What are carbon credits?
A carbon credit is a certificate that represents one tonne of carbon dioxide or greenhouse gas equivalent. In Australia these are called Australian carbon credit units (ACCUs) and because the precise monetary impact of this CO2 volume on the planet is difficult to define, carbon pricing today is decided by either taxes or trading. Though generally speaking, the price of carbon credits, amid growing net zero commitments from companies and government worldwide, is rising — and projected to double by 2030.
How to earn carbon credits
Applications for carbon projects can be made through the Emissions Reduction Fund (ERF), a scheme overseen by the Clean Energy Regulator (CER). If eligibility criteria are met (including accepted methodologies and reporting commitments), then an application can be made. Participants with a registered project may then bid for a contract to sell their ACCUs to the CER, who will run auctions to select bidders according to price. Carbon credit income varies between projects, but publications like Farm Online have reported substantial gains: “A 1000-hectare wheat farm that’s sequestering three tonnes per hectare per annum is going to be making 3000 carbon credits a year.” With carbon credits trading at around $22 in July 2021 and predicted to keep rising, that’s a decent return.
Partnering with GreenCollar to develop your project is a way to ensure you’re maximising your profits and project impact. GreenCollar’s technical team calculates the project’s potential carbon abatement potential and commercial viability, and works with land managers to tailor the project to their needs — this includes data collection and site visits. All ongoing monitoring and reporting processes are taken care of by GreenCollar, and the land manager can receive the first of their ongoing project revenues after approximately 18 months depending on stakeholder consents.
Importantly, eligibility for ACCU-generating projects is more varied than many land managers may realise, and include projects such as:
- Avoided clearing – protecting growing forest from future scheduled clearing by breaking with the property’s historical clearing regime.
- Avoided deforestation – preservation of native forest on property that has previously received government consent to be cleared and converted to cropland or pasture.
- Human-induced regeneration – allows natural regrowth of native vegetation by making management changes such as changes to grazing patterns, installation of new infrastructure, and cessation of regrowth clearing.
- Beef herd management – Aims to improve soil health and carbon sequestration through changes in livestock systems.
- Soil carbon projects – Manage the environmental cost and efficiency of farm systems to better serve the health of the farm, soil, and water and increase carbon uptake by changing irrigation and tilling systems.
Why earn carbon credits?
There are significant financial reasons to earn carbon credits. The diversification of income creates increased and ongoing economic resilience for farmers. But there are also a range of other on-farm, benefits that come from carbon projects. The environmental and social windfalls generated by projects are extras — often referred to as ‘co-benefits’ — and the benefits for land managers can be equally varied. One of the most crucial ways carbon farming can directly increase productivity is through soil improvement. A change in land management practices such as changes to tilling and irrigation regimes results in measurable increases in soil function and fertility as well as increased water and nutrient retention in plants — all of which contribute to enhanced productivity. Increased or preserved vegetation cover has also been proven to lessen the severity of seasonal events such as heat stress in livestock and frost in colder months. This is further enhanced by a range of environmental benefits which include: increased biodiversity above and below ground, habitat protection for endangered species, and increased soil and water health in the landscape.
How to claim carbon credits
Claiming ACCUs can be achieved through the Reporting and Crediting Form, found on the Emissions Reduction Fund’s (ERF) Client Portal. To claim, participants need a completed and signed ACCU application, an eligible offsets report for the reporting period, and method-specific supporting documentation. A comprehensive list of how to claim is available on the Clean Energy Regulator (CER) website, but by working with a project developer such as GreenCollar, land managers can hand the administrative burden of applications, documentation and reporting over and concentrate on implementing their project on the ground.
How to invest in carbon credits
Carbon credit investment can deliver significant benefits to a company. Some larger emitters are obligated to purchase credits in accordance with the CER’s Safeguard Mechanism, but for others the carbon market is voluntary, a way to meet their ESG commitments and deliver benefits to their brand.
- The first way is to purchase credits is through the Emission Reduction Fund’s (ERF) project register, which outlines a number of projects for investors to choose from.
- A second way is to contact projects and project facilitators through the Carbon Market Institute’s (CMI) marketplace.
- As Australia’s largest environmental markets investor, GreenCollar works directly with a number of land managers, Indigenous groups and Natural Resource Management organisations, all of which are generating ACCUs for purchase. For investors wanting high quality, high-integrity credits and high-value returns, GreenCollar provides projects that offer comprehensive ESG benefits for companies.
