The ability of land ecosystems like crops and soils to slow down climate change may have been overestimated because some of these ‘carbon sinks’ actually emit more greenhouse gases than first thought, a study has found.

The Gillard government’s carbon tax package assumes that part of Australia’s emissions reductions will come from the purchase of carbon permits, which allow a polluter to offset their greenhouse gases by paying for preservation of carbon sinks elsewhere. Offsets are also a cornerstone of the European emissions trading system.

But the jury is still out on how to calculate the quantity of greenhouse gases saved by carbon offset projects that lock carbon dioxide in the soil, such as crops and forests.

A U.S. study published in the journal Nature found that, the more carbon dioxide (CO2) a land ecosystem absorbs, the more it emits other, more potent greenhouse gases like methane (CH4) and nitrous oxide (N20).

“Increased CO2 stimulates both N2O emissions from upland soils and CH4 emissions from rice paddies and natural wetlands,” the authors said.

“These emissions are expected to negate at least 16.6 per cent of the climate change mitigation potential previously predicted from an increase in the terrestrial carbon sink under increased atmospheric CO2 concentrations.”

“Our results therefore suggest that the capacity of land ecosystems to slow climate warming has been overestimated.”

The carbon tax package modelling assumes that, by 2020, about two-thirds of Australia’s greenhouse gas abatement is done by buying offset permits from overseas.

The uncertainties around how to calculate greenhouse gas abatement achieved by carbon sinks should be dealt with openly, said Professor Warwick McKibbin, a climate economist from the Australian National University and a member of the Terrestrial Carbon Group (a group of economists, scientists and policymakers specialising in land carbon sequestration).

“When you are creating a market to price carbon and you are going to bring in things like carbon sinks, you have to be careful you have an mechanism to deal explicitly with the uncertainties,” said Professor McKibbin, who was not involved in the U.S. study.

“If you have a permit generated from some land-use change, you may not want it to be counted exactly the same as a unit of carbon taken out of a power station because of a reduction in burning of coal. One can be measured a lot more accurately than the other,” he said,

“You have to be very careful you don’t have this complete destruction of the market because you have brought in permits with the wrong carbon value. This applies domestically but also to offsets coming in from overseas.”

Professor McKibbin said the uncertainties were even greater when dealing with offset permits generated in other countries, where calculation methods or oversight mechanisms may not accord with Australian standards.

“With foreign permits, we often just don’t know where was the reduction generated. That’s the whole problem with allowing too many foreign permits to come into a domestic system – you can undermine the value of the domestic system,” he said.

“It’s like allowing another country to print Australian dollars and then those Australian dollars come into the Australian system. It can undermine the value of the domestic currency.”