Understanding Carbon Emissions: Key Insights for South Australian Dairy Farmers

The dairy industry in South Australia is integral to both our state’s economy and its agricultural sustainability goals. However, like many other sectors, dairy farming is confronted with the challenge of reducing carbon emissions while maintaining productivity and profitability. Greenhouse gas emissions, including methane and nitrous oxide, not only contribute to climate change but also represent inefficiencies within farming systems. The energy and nutrients lost through these gases could otherwise be directed towards improving production.

The industry has committed to a 30% reduction in emissions intensity by 2030. While progress is being made, further efforts are needed. 

Agriculture accounts for 13% of Australia's total greenhouse gas emissions, with dairy contributing 12.5% of that, primarily from methane emissions. Dairying in Australia contributes approximately 1.6% of total national GHG emissions. Despite having one of the lowest carbon footprints globally, there is still room for improvement.

Pressure to reduce emissions is increasing across the dairy supply chain:

• Australia has committed to net zero emissions by 2050 and signed international agreements like the Paris Agreement to meet GHG reduction targets.
• Banks are part of the Net Zero Banking Alliance.
• From 1 January 2025, the Australian Government mandates sustainability reporting for large businesses, including financial institutions, covering climate risks and sustainability efforts (link).

• While dairy farmers are not currently mandated to report emissions, they fall within Scope 3 emissions, meaning processors and retailers could potentially request this data in the future to meet their own Scope 3 reporting obligations.

   

Emission Reporting in Australia

The Australian Government has finally fulfilled its promise to mandate sustainability reporting in Australia, the start date for the legislation begins from 1 January 2025. The new requirement falls under the Commonwealth Corporations Act 2001.

Large Australian businesses, including financial institutions, will be required to report on climate-related risks and sustainability efforts, including their scopes 1, 2 & 3. A three-year phased approach will be implemented for mandatory sustainability reporting, based on employee size, assets, and revenue. Scope 3 reporting will begin with Group 1 entities from 1 January to 30 June 2026, with Groups 2 and 3 to follow in later phases. See the Australian Standard on Sustainability Assurance for group and phase details ASSA Phasing pg. 11

Dairy farmers operating as sole traders, partnerships, or trusts are not directly subject to reporting requirements. For those operating under a company structure, the reporting requirements will not apply until 2028. See Sustainability reporting for small business | ASIC

While dairy farmers are not directly mandated to report, these changes will likely expand overtime, indirectly impacting dairy farms. It is important to note that processors and retailers you supply may fall into these groups and thus be required to report their emissions.

Preparing now by understanding your emissions profile is crucial to stay ahead of regulatory changes. 

For further details see;

ASIC media release and guidance

ASSA Phasing, pg. 11

Get Emission-Ready: Know Your Baseline, Prepare for What’s Ahead

The first crucial step in this process is gaining a clear understanding of the sources of emissions on your farm and measuring your baseline. Once identified, you can take practical steps to reduce them, improve efficiency, and enhance profitability.

Dairy Australia

Offers a range of resources and tools to understand carbon emissions and calculate your baseline: 

• Dairy Australia Climate & Environment (Link) 
• Australian Dairy Carbon Calculator (ADCC) (Link) 
• Emissions Reduction Strategies (Link)
• DairyBase (Link) 

If you already use DairyBase, simply answer a few questions to get your emissions report. Otherwise, calculate your emissions with the Australian Dairy Carbon Calculator and resources.

Emission Reduction Strategies

There are many strategies to reduce dairy farm emissions, helping to improve profitability, productivity, and environmental sustainability.