regulation-wary farmers also wield plenty of influence at the federal level, as the National Party that forms part of the ruling Liberal-National Coalition government largely represents regional constituencies.

Financing Action

While Australia's major political parties are at odds over how to deal with land clearing, they share a keen interest in supplementing taxpayer-funded action to protect the reef with innovative financing tools.

Two measures are noteworthy, and although experts agree that they don't raise anywhere near the money required, there is some potential to scale them up over time.

The first is the Reef Trust, established and funded by the federal government and co-administered with the Queensland government based on advice from independent experts.

The federal government has committed A$210 million ($160 million) over six years to the trust, of which about A$69.1 million ($52.5 million) has been allocated, but it is soliciting contributions from corporate and philanthropic sources and also can broker partnerships with these groups.

In addition, governments eventually could allow companies to make payments to the Reef Trust or some other fund to satisfy legislative obligations to provide “environmental offsets” for any increases in sediment or nutrient flows linked to major new projects in reef catchments.

Reverse Auctions

The federal government has established an Innovative Financial Mechanisms Panel to advise on financing mechanisms that could be piloted through the Reef Trust, comprising representatives of major banks, Credit Suisse, Department of Treasury and the Clean Energy Finance Corporation.

An early focus, however, is likely to be on reverse auctions, a plan announced late last year in which organizations bid competitively to take cost-effective action that reduces impacts on the reef.

Reverse auctions are widely used in Australia for various environmental purposes, and the Queensland government, which has separately committed several hundred million dollars to reef protection efforts, currently has its own reverse auction underway to reduce sediment loads, with A$700,000 ($532,000) on offer.

The other noteworthy financial instrument is Australia's best known reverse auction scheme, the federal Emissions Reduction Fund (ERF), through which the federal government enters into long-term contracts to buy carbon offsets from projects that reduce emissions.

Vegetation Protection

Many of the ERF contracts have gone to projects that prevent vegetation loss or reinstate vegetation, and the federal government estimates that contracts worth A$150 million ($114 million) have been signed for revegetation projects in reef catchments.

They include the two largest ERF contracts, both signed in April, when combined will deliver more than 20 million metric tons of abatement over 10 years through vegetation protection activities.

The federal government has signed the two contracts with carbon offsets provider GreenCollar, a major force in the Emissions Reduction Fund market, and the Queensland state government provided data and information to help the company prepare its bid.

The partnership constituted “a first of a kind, public-private collaboration aimed at mobilizing green finance from the private sector to deliver crucial environmental outcomes through changes in land management,” said GreenCollar Chief Executive Officer James Schultz.

New Reef Fund

Meanwhile, the federal government in June announced it would direct the Clean Energy Finance Corporation (Australia's green bank) to allocate A$1 billion ($760 million) over 10 years to a Reef Fund. The fund would support clean energy projects that have benefits including better protecting the Reef.

That would result in loans and other forms of nongrant financial support totaling A$1 billion over 10 years going to projects that support such things as “more energy and water-efficient irrigation systems, pesticide sprayers or fertilizer application systems on agricultural land,” Hunt told Bloomberg BNA.

“The fund could also support cleaning up coastal sewage treatment plants to reduce ocean outfalls with next-generation wastewater treatment, efficient pumps or biogas electricity generation,” the minister said.

Details on the type of proposals that could be supported remain sketchy, however, and many interest groups are skeptical that sufficient projects will be found to simultaneously satisfy the CEFC's mandate to support innovative clean energy activities and the goal of improving water quality.

Landmark Costing Exercise

The issue of financing reef protection was highlighted Aug. 12, when an official estimate of the cost of meeting the 2025 reef water quality targets was released.

Prepared by a consortium of economic and water-quality experts at the request of the scientists who reported to the Queensland government in May, the landmark study said about A$8.2 billion ($6.3 billion) would be required to meet the targets.

That compares to projected expenditure of slightly more than A$2 billion ($1.5 billion) proposed in last year's Reef 2050 long-term sustainability plan. It is a scale of environmental expenditure that is not completely unprecedented in Australia, however, with a former federal government directing many billions of dollars into environmental protection of the Murray-Darling Basin in the country's southeast.

