The Australian government has expanded its carbon credits scheme to include blue carbon projects for the first time, as well as more options for plantation forestry.
Angus Taylor, the minister for industry, energy and emissions reduction, said the changes would expand the supply of Australian carbon credit units available under the government’s Emissions Reduction Fund scheme, which helps to support carbon abatement projects.
Businesses can register projects with the government and be issued ACCUs for any emissions reduction that is achieved. A single ACCU represents one tonne of carbon dioxide equivalent net abatement, which can be sold to the Australian government or on the secondary market.
In agriculture, projects that were already eligible to generate ACCUs included those that increased soil carbon levels, reduced livestock emissions, expanded opportunities for environmental and carbon sink plantings, and reforestation schemes.
Tidal restoration of so-called ‘blue carbon ecosystems’ has now been added, meaning ACCUs can be generated by projects that reintroduce tidal flows to areas of land where this was previously restricted.
“‘Blue carbon ecosystems’ is a term commonly used for coastal wetland and marine ecosystems that can sequester and store high amounts of organic carbon, and release very low amounts of greenhouse gases,” said the Clean Energy Regulator in an introduction to the blue carbon method on its website. “In many locations across Australia, saltwater coastal wetlands have been drained or converted to freshwater wetlands through the installation of levees, drains, bunds, or tidal gates that prevent tidal inundation.
“The method covers the establishment of vegetated coastal ecosystems including supratidal forests (eg, swamp mahogany, paperbark and casuarina), saltmarshes, mangroves, sparsely vegetated saltmarshes (salt flats), and seagrass. Under this method, vegetation includes both vegetation below and above ground including leaves, roots, tree branches, bark and trunks.”
Projects of this type could prove attractive to investors looking for natural capital projects outside the traditional areas of cropping and livestock.
Under other new additions to the scheme, four types of plantation forestry projects will be eligible to generate ACCUs: the establishment of new plantation forests; conversion of a short-rotation plantation to a long-rotation plantation; continuing rotational harvest cycles in a plantation forest, where that forest would otherwise have been converted to non-forest use within 24 months or left fallow; and transitioning a plantation forest to permanent forest, where that forest is at risk of being converted to non-forest land.
Abatement from industrial and commercial processes and biomethane have also been added to the ERF scheme.
In a statement, Taylor said: “The Emissions Reduction Fund is working. Since 2014, the ERF has committed A$2.2 billion ($1.6 billion; €1.4 billion) to projects across Australia, many in regional and rural areas. The ERF has already delivered more than 100 million tonnes of abatement and these new methods will bring on even more projects and abatement.”
The Australian government is in the process of developing the Australian Carbon Exchange, an online marketplace for the purchase, clearing and settlement of ACCUs, and potentially other types of carbon units and certificates. It is aiming to build the system in 2022 and 2023, with a launch planned for some time in 2023.
Private carbon credit markets have begun to emerge alongside the proposed Australian system.
The Reef Credit Scheme, an independent market mechanism established to measure, value and audit water quality improvements for the Great Barrier Reef, is one such example, with the Queensland government last year purchasing 18,000 reef credits from a group of farmers in the north of the state.
Also in 2021, Impact Ag Partners sold approximately A$500,000 of carbon credits derived from its Wilmot Cattle Company asset in New South Wales to Microsoft, in a voluntary deal brokered by US firm Regen Network outside of the Australian government’s ERF scheme.