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Carbon markets ‘huge opportunity’ for Australian farmers: Impact Ag Partners

In a ‘pioneering first’, Impact Ag Partners this month sold A$500,000 of carbon credits to Microsoft through a voluntary market established by Regen Network.

Impact Ag Partners managing director Bert Glover says that still-emerging markets for selling and trading carbon credits present a “huge opportunity” for farmers, with Australia particularly well-placed because of its large land mass with sizeable amounts of grassland.

Glover was speaking to Agri Investor after Impact Ag Partners’ sale of approximately A$500,000 ($387,720; €322,013) of carbon credits to Microsoft, in a deal brokered by US firm Regen Network.

The deal involved the sale of 43,000 credits derived from Impact Ag Partners’ Wilmot Cattle Company asset in New South Wales.

The price per credit was not disclosed but is understood to be commensurate with the Australian carbon credit unit price. ACCU spot prices hovered between A$15-A$17 in Q3 2020.

Impact Ag Partners described the deal as a “pioneering first” because of its size and the fact that it was a voluntary deal done outside Australia’s existing, regulated Emissions Reduction Fund regime.

“We believe that agricultural investment can play a major role in managing some of the current and future climate challenges that Australian agriculture is facing, and that it can be a major sequester of carbon,” Glover said.

“For the last 10 years or so we’ve been doing a substantial amount of data capture and analysis around the ecosystem services we generate through our farming practices, along with the other important metrics we capture such as financial returns. These include soil carbon, water quality, biodiversity, ground cover and emissions. That has enabled us to participate in this CarbonPlus credit market created by Regen Network.”

The credits, known as CarbonPlus credits, are verified through a third-party auditor engaged by Regen Network, and consider water retention in the landscape and wider farm biodiversity, as well as soil carbon levels.

Glover said the sale of the credits would contribute an additional 0.5-1 percent annual yield and that the deal had demonstrated the possibilities that carbon markets offered.

“We have other transactions in the pipeline which should be finalized soon, of a similar size and scale, and we’re now talking with another global corporation that wants to sequester carbon in Australia and partner with us, to do similar projects on a larger scale,” Glover said.

“I think this could be amazing for Australia, and agriculture globally. Markets are still in their infancy – the technologies and protocols aren’t always ideal, but we will end up with more sophisticated and suitable methodologies eventually.

“We’re collaborating with the regulator here in Australia to try and reduce the barriers to entry in our own carbon markets, so we’re proud to be able to demonstrate what these markets can look like. Things are moving in the right direction and the Australian government is really motivated right now to do this, as we get a feeling they want to take something of substance to the COP26 meeting in Glasgow this year.”

The Australian government last year made lowering the cost of soil carbon measurement one of its five priorities for reducing emissions, with a target of below A$3 per hectare per year. This would represent a 90 percent reduction from measurement costs in September 2020 and would “transform the economics of soil carbon projects for Australian farmers”, the government said at the time.

Investors have increasingly shown interest in the opportunities on offer, with KKR investing directly in environmental markets investor GreenCollar in July 2020 and Craigmore Sustainables recently stating that its new timber fund would derive roughly one-third of its returns from carbon credits generated over the life of the fund’s assets.