Coal Interests, Court Challenges

The dramatic changes on the reef have drastically sharpened and heightened debate in Australia over the legitimacy of coal mining—and one project in particular.

The site for Indian conglomerate Adani Group's proposed Carmichael mine—which would be one of the largest coal mines in the world—is about 200 kilometers inland from the Queensland coast.

If the mine proceeds and a rail line is built linking it to the coast, then Adani would be shipping up to 60 million metric tons of coal annually through the Great Barrier Reef.

The burning of that coal in destination cities would contribute 4.6 billion metric tons of greenhouse gas over the mine's life, according to an expert analysis prepared for one of the court challenges to the mine.

Furthermore, the rail line would make it possible for other massive coal mines to open in the same region.

‘Lawfare' Battle

Consequently, the proposed Carmichael mine has taken on symbolic importance.

The state's mining industry views the massive project as a test for whether environmental campaigns that it regards as illegitimate can block projects that bring jobs and economic growth.

Mining companies in turn are under fire for successfully campaigning to have community environmental lawyers that are backing the challenges stripped of federal funding and for seeking the repeal of rules that allow tax-deductible donations to a range of environment groups.

The battle is largely being fought in courtrooms and the boardrooms of banks, rather than either the Queensland or federal Parliament.

Environment groups have lobbied financiers to steer clear of backing the mine or its infrastructure while mining associations have accused environmentalists of “lawfare” for mounting numerous legal challenges to various approvals for the mine.

‘Pipe Dream.'

Adani still faces the daunting task of securing finance for the massive project at a time when coal prices have plummeted, and some politicians expect that means the mine is a dilemma that will take care of itself.

“I don't see the Carmichael mine as a viable prospect. I don't think that is going to happen,” Mark Butler, shadow minister for climate change and energy with the federal Opposition Labor Party, told a seminar in Melbourne in June.

Queensland has many existing coal mines that are operating at a loss and the idea of a new one “in the middle of nowhere with no infrastructure connecting it I think is basically a pipe dream,” Butler said.

International Steps

The UNESCO World Heritage Committee last year decided not to designate the reef as “in danger,” but set two important deadlines for the federal government.

In December, it must report on progress in implementing and financing its long-term reef protection plan; by the end of 2019, it must report on the state of the reef and whether the plan is protecting its health.

Ahead of this year's report to the committee, WWF's Leck told Bloomberg BNA that his organization would be watching closely to make sure the finance gap is bridged.

WWF didn't support a World Heritage Committee in Danger listing for the reef in 2015, Leck noted, but its stance could change.

Without sufficient finance “is an in danger listing on the cards?” he said. “It probably is.”

Such a designation could follow a UNESCO determination that the reef system faces “specific and proven imminent danger,” and would allow the UN to alert the world community and allocate additional funds to help.

But the World Heritage Convention dates from 1972—before the potential risks of climate change were fully understood—and any consideration of an in danger listing only peripherally considers climate change risks.

Consequently, any future World Heritage Committee decision to list the reef as in danger will rest largely on whether governments are properly dealing with risks they directly control.

Test for the UN

That means the committee certainly will scrutinize efforts to cut polluted runoff, along with the approach to managing reef ports and shipping.

But it won't be evaluating the adequacy of Australia's contribution to the global fight against climate change, let alone its attitude toward huge new coal mines.

In that regard, the fate of the reef is ultimately a test for the UN climate change process and its capacity to strengthen commitments by all countries.

Basically, it is the role of the World Heritage Committee to determine whether the reef is being kept strong.

But it is the role of all countries involved in UN climate negotiations to ensure that it remains one of the world's greatest natural wonders.

To contact the reporter on this story: Murray Griffin in Melbourne at correspondents@bna.com

To contact the editor responsible for this story: Greg Henderson at ghenderson@bna.com

For More Information

Decades of poor farming practices were detailed in an independent reef water science report commissioned by the Queensland government and released in May. It is available at http://src.bna.com/hvk .

The Reef 2050 long-term sustainability plan is available at http://src.bna.com/hvl .

An analysis of coal burning at the proposed Carmichael mine is available at http://src.bna.com/hvm .

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